CBI warns against reducing Govt IT spending

The Confederation of British Industry has laid out its demands to the Government: no extra taxes, continued investment in infrastructure, and tax breaks that favour the IT industry.

The group, which represents 240,000 UK businesses, last night urged Chancellor George Osborne in a letter to protect private business and focus instead on cutting public services in his forthcoming emergency budget on 22 June.

The CBI endorsed the government's plan to reduce the UK's £157 million budget deficit, modelled on cuts undertaken by the Canadian government in the 1990s.

But in its letter, the CBI called for "a radical re-engineering of public services to deliver more with less". The organisation set out its thoughts on restructuring the pubic sector in a recent document, Time for action: Reforming public services and balancing the budget.

The organisation urged the Government not to ditch lucrative infrastructure projects involving CBI members, saying: "the CBI would like to see capital spending on infrastructure return to its previous level of 2.25% of GDP, as soon as conditions allow".

While warning against planned increases in capital gains tax, the CBI called on the Government to retain the previous Labour administration's tax incentives for R&D, worth more than half a billion a year to UK firms.

The CBI's comments come after THINQ last month reported the new coalition Government had placed a freeze on all new IT projects costing more than £1 million. The Treasury has already demanded cuts worth £95 million to made across Whitehall departments.