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Lobby group the Confederation of British Industry (CBI) is urging Chancellor George Osborne to make cuts to the public sector rather than increasing the tax burden on its members.

In a letter to the Chancellor ahead of the emergency Budget the business group calls for major reform of the public sector to create savings to help reduce the UK's massive deficit rather than increasing taxes.

The group wants £4 in spending cuts for every £1 in extra taxes. It suggests three main ways to create these cuts:

  • Controlling workforce costs and reducing unnecessary spending
  • Eliminating waste and duplication, e.g. by sharing payroll and human resource functions
  • Re-engineering public service delivery, e.g. treating more patients in their homes and in the community could save over £8bn by 2015-16.

None of the above is entirely new, of course, and shared services contracts have already seen some successes, and some notable failures.

The CBI wants cuts to capital gains tax - a likely target for government reform.

But it also welcomed proposals to maintain loan guarantees for small and medium businesses and to maintain tax credits for research and development spending.

It warned that changes to the tax system for pensions were too complex and expensive to administer.

The press release and a link to the proposals are here. ®

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