JOHN CRIDLAND, the deputy director-general of the CBI, will urge the Chancellor today to curb wage inflation in the public sector in an attempt to reduce spending and avert Treasury plans to increase the tax burden on British business.

Mr Cridland is keen to spell out in a report to Gordon Brown — before the Pre-Budget report, which is still to be publicly scheduled — that new tax rises paid by business since 1997 have added a total of £51 billion to the burden on Britain’s companies. By 2010, businesses will have paid nearly £80 billion extra because of the Chancellor’s tax rises.

The CBI said that public spending should rise by £51.4 billion in the next two years, rather than the £61.4 billion spending growth planned.

The £10 billion saving could be made by keeping public- sector employees’ wages from rising faster than the private sector; by cracking down on absenteeism; by reducing fraud in the benefits system; and by leaving unspent the Government’s contingency budget reserves.

Ian McCafferty, the CBI’s chief economic adviser, said that the proposed cuts were “not heroic”. He said that tax rises, most notably an increase in employers’ National Insurance contributions at an estimated cost of £4 billion a year, had led to weaker corporate profits, a poorer share-price performance than every G7 economy except Japan, and the lowest-ever levels of nominal business investment.

However, the report calls for spending commitments that are helpful to business, such as investment in skills, transport and technology, to be maintained.

Mr McCafferty was highly critical of the Treasury’s programme of measures to stamp out what it terms “abusive” tax avoidance: “These measures are effectively a covert means of extending the tax base to raise revenue while circumventing previously accepted tax principle and practice,” he said.

The CBI also signalled its opposition to compulsory employer pension contributions, which it said would spark reductions in investment and staff numbers, and voiced concern over the possibility that a “planning gain supplement” would be an impractical new tax.

Mr Cridland added: “Tackling the structural deficit can only be deferred, not ducked forever. The prudent decision would be to reconsider the Government’s spending plans for the next two years and get a grip on the deficit now.”

A spokeswoman for the Treasury said that she did not accept the CBI’s view of the business tax burden, saying that tax levels were well below the level of many competitors and that the Government had cut corporation tax and regulations.

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