Prime Minister Theresa May has announced that the UK will have the “lowest corporate tax rate in the G20” ahead of her government’s first Autumn Statement, while Chancellor Philip Hammond hinted that benefit cuts targeting working families by up to £1,300 a year will still be implemented to offset “eye-wateringly” large Brexit costs.
Speaking at the Confederation of British Industry (CBI) conference yesterday, the Prime Minister said she was aiming “not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation.”
May’s words seem in direct competition with President-elect Donald Trump, who has vowed to cut corporation tax in the US from 35 per cent to 15 per cent. If UK corporation tax, which is due to drop to 17 per cent by 2020, falls to 15 per cent it will cost taxpayers £10bn a year, the Resolution Foundation said.
May also went back on her promise to install worker representatives on company boards and announced an annual £2bn investment for research and development by 2020.
Shadow secretary of state for business, Clive Lewis, blasted May’s plans and said they would not help Britain catch up with progress in other industrialised nations.
“(The investment commitment) is woefully inadequate and risks being too little too late. And it comes on the same day that the Prime Minister announced she is ditching her flagship policy to put workers on company boards – just one month after committing to it. Tory promises don’t last until Christmas. Britain has been falling short of other countries’ R&D spend for years, something reflected in our long-term productivity problem,” said Lewis.
“With even the Chancellor admitting that the economy is in for a rough time as we navigate Brexit, and the future of EU-backed science funding now in question, it has never been more important for government to be stoking the flames of innovation by committing significant public backing to R&D. But today’s commitment will leave us well below the OECD average, and well below the 3 per cent of GDP that the OECD recommends.”
The Prime Minister’s announcements came after Chancellor Hammond refused to confirm whether he would reverse damaging cuts to Universal Credit, which will leave working families up to £1,300 worse off a year by 2020. For low-income working families, the combined impact of welfare cuts will leave them £2,500 a year worse off, according to a new study by the Policy in Practise consultancy.
Asked if he would scrap the cuts, which were put in place by former Chancellor George Osborne, Hammond told the BBC that “forecasts are pointing to a slowing of economic growth next year and a sharp challenge for the public finances” after the vote to leave the EU.
Unite assistant general secretary, Steve Turner, said the combination of lower taxes for big business and further austerity for the public, is a sign that the Tories have still not learnt their lessons from Osborne’s failed policies.
“When George Osborne was ousted as Chancellor his goal of clearing the UK deficit by 2020 was exposed as delusional. Osborne attempted his fool’s errand by giving breaks to the richest through reductions in corporation and inheritance tax and punishing working families with brutal cuts to welfare and public services,” said Turner.
“Despite clear evidence that Osborne’s policies were dismal failures, the Tory party appears once again to be sticking to their ideological guns by exposing the ‘just about managing’ families they supposedly champion to more austerity. At the same time Theresa May’s only economic play of substance is to offer big business the lowest rates of cooperation tax out of all the G20 nations – at a massive cost to the tax payer.”
He added, “Of course Britain needs to attract international business in the wake of Brexit, but the country needs more to offer than tax breaks. The Tories are a one trick pony and without a clear industrial strategy that nurtures and sustains the economy, they risk piling even more financial difficulties upon the country than they have already.”