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Mr. Quentin Davies (Grantham and Stamford): The hon. Lady intoned her brief like an orthodox priest intoning a liturgy in Church Slavonic which he did not understand and did not expect his audience to. She does much less than justice to the two measures that the Government are proposing. They are quite different from one another.
Mrs. Roche: As a member of the United Synagogue, I hope that the hon. Gentleman will rephrase that; I would hate him to get me into any trouble.
Mr. Davies: The hon. Lady is proposing five new measures. They are, in fact, about two quite different subjects. The first two--new clauses 15 and 16--deal
with a PRT issue, and the subsequent three measures deal with a capital gains tax issue. It would be sensible to separate the two.
On the first group--new clauses 15 and 16--we have no problem in principle with a measure that is obviously designed to prevent avoidance of PRT. Let us say that a company has an asset that has benefited from PRT relief in its purchase or construction. It then gives up its interests in the production of a field, but maintains that tariff-generating asset to service the field. Under present rules, that tariff-generating asset could be allocated to a non-PRT field and so, whereas the asset had benefited from PRT reliefs in the past, the revenues generated by it would not be subject to PRT. In so far as new clause 15 restores symmetry in that respect and prevents the loss to the Exchequer of avoidable--I believe unjustly avoidable--PRT, we are very happy with it.
New clause 16 deals with the consequential case: if a company has given up its interests in the production of a field, by definition it has no production so, under the rule that says that if it has no production for two quarters it does not pay PRT, it would be relieved of paying PRT for ever. I take it that the hon. Lady, in conceiving these two new clauses, had in mind something like a gas or oil pipeline that services a number of fields and could, by this method, without new clause 16, be switched from a PRT field to a non-PRT field.
Mr. Davies:
I see that the hon. Lady endorses my interpretation. However, I would like to ask her, because it is an important point, exactly what type of assets would be involved. I take the pipeline to be a clear case in point. I see that the second line of new clause 15 excludes mobile assets. Clearly, something like a mobile drilling rig would be a mobile asset. However, what would be the position of a floating production platform? Could such a platform have benefited from PRT relief when it was installed in a PRT field? If it is shifted to another field, will it generate revenues free of PRT? I do not know whether the Financial Secretary is listening to my question but it is an important one. The House deserves an answer to it and we look forward to that.
I ask the hon. Lady to be precise with the definition of assets. She was not precise in her speech, and nor were the Government in their explanatory notes. I have suggested pipelines but we want to know beyond that what types of asset would be affected. That having been established, I think that in principle the Opposition would be happy to accede to the new clause.
When I read new clause 17, I naturally thought, "Hurrah!" What is the new clause? Of course, the Government would not tell us. The Financial Secretary has not mentioned it. New clause 17 represents the Government bringing forward a provision to deliver exactly the effect for which we have been lobbying. Our new clause 19 is designed to produce exactly the same effect. It is probable that the Government heard from the industry--we consulted it on these matters last week--that we were bringing forward a new clause. No doubt the Government thought, "Right, we shall trump the Conservatives. After all, we will do the right thing ourselves."
The Financial Secretary is clearly embarrassed about this. If not, she would have mentioned the Opposition's new clause in her introductory remarks. She managed to skate over the fact that there are two new clauses on the amendment paper that would have the same effect. Both would achieve by different means exactly the same effect.
Mr. Davies:
The hon. Lady has been rumbled and I give way.
Mrs. Roche:
The hon. Gentleman has been in the House rather longer than me. However, I did not think--no doubt I shall be corrected--that it was my job when I opened the debate to speak to the Opposition's new clauses and amendments. I might be wrong, but I thought that I would leave that to the hon. Gentleman and others.
Despite all the bluster that we have heard from the hon. Gentleman, I said that the Conservative Government had removed the relief in 1987. I am extremely glad that the hon. Gentleman has come around to our point of view, but it is rather late.
Mr. Davies:
The hon. Lady's attitude is astonishing. First, she is found guilty of plagiarism, and tries to hide the fact. Secondly, she introduces the Government's new clause while trying to hide from the House the fact that there is an alternative on the amendment paper which addresses the same issue but suggests a different response. My greatest suspicions are aroused by the hon. Lady's behaviour. Obviously she did not feel confident enough of her solution to the problem to want to refer to the Opposition's solution. If she thought that her solution was better and ours was weaker or less adequate than her own, she would have been delighted to speak to our new clause to explain why the Government's new clause was better. However, she did not do that.
Tonight, the House has a three-way choice. First, it can decide to do nothing and leave the present regime in place. Secondly, it can accept the Government's proposal to grant roll-over relief to North sea licences. Thirdly, it can accept the Opposition's proposal to grant North sea roll-over relief to North sea licences. The two proposals are very different.
Mr. Edward Davey:
If the Government are being as opportunistic as the hon. Gentleman seems to be alleging, surely they would have done this before the Scottish parliamentary elections.
Mr. Davies:
I do not think that the Government have been particularly clever in their handling of the Scottish parliamentary elections, which is why other parties did so well, to the Government's great surprise. I am not surprised that they got their tactics wrong for that one as well, as the hon. Gentleman suggests.
