Fox urges Budget business tax cuts

Liam Fox has urged the Government to cut tax on businesses

Published: 12:13am, 22nd February 2012
Updated: 4:39am, 23rd February 2012

Former defence secretary Liam Fox has put himself at the head of backbench Tory demands for Chancellor George Osborne to cut taxes on business.

In his most significant political intervention since he was forced to resign last year, Dr Fox urged Mr Osborne to use next month's Budget to cut employers' national insurance contributions.

Writing in the Financial Times, he also called for sweeping deregulation of the labour market, making it easier for firms to hire and fire staff.

"The Budget must confidently assert that capitalism works," he said.

His call came as the CBI urged the Chancellor to give a £500 million Budget boost to business through a series of changes to the tax system aimed at stimulating growth.

Dr Fox argued that cuts to business tax should take precedence over Liberal Democrat calls for the Government to raise personal tax allowances, taking more people on low incomes out of tax altogether.

"Although the coalition agreement may require the Chancellor to raise personal tax allowances (which should be paid for with spending restraint not new taxes) he should use the proceeds of spending reductions to cut employers' national insurance contributions across the board," he said.

"If that is deemed impossible, he should consider targeting such tax cuts on the employment of 16 to 24-year-olds, making them more attractive to employers."

He said the Government also needed to restore Britain's competitiveness by deregulating the labour market.

"Political objections must be overridden. It is too difficult to hire and fire and too expensive to take on new employees," he said. "It is intellectually unsustainable to believe that workplace rights should remain untouchable while output and employment are clearly cyclical. It is utterly unacceptable to condemn a generation of our young to unemployment by maintaining all the rights and privileges of those currently in work."