Labour corporation tax: Rachel Reeves announces business tax freeze during first term in government

Labour has announced plans to freeze corporation tax at 25% for the first term of their government if elected in the next general election.

Shadow Chancellor Rachel Reeve made the announcement to 400 senior business leaders at the party's Business Conference in London this morning (February 1). Revve told the crowd that the new plans to keep corporation tax at 25% was "genuinely pro-business", adding that “economic growth is essential for raising living standards and funding strong public services, and growth in turn will rely on attracting business to invest and create jobs and prosperity here in Britain.” Reeves said “After 14 years of uncertainty under this Conservative government, investment has cratered. I have heard time and time again from businesses that what they want is stability – including when it comes to tax. And they are right. 

"If we expect business to invest in Britain, then tax rates cannot shoot up and down like a yo-yo, according to each political whim. What Labour offers is a genuinely pro-business tax plan. Founded on a fair contract between a pro-business government and great British business.”

She also lambasted the recent and frequent changes to corporation tax rates made by the Conservatives, but said that Labour rejected calls to cut the rate. She said: “We believe that 25 per cent rate strikes the correct balance between the needs of our public finances, and the demands of a competitive global economy. The next Labour government will make the pro-business choice and the pro-growth choice: We will cap the headline rate of corporation tax at its current rate of 25 per cent for the next parliament. And should our competitiveness come under threat, if necessary we will act."

Reeve was also asked about Labour's decision not to back the re-introduction of caps on bankers' bonuses. The shadow Chancellor battled criticism of her stance, telling the room: “The truth is, that in financial services there are a lot more rules and regulations and safeguards in place than there were before the financial crisis, for example banks have to put aside much more capital than they did before 2008.

"And there are much stronger rules about clawing back bankers’ bonuses. So we didn’t think it was the right priority, it wouldn’t have been my number one priority in that budget. But the chopping and changing has got to end if we’re going to give stability to business and that’s why we will not be bringing that back.”