01/10/2018 18:42 BST | Updated 01/10/2018 19:30 BST

Brexit Secretary Dominic Raab Warns Brussels That UK Will Slash Corporation Tax In A ‘No Deal’ EU Exit

Labour says it'll turn Britain into a 'tax haven for the super rich'

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Brexit Secretary Dominic Raab has suggested the Tories would slash corporation tax and other taxes if Brussels forces Britain into a ‘no deal’ exit from the EU.

The cabinet minister told a fringe meeting at the party conference that radical moves to lower levies on business was what Chancellor Philip Hammond meant by using “fiscal firepower” in the event of no agreement being struck on UK-EU trade.

Hammond had used his own speech to the gathering in Birmingham to declare there would be a “dividend” for the UK from Brexit.

But Raab went further, explicitly citing reductions in taxation as a way to give the economy a shot in the arm to get it over “short term buffeting” caused by a no deal scenario.

Speaking at a separate event, Home Secretary Sajid Javid said if the UK left the EU with no deal and did not pay the so-called Brexit divorce bill, he would choose to use the money to cut taxes.

“In terms of the £40bn, there is tendency in government if you get some sort of windfall back in cash to your department or elsewhere to start wondering ‘how do I spend it’.

“The default position should be ‘I should give this back to the people’. Because it’s their cash in the first place. That’s exactly what I would do. We are taxed enough as it is. Give it back to the people.”

Javid also praised Singapore and said after Brexit it would be possible for the UK to “have the ability to look at some rules and regulations” currently in place.

Jeremy Corbyn has long warned that the Conservatives’ Brexit plans would turn the UK into a low-tax, low-regulation ‘Singapore-on-Thames’ in a desperate bid to undercut the EU.

Labour pounced swiftly on Raab’s comments to declare the Tories ‘want to turn our country into a tax haven for the super rich’.

Calls for the UK to wage cut-throat competition with the EU in the event of no agreement are popular with Brexiteers.

Singapore's skyline. Labour says low tax, low regulation Brexit would see the UK ape the city state.

At a fringe meeting hosted by the Institute of Economic Affairs think tank, Raab responded to a suggestion from TaxPayers’ Alliance campaigner Chloe Westley to slash taxes.

“You just said that Chloe wants to lower corporation tax to 10% and the Chancellor has talked about reserving fiscal firepower in case of no deal,” the minister told an audience member.

“What do you want? Of course he’s talking about a recognition that actually in a no deal scenario we want to pull every lever we’ve got to see us through what the short term buffeting, as I’d describe it, or disruption we’d have.

“The chancellor gave a brilliant speech. It shows you that we are all rowing in the same boat.”

The UK’s current corporation tax is 19% and is set to fall to 17% by 2020 under Tory plans. Setting a rate of 10% would cost the Treasury billions in the short term, but give the UK one of the lowest tax regimes for business anywhere in the Western World.

Raab stressed that Theresa May’s ‘Chequers’ plan was still the Government’s preferred choice, but he told the fringe meeting that he would “least take a look” at alternative proposals.

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Theresa May sets out her Brexit compromise plans at her Chequers country home in July

In his own speech to the conference, the Brexit Secretary warned Brussels that if it attempted to “lock us in via the back door of the EEA [European Economic Area] and Customs Union....we will be left with no choice but to leave without a deal.

“Some people say that no deal is unthinkable. Wrong. What is unthinkable is that this Government, or any British government, could be bullied, by the threat of some kind of economic embargo, into signing a one-sided deal against our country’s interests.”

At the fringe meeting he added that if there was a ‘no deal’ outcome “that’s a conscious choice from them [the EU]”.

Shadow Brexit Minister Jenny Chapman told HuffPost UK: “Dominic Raab’s comments expose a Tory party that’s determined to use a no deal Brexit to turn our country into a tax haven for the super rich. 

“A no deal Brexit would be catastrophic for the economy and for public services. For a Cabinet minister to say it would be an opportunity to slash corporation tax is reckless, irresponsible and offensive to hard working people across the country.”

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Chancellor Philip Hammond

Earlier, Hammond promised to intervene if Britain had to crash out of the EU without a deal.

“Be in no doubt that I will maintain enough fiscal firepower to support our economy if that happens,” he said.

Labour MP Gareth Thomas, part of the pro-EU Best for Britain campaign, said Hammond’s line was “spouting utter fantasy”.

“How on earth can Hammond speak of a Brexit deal dividend when his own department’s forecasts show our country will be worse off under all Brexit scenarios?

Clearly the Chancellor has kowtowed to the Brexiter wing of his party and feels unable to be honest with his party membership, and the country, on the economic harm of Brexit.”

Before the Tories lost the 2017 snap election, Hammond himself talked of lowering taxes as a way to cope without a Brexit deal.

He said at the time: “If Britain were to leave the European Union without an agreement on market access, we could be forced to change our economic model... to regain competitiveness.” 

But he has backed off such speculation until his speech this week.

The Chancellor also came up with an unusual analogy to defend the PM’s ‘Chequers’ plan following criticism from EU chief Donald Tusk.

“Mr Tusk says it won’t work, but that’s what people said about the light bulb in 1878. Our job is to prove him wrong.”