Incentivising business to invest: what’s the right approach?

In this event Labour’s former shadow chief secretary to the Treasury Seema Malhotra MP discussed business investment incentives with an expert panel.

Seema Malhotra MP, shadow chief secretary to the Treasury
Rob Fontana-Reval, head of tax and fiscal policy, CBI
Jane McCormick, head of tax, KPMG EMA
Nida Broughton, chief economist, Social Market Foundation

Giles Wilkes, leader writer, Financial Times

The Labour Party plans to undertake a consultation of how effective HM Treasury tax reliefs are in incentivising business to invest. The party has said that this will include an initial consultation of business, industry and other key stakeholders, and lessons from abroad in what works. One of the primary focuses of the consultation will be to discuss with businesses what they actually need from the tax relief system to support them to invest.

The review will also examine how tax expenditures (tax reliefs) can be made subject to the same level of analysis as other items of public spending. Our SMF report on Spending Choices published in June made a similar proposal and the National Audit Office and the House of Commons Public Accounts Committee has also suggested that tax reliefs currently receive inadequate scrutiny by the Treasury.

Questions around investment tax incentives include:

  • How effective are business tax reliefs in encouraging investment in UK firms and in driving innovation?
  • Which tax reliefs are the most important to preserve and which ones could we reform or dispense with?
  • Are there better ways to promote investment than through tax reliefs?