Jeremy Hunt has dropped hints over further support for businesses under consideration ahead of next week’s autumn statement, amid Tory calls for lower taxes.
The Chancellor faced a range of demands from MPs at Treasury questions, including scrapping the “hated factory tax” which relates to the inability to fully expense investments in machinery and buildings.
Mr Hunt used the budget in March to announce a three-year policy of “full expensing” to ensure every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profit.
But Tory former chancellor Nadhim Zahawi told the Commons: “May I implore him to make full expensing permanent and scrap the hated factory tax.”
Mr Hunt replied: “He is absolutely right to say how important it is to have competitive business investment taxes and I was very proud in the spring budget to introduce full expensing for three years, which gives us some of the most competitive business taxes in the OECD (Organisation for Economic Co-operation and Development) … and I will of course keep under review any possibility to extend that.”
Conservative MP Harriett Baldwin, who chairs the Commons Treasury Committee, added: “I think on this side of the House we all agree that the way to sustainable economic growth without inflation is through business investment.
“It’s early days but I wondered whether we have indications of how well the full expensing is working for encouraging business investment in this country and whether one of the measures he’s considering next week at the autumn statement is to make that full expensing permanent?”
Mr Hunt, in his reply, said: “One of the reasons our productivity is 15% lower than, for example, Germany’s is because they invest more as a proportion of their GDP (gross domestic product) every year – about 2% more – than we do in the UK.
“So improving the rate of business investment is one of the most effective ways we can boost productivity and people’s real disposable income.
“We’re very proud of what we introduced in the spring budget and we will continue to see whether it is possible to extend it further.”
Conservative MP John Baron highlighted proposals from party colleague Baroness Altmann to reform cost disclosure rules for investment trusts, with Mr Hunt replying: “The way that we treat costs in our investment industry and pension funds industry is not optimal and we need to reform it.”
Dame Priti Patel also called on the Government to allow people to “keep more of the money that they earn” by lowering taxes.
The Conservative former cabinet minister said: “In a week’s time we will have the autumn statement, may I appeal to the Chancellor in particular to look at lowering the rates of personal as well as business taxation, particularly in the areas of business rates and corporation tax, and all aspects to do with enabling people to keep more of the money that they earn.”
Treasury minister Bim Afolami replied: “(Ms Patel) tempts me to make tax policy … the Chancellor always keeps these things under review as does the Government, and indeed we have a fiscal event shortly.”
Conservative former minister Andrew Selous encouraged the Treasury to work with developers and other Government departments to ensure primary care services promised for new housing developments are delivered.
Mr Hunt replied: “He is right that it is taking too long for capital to reach NHS primary care projects when it relates to housing developments and we will look into the issue very carefully.”
Marco Longhi, Conservative MP for Dudley North, suggested increasing the VAT threshold to £250,000 for new registrations in a bid to “boost growth”.
Elsewhere in the session, Lib Dem MP Tim Farron (Westmorland and Lonsdale) asked if the Chancellor would “look at the rules to bringing in greater incentives for … pension investment funds to invest in affordable housing across the country”.
Mr Hunt said: “We are already working on proposals in that very area.”