| Previous Section | Home Page |
Mr. Speaker : I shall hear hon. Members, further to that particular point of order.
Mr. Tony Marlow (Northampton, North) : Further to that point of order, Mr. Speaker. I am on your side. I am sure that my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) does not mean to criticise you, Mr. Speaker, and it is very difficult, but we had two questions on a place called Bophuthatswana. I think about 5 per cent. of hon. Members in the House know where it is. As a result of those two questions, we had five supplementary questions. On the European question we had--
Column 870
Mr. Speaker : Order. I do not think we should have a debate on the matter. I thank the hon. Gentleman for what he has said. If he had been present, he would know that there was no further supplementary question apart from that of the hon. Gentleman who asked the question on the second of those two questions on that country, which I too find it difficult to pronounce.
Several Hon. Members rose--
Mr. Speaker : Order. I am on my feet. On the point made by the hon. Member for Wolverhampton, South-West (Mr. Budgen), it is a difficult judgment at Question Time. We went slowly today, because there were very long answers, and some supplementary questions with very long answers, too. I shall bear in mind what the hon. Gentleman has said. On the EEC question, if the hon. Gentleman wishes to go back to what happened in, I think, the last Parliament, he should pursue the matter through the usual channels.
Dr. Cunningham : On a point of order, Mr. Speaker. Is it not now clear from the Minister's answer to my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) that Government officials were present yesterday in the Queen's Bench Division of the High Court? Is it not also clear from the Minister's answer that the Government, and especially the Secretary of State, prevaricated, obfuscated and delayed for six hours before ensuring that the decision of the court was put into practice, thus ensuring that, in spite of the decision of the judge, deliveries of the leaflet went ahead throughout today? Is not that a constructive contempt of court? Is it not a further contempt of the House that the Secretary of State is not here to answer for all those matters?
Mr. Gummer : Further to that point of order, Mr. Speaker. The hon. Gentleman's point of order, if it is one, is entirely without foundation. The situation is that, the moment that we had any inkling that Greenwich had obtained some kind of order, I sought immediately to get the details of that order. The moment I got them, I immediately took action upon them. If Greenwich had wanted us to deal with it earlier, it could have arranged its affairs in a way which would have meant that we would have known-- [Interruption.]
Mr. Speaker : Order. We cannot have an extension of Question Time now. [Interruption.] Order. We shall doubtless return to this matter on other occasions.
Mr. Dave Nellist (Coventry, South-East) rose --
Mr. David Winnick (Walsall, North) rose --
Mr. Alex Carlile (Montgomery) rose --
Dr. John Reid (Motherwell, North) rose --
Mr. Bob Cryer (Bradford, South) rose --
Mr. Jeff Rooker (Birmingham, Perry Barr) rose --
Mr. Speaker : Order. I am on my feet and I must ask the House to listen to me. We have a Committee stage today, followed by a Ways and Means resolution, followed by a prayer. We have a long day ahead of us and we should now move on.
Mr. Rooker : I have a point of order for you, Mr. Speaker, on this matter, not for the Minister. It involves
Column 871
your decisions and your control of the Order Paper. Until today I had never been seriously questioned at the Table Office about the term "poll tax" in a written question, but today I was. I raise this with you, Mr. Speaker because I was told, "Soon, Mr. Rooker, decisions will have to be taken about this," and clearly those decisions will have to be taken by you. I do not ask you to rule on this now, but point out the words "poll tax" appear twice on the front cover of the leaflet about which the previous exchanges occurred. Indeed, it is commonly known as the "poll tax".Mr. Speaker : Order. The House should allow me to hear.
Mr. Rooker : I am asking you, Mr. Speaker, to give a ruling so that hon. Members are free to use expressions and to table questions in the common parlance of our constituents--as agreed by the Government, who now know it as the poll tax. I ask for your consideration of this matter.
Mr. Speaker : This is the first that I have heard of it, but I shall look into that matter.
Mr. Edward Leigh (Gainsborough and Horncastle) : Since when has a point of order been an extension of Question Time?
Mr. Speaker : Very frequently, I am afraid.
