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Mr. Gibb: The hon. Gentleman has completely ravaged Britain's corporation tax system solely because, in July, the Government wanted to raid Britain's pension funds to the tune of £5 billion a year. That is what we are paying for with these new complex provisions.

Mr. Robinson: The stock market is standing higher than on the day we took office, and the country continues to do well.

The Conservative Government's last three Finance Bills provided more than one dozen sets of regulation-making powers covering direct taxes alone. That is the extent of regulation under the previous Government. Three quarters of those regulations included powers to modify existing provisions in the taxes legislation. We need no lessons from Conservative Members on secondary regulations. I beg them to grow up in that respect and see that we are a Government who respect the proper prerogatives of this Parliament. The hon. Member for Bognor Regis and Littlehampton well knows that, although the regulations will be introduced under the negative resolution procedure, hon. Members can pray against them.

The hon. Member for Grantham and Stamford has a captivating interest in the American system. If we were to adopt that system en bloc, a high proportion of companies would pay the whole of their tax within the year, instead of just half of it as happens under the system that we have adopted. We considered the American system, but we have gone for one that is much better from that point of view. Moreover, our system includes a relatively small number of companies. We consulted on who should come within it and excluded the small and medium sectors.

I am looking to see whether Conservative Members have made any new points to which I should reply, but I cannot find any.

The new clause simply returns to an issue with which we dealt during the debate on new clause 30 in Committee of the whole House and again during the debate on amendment No. 8 to clause 36 in Standing Committee. As I made clear on both those occasions, the regulation-making power provided by clause 30 is already sufficiently wide to allow for the regulations governing the payment by large companies of their corporation tax

30 Jun 1998 : Column 202

by instalments from 1999 to include special rules for companies with seasonal trades. Therefore, the new clause is unnecessary, otiose and as useless as the Opposition.

Mr. Hammond: Is the Paymaster General, then, giving the House a commitment now that those regulations, when they are finalised, will include special provisions for retailers with highly seasonal patterns of profitability?

Mr. Robinson: No, I am not saying that. I am saying that the regulations are capable of doing that, so we do not need the new clause.

Much has been made by the Opposition of the alleged plight of retailers and others with businesses that have seasonal peaks and troughs in their profits, but many retailers do not have particularly seasonal trades. For example, I understand that supermarkets selling food--in fairness, this point was made by Conservative Members--earn their profits fairly evenly during the year, and many other retailing businesses are carried on by small or medium companies or by individuals, and so are not affected by the introduction of instalments.

I am aware that some large companies with retail businesses are quite highly seasonal, with sales, and therefore profits, peaking around Christmas and at sale times. The hon. Member for Runnymede and Weybridge mentioned some of them and obviously knows something about that sector. If that causes them to get their instalments wrong so that they pay their corporation tax late, they will be charged interest, but that will just reflect their late payment of corporation tax, and their use for a while of money that should have been paid over to the Exchequer. Similarly, if they pay too much corporation tax by instalments, they will get the extra back with interest. As Opposition Members know, the ratio of interest between what the Government pay and are paid has been brought into close, reasonably commercial proximity.

The Opposition have suggested that companies with seasonal profits should be allowed to pay their instalments based on actual tax-adjusted results for the previous six months. I think that that is the suggestion of the British Retail Consortium, which would confine it to companies consistently making less than 30 per cent. of their profits in their first half year. However, that would help few large companies, because few can consistently make upwards of 70 per cent. of their profits in the second half of the year, and it would be difficult to police.

This is simply another attempt by the Opposition to return to an issue that has already been thoroughly explored. I have said before that I am anxious to keep the instalment regime as simple as possible. It is no good the hon. Member for Kingston and Surbiton (Mr. Davey) saying that, because the Government could not obtain in aspects of other legislation the simplicity that we would have wanted, it does not matter in this case. That is a perverse argument. The hon. Gentleman would be surprised at the extent to which we have achieved simplification in many areas, and, if we can obtain it, we must clearly go for it.

