Surplus Target and Corporation Tax

Alison McGovern Excerpts

Monday 4th July 2016 Commons Chamber

[Mr Osborne]

Of course we keep taxes under review. As I have said, my revealed preference is generally to try to reduce reliefs and reduce headline rates, which I think is the least economically distorting approach, but there are many exceptions to that. One of them has been the investment allowance, which we have increased, and which is particularly targeted at small and medium-sized businesses. It now stands at £200,000 as a permanent annual allowance, which is the highest that it has ever been.

[Alison McGovern (Wirral South) (Lab)]

As ever, the Chancellor is fond of having a pop at the previous Labour Government, but there was a crisis in the markets to which that Government had to respond. This is a crisis made in Government to which the markets are responding. With that in mind, and because he has not answered this yet, will he say what proper assessment he has made of the impact of this cut in corporation tax on our country’s productivity crisis?

[Mr Osborne]

First of all, the problems in the financial markets eight years ago hit this country more severely than almost any other country in the world, and the Government at the time take some responsibility for that. Secondly, the challenge we face is one that was delivered by our democracy. It is a democratic outcome that we accept and respect and we have to make it work for our country. I am determined to make that happen.

As the hon. Lady well knows, productivity growth is a challenge in every western democracy at the moment. Indeed, the US is now predicted to have negative productivity growth. Productivity is still growing in the UK, but we need to do more to improve it. Education reform, welfare reform and transport investment are good places to start.