Theresa May to give Britain lowest corporation tax of world's top 20 economies
Theresa May will offer British business an olive branch following a series of disputes by vowing to cut corporation tax to a record low.
In a speech to business leaders ahead of the Autumn Statement, Mrs May will commit Britain to having the lowest corporation tax of the world’s 20 biggest economies.
It suggests that the Government will cut corporation tax further and faster than expected, potentially going lower than the 15 per cent rate promised by Donald Trump ahead of the US presidential election.
In a further sign of Mrs May’s desire to improve relations with the business community, it emerged that the Government is to back away from plans to force businesses to put workers on company boards.
As part of the Autumn Statement, Mrs May will also announce £2bn of investment per year for research and development by the end of this Parliament to make Britain a global leader in science and technology.
Philip Hammond, the Chancellor, will also use Wednesday’s fiscal statement to announce a continued fuel duty freeze and more than £1.3bn of spending on roads and rail projects.
However, he was criticised for being “relentlessly negative” about Brexit after saying the UK is facing "unprecedented uncertainty" after voting to leave the EU.
Since becoming Prime Minister, Mrs May has faced a backlash from business leaders angry at the scheme for workers on boards, a desire to curb executive pay and a plan to force companies to disclose how many foreigners they employ, which has since been abandoned.
But in her speech to the Confederation of British Industry, Mrs May makes clear that she wants to repair the damage, telling company bosses that Britain can only thrive after Brexit with their help.
However, she will remind them that they must “play by the rules” and not continue with the “business as usual” approach that has seen public anger over company bosses such as Sir Philip Green and Mike Ashley.
“We will do things differently,” Mrs May will say. “Not carrying on with ‘business as usual’, but opening our minds to new ways of thinking – those of us in government, and those in business too.
“For government, it means not just stepping back and leaving you to get on with the job, but stepping up to a new, active role that backs British business and ensures more people in all corners of the country share in the benefits of your success.
“For business, it means doing more to spread those benefits around the country, playing by the same rules as everyone else when it comes to tax and behaviour, and investing in Britain for the long-term.”
It is believed that the Government will in the coming weeks come forward with a “public interest test”, which will allow ministers to prevent company takeovers if there are concerns a new owner plans to reduce employee pension pots.
Bosses who raid company pension pots could also face tough new fines, it is understood.
The Prime Minister will add: “We believe in free markets. They are the means by which we spread opportunity and lift people out of poverty.
“We believe in capitalism – the means by which we drive economic growth, putting people into work to provide for their families.
“And we believe in business, the entrepreneurs and the innovators who employ millions of people up and down this country – the basis for our prosperity.
“The Conservative Party, and the Government I lead, will always believe in these things.
“But I am here today not just to reaffirm these core beliefs, but to say that if this is what we value, we need to be prepared to adapt and change.
“For if we support free markets, value capitalism and back business – and we do – we must do everything we can to keep faith with them.”
Mrs May will announce that the Treasury will begin a review of the corporation tax system.
Britain’s corporation tax is due to fall to 17 per cent by 2020. However, her comments suggest that she is prepared to cut it much more quickly than had been anticipated.
“We will also review the support we give innovative firms through the tax system,” Mrs May will say. “Because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation.”
Mrs May will also describe Brexit as a “true national moment” that will change the way Britain works “forever”.
She will say: “This is a true national moment. The decision of the British people on June 23 gives us a once-in-a-generation chance to shape a new future for our nation: the chance to build a stronger, fairer country.
“That’s the kind of change people voted for: not just to leave the European Union, but to change the way our country works – and the people for whom it works – forever.
“And I am determined that we will deliver the change they need.”
Mr Hammond used an interview on Sunday to suggest that he wants to focus government spending on infrastructure and productivity, rather than the JAMS – those "Just About Managing" – that Mrs May has indicated she wants Whitehall’s focus to be on.