Chancellor warned on election tax bribes

The Government was warned yesterday against pre-election tax cuts by business leaders fearful that they could wreck the stable economic climate being enjoyed by companies, writes Michael Harrison.

Robin Geldard, president of the British Chambers of Commerce, told the national conference that it was essential politicians kept their heads and did not succumb to electoral bribes as the election draws nearer.

"We certainly do not wish to see economic prudence cast to the wind for the sake of political expediency and we urge the Chancellor not to be seduced into a tax-cutting Budget which we cannot afford," he told delegates in his opening address.

Afterwards, he said that the business vote was important and if the Government wanted the support of the small and medium-sized businesses represented by the chambers it should resist the temptation to cut and run.

"A nice cut in income tax might look lovely but it is not justified by the economic figures and would do damage to what is the most stable economic background we have had almost this century."

He added that if the Government wanted to do something on tax it should simplify the way the tax system was administered to reduce the "terrifying" burden of regulation on companies.

Ambar Paul, chief executive of the metals group Caparo Industries, called on the Government to help bolster the country's manufacturing base. He gave a warning that it was too small to generate the wealth needed to sustain standards of living, despite the improvements made in productivity.

To help industry, Mr Paul said the Government would have to ensure a stable currency, education and training in engineering skills, compulsory language training in schools and enhanced investment allowances.