Chancellor Rachel Reeves told sceptical corporate leaders on Monday there would be no more tax rises on British businesses, as she insisted there was no alternative to the £40bn increase in taxes in last month’s Budget.
She said at the CBI annual conference she had no regrets about her fiscal decisions, even as some executives warned they were reconsidering investment plans because of her actions.
“There’s a lot of feedback about the Budget, and I expect I’ll hear more of it in the room today,” Reeves said to only sparse applause during the business lobby group’s event at the QEII centre in central London.
“What I haven’t heard is many alternatives, and we have to put the public finances on a firm footing to bring stability back to the economy.”
Reeves said business could be confident she would not return in the future with more tax rises.
“We have now wiped the slate clean,” she added. “You can be confident we’re not going to have to come back again and do another Budget like this.
“It’s really important that the sums add up, and I’m determined to be the chancellor that puts our public finances on a firm footing.”
Reeves’ pledge to not come back with further tax rises is an echo of comments by her earlier this month.
Some business leaders have been aghast at the £25bn increase in employers’ national insurance contributions in the Budget, and the removal of several tax loopholes, just as the government is raising the national minimum wage and implementing a big package of worker rights reforms.
Salman Amin, chief executive of snack maker Pladis, which owns the McVitie’s brand, told the conference his company had invested £2bn in Britain in the last decade.
“Historically we have been super bullish on the United Kingdom . . . we would like to continue to be a major investor,” he said. “Going forward, it’s becoming harder to understand what the case for investment is.”
Keith Anderson, chief executive of Scottish Power, said: “There are a number of people in here thinking . . . ‘Some of the measures announced in the Budget are actually going to make it more difficult’.”
CBI chair Rupert Soames told the conference the government “needs to work quickly on other areas of policy to ensure that business confidence in the government, so hard won during the election, does not evaporate.”
On the sidelines of the event, he described the Budget as “a bit shit”. He told the Guardian: “If we can come to a position where business can say: ‘Well OK, the Budget was a bit shit but we can live with the rest’, then there’s probably a landing ground we can get to, where the government can retain the confidence of business.”
Rain Newton-Smith, CBI director-general, gave Reeves credit for trying to stabilise the public finances and praised her for changing the fiscal rules to enable more capital investment, but she criticised the rise in corporate taxes.
She added: “When you hit profits, you hit competitiveness, you hit investment, you hit growth. Tax rises like this must never again be simply done to business. That’s the road to unintended consequences.”
Almost half of CBI members surveyed by the business group said they would reduce headcount and almost two-thirds would trim back hiring.
Conference attendees milling around the coffee tables at the QEII centre in Westminster expressed frustration about higher business taxes, albeit leavened with some sympathy for the incoming government.
Martin Jones, UK chief executive of the Home Instead care homes chain, said Reeves deserved a “frosty” reception given the rise in employer national insurance contributions, which he said would add £9mn a year to his company’s costs.
“It came out of the blue, the scale of it was very surprising, it makes you do a horizon scan and have to think about future investments,” he added.
Jones said the government “came in on a wave of optimism and had an opportunity to create economic growth, but you don’t do that by alienating business and by knocking investment and job security”.
Kemi Badenoch, the new Tory leader, condemned the Budget as an “unprecedented raid” on British business.
Badenoch told the conference everyday people would pay the price for the tax increases on business, either through lower wages or higher prices.
But she stopped short of promising that a Conservative government would reverse the measures.
Earlier, chief executives had a private breakfast with Varun Chandra, the Downing Street business adviser and former chair of Hakylut, along with Bank of England governor Andrew Bailey.
One attendee said the mood at the breakfast was civil rather than fractious.
“I don’t agree with the idea in some newspapers that this is the start of a communist takeover,” he added. “The general view in the room was that the chancellor deserves the benefit of the doubt, for now.”