Several Hon. Members rose --
Mr. Speaker : Order. [Interruption.] I am not hearing any more questions on this matter under the guise of a point of order, but if they are on a different matter, I shall hear them.
Mr. Nellist rose --
Mr. Speaker : Is it a different matter, Mr. Nellist?
Mr. Nellist : It is a point of order, Mr. Speaker-- [Interruption.]
Mr. Speaker : Order. I will hear any points of order that are not concerned with the poll tax, or the community charge, or whatever any Member of the House likes to call it.
Column 872
Dr. Reid : My point of order does not specifically concern the poll tax or the community charge, but I ask your guidance on procedure in the House, Mr. Speaker. If a statement were to be made and a long question session followed on a matter of great national importance, such as the Government's handling of taxpayers' money, and if, after an hour and a half of such questions it was discovered, following the closure of that question session on a point of order raised by the Opposition Front Bench, that all those questions had been predicated on an initial statement that had concealed information from Members of the House, would it be in order, in circumstances concerning the poll tax, or whatever, for an Opposition Member to be justified in demanding that we should have a further extension of questions to elicit the true information on that subject?
Mr. Speaker : That is a hypothetical matter.
Mr. Alex Carlile rose --
Mr. Cryer rose --
Mr. Winnick rose --
Mr. Brian Wilson (Cunninghame, North) rose --
Mr. Speaker : Order. I am not taking any more points of order on the private notice question, but I will take points of order on a different matter.
Mr. Carlile : On a point of order, Mr. Speaker.
Mr. Speaker : I will take Mr. Carlile's point of order if it is on a different matter.
Mr. Carlile : My point of order, Mr. Speaker, concerns the position of Ministers who may have acted in contempt of court. If it happened--and from what has been said it appears that it happened--that a Minister who had knowledge of an injunction ignored it for six hours, will you, Mr. Speaker, ask the Attorney-General to advise this House in a statement whether that Minister was in contempt of an order of the House?
Mr. Speaker : That would be a matter for the courts.
Column 873
Control of Electronic Surveillance Devices
4.14 pm
Mr. James Cran (Beverley) : At long last, I beg to move, That leave be given to bring in a Bill to control the manufacture and sale of electronic surveillance equipment in the United Kingdom. Although this matter is less sensational than what has gone before, the Bill's supporters and I believe that it is no less important. The Bill is necessary because of the growing availability in this country of electronic surveillance devices, which are commonly known in this and other countries as bugging equipment. There is no real impediment to the use of such equipment in this country. It can be sold over the counter in the relevant retail outlets for relatively modest prices. The equipment can be used to invade the privacy of third parties. The Bill's supporters and I regard that practice as grossly offensive. In line with other pieces of legislation introduced by other Back Bench Members, my Bill discourages that practice.
Technical developments are making the position a great deal worse. These devices are now becoming technically miniaturised and can be hidden in everyday office equipment and other equipment in houses and offices. These devices can be attached to the outside of buildings and walls, to windows, glass panes or whatever. When they are in place the conversations taking place inside the building can be picked up from anything from 1,000 yards to a few miles away. My Bill questions why law-abiding citizens in this country should wish to use such devices to eavesdrop on other people's affairs. These devices are such that those people who are being snooped upon--for that is exactly what it is--may not know what is happening. If hon. Members consult the advertising material for these devices, as I have done in some considerable detail, they will find that the equipment is sold for the purpose of, "discreet listening". Do hon. Members believe that the House should support discreet listening by the use of such equipment? We should not support it. The use of such devices could lead to a massive invasion of privacy. The Bill rectifies that position. It is much the same as the Anti-Hacking Bill introduced by my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson), which is before the House and which deals with eavesdropping on computer-held information.
Eavesdropping is occurring in many guises. My Bill will ensure that, from the time of enactment of the Bill, all such devices would be licensed by the Home Office. The Act would apply not only to home manufactured devices but to a considerable number of devices imported into this country. Therefore, unlicensed equipment could not be sold in this country, and that would equally apply to another growth industry in this country : counter- surveillance equipment. We need such equipment to discover whether surveillance equipment is being used against us.
The Bill's supporters also strongly believe that the offence should be made a criminal offence. Prosecutions would occur far more easily and, perhaps just as important, a clear signal would go out to the community that the invasion of privacy about which I am talking will not be tolerated by the House.
