Can Osborne really take credit for Glaxo's move?

It was a 2009 Labour announcement, not Osborne's Budget, that persuaded Glaxo to invest.

For George Osborne, who declared that his Budget "unashamedly backs business", GlaxoSmithKline's announcement of a new biopharmaceutical factory in Cumbria [its first manufacturing facility in the UK for 40 years] couldn't have come at a better time. In his interviews this morning, the Chancellor didn't miss an opportunity to take credit for the decision:

You have GlaxoSmithKline, one of the world's biggest companies, one of the great British success stories, saying the budget has changed their view of Britain as a place to invest.

They're going to create 1,000 jobs here. Now, surely my responsibility as the country's chancellor is to get the economy moving, to get jobs created, and when big companies say that about Britain, people should sit up and notice that we are changing the British economy for the better.

It is rather misleading, however, for Osborne to claim it as an overnight success. The main reason for GSK's move is the introduction of a "patent box" [which introduces a lower rate of corporation tax on profits generated from UK-owned intellectual property], a measure previously announced by Alistair Darling in the 2009 pre-Budget report. As Labour has highlighted this morning, yesterday's Budget document even admitted as much [see Table 2.2, p.53].

In his statement, GSK chief executive Andrew Witty made it clear that the patent box was the ultimate pull factor:

The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain. Consequently, we can confirm that we will build GSK's first new UK factory for almost 40 years and that we will make other substantial capital investments in our British manufacturing base.

In fairness to Osborne, however, Witty also cited further cuts to the general rate of corporation tax, which will fall to 24 per cent next month, having stood at 28 per cent when the coalition took office. Of interest, then, is the timing of GSK's announcement. The company's press office has confirmed to me that the decision was taken several days in advance of the Budget. To some, the conveniently timed announcement by Witty [who was knighted in 2012] has a whiff of corporatism about it.

George Eaton is political editor of the New Statesman.

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Richmond is a wake-up call for Labour's Brexit strategy

No one made Labour stand in Richmond Park. 

Oh, Labour Party. There was a way through.

No one made you stand in Richmond Park. You could have "struck a blow against the government", you could have shared the Lib Dem success. Instead, you lost both your dignity and your deposit. And to cap it all (Christian Wolmar, take a bow) you self-nominated for a Nobel Prize for Mansplaining.

It’s like the party strategist is locked in the bowels of HQ, endlessly looping in reverse Olivia Newton John’s "Making a Good Thing Better".

And no one can think that today marks the end of the party’s problems on Brexit.

But the thing is: there’s no need to Labour on. You can fix it.

Set the government some tests. Table some amendments: “The government shall negotiate having regard to…”

  • What would be good for our economy (boost investment, trade and jobs).
  • What would enhance fairness (help individuals and communities who have missed out over the last decades).
  • What would deliver sovereignty (magnify our democratic control over our destiny).
  • What would improve finances (what Brexit makes us better off, individually and collectively). 

And say that, if the government does not meet those tests, the Labour party will not support the Article 50 deal. You’ll take some pain today – but no matter, the general election is not for years. And if the tests are well crafted they will be easy to defend.

Then wait for the negotiations to conclude. If in 2019, Boris Johnson returns bearing cake for all, if the tests are achieved, Labour will, and rightly, support the government’s Brexit deal. There will be no second referendum. And MPs in Leave voting constituencies will bear no Brexit penalty at the polls.

But if he returns with thin gruel? If the economy has tanked, if inflation is rising and living standards have slumped, and the deficit has ballooned – what then? The only winners will be door manufacturers. Across the country they will be hard at work replacing those kicked down at constituency offices by voters demanding a fix. Labour will be joined in rejecting the deal from all across the floor: Labour will have shown the way.

Because the party reads the electorate today as wanting Brexit, it concludes it must deliver it. But, even for those who think a politician’s job is to channel the electorate, this thinking discloses an error in logic. The task is not to read the political dynamic of today. It is to position itself for the dynamic when it matters - at the next general election

And by setting some economic tests for a good Brexit, Labour can buy an option on that for free.

An earlier version of this argument appeared on Jolyon Maugham's blog Waiting For Tax.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues.