Sept. 24 (Bloomberg) -- Opposition Labour Party leader Ed Miliband pledged to halt a planned cut in U.K. corporation tax for big companies if he wins power in 2015 to reduce levies that hit smaller businesses harder.
In his keynote address to supporters at the party’s annual conference today, Miliband will announce plans to reverse the reduction in corporation tax to 20 percent from 21 percent due to take effect in April 2015, according to extracts released by his office. That would raise 340 million pounds ($545 million) in the 2015-16 fiscal year from about 80,000 businesses, letting Labour lower so-called business rates on commercial premises.
“They used to say ‘a rising tide lifts all boats,’” Miliband will say in his speech in Brighton, southern England. “Now the rising tide just seems to lift the yachts.”
Business rates are a local tax calculated on property values. They place a proportionally larger burden on companies with high property costs relative to their income. Labour would cut rates on premises with an annual rental value of 50,000 pounds or less, aiming to benefit 1.5 million shops, pubs and hi-tech businesses by an average of 450 pounds over two years.
Conservative Chancellor of the Exchequer George Osborne has been steadily cutting the main company-tax rate, taking it down from 28 percent when the government took office in 2010, with the stated aim of “creating the most competitive corporation-tax regime” in the Group of 20.
Miliband will argue that most jobs in the future will be created by a large number of small businesses, not a small number of big companies.
As Britain’s economy recovers from recession, Labour has switched its focus onto whether voters feel they are suffering from the effects of inflation in what Miliband has dubbed “the cost-of-living crisis.”
In an echo of the line made famous by Ronald Reagan in the 1980 U.S. presidential debate with Jimmy Carter, Miliband will say, “At the general election in 2015, you should ask yourself: am I better off now than I was five years ago?”
He will attack Conservative Prime Minister David Cameron and Osborne for doing a “lap of honor” highlighting economic growth.
“But you make the judgment: we have the slowest recovery for 100 years, 1 million young people looking for work, more people out of work for longer than any time in a generation, more people than ever before working part-time because they can’t find full-time work, and the longest fall in living standards since 1870,” he will say
With 20 months to go before the next election, Labour has found its poll lead over the Conservatives narrowing as Britain’s economic recovery builds momentum. One YouGov Plc survey last week showed the Tories running neck-and-neck with the opposition party.
In the speech, Miliband will also announce plans for new housing and to help school-leavers find jobs, as well as green-energy commitments.
He will also address his party’s relationship with labor unions, which founded it more than 100 years ago and pay subscriptions for “affiliated” members.
Miliband wants union members to join as individuals, which may cost Labour 1.2 million pounds a year in lost payments for members of the Unite union alone, its general secretary, Len McCluskey, said on Sept. 10.
The 619,000-member GMB union has already said it will cut the funding it gives Labour in membership dues to 150,000 pounds from 1.2 million pounds a year.
Union leaders are angered at moves to weaken the link between the party and organized labor and have accused Miliband of worrying too much about newspaper headlines and barbs from Cameron’s Tories.
McCluskey received loud applause from delegates in the conference hall yesterday and told a meeting of party activists that Miliband is listening to him and his colleagues.
“For too long within our own party we’ve felt uneasy, we’ve felt not wanted and that’s got to change,” he said. “In the last few years, since Ed Miliband’s been in charge, I’ve noticed a warmer reception for trade unions at Labour Party conference.”
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