Column 874
This matter is of particular significance for companies. One company taking over another would be at a considerable advantage if it knew what the other company was thinking about the takeover. The same applies to new products brought out by companies. Should not new products before they are launched be the business of the company that thought of them rather than the business of everyone else who can use this equipment?This must be a criminal offence because there is almost no legal protection at present. I do not know how it strikes other hon. Members, but it came as a surprise to me to learn that it is not illegal to listen in to other people's conversations--I do not mean in the street, but in their homes or offices. An Englishman's or a Scotsman's home is no longer the castle that it used to be. The only slender protection--this is disgraceful--in this country lies in the fact that if these devices transmit unauthorised radio signals their use is illegal. The same occasionally applies when they are used in conjunction with telephone lines or equipment. Only those instances are illegal, not stealing information from a third party. My Bill will rectify that.
My right hon. Friend the Home Secretary recognised these weaknesses in his letter to me of 4 August 1988 :
"Radio surveillance devices are unlikely to cause interference to other radio users simply because if they did their use would quickly be detected and their purpose defeated."
We are entitled to wonder why, if he believes that, he does not act on it. [ Hon. Members :-- "Hear, hear."] I am grateful for that support.
My Bill would also provide another measure of protection, in the form of ensuring that registers are kept of those who manufacture, sell and buy the equipment. We need to know where the equipment is going and for what purposes it is being bought. My impression is that the Home Office thinks the equipment is being bought for legitimate purposes ; I do not believe it. Such registration would give a clear signal to the community that abuse will not be tolerated in this country. That abuse is occurring is evident in the words of a major retailer and manufacturer of this equipment, who said :
"I never sit in judgment on or moralise about why a company or individual should be buying surveillance equipment."
My sponsors and I are of the same mind : retailers should exercise judgment. In its absence, we believe that legislation is necessary. For these reasons and in that spirit I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. James Cran, Mr. David Porter, Mr. Timothy Kirkhope, Mr. Matthew Carrington, Mr. Tim Boswell, Mr. Andrew Hargreaves, Mr. Dudley Fishburn, Mr. Alan Amos, Miss Ann Widdecombe, Mr. David Martin, Mr. Douglas French and Mr. James Paice.
Control of Electronic Surveillance Devices
Mr. James Cran accordingly presented a Bill to control the manufacture and sale of electronic surveillance equipment in the United Kingdom : And the same was read the First time ; and ordered to be read a Second time upon Friday 7 July and to be printed. [Bill 137.]
Column 875
Point of Order
4.24 pm
Mr. D. N. Campbell-Savours (Workington) : On a point of order, Mr. Speaker. May I record with you, in regard to the questions asked today on Bophuthatswana, that in evidence given to the Select Committee on Members' Interests by the person who represents that area of South Africa in London, we were informed that 36 Members of the House of Commons, all Conservatives apart from one, have been sent there free of charge, all expenses paid, within the last few years. That information was given in the evidence to the Committee. We were also told that the airport to which they flew was based within the fuller Republic of South Africa, that is to say, not within the area that we are talking about, and that most people went on to other towns and cities in South Africa. It seems that Bophuthatswana is no more than a freebie stopping-over place for people wishing to visit South Africa.
Mr. Speaker : Those facts would have been recorded in the Register of Members' Interests.
Mr. Campbell-Savours : They are not.
Mr. David Winnick (Walsall, North) : On a point of order, Mr. Speaker, about what was said earlier. If you allow a private notice question, I accept that on a number of occasions the Secretary of State to whom the question is addressed is not present. Where the Secretary of State is directly involved, should he not be here to answer the question? Failing that, should there not be an apology from the Minister who answers in his place? On a matter where the Secretary of State has been directly involved in the court and in Parliament, since he was not here to answer the private notice question, should not the Minister of State at least have given an explanation?
Mr. Speaker : It is not a matter of order in the Chamber. It is a matter for the Government which Minister answers questions or makes statements.
Mr. Patrick McLoughlin (Derbyshire, West) : On a point of order, Mr. Speaker.
Mr. Speaker : I hope the point of order is not about the matter that has just been raised.
