As the country awaits Alistair Darling's first budget speech, recruiters have outlined their wishlist for the Chancellor.

Greg Latham, managing director of industrial, driving and engineering recruiter Encore, said the minimum wage has helped stop 'rogue operators' who use wages as an "unethical price bargaining tool" but urged the government not to increase it.

He told Recruiter: "It has been suggested that a further increase from the present £5.52 is envisaged for October 2008. A threshold has now been reached and any further increase will be inflationary as pay differentials will be demanded by higher grade workers to keep their salaries rising in tandem."

Latham said it was disappointing that the government had not made the "incidental cost" of equity finance tax deductible to mitigate the restrictions on small expanding firms looking to raise new funds but restricted by the previous Budget's restrictions on venture capital trusts.

He said the Chancellor also needs to look at employee expenses.

"The limits for tax purposes for certain genuine business-related employee expenses are too low and can significantly constrain the operations of small employers. Those that should be increased include the 40p per mile limit on employee vehicle use, and the £8,000 limit on reimbursement of employee relocation expenses."

Latham urged the government to cushion the compulsory employer pension contributions for SMEs.

Meanwhile, Ann Swain, chief executive of IT and engineering recruitment body ATSCo, highlighted three important areas in Darling's pre-budget report.

She welcomed the £2.2bn of extra funding to educate more pupils in science, technology, engineering and maths.

"We welcome the move," she told Recruiter. "But it is not enough considering the problems the engineering sector faces with an ageing population and nobody coming up behind them; it is a huge problem."

She added that government mootings about simplifying the taxation system for small employers — merging national insurance contributions with income tax — should help freelance recruiters.

"This government really needs to get a better understanding of the role freelance and temporary staff play in the success of UK plc. The pressure is on with the ridiculous Private Members Bill and the EU agency workers directive," she said.