Surplus Target: Corporation Tax

Lord Higgins Excerpts

Monday 4th July 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, in repeating the Chancellor’s Statement I clearly said that tomorrow the Financial Policy Committee will report on its recommendations and the Treasury remains in a position to act on whatever advice is given with respect to support for whatever area of business—small, large or otherwise—that may or may not require additional help. On corporation tax, as I also said, that is a recommendation of an appropriate policy response in the event of the decision we have made to send a message to the world that Britain remains open for business. I imagine that a specific policy will be put in place in line with the Autumn Statement plan as envisaged previously, once we have a new Prime Minister in place.

[Lord Higgins (Con)]

My Lords, it is fortunate that the Chancellor has remained in post, since it would have created enormous trauma in financial markets if not only the Prime Minister but the Chancellor had decided that he would not continue to deal with the immense problems we face. Can I ask two simple questions? First, as far as the corporation tax cut is concerned, will my noble friend tell us—I am sure he ought to do so—whether the Treasury estimates that this will increase or decrease revenue in the immediate future? Secondly, as far as the abandonment—I think that is the right word—of the target on the deficit reduction is concerned, that is clearly necessary to have greater flexibility in fiscal policy, but does he agree that it is essential that none the less the long-term objective of reducing the deficit is maintained?

[Lord O'Neill of Gatley]

My Lords, in response to my noble friend’s question, let me repeat that the fiscal charter, including all its rules, allowed specifically that if an external shock—in this case one that we essentially brought upon ourselves—would result in a four-quarter basis GDP forecast of less than 1% the framework could be adjusted. That is the environment in which the Chancellor made his comments in the other place, and that is what I am repeating here. With respect to the comments on corporation tax that are receiving so much attention, the Treasury will—as it always does—indicate what any cost or benefits revenue-wise or otherwise might be as and when a specific policy proposal is brought to Parliament.