Labour will launch a detailed review of the multitude of tax breaks offered to Britain’s businesses, as the party seeks to craft a distinctive Corbynite economic policy, according to shadow chief secretary to the Treasury Seema Malhotra.
In an interview with the Observer, Malhotra said business reliefs, which allow companies to reduce how much they owe the taxman, should be subject to the same scrutiny as any other area of public spending.
“The big test really is to see whether economic policy is helping or hindering businesses and families; so that’s why we’ve started to look at the different types of incentives to invest business has,” she said. “A Labour-run Treasury would want to ensure that tax expenditures would be subject to the same rigorous analysis and review as other expenditure”.
A recent report from the Public Accounts Committee criticised HM Revenue & Customs for failing to publish a detailed analysis of the costs and benefits of the plethora of business tax breaks, from the research and development tax credit, to Entrepreneurs’ Relief.
During his leadership campaign, Corbyn criticised the “corporate welfare lobby” for demanding handouts from the taxpayer; but Malhotra insisted that rather than a money-saving exercise, the review would assess the effectiveness of government support for business. “How do you know what actually works?” she said.
The MP for Feltham and Heston was involved in Yvette Cooper’s leadership campaign, but now serves as number two to Corbyn’s right-hand man, shadow chancellor John McDonnell, who made a speech on Friday calling for “socialism with an iPad”.
This latest review will be carried out alongside separate studies by Labour of the work of the Revenue and the Bank of England. Malhotra said it would form part of a new, evidence-based approach to economic policymaking. “Why don’t we look again at how the economy is governed?” she said.
She also underlined the fact that while McDonnell is from a different wing of the Labour movement, drawing up economic policy will involve consultation with the wider party.
“The place we’re in now is really a story still being written, with Jeremy as leader. You don’t go from leadership campaigns to saying that you’ve shifted everything. You go through negotiations, we’ve got our policy committee – so we’re at a very early stage.”
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