Mr. McLoughlin : No, Mr. Speaker ; it is further to the point of order raised by the hon. Member for Workington (Mr.
Campbell-Savours). In regard to hon. Members declaring foreign travel, it might be useful for clarification to be included in the Register of Members' Interests about what foreign travel hon. Members should declare. Certain hon. Members have been on foreign trips that do not appear in the Register.
Mr. Speaker : I have always understood that trips paid for on behalf of hon. Members should be recorded.
Column 876
Orders of the Day
Finance Bill
Clauses Nos. 1, 32, 33, 44, 51 and 138)
Considered in Committee. [Progress 9 May.]
[ Mr. Harold Walker
in the Chair ]
Ordered,
That the order in which proceedings in Committee of the whole House on the Finance Bill are to be taken shall be Clause 51, Clause 33, Clause 32, Clause 44, Clause 138, Clause 1.-- [Mr. Major]
Clause 44
Close company loans : Business expansion scheme.
4.27 pm
Mr. Chris Smith (Islington, South and Finsbury) : I beg to move amendment No. 4, in page 32, line 14, leave out 14th March 1989' and insert 15th March 1988'.
It is important at the outset to sketch the background to the clause and the amendment that we are discussing. By means of clause 44 the Government are closing a loophole that gives enormous scope for abuse. We welcome the change but we wish to see the restriction biting harder and operating retrospectively to Budget day 1988 rather than Budget day this year.
We have long been highly sceptical of the merits of the business expansion scheme. It was established under the Finance Act 1983, supposedly to encourage risk investment by individuals in new equities. It was designed supposedly to close the equity gap that everyone agreed existed at that stage and that still exists. It provided for substantial tax incentives, with tax relief on income tax at the highest marginal rate. The highest rate is now 40 per cent. At that time it was 60 per cent. It is worth noting that the 60 per cent. provision persisted until 5 October last year, six months after the band itself had disappeared in the Budget changes. In addition to income tax relief on business expansion scheme investment, there is full capital gains tax relief on disposal, provided that the investment was taken out after 1986. For investment before 1986, slightly different rules apply. In other words, the business expansion scheme gives scope for two lots of tax relief--tax relief on income in relation to the initial investment, and tax relief on capital gains in relation to the profit made by the investment over a five-year period. Not surprisingly, as a result of the generous double relief thereby available, the business expansion scheme has become a means of tax avoidance for higher rate taxpayers rather than of raising capital for risky but good quality new companies.
Last year, in debate on the Floor of the House and in Committee, we spelled out our concerns about the business expansion scheme and the way in which it was developing. We highlighted research which was published last year by the Small Business Research Trust. That research revealed a number of worrying factors in relation to BES investment. First, it noted that there was an increasing use of the business expansion scheme for
Column 877
asset-backed and non-risky enterprises, predominantly in the wholesale, retail, real estate and leisure sectors of the economy, not in manufacturing.Secondly, the report revealed that BES investment was increasingly the preserve of top rate taxpayers. It started out in the first year of operation as a relatively low percentage of top rate taxpayers ; it is now almost exclusively the preserve of people in that economic bracket.
Thirdly, the Small Business Research Trust revealed that there were profound regional inequalities in BES investment. For example, 51 per cent. of all BES investments and 65 per cent. of invested BES capital went to the south-east and East Anglia between 1983 and 1986--way above the proportion of normal investment and capital in those regions' share of the overall national economy.
Fourthly, the Small Business Research Trust revealed that, as well as having the lion's share of BES investment, the south-east and East Anglia were attracting BES investment funds from the north. In other words, the BES was ensuring a north-south flow of capital, precisely the reverse of what we should be endeavouring to achieve in our economy with an underheated north and an overheated south. Most investors in the BES live in the south-east, but an even higher proportion of BES investment is placed in the south-east. The authors of the Small Business Research Trust document published last year have since updated their work and, in a report in the Financial Times last Monday, they confirm that changes that were purportedly made by the Government last year to encourage greater investment outside the south-east have not had that effect. The Financial Times on Monday reports :
"A limit of £500,000 per BES issue per year imposed by Mr. Nigel Lawson in the 1988 Budget"--
that was the principal change for the better introduced by the Government last year--
"will not have much effect, the researchers say. The limit was designed to encourage more investment outside the south-east but the region had 352 investments worth under £500,000 in its first five years out of a national total of 712."