Introducing special rules for retail companies would inevitably add considerable complexity to the instalment rules while benefiting only a relatively small number of companies. However, we have received representations on the point which we are continuing to consider, along with

30 Jun 1998 : Column 203

all representations received during the consultation period, ending on 15 July, on the draft regulations. We shall take all those into account and let the House know our decision.

Mr. Heathcoat-Amory: These debates are achieving a sort of regularity. Conservative Members put up an unanswerable case and the Paymaster General blusters and flusters. On this occasion, he ended up virtually accepting our case, but he spoilt it all by saying that new clause 5 was unnecessary because the regulations under the Bill already make the same provision. However, we have learnt not to accept Government intentions but to try to tie them down so that they deliver on some of their words. We debated earlier this evening a new clause which we introduced precisely because the Government had failed to deliver on an expressed sympathy for the low-paid and poorer pensioners who had been hit, and continue to be hit, by the withdrawal of dividend tax credits in the Bill. We shall press the new clause to a vote to ensure that the Government deliver on their intentions.

7 pm

Mr. Clifton-Brown: Does my right hon. Friend agree that one of Labour's hidden tax rises will be affected if the Government do not accept the new clause? In the tourism industry, for example, large hotels in my constituency with variable profit fluctuations will have to pay higher corporation tax or file higher corporation tax returns than they would otherwise have done because of the interest penalties that will endure. It will be cheaper to pay the tax in advance--which is, in effect, a cost--rather than endure the penalties.

Mr. Heathcoat-Amory: My hon. Friend has given a good example of the difficulties that businesses will face because of the Finance Bill as it stands. Our new clause would, in a modest way, relieve the ravages of Labour's high tax policy for a small sector of corporate Britain. We want to include it in the Bill, and this is our last chance to make that happen. The Paymaster General did not even refer to the fact that parts of the Bill will never be debated again because they will be relegated to secondary legislation.

I repeat that there is in the Chancellor's own Budget arithmetic a £2 billion a year increase in the effective rate of corporation tax, consequential on these quarterly payments. That is specified on page 18 of the Red Book, but it is not specified in the Bill, and hon. Members will not find any clause laying down how that sum is to be raised and who is to pay it.

Those who were Members of Parliament before us would be amazed that we are authorising a £2 billion a year increase in taxation which is to be laid down later in regulations that the House will never have a chance of debating, approving or voting against. We will betray the traditions of the House if we allow the Government to increase taxes in such a way, without giving ourselves any opportunity to express an opinion.

In a small way, through our new clause, we are ensuring that the parts of the retail sector that experience seasonal profits will have their interests at least partly protected. We have had a proper debate, which we have won, and we shall put the new clause, which should be incorporated in the Bill, to the test of a vote.

30 Jun 1998 : Column 204

Question put, That the clause be read a Second time:--

The House divided: Ayes 175, Noes 276.

