UK Industry Body Calls For £900 Million Aid Package

by Amanda Banks, Tax-News.com, London

19 February 2002

The Trades Union Congress (TUC) in the United Kingdom yesterday called for Chancellor Gordon Brown to include a £900 million aid package for the country's ailing manufacturing industry in his forthcoming budget.

In an official pre-budget submission released on Monday, TUC General Secretary, John Monks, argued that the country's manufacturing sector, which is being forced to cut around 150,000 jobs per year, is in desperate need of assistance, and that UK businesses in general need help to weather the current economic storm.

'To maintain improvement in our public services we need long-term commitments to extra investment,' he wrote, before detailing the TUC's budget wishlist. Proposals put forward by the trade union group included an additional £200 million for the R&D budget to fund the large firm tax credit set to be introduced in April, new training credits, and £40 million in extra funding for the Start UP project which aims to help the unemployed in Britain's inner cities.

Meanwhile, the Centre for Economics and Business Research, an independent economic think-tank, has predicted that although the figures released in Gordon Brown's pre-budget report may have been overly pessimistic, the Chancellor should still consider tax increases in his April budget in order to dampen domestic demand.

The CEBR has predicted that public sector borrowing will show a £4.7 billion surplus in April, which is in direct contrast with the Chancellor's gloomy forecast in November - then, a £2.5 billion deficit was forecast. The Centre has put this improvement in public finances down to resilient consumer demand, which has buoyed tax revenues.

However, the author of the CEBR February report, Angus McCrone, has warned that the Government's finances could deteriorate rapidly if Gordon Brown introduces substantial boosts to spending in April without corresponding tax rises.

'Just because both figures are working out better in the short term than the Treasury expected a few months ago does not mean they can be ignored,' he observed.

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