Finance (No. 2) Bill

Debate between Christopher Chope and James Murray

Committee of the whole House
Wednesday 8th May 2024 Commons Chamber

[Sir Christopher Chope (Christchurch) (Con)]

It is a pleasure to follow the hon. Gentleman. I wish to speak briefly on clause 12 stand part and the new clause to which he has just spoken.

Clause 12 is a simple clause. The title is “Charge and main rate for financial year 2025”, and it states:

“Corporation tax is charged for the financial year 2025…The main rate of corporation tax for that year is 25%.”

Just over four years ago, I was re-elected to this House on a Conservative party manifesto that said that we would keep corporation tax at 19% and would not increase it. As the hon. Member for Ealing North (James Murray) just reminded us, the Chancellor of the Exchequer thought that 19% was far too high, and he had a radical proposal to reduce it to 15%. At the time, I did not buy into that leadership bid of his, but it is clear now that it was an extraordinary gesture, completely at odds with what he must believe, because I presume that he supports clause 12, which sets corporation tax for the following year at 25%. That is far too high. I voted against the increase originally, and if clause 12 stand part was pressed to a Division today, I would certainly vote against it.

It was with some incredulity that I listened to the hon. Member for Ealing North. His new clause 2 talks about reviewing the impact of section 12. The incoherent subsection (1) says:

“The Chancellor must, within three months of this Act being passed, conduct a review of the impact of section 12 of this Act.”

Obviously, section 12 will not come into effect until the 2025 financial year, while the Bill will be on the statute book within a couple of months. What would be the point of conducting, within three months of that date, a review into something that will not come about until next year? If the new clause mentioned reviewing the impact of the current high levels of corporation tax, I would be with him. [Interruption.] He is shouting at me from a sedentary position. I will happily give way to him, so that he can make his point. Let us have a debate. If he does not want to engage in debate, so be it.

All I am doing is reading out the terms of the hon. Gentleman’s new clause 2. If he wishes to resile from that, let him say so. I am sure that, even at this late stage, Mr Evans, you would accept him withdrawing the new clause because its terms do not bear out what he is telling us.

[James Murray]

The hon. Gentleman invites me to respond. The key point of the new clause, as I am sure he realises, is to make it clear that Labour would cap corporation tax at 25% for the whole of the next Parliament. Does he agree with that?

[Sir Christopher Chope]

No, I do not, because that would be capping corporation tax at far too high a level. I would like to see it reduced, ideally back to 19%, as soon as possible. I certainly would not support any notion that we should stick with a 25% rate for the duration of the next Parliament.

That intervention was interesting. If that is the purpose of the hon. Gentleman’s new clause, I think we can say that it is rather opaque, because it does not say, for example, “Between 2025 and 2030, corporation tax shall be set at the rate of 25%”. It says that there should be

“a review of the impact of section 12 of this Act.”

What would the review look at? One thing would be how the 25% rate of corporation tax provided for by section 12 had affected

“investment decisions taken by businesses”.

Surely we know—I think he said so in his remarks—that having corporation tax set at 25% adversely affects businesses making investment decisions, including decisions on whether to increase their investments, or whether to invest in the United Kingdom for the first time. It is because such adverse investment decisions have been taken by businesses that, as he accepts, we have low growth, coupled with rising taxes and a stagnant economy.

It surprises me that more of my colleagues do not wish to engage in this debate. I very much support those Government Members who believe that the Chancellor of the Exchequer’s main objective should be to grow our economy, rather than stifle it through high taxes and more regulation, which seems to be what is happening.

In a sense, the hon. Gentleman has answered his own question—high rates of corporation tax adversely affect investment decisions taken by businesses—so why do we need a review to establish that? How can he both want a review because he does not know the answer to that question, and be so confident about its results that he can announce today that corporation tax will be at 25% for the next five years? It seems a pointless exercise. One is left with the feeling that the main parties have very similar policies on many aspects of taxation.