Division No. 319
[7.2 pm


Allan, Richard
Amess, David
Ancram, Rt Hon Michael
Arbuthnot, James
Ashdown, Rt Hon Paddy
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Baker, Norman
Ballard, Jackie
Bercow, John
Beresford, Sir Paul
Body, Sir Richard
Boswell, Tim
Bottomley, Peter (Worthing W)
Brady, Graham
Brake, Tom
Brand, Dr Peter
Brazier, Julian
Browning, Mrs Angela
Bruce, Ian (S Dorset)
Bruce, Malcolm (Gordon)
Burns, Simon
Cable, Dr Vincent
Campbell, Menzies (NE Fife)
Cash, William
Chapman, Sir Sydney
(Chipping Barnet)
Chidgey, David
Chope, Christopher
Clappison, James
Clark, Rt Hon Alan (Kensington)
Clarke, Rt Hon Kenneth
Clifton-Brown, Geoffrey
Collins, Tim
Colvin, Michael
Cormack, Sir Patrick
Cotter, Brian
Cran, James
Curry, Rt Hon David
Dafis, Cynog
Davey, Edward (Kingston)
Davies, Quentin (Grantham)
Davis, Rt Hon David (Haltemprice)
Day, Stephen
Donaldson, Jeffrey
Dorrell, Rt Hon Stephen
Duncan, Alan
Emery, Rt Hon Sir Peter
Evans, Nigel
Ewing, Mrs Margaret
Fallon, Michael
Fearn, Ronnie
Flight, Howard
Forth, Rt Hon Eric
Foster, Don (Bath)
Fox, Dr Liam
Fraser, Christopher
Garnier, Edward
George, Andrew (St Ives)
Gibb, Nick
Gill, Christopher
Gillan, Mrs Cheryl
Gorman, Mrs Teresa
Gorrie, Donald
Gray, James
Green, Damian
Greenway, John
Grieve, Dominic
Gummer, Rt Hon John
Hamilton, Rt Hon Sir Archie
Hammond, Philip
Hancock, Mike
Harris, Dr Evan
Harvey, Nick
Hawkins, Nick
Hayes, John
Heald, Oliver
Heath, David (Somerton & Frome)
Heathcoat-Amory, Rt Hon David
Hogg, Rt Hon Douglas
Horam, John
Hughes, Simon (Southwark N)
Hunter, Andrew
Jack, Rt Hon Michael
Jackson, Robert (Wantage)
Jenkin, Bernard
Jones, Ieuan Wyn (Ynys Mon)
Jones, Nigel (Cheltenham)
Kennedy, Charles (Ross Skye)
Key, Robert
Kirkbride, Miss Julie
Kirkwood, Archy
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lansley, Andrew
Leigh, Edward
Letwin, Oliver
Lidington, David
Lilley, Rt Hon Peter
Livsey, Richard
Lloyd, Rt Hon Sir Peter (Fareham)
Llwyd, Elfyn
Loughton, Tim
Luff, Peter
MacGregor, Rt Hon John
McIntosh, Miss Anne
MacKay, Andrew
Maclean, Rt Hon David
McLoughlin, Patrick
Major, Rt Hon John
Maples, John
Maude, Rt Hon Francis
May, Mrs Theresa
Michie, Mrs Ray (Argyll & Bute)
Moore, Michael
Morgan, Alasdair (Galloway)
Moss, Malcolm
Nicholls, Patrick
Norman, Archie
Öpik, Lembit
Ottaway, Richard
Page, Richard
Paice, James
Paterson, Owen
Pickles, Eric
Prior, David
Redwood, Rt Hon John
Rendel, David
Robathan, Andrew
Robertson, Laurence (Tewk'b'ry)
Rowe, Andrew (Faversham)
Ruffley, David
Russell, Bob (Colchester)
St Aubyn, Nick
Sanders, Adrian
Sayeed, Jonathan
Shephard, Rt Hon Mrs Gillian
Shepherd, Richard
Simpson, Keith (Mid-Norfolk)
Smyth, Rev Martin (Belfast S)
Soames, Nicholas
Spicer, Sir Michael
Stanley, Rt Hon Sir John
Steen, Anthony
Streeter, Gary
Stunell, Andrew
Swayne, Desmond
Swinney, John
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, John M (Solihull)
Taylor, Matthew (Truro)
Taylor, Sir Teddy
Tonge, Dr Jenny
Townend, John
Tredinnick, David
Trend, Michael
Tyler, Paul
Tyrie, Andrew
Viggers, Peter
Wallace, James
Waterson, Nigel
Webb, Steve
Wells, Bowen
Welsh, Andrew
Whittingdale, John
Wigley, Rt Hon Dafydd
Wilkinson, John
Willetts, David
Willis, Phil
Wilshire, David
Winterton, Mrs Ann (Congleton)
Winterton, Nicholas (Macclesfield)
Woodward, Shaun
Yeo, Tim

Tellers for the Ayes:

Sir David Madel and
Mrs. Caroline Spelman.


