Shadow Chancellor Ed Balls
Britain's main opposition plans to enhance greater competition and long term investment. Shadow Chancellor Ed BallsReuters

Britain's Labour party is set to unveil a business friendly policy to promote greater competition and long term investment in the UK economy.

The UK's shadow chancellor Ed Balls will announce the new initiative dubbed, "pro business but not business as usual", in which he will pledge to keep a low rate of corporation tax and reveal new tax breaks to encourage companies to invest in Britain.

"If we are to maintain public support for an open market economy, we need to address public concerns, promote competition and long-term investment and make sure markets like energy and banking work better for consumers and businesses alike," Balls will say in a speeech at the London School of Business today.

"Our business tax system must be competitive, promote long-term investment and innovation, and be simpler, predictable and fair. The last Labour Government left Britain with the most competitive rate of corporation tax in the G7 and we are committed to maintaining that position.

"That is why, having started and supported successive cuts in corporation tax over the last 15 years, we do not think the right priority is a further cut next year. We will, instead, cut and then freeze business rates for more than 1.5 million business properties. When resources are tight this is a tough choice to allow us to support more businesses and keep our overall business tax regime competitive."

The plans include a lower rate of capital gains tax on equity and debt-financed investments, described as an "allowance for corporate equity", which was recommended by leading economic think-tank the Institute for Fiscal Studies four years ago.

"A competitive business tax system is crucial for future growth – and that includes an attractive headline rate of corporation tax," said Katja Hall, CBI Deputy Director-General.

"Tax and other measures to boost business investment, including capital allowances and equity finance will help firms of all sizes harness their potential, particularly medium-sized companies and those in the manufacturing sector. It is also important that the tax system encourages and rewards a long-term investment focus.

"The best way of ensuring the recovery benefits all is through a thriving private sector and businesses of all sizes will deliver this growth."

The move suggests attempts to close the gap in polls ahead of the General Election in 2015 after Labour made a major pledge to fix energy prices.

Meanwhile, Britain's Chancellor George Osborne is tipped to be announcing a merge in national insurance and income tax as part of a key component to the Conservative party's manifesto.