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“The Plan for Growth”, published alongside the Budget this year, sets out the Government’s plan to put the UK on a path to sustainable long-term economic growth. The second phase of the Government’s growth review will report later this year.
I thank the Minister for his answer. In the last decade the UK has fallen from 14th to 89th in terms of burden of regulation and from 14th to 95th in terms of extent of taxation. Does the Minister agree that we should be freeing up companies, rather than spending money that we do not have, to drive economic growth?
My hon. Friend is absolutely right. Of course, it is part of the previous Government’s legacy that our competitiveness fell so far behind that of our international competitors. That is why we have taken action to reform corporation tax, for example, so that we have one of the best and most competitive regimes in the G20 and more businesses are encouraged to come to the UK. It is also why we are tackling regulation and red tape in the economy, which is why, as I said earlier, we have seen 500,000 net new jobs created in the private sector. That is three and a half jobs in the private sector for every job lost in the public sector, which shows the progress that we have made over the last year.
Both this Government and the previous one have taken an axe to tax allowances for investment on the supply side of the economy—for example, the abolition of the industrial buildings allowance under Labour and the reduction of the annual investment allowance of £100,000 to only £25,000. Have the Government turned their face away entirely from the reintroduction of tax allowances, or will they listen to representations that demonstrate the positive growth in investment on the supply side from such tax allowances?
The reforms to allowances were used to help to fund measures such as the reduction in corporation tax rates for large companies and the reduction in the small companies’ tax rate from the 22p proposed by Labour when it was in government to 20p. We are therefore seeing changes in the rate of tax paid by businesses of all sizes, which is helpful in encouraging economic growth and job creation.