We’ll freeze corporation tax at 25 per cent, says Labour as Rachel Reeves woos business

Labour will freeze corporation tax for its first term in Government if the party wins the general election, Rachel Reeves has announced.

The Shadow Chancellor pledged to “bring back stability” to the British economy as she unveiled Labour’s plans to cap the tax at the current 25 per cent rate for the entirety of the next Parliament.

The party would monitor the effect of the tax rate on the UK’s competitiveness and act “if needed”, Ms Reeves said.

In a keynote speech to 400 City leaders at Labour Party’s Business Conference on Thursday, she said “tax rates cannot shoot up and down like a yo-yo, according to each political whim”.

“After 14 years of uncertainty under this Conservative Government, investment has cratered,” she said. “What Labour offers is a genuinely pro-business tax plan, founded on a fair contract between a pro-business government and great British business.”

Ms Reeves claimed there have been 26 changes to corporation tax in the last Parliament alone, adding: “We can’t go on like this.”

She told business leaders that holding corporation tax at 25 per cent “strikes the correct balance between the needs of our public finances, and the demands of a competitive global economy”.

Ms Reeves also defended her decision not to reintroduce the cap on bankers bonuses and rejected suggestions it was a U-turn.

She said it was the wrong priority for the Budget at the time the cap was lifted by Liz Truss and Kwasi Kwarteng, but that now “the last thing we need is more chopping and changing”.

Asked whether Labour would drop its pledge to spend an extra £28bn a year on building a “green economy”, the Shadow Chancellor said it was “absolutely essential” that Labour’s policies adhere to its “fiscal rules”.

“The green prosperity plan is no exception to that,” she said, adding that there was still “at least one more fiscal statement” for Labour to set out its plans on the matter.

This story is being updated