HC Deb 16 May 1991 vol 191 cc414-5
5. Mr. Gill

To ask the Chancellor of the Exchequer what are the corporation tax rates and thresholds for small businesses; and what were the equivalent figures for 1979.

Mr. Maude

The small companies rate of corporation tax is 25 per cent. compared with 42 per cent. at the time of the 1979 general election. The profits limit for the small companies rate will be raised this year to £ 250,000, compared with £ 50,000 in 1979, and the threshold for marginal relief will be £ 1,250,000, compared with £ 85,000 in 1979.

Mr. Gill

As one who vividly remembers the difficulties and frustrations of running a business under the last Labour Administration, may I say how much I welcome my hon. Friend's reply? The relative improvement since 1979 is substantial and welcome, but will my hon. Friend never lose sight of the fact that substantial additional benefits can be gained by continuing to reduce the rates of tax in the corporate sector?

Mr. Maude

My hon. Friend puts a powerful case. It is worth pointing out that, at 33 per cent., the main rate of corporation tax for the coming year is now lower than the small companies rate was under Labour, and that is a huge benefit for small and large companies alike. We now have a corporation tax regime which is more generous and lower than that in any other country in the EC or in the Group of Seven. That puts the United Kingdom in an advantageous position which we shall seek to maintain and enhance. The House is waiting for some answers to the questions that we put to the Labour party about its proposal for new capital allowances. We want to know how much that would cost and whether the Labour party would increase the rate of corporation tax to pay for it.

Ms. Short

Labour Members of Parliament in Birmingham recently met the West Midlands Employers Federation. The situation there is desperate and worrying for manufacturing firms which are trying to invest and survive. The Minister should not mislead the House about its seriousness. Manufacturers badly want to be able to offset corporation tax against investment, which will result in higher investment in our country. Will the hon. Gentleman consider that?

Mr. Maude

I am a west midlands Member myself and I am aware of the difficulties that some businesses are experiencing in the west midlands, as elsewhere. I am also aware of the news from the car industry. Production of cars in the west midlands, as elsewhere, has increased this year. The number of cars produced for export has more than doubled and overall production has increased compared with last year. Exports have increased by 40 per cent. with the British car industry now exporting two thirds as many cars as are imported, compared with one third only a year or two ago. That is good news. It would be nice to hear the hon. Lady giving the credit that is due to the managers and work force in the British car industry who, in the past decade, have transformed the way in which the industry performs. It is now a powerful and good industry, not the joke that it used to be.