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Column 948

Mans, Keith

Maples, John

Marlow, Tony

Marshall, Michael (Arundel)

Martin, David (Portsmouth S)

Mates, Michael

Maude, Hon Francis

Mellor, David

Miller, Sir Hal

Mills, Iain

Mitchell, Andrew (Gedling)

Mitchell, Sir David

Montgomery, Sir Fergus

Morrison, Sir Charles

Moss, Malcolm

Neale, Gerrard

Needham, Richard

Nelson, Anthony

Neubert, Michael

Nicholson, David (Taunton)

Onslow, Rt Hon Cranley

Oppenheim, Phillip

Page, Richard

Paice, James

Parkinson, Rt Hon Cecil

Patnick, Irvine

Pattie, Rt Hon Sir Geoffrey

Pawsey, James

Porter, David (Waveney)

Powell, William (Corby)

Price, Sir David

Raison, Rt Hon Timothy

Redwood, John

Rhodes James, Robert

Riddick, Graham

Ridley, Rt Hon Nicholas

Ridsdale, Sir Julian

Roberts, Wyn (Conwy)

Rost, Peter

Rowe, Andrew

Rumbold, Mrs Angela

Ryder, Richard

Sackville, Hon Tom

Sainsbury, Hon Tim

Sayeed, Jonathan

Shaw, David (Dover)

Shaw, Sir Giles (Pudsey)

Shephard, Mrs G. (Norfolk SW)

Shepherd, Colin (Hereford)

Skeet, Sir Trevor

Smith, Tim (Beaconsfield)

Speller, Tony

Spicer, Sir Jim (Dorset W)

Stanley, Rt Hon Sir John

Steen, Anthony

Stevens, Lewis

Stewart, Andy (Sherwood)

Stradling Thomas, Sir John

Summerson, Hugo

Tapsell, Sir Peter

Taylor, Ian (Esher)

Taylor, John M (Solihull)

Thompson, D. (Calder Valley)

Thurnham, Peter

Townend, John (Bridlington)

Tredinnick, David

Trippier, David

Trotter, Neville

Vaughan, Sir Gerard

Waddington, Rt Hon David

Waller, Gary

Wheeler, John

Whitney, Ray

Widdecombe, Ann

Wolfson, Mark

Wood, Timothy

Younger, Rt Hon George

Tellers for the Noes :

Mr. Alan Howarth and

Mr. Sydney Chapman.

Question accordingly negatived.

It being after Ten o'clock, The Second Deputy Chairman-- left the Chair.

BUSINESS OF THE HOUSE

Ordered,

That, at this day's sitting, the Ways and Means Motion may be proceeded with, though opposed, until any hour.-- [Mr. Maclean.]

FINANCE BILL

Clauses Nos. 1, 32, 33, 44, 51 and 138)

Considered in Committee.

[Miss Betty Boothroyd

in the Chair ]

Clause 1 ordered to stand part of the Bill.

Bill (Clauses 1, 32, 33, 44, 51, and 138), reported without amendment ; to lie upon the Table.

WAYS AND MEANS

Value Added Tax (Overpayments)

Resolved,

That provision may be made about refunding overpayments of value added tax. -- [Mr. Maclean.]

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Column 949

Personal Equity Plans

10.16 pm

Mr. Chris Smith (Islington, South and Finsbury) : I beg to move, That the Personal Equity Plan Regulations 1989 (S.I., 1989, No. 469), dated 14th March 1989, a copy of which was laid before this House on 14th March, be revoked.

The statutory instrument consolidates the position in relation to personal equity plans. It also enshrines within the consolidation changes announced by the Chancellor in his Budget in March. The changes formed a major part of the Chancellor's Budget speech, yet they are not formally part of the Finance Bill, because personal equity plans are covered by regulation rather than by primary legislation. However, the House should debate PEPs and, in particular, the changes which the Chancellor has brought in, in order, if nothing else, to expose just how generous the Government are in their provisions for equity portfolios, to a certain extent to the disadvantage of other forms of saving.

Let me for a moment chart the history of personal equity plans. The Chancellor announced the introduction of the plans in his Budget on 18 March 1986. They were brought in as a tax incentive to encourage savings through the purchase of shares. Anyone over 18 could invest at that stage up to £2,400 a year in a PEP. Provided the shares were held for a minimum period of between 12 months and two years, any capital gains and reinvested dividends were to be free of tax. The scheme started on 1 January 1987.

In his Budget speech three months later, the Chancellor reported on the progress of PEP schemes :

"In the first month of the scheme, more than 2,000 people a day took out personal equity plans, many of them first-time investors, as I had hoped."- -[ Official Report, 17 March 1987 ; Vol. 112, c. 824.] A year later, in his 1988 Budget speech, the Chancellor again reviewed progress on PEPs :

"Over a quarter of a million people took out PEPs in 1987".--[ Official Report, 15 March 1988 ;, Vol. 129, c. 1004.]

One can tell immediately from the figures that the take-up of PEPs had fallen off in the later months of 1987 compared with the early months.

The annual limit was raised in the 1988 Budget from £2,400 to £3, 000, and the amount which could be invested in a unit trust or an investment trust in Scotland was increased from £420 to £540. A number of other changes took place in August 1988 and January 1989, but despite the changes that were made in the Budget last year, and despite the changes that have subsequently occurred, the take-up of PEPs has noticeably flagged in recent years.

In that respect, let me quote from a note on personal equity plans supplied to my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) by the Library :

"Despite the Chancellor's optimism over the introduction of PEPs, other commentators view them as less successful. The Independent described 1987 as the year PEPs fell flat', and the Times headed its article Birthday blues for unpopular PEPs'. Figures for 1988 given by the Inland Revenue are that 100,000 schemes were taken out and £150 million invested in such schemes. No effort is made to distinguish first-time investors but according to a number of financial journalists, the general feeling of the institutions involved in PEPs is that very few are first-time investors. On the whole the main attraction of PEPs is to the richer investors who find PEPs a useful way of repackaging existing portfolios."

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