Labour has today announced plans to cut business rates by an average of £400 each for 1.5m small businesses, if the party wins the general election on May 7.
As part of five key pillars in the party’s business manifesto, Labour added it would not cut the level of corporation tax. It would also establish a British Investment Bank to provide financial aid and support growth.
In addition, the 22-page document said a Labour government would work with businesses to create “thousands” of new apprenticeships while making it compulsory for all young people to study English and Maths until the age of 18.
Meanwhile, in order to plan for “Britain’s long term infrastructure needs”, a National Infrastructure Commission would be founded.
Shadow chancellor Balls said: “Under the Tories, higher business rates have cost firms an average of £1,500 a year and are an ever bigger part of their tax burden. So instead of another corporation tax cut for large companies which helps fewer than one in 10 firms, we will cut and then freeze business rates for small firms instead.”
However, the Conservatives claim the move would equate to a 1% hike in corporation tax, as it would mean reversing a cut from 21% to 20% that will come into force tomorrow (April 1.)
Treasury minister David Gauke said: “You have it now in black and white – Ed Miliband and Ed Balls will whack up corporation tax in their first budget. This would be the first time corporation tax has risen in over 40 years.”
Director of policy (finance) at the British Property Federation, Ion Fletcher, welcomed the news but said more is needed to make the system sustainable.
“We would like to see all SMEs, which represent roughly two thirds of properties but account for just 6% of rental income, removed from business rates entirely. We would also like to see Labour commit to a full review of business rates, as the current government announced earlier this month, as that is the only way to address much of the deep-seated unfairness in the current system.”
The document also reiterated Labour’s plan to keep the UK in a reformed European Union.