Just one thing: unlock corporate Britain's cash pile

The TUC tells George Osborne what it wants to hear in the 2012 Budget.

The economy is facing a crisis of low consumer and business confidence.

People are not spending because too many of them have lost their jobs or have seen their wages cut, partly as a result of the government's self-defeating deficit reduction strategy.

Big companies are hoarding cash, rather than investing, because they fear that a lack of confidence among consumers will mean their goods remain unsold.

Last year's VAT rise, the lack of support for young unemployed people and rumoured plans to cut public sector pay outside London and the South East by abolishing national pay bargaining suggest the Chancellor is not much interested in addressing the biggest squeeze in living standards since 1920s.

So if he does one thing on Wednesday, it should be to boost growth by encouraging larger companies to start spending the £700bn they are sitting on.

Ironically, while big business sits on these massive surpluses, small businesses are finding it harder than ever to access credit.

So what can be done? Ideally, the Chancellor would scrap the disastrous spending cuts and introduce a Plan B for growth. The public sector pay freeze should be scrapped and VAT should be cut to 17.5 per cent. This, along with a major attack on unemployment, would boost demand.

To encourage companies to spend, the Chancellor should rebalance the tax system away from profits and towards investment. Cutting corporation tax won't achieve this but raising capital allowances will.

Long-awaited progress on credit easing will be welcome, but the Chancellor must do more. A state investment bank, as they have in Germany, could provide the finance - particularly for small firms in high-growth industries. Reversing the planned 47 per cent cut in infrastructure spending will also boost growth, although the government should learn the lesson from the failed rail privatisation and keep Britain's roads in public hands.

Much of the pre-budget leakage has revolved around tax breaks for the top 1 per cent and mitigating the impact of previously announced cuts.

Action to unlock corporate Britain's £700bn cash pile would be a welcome surprise come Budget day.

Frances O'Grady is Deputy General Secretary for the Trades Union Congress

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David Cameron’s speech: a hymn to liberalism from a liberated PM

The Prime Minister spoke with the confidence of a man who finally has a full mandate for his approach. 

At every one of his previous nine Conservative conference speeches, David Cameron has had to confront the doubters. Those Tories who rejected his modernisation of the party from the start. Those who judged it to have failed when he fell short of a majority in 2010. Those, including many in his own party, who doubted that he could improve on this performance in 2015. Today, rather than confronting the doubters, he was able to greet the grateful. As the first majority Conservative prime minister for 18 years, he rightly savoured his moment. "Why did all the pollsters and pundits get it so wrong?" he asked. "Because, fundamentally, they didn't understand the people who make up our country. The vast majority of people aren't obsessives, arguing at the extremes of the debate. Let me put it as simply as I can: Britain and Twitter are not the same thing." Labour should pin that line to its profile. 

With a full mandate for his approach, Cameron went on to deliver his most unashamedly liberal speech to date. Early on in his address, he spoke with pride of how "social justice, equality for gay people, tackling climate change, and helping the world's poorest" were now "at the centre of the Conservative Party's mission". A lengthy section on diversity, lamenting how "people with white-sounding names are nearly twice as likely to get call backs for jobs than people with ethnic-sounding names", was greeted with a standing ovation. Proof, if needed, of how Cameron has changed his party beyond recognition. The former special adviser to Michael Howard, who avowed that "prison works", told his audience that prison too often did not. "The system is still not working ... We have got to get away from the sterile lock-em-up or let-em-out debate, and get smart about this." From now on, he declared, the system, would "treat their [prisoners'] problems, educate them, put them to work." 

There were, of course, oversights and lacuna. Cameron reaffirmed his commitment to a budget surplus but glossed over the unprecedented, and many believe undeliverable, that will be required to achieve it (and which may fail to do so). He hailed the new "national living wage" with no mention of the tax credit cuts that will leave the same "strivers" worse off. His "affordable" starter homes will be unaffordable for average-earning families in 58 per cent of local areas. But it is a mark of Cameron's political abilities that it was easy to forget much of this as he spoke. Like George Osborne, he deftly appropriated the language of the left ("social justice", "opportunity", "diversity", "equality") to describe the policies of the right. Cameron is on a mission to claim ownership of almost every concept associated with Labour. The opposition should not sleep easily as he does so. 

There was little mention of Labour in the speech, and no mention of Jeremy Corbyn by name. But when the attack came, it was ruthlessly delivered. "Thousands of words have been delivered about the new Labour leader. But you only really need to know one thing: he thinks the death of Osama bin Laden was a 'tragedy'". The description of Corbyn as the "new Labour leader" shows the Tories' ambition to permanently contaminate the party, rather than merely the man.

There are plenty of potential landmines ahead for Cameron. The comically lukewarm applause for his defence of EU membership was a reminder of how divided his party is on this issue. But today, he spoke as a man liberated. Liberated by winning a majority. Liberated by not having to fight an election again. Like a second-term US president, he was able to speak of how he was entering "the second half of my time in this job". Tributes to Osborne (the "Iron Chancellor) and Boris Johnson (greeted with a remarkable standing ovation) alluded to the contest to come. But whoever succeeds him can be confident of assuming a party in good health - and more at ease with the modern world than many ever thought possible. 

George Eaton is political editor of the New Statesman.