Joint call by TUC and CBI for
budget to improve productivity

4 March 2001 - The Confederation of British Industry and the Trades Union Congress were asked by Chancellor Gordon Brown to work together on budget proposals. CBI/TUC recommendations include:

 - Extendsion of tax credits for research and development, andadditionally offering more generous capital allowances for small and medium-size firms.
 - Improving the funding of regional development and conducting an urgent investigation into the causes of industrial under-investment.
 - Widening eligibility for discounts on the government's energy tax, the Climate Change Levy, to include more firms.
 - Releasing adequate funds to allow all adults to receive publicly-funded education or training up to the equivalent of GCSE.

Official statistics show that the United Kingdom is not closing the long-standing productivity gap with key competitor countries such as the USA, France and Germany. According to John Monks, TUC General Secretary:

'We are ready to do all we can to rise to the productivity challenge set out by the Chancellor. By working in partnership with the CBI and others, we have a golden opportunity to secure a lasting improvement in our productivity record.

Digby Jones, CBI Director-General stated:

'Our first ever joint Budget Submission sets out the immediate priorities. Over the next six months we will be working together to identify further practical steps for action by employers, trade unions and government. It is time to stop talking about the productivity gap and start doing something about it. Nothing is going to change overnight because closing the gap is a long-term business. But these are a realistic set of proposals that would be an important step in the right direction.

'There are many other areas where the CBI is looking to the Chancellor to improve the climate for doing business in the UK. But where there is common ground with the TUC, we are pleased to make our joint voice heard.'

TUC/CBI Joint Budget Recommendations

The TUC and the CBI agree that the following measures should be introduced in the March 2001 Budget as the first step in supporting the government's productivity initiative.

 - We recommend the introduction of an incremental R&D tax credit which gives clear recognition to development as well as the traditional areas of research - to be available to companies above the SME threshold.

 - We recommend that plant and machinery capital allowances for SMEs are made more generous, and a broader definition adopted for the temporary 100% first year allowance for ICT spending.

 - We recommend the strengthening of the industrial support and regional development budgets for the DTI, Scottish Parliament and Welsh Assembly, particularly for Regional Development Agencies and the Partnership Fund

 - In order to support the joint work programme of the TUC and CBI on productivity, we recommend the Government undertake an urgent investigation into the underlying causes of industrial under-investment and possible solutions, including additional investment incentives.

On training, we recommend:

 - Sufficient additional funding to allow the implementation of the Skills Task Force recommendation that all adults who do not hold a qualification at level two be entitled to public funding to achieve this level:

 - An incentive for small firms to help them achieve the Investors in People standard.

 - We believe improvements to the Climate Change Levy (CCL), particularly on eligibility criteria for discounts, should be made before implementation in April 2001. Failing that, we recommend the government commits itself actively and immediately to reviewing the operation of the CCL in consultation with the social partners in order that changes can be made at the earliest opportunity in the budgetary process.

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