Darling offers capital gains sweetener to CBI

Alistair Darling today bowed to pressure from the business community and promised to come forward with changes to capital gains tax within three weeks.

The Chancellor told the CBI conference he understood the concern at his decision to raise the tax from 10 per cent to 18 per cent.

Sources close to Mr Darling said he was in discussions with business leaders about how to soften the impact of his reforms.

One official said: "He is committed to working with the business community and listening to what they have to say and he expects to bring forward proposals in the next three weeks."

His speech made clear some sort of sweetener was in the offing, but stressed it had been "the right move" to simplify the tax system.

His changes had infuriated business leaders, who claimed the higher level of CGT would dampen Britains entrepreneurial culture and drive investment overseas.

Mr Darling refused to say what sort of compromise was on offer and there are concerns that any measure which falls short of a return to the 10 per cent rate will not placate business leaders.

David Cameron earlier told the conference in London the Tories would work to reverse the planned CGT changes.

He said the Government was now "so weak" it would have to bow to pressure.

Mr Cameron said the Chancellor had to "resolve the uncertainty" he had created. "He must tell us what the capital gains tax system will look like in five months time."

"The best thing he could do is stand up, admit he's made a mistake and abandon his ill-conceived plan. If the Chancellor fails to abandon or radically alter his approach we will fight his tax hike on Britains entrepreneurs every step of the way, both inside and outside Parliament," Mr Cameron said.

The Conservative leader said any changes brought forward by Mr Darling must not just be "sticking plaster" solutions.

Mr Darling also used his speech to try to restore some confidence in the Government - and his running of the Treasury in particular.

Since he became Chancellor he has faced a turbulent global economy, the Northern Rock crisis and the loss of the personal data of 20million people by HM Revenue & Customs.

Mr Darling welcomed the approach by Virgin for Northern Rock but he said any takeover must be in the interest of the taxpayers and depositors.

He said: "I believe it was right to intervene, that it was right to place guarantee arrangements to savers. And it is right to see it through."

On capital gains, Mr Darling said: "We are working with the CBI and other business organisations to listen to what you have to say."

He went on to launch a staunch defence of the economy, saying Britain had been the only major economy to have enjoyed continuous growth over the past 10 years.