The president of the organisation which speaks for UK businesses has urged the government to lower taxes immediately to help the country’s “very fragile economy”.
Speaking exclusively to Eastern Eye, Lord [Karan] Bilimoria, founder of Cobra Beer, said that families and businesses were suffering from a triple whammy of higher inflation, higher interest rates and higher taxes.
Last September (8), the government won a parliamentary vote to hike national insurance by 1.25 per cent to pay for health and social care.
This will take effect from April.
And next year corporation tax, the money paid on company profits, climbs to 25 per cent from its current 19 per cent.
Lord Bilimoria, president of the Confederation of British Industries (CBI), urged the chancellor to reverse immediately the planned tax rises.
“Now’s not the time to put up taxes, now’s the time to put taxes down to encourage investment,” said the peer.
“That investment will encourage the growth, that growth will create the jobs, those jobs will actually pay the taxes and that tax that will pay down all the borrowing that we’ve needed to save the economy and the jobs throughout the pandemics, investment.
“Growth is required now more than ever.”
The introduction of Plan B restrictions on working from home and wearing face masks on public transport and in public places “ruined the whole of December for the hospitality sector”, he said.
Just before Christmas, the government announced plans to inject £1 billion into the industry to help it try to overcome the loss in business owing to the Omicron virus.
Lord Bilimoria calculated that it meant some restaurants got between £2000 and £6000, but he wanted the government to “follow through”.
“You appreciate any help you get, but that is that is nowhere near enough to help the businesses that have suffered so much,” he said.
“You had the guts to spend 400 billion pounds. If it requires spending some more to save the business, save the jobs, you’ve done so much at the peak of the pandemic, do it now because you need those businesses and jobs there when we recover.
“The analogy I use is like a tennis shot. If you play a tennis shot, and you stop when you hit the ball, the ball is going to go into the net.
“You’ve got to follow through for the ball to go over the net.”
The CBI president revealed that last February he told the chancellor, Rishi Sunak, not to increase taxes and that Britain should follow India’s lead.
“I said to Rishi Sunak in light of India last budget, in February last year, a month ahead of us, India did not put up taxes.
“I said as a chancellor of Indian origin, please listen to what India has done. India has not put up taxes for two reasons.
“One is they don’t want to stifle the recovery, and secondly, businesses have suffered so much.
“That’s exactly the case here. High taxes are never a good thing, but at a time like this with a fragile recovery, your high taxes can stifle the recovery, and we’ve now got high taxes.
“This is the worst time to have the highest tax burden in seven decades. This is the time when taxes need to be capped. This is a time when you need to incentivise investment to create jobs.”
The peer told Eastern Eye that now was the time “to take bold moves”.
“We are suggesting that the government should make the Migration Advisory Committee an independent body, like the Monetary Policy Committee,” he said.
“[It]is independent and sets interest rates every month that the Bank of England has to follow.”
It would not mean an “open border” policy in the UK, Lord Bilimoria stressed.
“Like the low pay commission sets a minimum wage that the government has to follow, the Migration Advisory Committee should be tasked from time to time.
“Whether it’s every quarter, or whether it’s every six months, it comes up with an assessment of shortages in different sectors economy and sets the government and prescribes that you need to open up 1000 jobs or 2000 jobs per sector.
“It identifies sectors and gives visas for one year or two years, and the government should then do that. That’s what we need.”
Last year (December 29) the Resolution Foundation think tank warned that households could be £1,200 a year worse off.
It predicted that millions of families were facing a “cost-of-living catastrophe” in 2022.
Lord Bilimoria said he understood the pain of families who were suffering.
“You’ve got energy prices going up, you’ve got your fuel costs have gone up so much as well.
“You’ve got inflation across the board, and you’ve got taxes going up as well. So, the consumer really is being squeezed.”
He brought up his concerns when he spoke to the chancellor last February, he said.
“I was chairing a CBI meeting as president with Rishi Sunak, the chancellor, and I asked him the question, are you worried about inflation?
“So, I’ve been worried about inflation for literally for a year now, and unfortunately, my worries have come through.
“We have got inflation in just about every area you can imagine.
“The official figure, maybe six per cent percent, but actually, in many areas, inflation has been much, much higher.
“I know this from my own business, from Cobra Beer, from our input costs, from the supply chain, from freight costs. In many cases, they over 20 per cent.
“There are many reasons for the cause of it, and a lot of it is global as well.
“When you have interest rates at such a low level, going up to 0.25 per cent from 0.1 per cent, to control inflation using interest rates, is going to be very difficult at a time like this, because how much do you have to put up interest rates to be able to control inflation at these levels?”
The entrepreneur praised the government for listening to ideas floated by business leaders.
“My members, the President’s Committee, are the most important businesses in this country,” the peer explained.
“As business leaders, we will quite often see a problem. But we also see a solution, and if you’re an entrepreneur, your mindset is to not only see the problem, not only see the solution, but you want to act on it straight away quickly.
“When it comes to government, we have the advantage of being able to do that to point out the problem, the solution and urge them to act as quickly as possible.
“There is a timeline, there’s always going to timeline.”
He gave an example where the government did act on the advice of business.
“During the pandemic, I started urging the government to mass test from August 2020, and it was in November where I asked the question again, why don’t you implement mass testing, which will save mass isolation and allow the economy in schools and colleges and universities to be able to operate?
Lord Bilimoria said the government had to continue to listen to business, because, he said, businesses have been helping people.
“The government help has been phenomenal. We’ve had bounce back loans,” he said.
“They’ve saved so many businesses, people will remember, employees will remember how they were treated in this time, and many, many businesses have looked after their employees in a time of crisis, and that will be remembered.
“Look at the curry restaurant sector, they have suffered so much, and I’ve seen first-hand that they’ve gone to the expense, the time, the effort to make their premises COVID secure and gone even further.
“I’ve seen hundreds of restaurants, unprompted, preparing hundreds of meals that they would deliver when the restaurant is closed.
“They opened the kitchen and prepared those meals and deliver to the local hospitals.