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Mr. Devlin: On a point of order, Madam Speaker. The new clause that we have just passed exempts Ministers and the Leader of the Opposition from paying tax on the cars provided for them for the purpose of carrying out their duties. Given that the right hon. Member for Sedgefield (Mr. Blair) and his party voted against that new clause, will the right hon. Gentleman now do the honourable thing and pay the tax anyway?
Madam Speaker: That is not a point of order for me; it is a point that should have been debated when we were debating the new clause.
New clause 17
'. Schedule (Life assurance business losses) to this Act, which makes provision about losses arising to insurance companies in the carrying on of life assurance business, shall have effect.'.--[Mr. Jack.]
Brought up, and read the First time.
Mr. Jack: I beg to move, That the clause be read a Second time.
Madam Speaker: With this, it will be convenient to discuss also Government amendments Nos. 65 to 67.
Mr. Jack: The new clause and the schedule in amendment No. 65 fulfil an undertaking I gave in Committee to my hon. Friend the Member for Beaconsfield (Mr. Smith) that, if possible, we would introduce our own provision to do what his new clause 38 sought to do.
The schedule amends a rule introduced in last year's Finance Act--a very necessary rule, designed to stop the creation of wholly artificial losses in a life insurance company. My hon. Friend and the life insurance industry think that we went too far last year. In particular, it is said that the 1995 rule bore too harshly on companies just starting up, and discouraged new entrants to the life insurance market. We have found a way of allowing start-up life insurance companies to use their losses within a group, as any other company would.
The new clause and the schedule identify circumstances in which the 1995 rule will continue to apply--where there is a takeover, including one following a demutualisation, and where the business is split by way of reinsurance or transfer of business. It will no longer apply to the start-up company where losses arise through normal patterns of business.
The measures in the schedule also clarify and amend existing rules preventing double relief for losses. If we relax the 1995 rule to allow more losses to arise than in the past, it is important that we have robust rules to prevent double relief.
Associated with the new schedule is a purely consequential amendment to schedule 13, and an amendment to the repeals schedule.
Mr. Tim Smith:
As you will have gathered, Madam Speaker, this is effectively a piece of unfinished business from last year's Finance Act. We discussed it in Committee, and I am grateful to my hon. Friend the Financial Secretary to the Treasury for bringing the measure forward.
Mr. Alistair Darling (Edinburgh, Central):
I think that there is unanimity that the new clause should be added to the Bill, but I want to make one small point, which follows to some extent from the previous debate. The schedule is extremely complex. I understand why it is complex, and I support what it aims to do, but its complexity raises a point that has been identified again and again during the Bill's passage through the House. That is that Parliament is passing complex legislation without adequate scrutiny. It is not possible on Report to go through a schedule or a new clause in anything like the detail possible in Committee.
The new clause and the schedule were tabled comparatively recently, and, as far as I know, there is nothing wrong with the drafting, and there are no unintended consequences. But I say "as far as I know", because the fact is that we do not know. The chances are that a further amendment will be necessary if we are debating the measure this time next year. Understandably, the industry complains about the way in which Parliament treats it, as the changes and uncertainty add to the cost and other complications faced by the corporate taxpayer, as well as by the individual taxpayer.
I repeat my request for the Government to do two things. First--in so far as they can--they should avoid tabling complicated and lengthy pieces of legislation at the eleventh hour. Secondly, they should reflect further on a point raised by a number of hon Members--the desirability of transferring certain aspects of the Finance Act to a taxes management Act, where they can be looked at with greater leisure.
There is no political difference between the parties on these points, which are technical to a large extent, and we all agree on the objective. But we are not making good law by dealing with complex matters at the last possible moment. I agree with the measure, and I understand why the Financial Secretary has brought it before the House at this stage. But the Government ought to try harder to avoid getting themselves into such situations in the years to come.
Mr. Jack:
If there is one thing that I have learnt from my first ministerial involvement in the Finance Bill, it is that there is a need for the earliest possible consultation to take place with interested parties on complex matters. I understand the point raised by the hon. Member for Edinburgh, Central (Mr. Darling), and I take his message to heart.
In fairness, the matters dealt with by the new clause were discussed thoroughly in 1995. My hon. Friend the Member for Beaconsfield (Mr. Smith) tabled an amendment in Committee that the Government, while unable to accept it in the letter, certainly accepted in spirit. That is why we worked hard and fast--given that this is a complex matter--to try to meet the request of the life insurance industry.
Clearly the industry was party to the discussions in the period between the Committee and now, but I accept that others may not have had the chance to scrutinise the precise words. Those directly affected by the measure, however, have studied them, and are grateful and pleased by the moves we have made. I take the hon. Member for Edinburgh Central's point. It is sensible, and I shall bear it in mind when dealing with future Finance Bills.
Question put and agreed to.
Clause read a Second time, and added to the Bill.
The Economic Secretary to the Treasury (Mrs. Angela Knight):
I beg to move, That the clause be read a Second time.
'.--(1) In section 633(1) of the Taxes Act 1988 (Board not to approve a personal pension scheme which makes provision for any benefit other than those specified in paragraphs (a) to (e)) in paragraph (e) (payment on or after the death of a member of a lump sum satisfying the conditions in section 637A) for the words following "a lump sum" there shall be substituted "with respect to which the conditions in section 637A (return of contributions) are satisfied".
(2) For section 637A of that Act (return of contributions on or after death of member) there shall be substituted--
"Return of contributions on or after death of member
637A.--(1) The lump sum payable under the arrangements in question (or, where two or more lump sums are so payable, those lump sums taken together) must represent no more than the return of contributions together with reasonable interest on contributions or bonuses out of profits, after allowing for--
(a) any income withdrawals, and
(b) any purchases of annuities such as are mentioned in section 636.
To the extent that contributions are invested in units under a unit trust scheme, the lump sum (or lump sums) may represent the sale or redemption price of the units.
(2) A lump sum must be payable only if, in the case of the arrangements in question,--
(b) no such annuity as is mentioned in section 636 has been purchased in respect of the relevant interest; and
(c) no election in accordance with subsection (5)(a) of section 636 has been made in respect of the relevant interest.
(3) Where the member's death occurs after the date which is his pension date in relation to the arrangements in question, a lump sum must not be payable more than two years after the death unless, in the case of that lump sum, the person entitled to such an annuity as is mentioned in section 636 in respect of the relevant interest--
(a) has elected in accordance with section 636A to defer the purchase of an annuity; and
(b) has died during the period of deferral.
(4) In this section "the relevant interest" means the interest, under the arrangements in question, of the person to whom or at whose direction the payment in question is made, except where there are two or more such interests, in which case it means that one of them in respect of which the payment is made.
(5) Where, under the arrangements in question, there is a succession of interests, any reference in subsection (2) or (3) above to the relevant interest includes a reference to any interest (other than that of the member) in relation to which the relevant interest is a successive interest."
(3) This section--
(a) has effect in relation to approvals, of schemes or amendments, given under Chapter IV of Part XIV of the Taxes Act 1988 (personal pension schemes) after the passing of this Act; and
(b) does not affect any approval previously given.'.--[Mrs. Angela Knight.]
Brought up, and read the First time.
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