Mr Osborne has been under pressure from Labour to cut VAT in order to put some money back into the economy, and senior Conservative figures are urging him to axe the 50p top rate of income tax.
However, the Chancellor said it would be wrong to borrow money to fund temporary tax cuts or to increase public spending.
In his speech, Mr Osborne said he had explored “every single option” to boost economic growth in the UK but said that "borrowing too much is the cause of Britain's problems, not the solution".
He said: "We would be risking our nation's credit rating for a few billion pounds more, when that amount is dwarfed by the scale and power of the daily flows of money in the international bond markets, swirling around ready to pick off the next country.
"We will not take that risk. We are in a debt crisis, it is not like a normal recovery. You can't borrow your way out of debt."
Mr Osborne said that UK finances were still tight and that he would be sticking with his deficit reduction plan.
In his speech, he also announced the Treasury would undertake “credit easing”, which would see the cost of borrowing being cut for struggling businesses, and improving access to loans.
He said the Government is helping businesses by keeping interest rates low, which he described as being "the most powerful stimulus that exists".
However, the Chancellor has found £805 million to enable council tax to be freezed in England from 2012-13. This will save £72 a year for UK households.
He said: "I'm a believer in tax cuts - permanent tax cuts paid for by sound public finances.
"Right now, temporary tax cuts or more spending are two sides of exactly the same coin, a coin that has to be borrowed - more debt that has to be paid off."
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 152 )New legislation coming into force on Saturday will see agency workers gaining additional rights in pay and benefits.
Agency workers will be entitled to similar rights to permanent staff, as of October 1, after they have completed 12 weeks of service in a temporary job role.
These include pay, overtime, shift allowances, holiday pay and bonuses attributable to individual performance, as well as maternity rights.
The rules are being brought in after long negotiations between unions and the Government.
Stefan Martin, an employment lawyer with law firm Allen & Overy, said: "It won't give them equal rights in terms of protection from dismissal."
"What it is going to give them is equal rights in relation to pay and other basic employment rights.
"It's going to be extra basic pay, [and] extra shift allowances potentially, where those workers are not paid at the same level as the equivalent permanent employee.”
Various legal protections are already in place for agency workers, which include the minimum wage and basic holiday rights. However, under the new European rules, agency workers will also be entitled to the use of the same facilities as staff.
From the first day of employment, they can use a creche, canteen or transport services. They will also be entitled to information about internal vacancies at the company they are working for, and to be given the opportunity to apply for them.
Business groups suggest the new rules will cost firms up to £2bn a year, with concern that the new legislation will lead to more red tape for already struggling small firms who depend on agency workers.
There have also been fears that some agency workers will simply be laid-off after 11 weeks so they do not benefit from the increased rights.
Agency workers, however, will not be entitled to all the same benefits, such as occupational sick pay, redundancy pay and health insurance.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 225 )The Bank of England’s Financial Policy Committee (FPC), the financial sector’s new super-regulator, yesterday advised banks to cut their dividends and bonuses in order to strengthen their balance sheets.
Following its second quarterly meeting, the FPC, which is due to take over from the Financial Services Authority, released the statement yesterday which also warned about the eurozone crisis being a risk to the financial stability of the UK.
The minutes from the FPC meeting recommended that banks "strengthen their levels of capital and liquidity so as to increase their capacity to absorb flexibly any future shocks, without constraining lending to the wider economy." It also stated that these efforts should include "ensuring that discretionary distributions reflected any reduction in profits".
The FPC also advised that banks should allow their capital ratios to run down in the event of an overseas financial shock, rather than attempt to protect their buffers by cutting lending.
However the Bank of England’s quarterly Credit Conditions Survey showed signs that the squeeze on domestic UK borrowers continues.
The survey said that the supply of secured credit to households increased slightly in the three months to September, however, lending to businesses remained low. And the findings also led the Bank of England to warn that “adverse wholesale funding conditions” might restrict future lending to the British economy.
In its statement, the FPC also suggested that it will need regulatory tools to carry out its works on ensuring financial stability in the UK. These would include powers to set maximum leverage ratios for banks and the authority to dictate maximum loan-to-value ratios on mortgage lending.
The FPC, which is chaired by the Bank of England's Governor, Sir Mervyn King, is currently an advisory body but it will gain formal powers once legislation, presently before Parliament, is passed.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 202 )A financial tax has been proposed by the European Commission, but the UK has said it will “resist” the financial transaction tax on EU members.
Under the proposals, the financial tax would be levied at a rate of 0.1 percent on all transactions between institutions when at least one party is based in the EU. The tax would raise about 57 billion euros a year and would begin from the start of 2014.
A spokesman for the UK Treasury said it would “absolutely resist” any tax that was not introduced globally.
“We would not do anything that is not in the UK's interests," the spokesman said.
In order to be implemented across the EU, the tax would need to be approved by the UK. But the commission said if the UK did not give the tax approval then it would look to having it implemented across the eurozone instead.
Commission president Jose Manuel Barroso said Europe was facing its “greatest challenge” and banks must "make a contribution".
The commission said the tax was “to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the member states".
It also said that financial firms were “under-taxed” compared with other sectors, and that they had played a role in the current “economic crisis”.
The commission also stated that the "significant additional revenue" raised would contribute to public finances.
City of London officials have said that about 80 percent of the revenues of any Europe-wide financial tax would come from London.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 178 )Labour Party leader Ed Miliband will today criticise companies who have the “wrong values” by not creating jobs, invest in other companies or train their staff.
Mr Miliband will speak today at the Labour Party Conference, where he is expected to warn private equity firms and businesses believed to be “asset strippers” that they will face higher taxes under a Labour Government.
The Labour leader is also expected to tell the party’s conference that businesses would no longer be equally taxed and regulated. Firms would instead be judged by the ways in which they make their money.
Financial incentives would also be offered by the Government to businesses that behave responsibly and contribute to society.
Labour’s controversial plan is expected to receive its fair share of criticism, as ministers will have to defend their labeling of businesses as being either “good” or “bad”.
Mr Miliband is also expected to call for a “new bargain, based on a different set of values”.
He will tell the conference: “Let me tell you what the 21st-century choice is: are you on the side of the wealth creators or the asset strippers?
“For years as a country we have been neutral in that battle. They’ve been taxed the same, regulated the same, treated the same, celebrated the same. They won’t be by me.”
Mr Miliband will also propose reforms to the tax and regulation system to give incentives to businesses that “make a wider contribution to the economy”.
The City have often accused the Labour leader as being anti-business, and private equity companies will argue that they have enabled failing businesses to carry on employing people and adding to the economy.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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