Cut spending, don't hike taxes - IoD

The government must bring down the deficit, while making infrastructure and education its top priorities, members of the Institute of Directors have said.

A survey of 1,211 members, conducted immediately after the general election, reveals Britain's SMEs overwhelmingly believe the deficit reduction should be achieved primarily through spending cuts rather than tax rises.

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More than half strongly oppose increases in National Insurance, Income Tax, VAT and business rates, the research shows.

Improving the UK's broadband capability is the most urgent infrastructure project, with 56% of those questioned prioritising government investment in high-speed internet.

More than half (55%) also want the government to invest in energy generation and there is strong support for spending on railways (50%), roads (44%) and airports (34%) over the next five years.

The survey also reveals nine in 10 IoD members back a clampdown on tax avoidance, although many are sceptical about how much can be raised from the proposed measures.

Less than one in six are confident the government would reap the £5 billion it has outlined.

IoD director Simon Walker said: "The election result was more decisive than most expected, and now is the time for the new government to take decisive action.

"Returning the budget to surplus must be the overriding goal in this Parliament, but businesses want the emphasis to be on finding further reductions in spending, not significantly raising taxes."

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