Philip Hammond ditches George Osborne's 15% corporation tax cut target

In his speech to the Conservative Party conference in Birmingham the new Chancellor made no reference to his predecessor's idea

George Osborne delivering his speech on the potential economic impact to the UK on leaving the EU, at a B&Q Store Support Office in Eastleigh, in May (AFP/Getty)

Chancellor Philip Hammond has apparently rejected the plan of his predecessor George Osborne to slash corporation tax to just 15 per cent in the wake of the UK’s Brexit vote.

In early July Mr Osborne said he wanted to push the levy on company profits to 15 per cent as a bold signal to global companies that the UK is still “open for business” despite the vote to leave the EU.

That would have taken the UK’s rate close to Ireland’s ultra-low 12.5 per cent.

However, in his speech to the Conservative Party conference in Birmingham today, Mr Hammond made no reference to that 15 per cent goal, merely referencing the existing policy for the levy to decline to 17 per cent.

“At 20 per cent, we have a highly competitive Corporation Tax rate,” he said.

“And as it falls to 17 per cent over the next three years, it will be more attractive still.”

Mr Osborne had slashed the rate from 28 per cent in 2010 and had made deep reductions in the levy one of the centrepieces of his personal economic record.

But as The Independent has reported, his proposals to carry on reducing the rate were drawing growing criticism from prominent economists.

Some EU leaders had also warned that slashing the corporation rate was harmful to tax competition and would hinder the UK’s efforts to negotiate an advantageous post-Brexit trade deal.

In contrast to the International Trade Secretary Liam Fox, who recently described UK businesses as “fat and lazy” for failing to export enough, Mr Hammond stressed that he fully grasped the anxiety of businesses about Brexit.

“They have understandable questions about the process of the negotiations ... I understand their concerns: business hates uncertainty,” he said.

Adam Marshall of the British Chambers of Commerce said that Mr Hammond had made an “important start” in terms of building business confidence in his speech and singled out the new guarantee of any EU funding won by UK companies between now and the Brexit date.

But Mr Marshall added that the Chancellor needed to follow up by giving the green light to major infrastructure projects in the Autumn Statement on 23 November.

In her response to the speech, Carolyn Fairbairn, director-general of the Confederation of British Industry, said the “core challenge” of determining the UK’s trade relationship with the rest of the EU still loomed and stressed that “the clock [is] now ticking”.

Mr Hammond offered no specifics on what sort of relations with the EU the Government would be seeking, saying only that ministers would “fight for the best possible deal for British business and British workers”.