We have had this situation before, and it has done great damage to the country. The Conservative party has come up with a solid proposal. It is a well-thought-through, viable and sensible proposal that is very much in the national interest. The Labour party, not to be outdone, and out of sheer machismo or pique, has decided to destroy what the Conservative party put in place when we were
in government, or to pretend or attempt to neglect, as we have seen this afternoon, the proposals that we are putting forward in opposition, in favour of their own.
There was a striking example of that over the past few months with the destruction of personal equity plans and tax-exempt special savings accounts, which were great successes. The Government could not bear the fact that those scheme were great successes and that people were saving more money.
Mr. Bob Blizzard (Waveney):
Will the hon. Gentleman give way?
Mr. Davies:
I shall give way to the hon. Gentleman in a moment. He must learn patience.
The Government could not bear the idea that these schemes were great successes and that household saving was increasing so well through PEPs and TESSAs. Against that background, they had to introduce their own scheme. The independent savings account is full of holes, full of shortcomings and badly thought through. Of course, it went quite wrong.
Mr. Deputy Speaker:
Order. I am sure that the hon. Gentleman knows that he is straying way beyond the terms of the new clause. Perhaps he will return to the matter in hand.
Mr. Davies:
Of course, Mr. Deputy Speaker, I will not say any more about PEPs and TESSAs versus ISAs. However, I think that the analogy is a fair one. We have a choice between a Conservative proposal and a Labour proposal. What is more, we have the Labour Government trying to pretend that the Conservative proposal does not exist. The Labour Government are running away from the opportunity to explain the merits of the two proposals and to defend their own. It appears that they are not capable of criticising our proposal.
Mr. Blizzard:
The hon. Gentleman is trying to claim credit for a Conservative proposal. However, when I argued the point during Treasury questions, no Conservative Member rose to continue to press it. When I asked my hon. Friend the Minister for Energy and Industry during Trade and Industry questions to take up the point, again no Opposition Member intervened in support. During the meetings of the all-party group, of which I am the chairman, no Conservative Members have pressed the case. How can the hon. Gentleman square reality with what he is saying now?
Mr. Davies:
If the hon. Gentleman is dissatisfied with an answer that he receives during parliamentary questions, he must take up the matter with the Ministers concerned. It is Labour Ministers who are in a position to give answers. The hon. Gentleman has scored something of an own goal or has aimed a shot at his own side.
The difference between the two approaches is quite significant. However, we both appear to have the same stated aims, just as with savings schemes, which I must not mention--but we both apparently want to increase savings. The Conservative scheme or schemes delivered that and Labour's did not. Indeed, the Labour scheme delivered a great reduction in savings. In this instance,
we again have the same aims. We both agree that it would be desirable to remove any tax obstacles to greater trading of North sea assets.
It is quite natural that at the beginning of the exploitation of a new field, such as the North sea, the risks are high. When licences are being bid for, those risks will be syndicated extensively so that there will be many participations. As fields become more mature, it is natural that there should be trading of those assets, shares and licences, and that there should be fewer holders. In many instances such restructuring can lead to economies of scale, which are extremely desirable.
Apparently we are all at one on the objective. That is certainly the Opposition's position. We believe that roll-over relief should be provided for North sea assets, as it is for many other business assets in this country. The question is how best to get there. We decided to get there in the most direct and straightforward fashion, and that was by saying, "We already have eight classes of business assets which qualify for roll-over relief, so we shall create a ninth." The eight classes have proved to be quite robust. There has been no difficulty at all in obtaining roll-over relief. There has been no ambiguity--and, to my knowledge, no court cases--about businesses in those eight established classes getting roll-over relief.
The sensible step would be to add a ninth class as we have done in new clause 19. What is wrong with that approach? The Financial Secretary did not attempt to argue that there was anything wrong with that approach, and I draw some comfort from her silence. That approach was evidently so unexceptionable that the hon. Lady, who is pretty combative in her way when she wants to be, gave up at the thought of trying to take exception to it. We can take comfort from the proposal that we conceived and tabled.
The hon. Lady's proposal, new clause 17, takes a different approach--a more complicated and less certain approach, which is much less sensible. It knocks out the provisions of the Taxation of Chargeable Gains Act 1992 that explicitly excluded North sea assets from benefiting from roll-over relief. The Government's new clause would restore the status quo ante--the status quo before 1992. The hon. Lady either has not done her homework, or she is being less than frank with the House by not mentioning that. She tried to skate over a material aspect of her new clause. The problem with re-establishing the status quo that existed before the 1992 Act is that that state of affairs was uncertain and unsatisfactory.
It was possible to argue then, and it had been argued before 1987, that North sea licences amounted to a claim on the continental shelf. The continental shelf is land--indeed, it was defined by the 1958 Geneva convention on the continental shelf, and confirmed by the 1982 law of the sea convention, as the extension of the land of a coastal state under the waves, so to speak.
The claim was made before 1987, not unreasonably but by no means with unambiguous certainty, that a licence was a claim on land, and that roll-over relief should therefore be provided, because land that was being exploited by the business that held the licence should qualify for roll-over relief under class 1, whereby land occupied for a commercial purpose benefits from roll-over relief.
7.30 pm
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