IoD: members want govt to prioritise deficit reduction

Tuesday 19 May 2015

A number of limited companies want the government to prioritise deficit reduction during the early stages of parliament, a survey from the Institute of Directors (IoD) has revealed.

The IoD surveyed over 1,200 of its members, of which many were small and medium-sized enterprises (SMEs), and found that 85 per cent would like to see the UK running a budget surplus by the end of parliament.

What's more, a number of business leaders believe that this should be done through cuts to public spending rather than increasing tax. Over half of respondents said that they are strongly against increases to national insurance, income tax, business rates and VAT.

Director general of the IoD Simon Walker said: “While cuts are always difficult to make, the simple truth is that every year we run a deficit is another year that the stock of debt increases, and interest payments with it. Interest rates on government debt may be low now, but they will not stay low forever. If we do not even begin to deal with the pile of debt, the situation will only be more dangerous if we encounter another economic shock.”

However, over half of respondents were strongly opposed to cuts on infrastructure and education. These areas were ranked among the top issues for businesses, who say that the government should make these things immediate priorities.

Making broadband capabilities better across the UK was ranked as the most urgent infrastructure project; 56 per cent said that the government should prioritise investment in high speed internet. Fifty-five per cent said they would like the government to invest in energy generation, 50 per cent want to see increased spending on railways, 44 per cent want more spending on roads and 34 per cent want to see more investment in airports over the next five years.

The government's plans to tackle tax avoidance were also backed by the majority of respondents, with 89 per cent saying they are in support of this. Yet respondents were sceptical about how much money would be raised through the measures posed to crack down on tax avoidance. Only 15 per cent said they were confident the government would be able to gain the £5 billion it has outlined.

Mr Walker explained that the result of the general election was more decisive than had been expected by most people. With the government now arranged for the next parliament, he said that it should take decisive action, with a budget surplus the main goal.

By Victoria McDonnell

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