Chancellor under fire from peers over corporation tax rise
Ministers warned that increase from 19pc to 25pc is disincentive to investors and barrier to UK growth
SENIOR business figures in the House of Lords have lined up to attack the Government’s decision to push ahead with the rise in corporation tax.
Jeremy Hunt, the Chancellor, defied warnings about the damage to Britain’s ability to compete internationally by increasing the rate from 19 per cent to 25 per cent in the Budget.
Lord Bilimoria, the founder of Cobra Beer and a former president of the CBI, warned that ministers were “killing the goose that lays the golden egg”.
Baroness Moyo, who worked as a research economist and strategist at Goldman Sachs, used her maiden Lords speech on Wednesday to criticise the increase.
“From my reading of the Budget, we can see the beginnings of a credible growth plan, although it seems to be a concern that corporation tax in 2023 and 2024 has been reaffirmed to rise from 19 per cent to 25 per cent,” she said.
“And surely there’s more work to do to unburden companies from excessive regulation. After all, there is no credible path to strong, sustainable economic growth if the economy is subjected to both high tax and high regulation.”
Meanwhile, Lord Bridges, a former
‘There is no credible path to sustained growth if the economy is subject to high tax and high regulation’
Conservative Brexit minister, said his party was “in danger of slipping into the groupthink that higher spending, higher taxes and a bigger state are the path to prosperity – they are not”.
MPS including members of the Conservative Growth Group set up by allies of Liz Truss were also dismayed by the decision.
A former cabinet minister who feared there was “nothing” in Mr Hunt’s announcement for small businesses told The Daily Telegraph: “You look at the markets and it feels like [the Budget] is a non-event.
“If you’ve worked hard all your life and done the right thing, you are being hit by rising bills and there’s nothing for you.”
Another former frontbencher labelled the corporation tax hike “a Labour policy that is being backed by the Conservatives, and vice-versa”.
Sir John Redwood, who led Margaret Thatcher’s No 10 policy unit, said there had been “no proper growth agenda” in the Budget and the Government was pursuing “socialist” policies.
Sir John added: “The corporation tax rise will affect the attractiveness of Britain as a place to invest, including for people here who may decide to divert their tax rates to somewhere else.
“There’s great uncertainty and the feeling that if you should make a successful investment, you will then be very heavily taxed on it. There will be taxation on success.”
It came after Mr Hunt suggested the industries of the future will help fund the NHS in the long-term, arguing Wednesday’s measures encouraged innovation to fund public services.
In an interview with the BBC’S Today programme, he cited Britain’s life sciences and film and TV sectors, which are the biggest in Europe, and the third-largest technology sector in the world, beaten only by the US and China.
“I think that the things that are going to really matter – that are going to pay for the NHS in the long run – are things where we are doing very, very well.”
During the first full afternoon of debate in the Commons on the Budget measures yesterday, senior Tory backbencher Richard Drax warned the Government against “falling into the socialist trap” of trying to “provide all the answers” via tax increases.
“What concerns me is the tax pressure on, certainly, those who receive less,” he said.
“We are still facing the highest burden on taxation since the end of the Second World War and personally I fear we’re falling into the socialist trap of raising expectations that the Government will provide all the answers. It can’t and shouldn’t try to.”
But Chloe Smith, a former work and pensions secretary, hailed the Chancelllor’s welfare reforms, and urged him “not to waver” on these – adding that he was “right to pull the levers that he has”.