Two of Britain’s biggest companies sounded the alarm over high taxes yesterday as fears mount of another punishing raid in the Budget.
Telecoms giant BT and Premier Inn owner Whitbread warned rising costs are taking their toll on business and the wider economy.
The comments came as official figures showed the economy flatlined over the summer, with output rising by just 0.1 per cent in August following a 0.1 per cent contraction in July.
The economic malaise, and huge increases in public spending, have left Chancellor Rachel Reeves looking to plug a hole in her Budget plans with further tax hikes following last year’s £40billion raid.
Business bore the brunt of her first Budget last October and a new poll highlighted the damage that another raid next month could cause.
The survey from the Institute of Chartered Accountants in England and Wales (ICAEW) found 56 per cent of firms would cut staff or freeze recruitment if taxes are hiked, 45 per cent would consider raising prices and 39 per cent would reduce investment.
Tax threat: Telecoms giant BT and Premier Inn owner Whitbread warned rising costs are taking their toll on business and the wider economy
ICAEW chief executive Alan Vallance said: ‘Britain faces a damaging cliff edge if the Chancellor decides to raid businesses again in next month’s Budget.
‘Business confidence is fragile, investment is stalling, and everyday decisions are being slowed by complexity, cost and uncertainty.’
BT finance chief Simon Lowth warned changes to business rates at next month’s Budget could cost infrastructure firms an extra £400million a year and ‘risk a slowdown’ in investment in crucial projects such as the roll-out of ultra-fast broadband.
The Openreach owner is the latest business to warn it could be hit by proposed changes to commercial property taxes, expected to come into force next year.
Supermarkets, airports and office firms have urged the Government to step back from increasing their tax payments.
BT Group pays about £375million in business rates a year for its Openreach broadband network, and further rates for offices and shops.
It warned its infrastructure operations are set for increased payments after Reeves said premises with a rateable value of more than £500,000 face a higher tax band, with the final rate expected to be confirmed in the Budget on November 26.
The Government said the higher rate will finance a cut in rates for smaller retail, hospitality and leisure firms.
But Lowth claimed the plans will have ‘serious unintended consequences’. He said: ‘Proposed changes to business rates risk a slowdown in infrastructure investment at a time when the nation needs it most.’
He added: ‘Any increase in this tax on infrastructure could threaten investment across a broad range of infrastructure sectors.’
Whitbread warned higher taxes could prompt it to divert investment from the UK to Germany. Boss Dominic Paul urged the Chancellor not to heap ‘punitive’ rates on its hotels as shares crashed 10.3 per cent yesterday following weaker sales.
He said: ‘If business rates go up materially in our large hotels, of course, that will have an impact on our ability to invest.
‘We would consider moving some of the investment to grow into other markets and we would potentially have to slow down some more investment for growth here in the UK.’
He also expressed concern on imposing more red tape on employers ahead of Labour’s workers’ rights reforms.
‘The more burdens we put on businesses, whether that is taxation or regulations, makes it harder to grow,’ he said.
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