THERESA May will cut Britain’s corporation tax to make it the lowest rate of the world’s top 20 economies as she makes businesses a carrot-and-stick new offer – but only if they “do more” for society.
In an olive branch move, the PM will pledge an extra £2bn to fund cutting edge research and development in science, technology and robotics as she aims to make the UK the world’s high tech leader.
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She will also pledge a new “active role” for government to solve companies’ problems and turn them into major successes.
But in return, the PM will insist firms must “do even more” for the country – including paying their full taxes, helping young people and giving more back to local communities.
Mrs May’s new deal comes as she lays out her flagship Industrial Strategy for the first time at the CBI’s Annual Conference today.
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Her blueprint – which she dubs “stepping up, not stepping back” – marks a major break from predecessor David Cameron’s hands-off approach to business.
She will also use the speech today to heal wounds with bosses after unleashing a barrage of attacks on them since entering No10 that left many spooked.
In her speech to captains of industry, Mrs May will insist: “We believe in free markets, we believe in capitalism, and we believe in business.
“The Conservative Party – and the Government I lead – will always believe in these things.
But if this is what we value, we need to be prepared to adapt and change.”
“We must do everything we can to keep faith with them.”
She will also commit Britain to having the lowest rate of corporation tax of the G20, the group of the world’s 20 biggest economies.
This could see the figure applied to firms drop below the 15% Donald Trump pledged to introduce during his US Presidential campaign.
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The PM will also herald the landmark EU referendum result as “a true national moment” to be seized on.
She will add: “The decision of the British people on 23rd June gives us a once-in-a-generation chance to shape a new future for our nation: the chance to build a stronger, fairer country”.
Chancellor Philip Hammond will confirm the extra £2bn for research and development in his first Autumn Statement mini-budget on Wednesday – taking the budget total for it to £10bn.
There may also be tax breaks to reward innovative firms, Mrs May will hint today.
At the moment, start ups don’t get the help they need, the PM will argue.
The UK ranks 3rd in the developed world for the number of start-ups, but only 13th for the number that go-on to be big businesses.
Mrs May will also lay out her hope to bring economic success to slump areas of Britain not just big cities.
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While London and a few other areas have boomed, wages and jobs in many towns and regions have flat-lined as globalization splits the nation.
Writing in the Financial Times, Mrs May said she will ask business to “work with me” in “calling out what is bad in order to promote what is just and good”.
When a few bad apples “game the system and work to a different set of rules, the reputation of business as a whole is undermined”, she added.
The plea is a clear references to corporate sinners Sir Philip Green and Mike Ashley.
But the move is “essential to ensure business maintains and regains public trust”, the PM also said.
It will mean tough new corporate governance rules, ensuring employees and consumers are represented in big board room decisions, and reforming fat cat executive pay, she added.
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