John Cridland, CBI Director-General, said:
“This is a double edged Budget for business. Firms will welcome measures to balance the books and boost investment, but they will be concerned by legislating for wage increases they may not be able to deliver.
“Firms have been unwavering in their support for the Chancellor’s deficit reduction plans and will welcome the clarity that the new fiscal rules provide. Other standout measures include making the Annual Investment Allowance permanent at £200,000, which the CBI called for, as well much-needed investment in our roads network.
“The further reduction in corporation tax is a welcome surprise but tax reductions for employers don’t appear to match the businesses most affected by a rise to £7.20 in the National Minimum Wage next April – a 7% increase.
“The CBI supports a higher skilled, higher wage economy, but legislating for a living wage does not reflect businesses’ ability to pay. This is taking a big gamble that the labour market can absorb year-on-year increases of an average of 6%.
“Firms want to play their part in training up more apprentices but an apprentice levy is a blunt tool. A volunteer army is always better than conscription but the CBI will work with the Government to make the best effect of this measure.”
On the new fiscal rules, Mr Cridland said:
“These new rules strike the right balance between getting down our national debt as share of GDP and ensuring we can respond to future shocks in the economy.”
On the introduction of the National Living Wage, Mr Cridland said:
“Small shops, hospitality firms and care providers are the businesses that will face real challenges in affording the National Living Wage.
“Delivering higher wages can only be done sustainably by boosting productivity. Bringing politics into the Low Pay Commission is a bad idea.”
On changes to Corporation Tax, Mr Cridland said:
“The Chancellor has provided clarity on the future direction of corporation tax rates for the remainder of this Parliament. Combined with a welcome commitment to publish a business tax roadmap in April 2016, which was called for by the CBI, this must provide businesses of all sizes with the certainty they need to invest.”
On the apprenticeship levy, Mr Cridland said:
“In the past, the training delivered by levy approaches has often been costly and not linked to the needs of businesses and learners. The real solution to more quality apprenticeships lies in giving greater control over content to businesses working together in partnership.”
On reducing the bank levy and introducing an 8% surcharge, Mr Cridland said:
“By phasing out the bank levy, the Chancellor has tackled an issue that was making the UK uncompetitive for global banks headquartered here. But the proposed new banking profits surcharge will need careful examination to avoid unintended consequences and ensure it doesn’t stifle choice in the banking sector.”
On further tax avoidance measures, Mr Cridland said:
“We support efforts to counter tax avoidance and evasion, such as increasing HMRC resources, and we look forward to consulting closely with the relevant authorities on a number of matters to ensure they are well designed.”
On transport and energy commitments, Mr Cridland said:
“The Chancellor is right to address the £8bn black hole in the existing road budget through the creation of the new Roads Fund. However there’s more to do to reverse rather than simply halt the decline in road funding.
“The CBI has long argued that the current business energy efficiency regime is far too complex and burdensome and so we welcome the review announced. Better designed green taxes and regulation will drive business investment.”
On boosting local growth, Mr Cridland said:
“New enterprise zones, city and county deals, smart transport investments and science and innovation audits provided further detail on the Northern Powerhouse agenda. Business wants to work with Government to ensure new powers boost job creation and business investment.”
On further pensions changes, Mr Cridland said:
“The Chancellor is right to tread carefully in reforming the taxation of pension saving. Previous mis-steps in this area have damaged our savings culture. Any future measures should not damage the attraction of saving in a workplace pension for employees –this remains the best way of preparing for retirement.”