Tory Chancellor George Osborne has announced a “5-point plan” following the EU referendum, with the centrepiece being an intention to cut the corporation tax rate to 15 per cent.
Osborne justifies this decision by claiming it will attract extra investment and thereby help to offset the shock of the Brexit referendum outcome. In reality, it will do nothing of the sort.

Despite falling corporate tax rates UK investment has shrunk in both of the last two quarters even with record profits and British companies sitting on a £700bn cash pile.
The Office for Budget Responsibility has noted that previous cuts to corporation tax have not resulted in increasing investment and far from helping to address the problem of underinvestment in our economy — as noted by a range of experts and international institutions including the IMF and OECD — the effect of this proposed tax cut would be to further reduce the funds available for public sector investment. This is particularly concerning in that private-sector investment was already in recession (two quarters of contraction) before the vote.
As John McDonnell MP put it, “Instead of turning the whole country into a giant tax haven and playground for the ultra-rich, the Chancellor needs to get a grip on the real problems by reversing planned cuts to government investment and bringing forward shovel-ready projects for those areas worst affected by the investment slump and the shock of Brexit.”

Labour’s leadership is 100 per cent right to argue that, in fact, emergency measures to boost investment are what is needed in the wake of the Brexit vote.