Alistair Darling signalled yesterday that he might compromise – a little – on changes to capital gains tax announced in his pre-Budget report last month.
Speaking at a Confederation of British Industry conference, the Chancellor defended his reforms but hinted that he may be willing to make alterations to the new regime, which is due to come into effect in April.
"I know my proposals to introduce a single rate of capital gains tax have been controversial. That was inevitable," he said. "We are working with the CBI and other business organisations to listen to what you have to say. I expect to publish final proposals in the next three weeks."
Pointing out that the new flat CGT rate of 18 per cent was half the level it was 10 years ago, and "among the most competitive in the world", Mr Darling nonetheless told delegates: "I understand entirely when people say that simplification will not help."
The most likely changes are thought to be on retirement relief and for small businesses. The principles and rates Mr Darling has set down for CGT will most probably stay.
The CBI's director-general Richard Lambert told Mr Darling there would be a "cry of rage from us, other business groups and loads of businesses around the land" if the changes fell short of the CBI's demands.
More welcome to business was a review of health and safety laws the Chancellor announced. Mr Darling also defended his management of the Northern Rock crisis and the loss of child benefit data.
"I am very clear that any proposal for the future of Northern Rock must be consistent with the principles I have set out – namely protecting the vital interests of the taxpayer, depositors and wider financial stability. I welcome Northern Rock's decision to work with Virgin. Discussions are now proceeding urgently." Mr Darling said the loss of child benefit data was a "huge problem", adding: "It is difficult but we have to get on with it and sort it out."
There was also a word on the controversial topic of sovereign wealth funds, with Mr Darling emphasising his support for plans by the International Monetary Fund and the Organisation for Economic Co-operation and Development to establish international guidelines, "including high standards of governance and appropriate transparency".
Mr Darling's speech earned him polite but unenthusiastic applause and was followed by an unremittingly hostile question-and-answer session with CBI delegates.
The Conservative leader David Cameron received a warmer reception when he spoke earlier. However, Mr Cameron refused to commit his party to reversing the CGT changes. He said that, while he would fight Mr Darling's policy, "let's not go there now" when it came to a future Tory government's approach.
On the Northern Rock fiasco, Mr Cameron said: "I believe we must urgently examine the way banks are regulated as the tripartite arrangements... are clearly not working properly."
Mr Cameron also promised a "triple lock" on economic stability, by enhancing the independence of the Bank of England Monetary Policy Committee, independent monitoring of fiscal rules and "truly independent national statistics".Reuse content