Danny McCance 10 May 2017 02:40pm

Labour would raise corporation tax to 26%

The Labour party has promised a new education package, financed by increasing corporation tax from 19% to 26%, by 2020

Shadow secretary for education, Angela Rayner, told the BBC’s Today programme this morning that the party would increase the schools budget by £5.6bn by the end of the parliament. This would include a real terms increase as well as a reversal on the current government’s planned cuts to education.

Rayner confirmed Labour leader Jeremy Corbyn’s statement that this would be paid for by increasing the main rate of corporation tax to 26%.

In recent weeks Labour also announced that it would increase the corporation tax rate to give a pay rise for staff across the NHS.

In response to the announcement the Institute for Fiscal Studies (IFS) said, “What is clear is that the Labour plan to spend significant amounts of additional money on education as compared with the current government plans, about £8.4bn a year in today’s prices by 2021–22 (or £9bn in cash-terms).

“The policy could raise around £19bn in the near term, but substantially less in the medium to long run because companies would respond by investing less in the UK,” said the IFS.

Luke Sibieta, research fellow at the IFS said, "These commitments would represent a significant increase in education spending and would leave the school sector insulated from cuts made to most other areas of public service spending.”