I remind the House that I offer advice for an industrial company and an investment company, although not on these subjects.
I thought that the hon. Member for Birmingham, Ladywood (Shabana Mahmood) started her speech very promisingly. I admire her background, and I can think of a former great Member of Parliament who came from a very similar background and who deduced some very sound principles about how economies and shops work. I thought that the hon. Lady was going to develop in that style. I was delighted when she said that she is now a convert to tax reduction. She said that she and the Labour party now think that taking corporation tax down from 28% to 21% was right. It is wonderful news that we seem to have cross-party accord on the fact that lower tax rates can bring businesses to Britain, keep more profit in Britain and, if we let such policies fructify for long enough, even lead to more revenues and help to promote the economic growth that we all want.
The hon. Lady went even further and thought up another tax reduction that she wants. I am not normally one to let a tax reduction opportunity go by, and she said that a reduction in business rates would be a very good idea. She said that it would be good to find a way to make a further reduction in business rates, because that would be very welcome after years of increases.
I was then disappointed, however, because the hon. Lady said, “Oh, you can’t have too much of a good thing. It might start to work. You’ve got to have a tax rise, as well as a tax reduction.” She did set one part of the business community against another, although she claims that she did not do so. I find that rather curious, because we are meant to be debating the Opposition’s amendment 2, which does not propose a reduction in business rates or an increase in the corporation tax rate, although she says that that is their policy. The amendment allows us to talk about that because it is very wide ranging. We can talk about any kind of tax because it invites us to look at alternatives to corporation tax in ways that she spoke about.
We have a contradiction: the Opposition say that they have a settled policy to put up the corporation tax rate for larger companies and to cut and then freeze business rates. However, we are asked to vote on a much weaker amendment, which just says that the Chancellor of the Exchequer should conduct a review of the impact of cutting the corporation tax rate from 21% to 20%, as well as of other options, presumably including the one that the hon. Lady has already adopted.
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I wonder whether Labour Members are in a bit of a muddle. Why do they need a review if they have already made up their minds about its answer, and if they have not made up their minds, why have we been given a clear policy for once, given that they usually use the advantages of being in opposition to be rather shy about coming up with clear policies?
Let me address the policy that Labour recommends the House to adopt, rather than the one that it might put to the electors—that we need a review to be carried out in the six months after the passage of the Bill. In other words, the review of the tax reduction would be conducted before we knew the results of the tax reduction. That is curious: if we were going to conduct a review into the consequences of an action, we might have thought that we would want to see the action first, but no, Labour thinks that we can conduct a thought experiment on the action. I am not against thought experiments; an awful lot of policy has to be based on them or on history.
There is a contradiction in that the review would have to be done in advance of the action, while there is also the contradiction that Labour has apparently settled its policy without needing a review. I therefore wonder whether the review is just a waste of time and a bit of a waste of money; whether it is some kind of smokescreen or whether there is some muddle between Front Benchers about whether or not they have a settled policy. Having started by feeling very warm and sympathetic towards the hon. Lady, I am now reluctant to vote for the amendment. I am not sure that it is a very serious proposal, because it seems already to have been prejudged by what Labour is offering in this debate.
In thinking about other options, as amendment 2 invites us to do, we should bear it in mind that if we are clever with our taxation policies, we can actually cut a rate and increase the revenue. That is the kind of tax cut that I like at the moment, because I want to get the deficit down. It makes intelligent sense not to pursue a policy of jealousy, but to decide how we can get money out of rich companies or individuals who have money—one obvious point about taxation is that we have to tax people who have money; we cannot tax those who have not got any—by setting rates that they are prepared to pay, that they are prepared to stay and pay or that they are prepared to come here to pay because the rates are more attractive than those elsewhere.
There is already some evidence for such a review in that the Government have now got round to cutting the top rate of income tax from 50% to 45%, and the latest revenue figures for the nearly completed financial year show that there has been an extraordinary surge of £9 billion of extra revenue this year compared with the previous year from payers of the top rate of income tax. That is an astonishing achievement.