Rachel Reeves was under attack from MPs in the House of Commons today about removal of the pensioners’ winter fuel payments, as well as confirming a business tax roadmap
Although questions on the Budget inevitably came up for Reeves at Treasury questions, she reminded MPs that ‘tax announcements will be made in the Budget on the 30 October alongside an independent forecast from the Office for Budget Responsibility’.
Private sector investment and growth was brought up by a number of MPs and the Chancellor committed to the current rate of 25% corporation tax for the duration of the parliament.
She also confirmed that at the Budget ‘the government will be outlining a tax roadmap for business to offer the certainty that encourages investment and gives business the confidence to grow’.
Reeves once again attacked the Conservative government’s handling of the economy, repeatedly mentioning the ‘£22bn’ black hole in public finances Labour had inherited.
Chris Denning, tax partner at MHA said: ‘We welcome the announcement by the Chancellor committing the government to not increasing the 25% corporation rate for the whole of this parliament and the proposed setting out “a tax road map for business” which will help businesses with their forward planning.
‘The corporate tax regime in the UK should be used as a platform to create growth and investment both within and into the UK.
‘Whilst on the face of it, committing to a 25% cap on the corporation tax rate for the lifetime of parliament provides some level of certainty and stability for business, it is not a positive message for the UK being seen as a competitive place to invest. The corporate tax rate is one of the key factors in driving investment decisions.’
An international investment summit will take place on 14 October to bring together some of the biggest global investors in the world and show them the investment opportunities ‘our great country has to offer’, said Reeves.
It was also confirmed by Tulip Siddiq, economic secretary to the Treasury, that tax thresholds would remain frozen until at least 2028, once again throwing the blame on her predecessors in the Conservative party.
Claiming the upcoming Budget will ‘fix the foundations, to rebuild Britain and to ensure working people are better off’, the Chancellor failed to directly answer many of the questions put to her, throwing blame at the ‘party opposite’ for the £22bn black hole we have heard so much about.
Winter fuel furore
Although the winter fuel payment is being ripped from the grips of all but the poorest of the country’s 10m pensioners, Reeves stressed that the commitment to the triple lock for the duration of parliament and a £900 increase in the state pension in the last 12 months, will be enough for affected pensioners to keep their houses warm.
When asked if the Chancellor would reconsider the axe on the payment, Reeves said: ‘The state pension is worth £900 more than it was a year ago and energy bills are lower this winter than last winter, as the honourable lady points out we inherited a £22bn black hole from the previous government who had made unfunded spending commitments with no idea of how to pay for them.
‘They were tough decisions, but they were the right decisions.’
On pensions, she did say she recognised the importance of workers saving for their later years, though, saying that ‘every penny saved into a pension should get a decent return’. This led Reeves to claim, that ‘billions of pounds of investment could be unlocked in the UK’, through the reforms set out in the pensions review.
An additional £11,000 could be added to people’s pensions pots, according to Reeves through Labour’s proposals. But she chose not to ‘speculate’ on any tax increases on pensions currently when asked by former Conservative Treasury minister Nigel Huddleston if she could ‘give those people [working people] saving for the future peace of mind by confirming that they will not increase taxes in pensions’.
However, Reeves did say: ‘I’m absolutely determined to ensure working people are better off. Under the last government, the tax burden reached its highest level in 70 years and ordinary people paid the price.
‘This Budget will be a Budget to fix the foundations of the economy after the mess left by the previous government.’
Story by Will Drysdale from Accountancy Daily
