George Osborne reassures businesses tax breaks are in the pipeline

Published on Wednesday 19 May 2010 23:34

A MOVE to slash corporation tax was the headline measure in the first major speech by George Osborne since he was made Chancellor.

Speaking to the CBI, Mr Osborne said that he wanted "Britain to be open for business again".

And he claimed that the last 13 years of Labour government had reduced enterprise and left the UK lagging behind.

In particular he highlighted how public-sector spending forms 50 per cent of the economy, while there are five million people out of work.

He said: "I believe that when you succeed, Britain succeeds. Back in the late 1990s this seemed a rather obvious argument to make. All politicians paid lip-service to enterprise.

"But the events of the last 13 years have shown that we can never assume that the argument is won."

He added: "No wonder too many people around the world thought that Britain had put up a sign that said 'closed for business'.

"Today we take that sign down. And we need to start making the case for enterprise all over again."

As part of his "tax cutting" proposals he said there would be a five-year plan to radically change corporation tax.

He did not give any figures, but made it clear that it would be brought down significantly in an effort to stop multinationals "deserting Britain".

He also confirmed that Labour's plans to increase national insurance – described by the Conservatives and business leaders as "the jobs tax" – would be reversed in his emergency Budget next month.

He was also full of praise for his "excellent" new Liberal Democrat Chief Secretary to the Treasury David Laws, whom he said will be working with him on making significant cuts to public spending, including finding the 6 billion needed to fill the black hole left by reversing the NI increase.

He added that the Budget on 22 June will include measures to raise the threshold of income tax significantly and the Con/Lib government would work to reach a 10,000 threshold by the end of the government.

This was one of the Liberal Democrats' key manifesto promises.

Mr Osborne also made it clear that he wants to stop the economic cycle of Britain "borrowing money of China and Asia to buy products made in China and Asia".

He said it is essential the country starts producing and selling goods again.

Taxation has been an area where the two parties in coalition have found easy agreement, although some right-wing Tories are privately concerned that the tax-cutting agenda may be watered down.

Earlier yesterday Liberal Democrat leader Nick Clegg, the Deputy Prime Minister, had described the coalition's proposals as not reducing tax, but rebalancing it.