This House of Lords Library Briefing has been prepared in advance of the debate due to take place on 11 July 2019 in the House of Lords on the motion moved by Baroness Neville-Rolfe (Conservative) that “this House takes note of the case for creating an environment which encourages (1) business growth, and (2) job creation, especially in relation to the tax system”.
Encouraging Business Growth and Job Creation (346 KB , PDF)
The UK ranks highly in international pro-business league tables. However, the UK economy faces a number of challenges. These include low GDP growth and productivity, and historically-high levels of employment, but low-skilled and low-wage jobs in some sectors. Other challenges include the potential impact of the UK’s withdrawal from the EU. To address these, the Government has launched its industrial strategy, which aims to increase investment in infrastructure and skills to encourage growth and job creation.
Since the 2008 financial crisis, the UK’s corporation tax rate has been reduced from 28% to its current rate of 19%. It is due to reduce to 17% in 2020. Corporation tax receipts are now at their highest ever level. However, there is debate over whether the tax rate reductions have resulted in greater business investment in the UK. Over the same period, employers’ national insurance rates have increased. This has provoked criticism that the burden of business taxation has been shifted from shareholders to employees. Similarly, business rates receipts have increased, placing a separate cost burden on businesses, particularly small- and medium-sized enterprises in the retail sector.
This briefing focuses on the UK’s business taxation regime. It provides information on the three most substantial business taxes (in terms of revenues raised): corporation tax; employers’ national insurance contributions; and business rates. The briefing also summarises proposals for reform of these taxes.
Encouraging Business Growth and Job Creation (346 KB , PDF)
The collapse of major UK companies such as BHS and Carillion has raised questions about the effectiveness of the country’s auditing practices. The government has committed to reforming the auditing industry. The 2024 King’s Speech included plans to publish a draft bill comprising measures to establish a new audit, reporting and governance regulatory body with enhanced enforcement powers. The draft bill has not yet been published.
This briefing is the fifth of a series on the post-war history of the UK economy. The series proceeds decade-by-decade from the 1950s onwards, providing an overview of the key macroeconomic developments of each decade. This fifth briefing looks at the 1990s. In this decade the UK economy settled into a period of low inflation and steady growth; however, living standards growth was lower and more regionally concentrated than in previous decades.
The Budget Responsibility Bill would require ministers to request an assessment from the Office for Budget Responsibility (OBR) for every major fiscal announcement and give the OBR the power to decide to publish one if the minister failed to request it. This follows the September 2022 ‘mini-budget’. The statement included plans that would have resulted in a projected £45bn reduction in tax income. It did not have an accompanying OBR assessment.
