In its pre-budget submission, written by Stephen Davies, a former senior Treasury economic adviser, the IoD called for pounds 7bn to be slashed from Government revenues. Savings of pounds 5bn could come from public spending cuts and a further pounds 2bn from the Treasury's reserves.
Tim Melville-Ross, the IoD's director-general, said: "Progress on sorting out the public finances has simply not been achieved ... I think it would not be too strong a word to say we're alarmed by the lack of progress in that direction."
The IoD said the state of the public finances was getting "ever more disturbing" as tax revenues fell short of Treasury predictions. In addition, lower-than-expected inflation meant Government spending plans for 1997/98 were more generous than they appeared in cash terms.
Mr Melville-Ross said the IoD had received "virtually no calls" from members urging further tax cuts. "Even your average Conservative voter understands the wisdom of a prudent budget", he said.
But the IoD admitted that the Chancellor was almost certain to ignore the advice and press ahead with tax cuts. Today the CBI will issue a similar call for a "prudent budget". "There's clearly strong political pressure on the Chancellor to cut taxes.... I suspect he will put pounds 1bn or pounds 2bn into income tax reductions," Mr Melville Ross explained.Reuse content