Theresa May is to suggest further cuts to corporation tax to match those proposed by Donald Trump as she outlines a series of pro-businesses proposals to the Confederation of British Industry (CBI) annual conference on Monday morning.
In her first speech to the organisation as prime minister, May was expected to outline her “aim” for the UK to keep its status as having the lowest corporation tax rate among the G20 group of countries.
In the UK this is currently 20%, and is due to fall to 17% by 2020. However, Trump, the president-elect, has talked of cutting the equivalent US federal tax from 35% to 15%, raising the possibility of further cuts in the UK.
May was also due to commit the UK to a £2bn annual fund for scientific research and development and a review of tax incentives for innovative corporations in an effort to boost the technology industry.
In her first speech to the CBI’s annual conference, May will outline “the first steps in a modern, ambitious industrial strategy” following increasing anger from bosses at her administration’s approach towards big business.
Mounting frustration with No 10 was disclosed last month when Carolyn Fairbairn, the CBI’s director general, publicly accused May of “closing the door” on Britain’s open economy. It followed industry concerns that the new prime minister was less business-friendly than her predecessor, David Cameron.
She was to use the speech in central London to outline elements from this week’s autumn statement, and to say she will “always believe in business” and the benefits it brings.
“In the autumn statement on Wednesday, we will commit to substantial real terms increases in government investment in RD investing an extra £2bn a year by the end of this parliament to help put post-Brexit Britain at the cutting edge of science and tech,” she was to say.
“And we will also review the support we give innovative firms through the tax system … because my aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation.”
The prime minister was also to announce a new Industrial Strategy Challenge Fund to back priority technologies, such as robotics and biotechnology.
May will also announce a review of current research and development tax incentives to ensure the global competitiveness of the UK as a home for scientists, innovators and tech investors.
She will say: “It is not about propping up failing industries or picking winners but creating the conditions where winners can emerge and grow. It is about backing those winners all the way, to encourage them to invest in the long-term future of Britain, and about delivering jobs and economic growth to every community and corner of the country.
“That is the ambition – and we need your help to put it into practice.”
In other parts of the speech previewed in advance, May was to stress that companies need to do “more to spread those benefits around the country, playing by the same rules as everyone else when it comes to tax and behaviour, and investing in Britain for the long-term”.
She was to say: “We believe in free markets. They are the means by which we spread opportunity and lift people out of poverty. We believe in capitalism – the means by which we drive economic growth, putting people into work to provide for their families. And we believe in business – the entrepreneurs and the innovators who employ millions of people up and down this country – the basis for our prosperity. “
The idea of cutting corporation tax was floated in the Sunday Express last month as a way of wooing banks considering leaving the UK because of an impending Brexit.
Former chancellor George Osborne had previously floated the idea of cutting corporation tax to 15% to reassure businesses worried about the impact of Brexit. He had already reduced the rate from 28% to the current 20% during his time in office.
May upset some business leaders in June when she entered Downing Street with a promise to be guided “not by the interests of the privileged few” but by the concerns of ordinary workers.
A few months later, her hardline rhetoric on immigration at the Conservative party conference, which suggested the government was headed for a hard Brexit outside the European single market, sparked further concern in boardrooms.
In Monday’s speech, shewill also offeran olive branch to business leaders over plans to place workers on company boards, which have prompted a backlash in the City.
Referring to the upcoming green paper on corporate governance, the prime minister will emphasise that she will take business leaders’ opinions into consideration. “This will be a genuine consultation – we want to work with the grain of business and to draw from what works. But it will also be a consultation that will deliver results,” she will say.
Hours later, Jeremy Corbyn will tell industry leaders that “Labour will be on the side of the innovators, entrepreneurs and investors” as long as they “live up to their side of the deal” by treating workers fairly.
The Labour leader will say companies must pay decent wages, respect workers’ rights and pay the taxes they owe. In return, a Labour government would use a £500bn national investment bank to “break the logjam” in bank lending, which has “starved” small- and medium-sized companies.
A Labour government would “use public intervention to unleash the creativity and potential of entrepreneurial Britain”, Corbyn will say.
He will insist he has a mandate for change from the Brexit vote and Donald Trump’s election as US president, which he says show that the current economic system has been rejected by voters faced with “ballooning” inequality and falling or stagnating living standards.
Corbyn will say in central London: “Labour is setting out the path to a better alternative that’s about good intervention. In fact, it’s intervention for the common good. In 1963, Harold Wilson famously said if the country was to prosper, a ‘New Britain’ would need to be forged in the white heat of a scientific revolution.
“More than 50 years later we now face the task of creating a New Britain not just out of Brexit and a new relationship with Europe but from the challenge of the fourth industrial revolution – powered by the internet of things and big data to develop cyber physical systems and smart factories.”