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Mr. Heathcoat-Amory: If the Government wish to protect their revenue, while at the same time protecting the position of important British companies, why did they not announce a consultation exercise with a view to legislating in a future Finance Bill? Why rush ahead with an ill-judged announcement about the entire and immediate abolition of FIDs, which has turned out to be a fiasco?
8.45 pm
Mr. Robinson: I notice that the right hon. Gentleman challenged not the need for a review but the need to get the balance back that his own Government so rightly struck when they introduced FIDs. The point is very narrow. We had to include in the Bill the fact that we could not accept the tax loss that could well amount to more than £1 billion. Industry had to be notified of that. That does not mean that we are prejudging in any way where the new balance will be struck or the mechanism for it.
I notice that Opposition Members were scathing about some of the proposals that I put forward just as starters, but two of them came straight from the initial consultation that we have already had with companies.
Mr. Robinson:
I shall give way to the hon. Gentleman in a second. He might deal with the following point in his intervention. I do not think that he is a scaremonger or very irresponsible--if he is, I have misjudged him--but ever since we have been discussing the point, he has mentioned the damage that it is doing. Why did Billiton go ahead with a major flotation that was a great success?
Mr. Gibb:
I have been told about the damage to which I have referred by the Association of Unit Trusts and Investment Funds. That is the body which is most concerned about the damage. The proposals are doing enormous damage to the City of London. Investment in OEICs has almost been totally wiped out by them. You refer to my criticism--
Mr. Deputy Speaker (Mr. Michael Lord):
Order. The hon. Member should be referred to as the Paymaster General.
Mr. Gibb:
I am sorry, Mr. Deputy Speaker. The Paymaster General refers to my criticism of his four proposals and says that one of the proposals came from
Mr. Robinson:
We need a new arrangement--a properly balanced arrangement like the previous one among the three parties. That is what I am sure we will strike.
Mr. Robinson:
The hon. Gentleman missed much of the debate, but I know that he was very vocal and garrulous in Committee, so I shall give way to him.
Mr. Loughton:
I am grateful for the hon. Gentleman's somewhat more subdued comments in comparison with the Economic Secretary to the Treasury, who is not in her place. Perhaps, as an employee of the company that floated Billiton, I could be granted the opportunity to respond to the question that he asked my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb). Why did that company have to be floated at a substantially reduced price than was previously anticipated, due to the changes in the Budget? If it had not been affected by those changes, why is the share price heading below the issue price? The change has not been taken very well, has it?
Mr. Robinson:
I should have thought that a share price returning to its issue price happens quite often in the markets. The hon. Gentleman should know that far better than most in the House, and perhaps even better than I. As I have said before, I long ago gave up trying to read the markets and how a price may move on a particular day.
I do not know of any criticism of the Government from the Flemings advisers--I imagine that the hon. Member for East Worthing and Shoreham (Mr. Loughton) was declaring an interest, if he still retains one--or from the company itself. If he considers a personally written letter that arrived on my desk--I will spare him the embarrassment of quoting from it--he will find that the negotiations that we conducted with Billiton and its advisers might well serve as a model for how Government and industry can work together. Far from there being damage, the Government have regained the confidence of industry and of the stock exchange, and we are building on that.
Mr. Brooke:
I thank the hon. Gentleman genuinely for the straightforward way in which he answered my question. What I am not quite clear about--perhaps he could clarify this--is whether the events on 2 July in the Chamber, on 4 July in Standing Committee, and in debates today are exactly what the Government intended in the first instance.
Mr. Robinson:
Yes, exactly. The relevant part of the Budget speech by my right hon. Friend the Chancellor, who has just joined us for these climactic moments as we move towards the last few seconds of the debate, said precisely that. We could see that there would be a problem, and we said, "That is why it has to end then. We must have new arrangements."
I, too, remember the Finance Bills that the right hon. Member for Cities of London and Westminster (Mr. Brooke) rather ungraciously brought up. He knows that to be straightforward and clear-cut gives a deadline against which the negotiations can be undertaken, a benchmark against which the new arrangements can be set. That is precisely what we have done.
Far from there being any uncertainty, we have certainty in the markets, and a willingness on the part of all the major companies that have written to us to enter into the negotiations. We are determined to reach a balance between the three interested parties.
SmithKline Beecham has already proposed one of the suggestions that I put forward. Flemings has also put forward one of the proposals--I see the hon. Member for East Worthing and Shoreham (Mr. Loughton) nodding. For all I know, there may be better and more radical proposals, but what I do know is that we are approaching the negotiations in a spirit of commitment and determination, and that industry is doing the same.
Throughout our debates we have seen and heard the Opposition's crass hypocrisy. They say that they do not have enough time; then they filibuster for hours to fill the time that they get. We have seen them perform with rank incompetence from the very first day, when they could not table any amendments that were in order. The best that they have been able to do tonight consists of two wrecking amendments, which I urge the House to reject.
Mr. Heathcoat-Amory:
Why cannot the Government, just once, admit that they have messed up? That is clearly what happened, and we all know it. Any impartial outside observer--there are plenty of them--realises that the Government have fallen into a trap of their own making.
On Budget day the Chancellor announced with a flourish, and without qualification, that he would abolish foreign income dividends. He did not say that he might not do it after all, or that he might have a second thought. He did not say that he would consult. It was a bald and unambiguous assertion: foreign income dividends would go.
That is what is in the Bill before us. Clause 36 does not refer to any conditions being attached. Schedule 6, which, sadly, the guillotine denied us the opportunity to debate, puts into practice and lays down detailed mechanisms for the abolition of foreign income dividends.
We all know what happened then. The Government suddenly realised that they had made a mistake. Under the impact of what the Opposition said, what the trade associations, the Confederation of British Industry and so on said, and what the companies were saying, the Government suddenly realised what any tax practitioner could have told them--that one cannot simply abolish foreign income dividends and expect important British companies to go on locating in the City of London or elsewhere in the United Kingdom.
Companies are subject to double taxation without the relief granted by foreign income dividends. We know that, and now the Government know it, too. They did not know it on Budget day, but they have learnt it since. An extraordinary combination of ignorance and arrogance characterised both the Chancellor of the Exchequer's statement on Budget day, and the bluster of the Paymaster General throughout the Committee.
The Paymaster General refused to admit that the clause was defective. It apparently protected the Revenue, but by threatening to drive companies out of the United Kingdom altogether it would have the paradoxical effect of decimating revenues.
Why can the Government not withdraw the clause? It will not come into effect for two years, anyway, so what would be lost by admitting that they have made a mistake? If they accepted our amendments, they would thereby withdraw the damaging proposals and could then have their discussions and consultations with those affected. That would enable them to bring forward some genuinely thought out proposals in plenty of time for the next Finance Bill.
The Government have not established that there is a threat to the Revenue. The Paymaster General merely asserts that there is. Even if there is a need to protect the Revenue, while balancing that with the needs of British companies, that is all the more reason to take the matter rather more slowly.
The Government are a victim of their own timetable motion. We know that, and it is extraordinary that on this small item, this small amendment that would simply withdraw from the Bill something that they know to be wrong, they, in their pig-headed way, proceed in the knowledge that they are thereby putting into law something that they know to be damaging.
We shall persist with our amendments and press the matter to a Division. Outside commentators will draw their own conclusions--that, when the Government talk of the need for a partnership with industry, a need to consult and to listen, those are hollow words from a hollow Government.
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