Adams, Mrs Irene (Paisley N)
Ainger, Nick
Ainsworth, Robert (Cov'try NE)
Alexander, Douglas
Anderson, Janet (Rossendale)
Armstrong, Ms Hilary
Ashton, Joe
Atkins, Charlotte
Austin, John
Banks, Tony
Beard, Nigel
Begg, Miss Anne
Bennett, Andrew F
Benton, Joe
Berry, Roger
Betts, Clive
Blears, Ms Hazel
Blizzard, Bob
Borrow, David
Bradley, Keith (Withington)
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brinton, Mrs Helen
Brown, Rt Hon Nick (Newcastle E)
Brown, Russell (Dumfries)
Browne, Desmond
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Byers, Stephen
Caborn, Richard
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Cann, Jamie
Caplin, Ivor
Casale, Roger
Chapman, Ben (Wirral S)
Chaytor, David
Chisholm, Malcolm
Clapham, Michael
Clark, Rt Hon Dr David (S Shields)
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Coaker, Vernon
Coffey, Ms Ann
Cohen, Harry
Coleman, Iain
Colman, Tony
Connarty, Michael
Cook, Frank (Stockton N)
Corbett, Robin
Corston, Ms Jean
Cousins, Jim
Cranston, Ross
Crausby, David
Cummings, John
Cunliffe, Lawrence
Cunningham, Jim (Cov'try S)
Dalyell, Tam
Davey, Valerie (Bristol W)
Davidson, Ian
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C)
Davies, Rt Hon Ron (Caerphilly)
Davis, Terry (B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Denham, John
Dismore, Andrew
Dobbin, Jim
Donohoe, Brian H
Doran, Frank
Drew, David
Eagle, Maria (L'pool Garston)
Ellman, Mrs Louise
Ennis, Jeff
Etherington, Bill
Fatchett, Derek
Field, Rt Hon Frank
Fitzpatrick, Jim
Flint, Caroline
Flynn, Paul
Foster, Rt Hon Derek
Foster, Michael Jabez (Hastings)
Foster, Michael J (Worcester)
Foulkes, George
Gapes, Mike
Gardiner, Barry
George, Bruce (Walsall S)
Gibson, Dr Ian
Gilroy, Mrs Linda
Godman, Dr Norman A
Goggins, Paul
Golding, Mrs Llin
Gordon, Mrs Eileen
Grant, Bernie
Griffiths, Jane (Reading E)
Griffiths, Nigel (Edinburgh S)
Grogan, John
Gunnell, John
Hain, Peter
Hall, Mike (Weaver Vale)
Hamilton, Fabian (Leeds NE)
Hanson, David
Heal, Mrs Sylvia
Henderson, Ivan (Harwich)
Heppell, John
Hewitt, Ms Patricia
Hill, Keith
Hinchliffe, David
Hoey, Kate
Home Robertson, John
Hood, Jimmy
Hoon, Geoffrey
Howarth, Alan (Newport E)
Hoyle, Lindsay
Hughes, Ms Beverley (Stretford)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hutton, John
Iddon, Dr Brian
Illsley, Eric
Jackson, Ms Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Jenkins, Brian
Johnson, Alan (Hull W & Hessle)
Jones, Mrs Fiona (Newark)
Jones, Jon Owen (Cardiff C)
Jones, Dr Lynne (Selly Oak)
Jones, Martyn (Clwyd S)
Jowell, Ms Tessa
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Keen, Ann (Brentford & Isleworth)
Kennedy, Jane (Wavertree)
Khabra, Piara S
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
Kingham, Ms Tess
Kumar, Dr Ashok
Ladyman, Dr Stephen
Lepper, David
Leslie, Christopher
Lewis, Terry (Worsley)
Liddell, Mrs Helen
Livingstone, Ken
Lloyd, Tony (Manchester C)
Lock, David
Love, Andrew
McAllion, John
McAvoy, Thomas
McCabe, Steve
McCafferty, Ms Chris
McDonagh, Siobhain
McDonnell, John
McGuire, Mrs Anne
McKenna, Mrs Rosemary
McNulty, Tony
MacShane, Denis
Mactaggart, Fiona
McWilliam, John
Mahon, Mrs Alice
Mandelson, Peter
Marek, Dr John
Marsden, Gordon (Blackpool S)
Marsden, Paul (Shrewsbury)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Martlew, Eric
Maxton, John
Meacher, Rt Hon Michael
Meale, Alan
Merron, Gillian
Michael, Alun
Milburn, Alan
Miller, Andrew
Mitchell, Austin
Moffatt, Laura
Morgan, Ms Julie (Cardiff N)
Morgan, Rhodri (Cardiff W)
Morris, Ms Estelle (B'ham Yardley)
Mudie, George
Mullin, Chris
Murphy, Jim (Eastwood)
O'Brien, Bill (Normanton)
O'Brien, Mike (N Warks)
Olner, Bill
O'Neill, Martin
Osborne, Ms Sandra
Palmer, Dr Nick
Pearson, Ian
Pendry, Tom
Pickthall, Colin
Pike, Peter L
Plaskitt, James
Pope, Greg
Pound, Stephen
Powell, Sir Raymond
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Primarolo, Dawn
Prosser, Gwyn
Purchase, Ken
Quin, Ms Joyce
Quinn, Lawrie
Radice, Giles
Rammell, Bill
Reed, Andrew (Loughborough)
Reid, Dr John (Hamilton N)
Robertson, Rt Hon George
(Hamilton S)
Robinson, Geoffrey (Cov'try NW)
Roche, Mrs Barbara
Rooker, Jeff
Rooney, Terry
Ross, Ernie (Dundee W)
Rowlands, Ted
Roy, Frank
Ruddock, Ms Joan
Russell, Ms Christine (Chester)
Ryan, Ms Joan
Salter, Martin
Savidge, Malcolm
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheldon, Rt Hon Robert
Simpson, Alan (Nottingham S)
Singh, Marsha
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)
Smith, Miss Geraldine
(Morecambe & Lunesdale)
Smith, Llew (Blaenau Gwent)
Soley, Clive
Southworth, Ms Helen
Spellar, John
Squire, Ms Rachel
Steinberg, Gerry
Stevenson, George
Stewart, Ian (Eccles)
Stoate, Dr Howard
Stott, Roger
Strang, Rt Hon Dr Gavin
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Gerry
Taylor, Rt Hon Mrs Ann
Temple-Morris, Peter
Thomas, Gareth R (Harrow W)
Timms, Stephen
Touhig, Don
Trickett, Jon
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Twigg, Derek (Halton)
Vaz, Keith
Vis, Dr Rudi
Walley, Ms Joan
Wareing, Robert N
Watts, David
White, Brian
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Alan W (E Carmarthen)
Winnick, David
Wood, Mike
Woolas, Phil
Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)
Wyatt, Derek

