Finance (No.2) Bill

Debate between Shabana Mahmood and James Morris

Tuesday 8th April 2014 Commons Chamber

[Shabana Mahmood]

I agree that business needs certainty. All our figures are based on analysis from the House of Commons Library. That is the best we have to go on and it is, of course, a respected source for making projections on the likely cost of cutting the rate and how much will remain for business rates. As I have said, all the money raised will go towards our business rate policy, which applies to 2015-16 and 2016-17. We will, of course, consider the circumstances in the early part of the next Parliament when deciding what to do about business rates.

During the Budget debates, Government Members tried to argue that our proposal to increase corporation tax back up to 21% meant that Labour was all about increasing business taxes. It is interesting that that argument has not been repeated since those debates. It quickly fell apart when it was pointed out to Government Members that, given that all the revenue from our corporation tax policy would be spent on cutting and then freezing business rates for small businesses, their argument did not seem to consider small businesses to be real businesses. I am glad that Government Members appear to have dropped that particular line of attack and I would warn them against trying to run it again, because it was insulting to small and medium-sized enterprises.

[James Morris (Halesowen and Rowley Regis) (Con)]

Under this Government, local authorities will be able to retain an uplift in business rates as part of local government funding. Has the hon. Lady considered the impact of a business rate freeze on the ability of local governments to benefit from an uptake in business rates, and on local government finance in general?

[Shabana Mahmood]

Our policy is fully costed. We do not envisage any loss of revenue for local government. Our key priority is to give practical assistance to businesses as soon as possible, so that people such as those who visit my constituency surgery to say that they are fearful that they will have to close their business get some relief from what is becoming a very real business burden.

Last week the Secretary of State for Education suggested to the British Chambers of Commerce that our policy on corporation tax and business rates pits businesses against each other, which is complete nonsense. The idea is not to tell one business that it is going to suffer while another business does really well; it is to get a better balance with regard to the landscape of business taxation.

As I have set out in detail, corporation tax cuts over the life of this Parliament amount to some £10 billion and 2% of businesses in this country have done very well with their tax bill. It is fair and right to consider what is happening to the other 98%, understand the struggles they face and make choices that the 2% might not like, but that will offer support to smaller businesses and that will go some way to ensuring that they can remain in business and continue to grow and do good for the economy.

Even if the headline rate of corporation tax increases from 20% to 21%, it is important to remember that it will remain competitive. I do not believe that the change would be destructive or damaging to UK plc. In fact, I think that it and the moneys that will go to businesses as a result of a cut and then a freeze in business rates could do real good, not just for SMEs but for the economy as a whole.