In other words, despite the Government's intention of using the £500,000 limit brought in last year to encourage investment under the BES outside the south-east, it is extremely unlikely, according to the research carried out by Southampton university and the university of Ulster, that it is having that effect.
The fifth point that that report last year drew out was that the cost per job created by BES investment was increasing as the scheme developed year by year. Even in 1983-84, the cost per job created was higher than that for other small firm schemes, and in subsequent years that disparity got worse.
All those criticisms of the BES--the regional inequality, the north-south flow of capital, the increasing use of asset-backed non-risky enterprise, the increasing preserve of the top rate taxpayers and the increase in the cost per job created--still apply. They apply the more so because of the principal change that the Chancellor made last year.
That change was to expand the BES, and the tax relief available under it, to the acquisition and letting of private rented property under the assured tenancy scheme introduced under the Housing Act 1988. The great
Column 878
majority of BES investment now goes into precisely that form of investment--into the private rented property scheme.That is not surprising. There is, for a start, a much higher limit on the overall BES investment for private rented property than there is for any other sector, with one exception. That higher limit for private rented property is £5 million per scheme, rather than the limit of £500,000 which exists for other sectors of the economy. Secondly, investment in property is almost entirely asset-backed ; it is far less risky than investment in other sectors. Thirdly, it is virtually entirely non-productive. Fourthly, it rests on the prospect of escalating property values.
The impact of interest rates currently means that property values may not be escalating as fast as they have in the last three years, but that position will not last for ever. Since 1978, the retail price index has risen by just under 100 per cent., whereas property values have risen by nearly 400 per cent. The return from investment in property, as opposed to investment in most other sectors of the economy, is considerably more lucrative.
Investment under the private rented property scheme of the BES is based on assured tenancies, which in fact are anything but assured. For example, schedule 2 of the Housing Act 1988, which applies specifically to assured tenancies, reveals that there are 16 different grounds on which a landlord letting property under assured tenancy rules can obtain possession of that property from the tenant.
Indeed, those facts were spelled out in many of the documents promoting BES investment put out by BES financiers during the last year, and I will give just one example. Chancery Securities plc, in its description of the investment that is available to the BES investor, sets out in clear detail the grounds for claiming possession, either on mandatory or discretionary grounds, as spelled out in the Housing Act.
It is clear from the way in which BES investment in private rented property has been marketed that investors are expected to use those grounds to obtain possession from tenants when they wish to do so. Those same prospectus spell out the ease with which a BES company can at the end of the five-year period, after which capital gains tax relief becomes available, transfer the property that it owns, thereby releasing the capital gains to the benefit of its investors. The Johnson Fry plc "Bulletin" for July 1988 set out on page 6 the details of how it is effectively possible to buy out tenants at the end of a five-year period. The Assured Property Management plc prospectus sets out a number of exit routes, as it describes them, whereby a company can be sold to a third party for cash, exchanged for shares in another company, or its assets realised and the proceeds distributed to its shareholders in a liquidation. Alternatively, it is suggested that the company might seek a public quotation on the stock market and merge with other companies for that purpose. A variety of different devices are available whereby a BES company's profits can be realised at the end of the five-year period, thereby freeing the investment for profiteering by its individual investors.
The entire scheme is a recipe for bad landlordism, for tenant insecurity, and for pocketfuls of tax relief for top rate taxpayers. When that change to the scheme was
Column 879
announced in last year's Budget and private rented property was included, even the Evening Standard noted that various commentators were saying that the scheme"could become Britain's number one tax shelter."
Referring to the provision for private rented property, the article concluded :
"Rachman, one suspects, would not have been slow to take advantage of the scheme if it had been around in the 1960s."
The predictions made in the Evening Standard in March 1988 are coming true. The opportunities offered by the BES to invest in private rented property have totally distorted the BES market. The vast majority of such investment is now being made in assured tenancy properties. That is the background to the specific subject of the clause and the amendment.
| Next Section
| Home Page |