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News - 9 September 2006
Richard Lambert, Director General, CBI

New CBI chief says taxation is crippling business

British businesses are over-taxed and over-regulated at the expense of profits and jobs, the new head of the Confederation of British Industry (CBI) has warned.

CBI director general Richard Lambert said too few politicians recognise the ‘fundamental role’ companies have to play in society with government policy leaving them burdened and struggling to grow.

Delivering his first major speech since becoming CBI boss in July, Lambert added that if the UK fails to achieve a free trade, low tax and high skill economy, it will lead to an inward-looking, protectionist state bedevilled by high unemployment and high taxes.

He argued that as business taxes have increased, the UK has slipped down the international competitiveness league.

Companies have reacted to globalisation, he said, by introducing new work practices, off-shoring jobs and generating more jobs and prosperity but the changes have loosened the ties between business and society. Lambert argued that although firms "are more accountable, transparent, socially responsible and engaged in the local community than ever before", public mistrust of business has increased.

This has partly occurred, he claimed, because senior executive pay has increased in line with international benchmarks while lower skilled employees have found themselves competing with low-cost workers overseas.

He also blamed the media for focusing on stock market announcements and caricatures of ‘fat cat bosses’. Lambert said the mistrust of business must be overcome with the public reminded of how a "healthy business sector lies absolutely at the heart of a healthy society".

Looking forward to the next decade, he called for: "A society that will be successfully managing the transition to big changes in the workplace. We will have a better trained, more productive workforce."

"Regulation and the tax system will be simpler than they are today, and continued growth will have increased tax revenues while reducing the size of government as a share of the state.

"Competition policy will be tough, but business will be trusted to manage its own affairs within a fair and proportionate regulatory framework. The UK will be an outward looking society, the champion of free trade and open markets.

This second vision is achievable. And it's something we all have an interest in striving for."

Read related items on:
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Lambert, Richard

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