The Government are committed to ensuring that Britain has a competitive corporate tax system that encourages innovation and business investment. We have already announced a reduction in corporation tax to 17%—the lowest rate in the G20—and we are reducing the business rates burden by £6.7 billion. The Government have also increased the rate of research and development tax credits and set the annual investment allowance at its highest ever permanent level.
I thank the Chancellor for his response and congratulate him on his new role. Many small businesses in my constituency face difficulties. The Costcutter on Claremont Road in Seaford employs four people, but the store is too large to benefit from the Government’s extension of small business rates relief to properties whose rateable value is less than £12,000. Will the Chancellor therefore consider reintroducing the retail rate relief, which last year helped such businesses with a £1,500 discount on their rates bill?
The retail scheme was a temporary arrangement until the current proposals were fleshed out fully, so I am afraid that we will not be able to reintroduce it. Many businesses that benefited under the old, temporary retail scheme will benefit from the permanent scheme that we have introduced to reduce the burden of business rates, but I am afraid that some may slip through the net.
May I congratulate the Chancellor and his team on their appointment? On supporting businesses, PricewaterhouseCoopers yesterday said that growth in Northern Ireland is likely to remain at zero, the worst in the United Kingdom. Will the Chancellor put in place some mechanisms—he has already discussed enterprise zones such as Belfast international airport—to help us?
One of our priorities, in the interests both of social fairness and of improving the productivity of the economy, will be to address the huge—one might say almost grotesque—disparities between economic performance in the different regions and nations of the UK. That will be a central part of our productivity agenda, which will be a key cornerstone of our long-term economic plan.
Since the referendum, some businesses in my constituency have put investment and recruitment on hold due to uncertainty. They welcome the policies that my right hon. Friend has mentioned. I also welcome the indication that he will look at further fiscal stimulus in the autumn statement, but that is some time off. May I press him to reveal a bit more about the options that he might consider to support the economy and businesses?
I am afraid that I shall not be tempted by my hon. Friend to speculate on the content, or even the date, of the autumn statement. What I can say is that the Bank of England is well equipped with the tools necessary to deal with the short-term needs of the economy following the shock of the referendum, and the autumn statement is well placed, after the batch of economic data that will be published this autumn, to provide a longer-term response.
I welcome the right hon. Gentleman to his new position. He may recall that his predecessor cut corporation tax for business to allow the living wage to be introduced. As we speak, Marks and Spencer is consulting on cutting overtime payments and Sunday and bank holiday pay, in order to do just that. What will the Chancellor do to ensure that my constituent, Mrs M, does not lose £2,000 a year because of the introduction of the living wage?
Very clearly, the intention of the introduction of the living wage was not to make people worse off; it was precisely to support the living standards of those on the lowest wages. I will look carefully at the case that the hon. Lady has drawn to my attention.
I welcome the Chancellor to his post. A report published in March illustrated that someone who lives in a deprived area is 50% less likely to start a business on a self-employed basis, and it highlighted the barriers they face to starting such a business. Will my right hon. Friend consider the recommendations in the report and work with me to reverse that trend?
May I congratulate the Chancellor and the Chief Secretary to the Treasury on their new roles? The problem we have seen over many years is that fiscal policy occasionally works against the interests of business. Innovation funding has been converted from grants to loans, and there has been a cut during this Parliament to the UK Trade & Investment budget. I ask the Chancellor, who is new and fresh to the job, to look again at those policies, in particular, to make sure that innovation and export support funding is aligned with innovating and exporting businesses.
I assure the hon. Gentleman that I will be looking comprehensively at all areas of the portfolio as I prepare for the autumn statement, in the context of the economic situation that we face post this shock.
I welcome that, and I ask the Chancellor to look again at one other thing. One of the problems that business and the economy face is a lack of demand. May I ask the Chancellor to look again not just at headline corporation tax cuts, but at an intelligent use of allowances—for example, the reintroduction of industrial buildings allowance—to build demand for construction now and long-term supply side capacity to boost what we do, particularly in terms of exporting, in the future?
I assure the hon. Gentleman that when we look at the corporate tax environment, we will not just be looking at headline rates. We will be looking at the marginal effective rates of corporate tax for investors in the UK, because that is what we want to target—more investment, more jobs and the creation of more wealth in the UK.