Business chiefs urge Healey to rule out fresh tax raid as private sector slump deepens

John Healey has been urged to use the Budget to draw a ‘clear red line’ under rising business costs as new figures showed no sign of an end to the slump under Labour.

The Confederation of British Industry (CBI) urged Mr Healey to refrain from any further increases in the cost of hiring, investing or doing business.

Firms have already been crushed by rises in employer national insurance and minimum wages as well as botched business rates reform and the introduction of a raft of new workers’ rights.

Much of the damage was done under Mr Healey’s predecessor Rachel Reeves.

Now, fears are growing that the new Chancellor will again put up taxes – adding to £75 billion of increases under Ms Reeves – to make the Budget sums add up as spending pressures grow and as Labour fights shy of tackling ballooning welfare spending.

The CBI called on Healey to rule out fresh tax hikes as firms grapple with higher costs 

Latest figures from the CBI show that businesses expect private sector activity to decline in the three months to December, extending a run of gloomy sentiment going back to around the time of Ms Reeves’s first Budget in 2024.

The survey also revealed that activity had declined in the three months to September.

CBI deputy chief economist Alpesh Paleja said: ‘The outlook for growth remains subdued.

‘Cost pressures remain strong, especially around energy and employment and, coupled with weak demand, this continues to put pressure on margins, recruitment and investment plans.

‘Uncertainty ahead of next month’s Budget is also holding back activity in some sectors.

‘Against the backdrop of renewed fiscal pressures, the Budget must draw a clear red line under any more rises in the cost of hiring, investing and doing business.

‘The Chancellor must focus on easing the cumulative burden of costs, as an entry point to spurring dynamism and activity.’

Mr Paleja called for Mr Healey to remove green levies from green energy bills, reduce employer national insurance contributions and commit to a ‘clear path’ for business rates reform.

Those would be ‘important first steps to building business confidence and putting the country back on a path to sustained growth’ he said.

The comments from Britain’s biggest business group are the latest intervention from corporate Britain aimed at lifting the burden on struggling firms.

As well as the costs imposed by Labour, companies are facing stark increases in energy and fuel bills after Donald Trump’s Iran war pushed up oil and gas prices, stoking global inflation.

That is likely to prompt the Bank of England to hike interest rates next month, causing more pain.

And while Britain’s resilient firms managed to deliver robust growth in the first half of this year, that has failed to improve the dismal jobs market. Recent official figures showed the workforce has shrunk by 200,000 under Labour.

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