Inward Investment

HC Deb 27 November 1997 vol 301 cc1069-71

1. Dr. Stoate

If he will make a statement on the impact of the Green Budget on the Government's policy on inward investment into the United Kingdom. [16585]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Our policies for stability, for sustainable public finances, for long-term investment, including our cuts in corporation tax, and for skills and employment will enhance the attractiveness of the United Kingdom as a location for inward investment.

Dr. Stoate

Does my right hon. Friend agree that partnerships between the public and private sectors, such as the Kent Thames-side group, which is working for the regeneration of north-west Kent including my constituency of Dartford, are the blueprint for inward investment and stable growth that this country needs and that this Government can deliver?

Mr. Brown

I am grateful to my hon. Friend. I understand that this morning he launched an exhibition on the Kent Thames-side region, and I wish him well in his efforts both to form an effective public-private partnership there and to attract inward investment. What is absolutely clear is that for inward investment we need a stable monetary framework—that is why we gave the Bank of England independence—a commitment to Europe, sustainable public finances and measures such as our cuts in corporation tax for long-term investment, which are all measures that we support. We have still to hear what the Opposition think of them.

Mr. Nicholas Winterton

While the Chancellor will know of my deep commitment to manufacturing industry and while I commend him on some of the actions that he has taken, is he not worried that in the short term the changes that he has made to corporation tax will cause many companies to have liquidity problems, so that in the short term there will be a problem with investment? Will he perhaps give that matter serious consideration?

Mr. Brown

I am grateful to the hon. Gentleman for raising that matter. He has always championed the cause of manufacturing industry. I must tell him that businesses have welcomed our proposals: they accept that it is necessary to move to the abolition of advance corporation tax and have welcomed our cut in corporation tax. It is a measure of how much the Conservative party is now out of touch with business that Conservative Members cannot welcome our proposals.

Mr. Gunnell

Is it not true that the one policy mentioned by the Chancellor on which we are certain where the Conservative party stands is the policy on Europe? Is it not also true that our commitment to Europe and our insistence that we will be at the heart of Europe are particularly attractive to inward investors after the uncertainties that they suffered with the previous Government's position?

Mr. Brown

I am grateful to my hon. Friend, with whom I remember working for many years and who has always been a champion of inward investment for Yorkshire. I think that most people in business agree that a stable policy on Europe—one that will make people sure that this country is committed to Europe—will benefit Britain. It is therefore unfortunate that we do not have all-party support for that policy.

Mr. Lilley

I congratulate the Chancellor on his well-deserved award at the Spectator"parliamentarian of the year award" lunch yesterday. Can he confirm that the combined effect of his July and November changes in corporation tax, after taking account of the changes in the rate of tax, will mean that, over the lifetime of this Parliament, British business will have to pay £20 billion more tax?

Mr. Brown

I do not accept those figures at all. The corporation tax cut will give business an extra £1.5 billion a year. The transitional costs having been met, business will be £1.8 billion a year better off. I thank the right hon. Gentleman for his good wishes on The Spectator award, but if he is going to pursue this course of action, he had better explain why Adair Turner, secretary general of the Confederation of British Industry—[Laughter.] It is interesting that Conservative Members now scoff at the CBI. That is what has happened to the Conservative party.

Mr. Nicholas Winterton

Red Adair.

Mr. Brown

The Conservatives now call the secretary general of the CBI "Red Adair". That is how far the Conservatives have sunk and how far they have moved away from business. One of their friends at the Institute of Directors, Mr. Richard Baron, its taxation executive, said that abolition of ACT was wonderful for companies. The Institute of Directors, the CBI, the chief executive of BP, and many others, including the Financial Times, have welcomed the proposals.

I fear for the Conservative party. It has moved so far from business that in Scotland, business people who were pro-Conservative are trying to form their own pro-business party to fight the Conservatives. I think that the Conservatives should go back to Eastbourne, hold another bonding session and think again.

Mr. Lilley

Is the Chancellor then denying the figures that he himself published, which show that, over the lifetime of this Parliament, British industry will have £20 billion less to invest and to create jobs with? Does he deny that the effect of his changes will be to make investment abroad more attractive and investment at home less attractive? Those are the figures on page 19 of the document "A Modern System for Corporation Tax Payments", which the right hon. Gentleman published. The document also shows a figure of £2 billion a year extra taxation during this Parliament as a result of the changes announced in November.

Can he confirm that, in the borrowing forecasts that he issued for this Parliament on Tuesday, he did not take into account the extra revenues that he is to raise from the changes in corporation tax, and will he explain why he did not do so? Is it because he did not want Labour Members to realise that he was raising several times more than it would cost to meet recent demands to defer certain changes in benefits?

Mr. Brown

If the right hon. Gentleman is going to read out that document, perhaps he will remind the House—[HON. MEMBERS: "Answer the question."] I am about to—[Interruption.] They must listen, Madam Speaker. I am about to quote from the very document that the shadow Chancellor mentioned. Will he not thank us for the cut in corporation tax in July, and the further cut announced on Tuesday, and will he read to the House the passage that states: After the transition, the annual impact is an Exchequer cost of about £2 billion a year"? We are doing something to help long-term investment. That is the reason why it is being supported as a principle by business.