Tellers for the Noes:

Mr. Jim Dowd and
Mr. David Jamieson.

Question accordingly negatived.

30 Jun 1998 : Column 207

New clause 7

Definition of national debt

'.--For the purposes of sections 152 and 153--
The "National Debt" shall be taken to include the principal amount of any non-governmental debt to the extent that such debt is guaranteed by the Government or by any organisation under its effective control or management and the amount of Government borrowing in any one year shall be calculated accordingly.'.--[Mr. Heathcoat-Amory.]
Brought up, and read the First time.

Mr. Heathcoat-Amory: I beg to move, That the clause be read a Second time.

The new clause attempts to incorporate into the Bill a tighter definition of what the Government mean by national debt. The matter has assumed greater importance since the publication, some two weeks ago, of the Government's public expenditure plans, which signal a marked increase in public expenditure under a smokescreen of fiscal rectitude.

The talk has been about imposing a discipline on the national account, but the reality underneath is that public expenditure is signalled to rise from next year and in every subsequent year by at least 2.75 per cent. in real terms. We estimate that the figure will be greater than that, once account is taken of all the changed definitions at the margin.

Thus, the question of definitions is important, particularly the frontier between capital and current expenditure. Those of us who have laboured in one of the professions thought that we understood the distinction between capital and revenue expenditure, but I do not think that the Government do. I tabled a simple question to the Chancellor of the Exchequer about whether

Any first-year accountancy student can answer that. Repairs are revenue, whereas alterations or additions are capital expenditure. However, the Chief Secretary answered, after some delay:

    "Expenditure on hospital repairs will follow the classification rules for the national accounts."--[Official Report, 29 June 1998; Vol. 315, c.29.]

Therefore, either he does not know or it is still to be determined. A simple question received a very muddled response.

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