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Mr. Davey: I am afraid that the hon. Gentleman was not listening to the Paymaster General as carefully as others of us were. I understand that she was talking about historic data, not the projected data which are being quoted in the newspapers.
Mr. Letwin: I am grateful to the hon. Gentleman for giving way. He may have noticed that at that juncture--one of many--I tried to intervene on the Paymaster General in order to ask her whether, at the meetings to which she referred, it was the case, as I have heard from people who were present, that it was pointed out to the Inland Revenue and the Treasury that the base year that they were using was exceptional and hence misleading. Does the hon. Gentleman agree that it would be useful if the Paymaster General answered that question? Was that pointed out to them?
Mr. Davey: It would indeed be useful if the Paymaster General answered that question, but I fear that she will not, and that is a problem. It was very noticeable and should be on the record that the Paymaster General refused to take interventions from the hon. Member for West Dorset and myself, thereby reducing the quality of the debate and the ability of the House to get to the truth. If a Treasury Minister is not prepared to take detailed interventions on a matter of this importance, the House is
in a truly awful position. We need proper debate so that we can get to the truth. The Minister ought to be able to take cross-questioning.
Mr. Beard: I thank the hon. Gentleman for giving way to me again. He has not said what criticism he has of the methodology that my right hon. Friend the Paymaster General has set out. We have heard only the vague comment that the Government picked the wrong starting date [Interruption.] The hon. Member for West Dorset (Mr. Letwin) is shouting from a sedentary position, but the sources that he quoted espoused figures ranging between £200 million and £8 billion. On what grounds does the hon. Member for Kingston and Surbiton (Mr. Davey) object to the methodology that my right hon. Friend has quoted as the basis of the Treasury estimates?
Mr. Davey: We have touched on that. I am glad that the hon. Gentleman intervened for a second time to enable me to make the point yet again. Taking one exceptional year is not the best way of making the calculation. If the Government want to make the calculation properly, they should take several years and use averages and work with accountancy firms and the firms concerned to produce a more accurate figure--[Interruption.] Rather than shouting from a sedentary position, the hon. Member for Bexleyheath and Crayford (Mr. Beard) should let me finish.
The Liberal Democrats are arguing that the Government should halt the progress of the legislation and engage in proper and full consultation with business to produce the exact and accurate calculations that the hon. Gentleman seems to want the Government to carry out. It appears from the way in which the debate is proceeding tonight that those figures have not been properly produced, and we need them. British industry needs them so that it is not penalised by the legislation.
Mr. Beard: Will the hon. Gentleman give way?
Mr. Davey: No. I have already given way to the hon. Gentleman twice, which is more than the Paymaster General did.
We need to look at the wider implications of the measure. British and multinational companies are increasingly concerned about the way in which the Government go about tax legislation and consultation on potential tax changes. It is a serious matter. If we are to attract investment into the country, whether it is from companies operating in Britain or from Britain, we need to ensure that those companies can feel confident that they will be operating under a relatively stable and predictable tax regime, not one that will suddenly change without due consultation or proper analysis.
Presumably, the objectives of achieving stability and ensuring proper analysis lay behind the code of consultation itself. That is why the code of consultation offers a very sensible way of improving our tax system. The problem--as the hon. Member for West Dorset so eloquently explained to the Committee--is that the Government have not abided by their own code.
9.30 pm
Mr. Letwin: The hon. Gentleman is making a serious point which I perhaps omitted to stress sufficiently. Does he agree that, even if the Government were to return with
the same damaging measure after a proper re-consultation of the type that he and I advocate, such action would at least do something to restore multinational corporations' now very damaged confidence in the Government and, much more importantly, in the United Kingdom?
Mr. Davey: The hon. Gentleman is right--it would restore at least some confidence. I think, however, that that confidence has been quite badly shattered already, and that the damage has been caused after the introduction of other damaging measures, such as abolition of advance corporation tax, which I wanted to debate earlier. The Government's actions are beginning to suggest that there is something old Labour about the Administration. I was talking to one business man who described clause 102 as being akin to something that the hon. Member for Brent, East (Mr. Livingstone) might have wished to introduce. The measure is a deliberate attempt to target and attack multinational corporations.
The hon. Member for West Dorset did the Committee a great service in his excellent speech, which was a tour de force on a rather complicated matter. He dealt with the matter with far greater precision than I feel that I am able to apply to it. However, although he analysed the possible motives behind the measure, he may have missed out one motive, which is that the measure is simply a knee-jerk reaction and ideological attack on a part of British industry. That would be particularly worrying. Nevertheless, the Government say that they want to talk to business and to understand business. The Labour party even says that it wants to be the party of business.
I think that, if they have not already done so, the businesses that will be affected by the measure should contact No. 10 Downing street. I do not believe that the Prime Minister is particularly happy with this type of measure. As the architect of new Labour, he should be concerned that such measures will undermine everything that he has been attempting to do with the Labour party.
Mr. Oliver Heald (North-East Hertfordshire): He should be told.
Mr. Davey: This is a very serious point. I hope that the Paymaster General will tell the Committee whether she has had proper and full discussions with the Prime Minister about the implications of clause 102 and schedule 30 for British industry, and perhaps for the relationship that British industry will in future have with the Labour party. British industry--composed of small, medium and large businesses--is increasingly fed up with the way in which the Government are going about their business. British industry has grave concerns.
Ministers have to realise that capital is increasingly mobile, and that--despite the potential capital gains liabilities that the types of firm hit by the measure may have in one particular year--those firms will realise that, in the long run, it is cheaper to move abroad. Worse, the measure will alter the investment decisions made by those firms on all their portfolio. The measure really is profoundly affecting the way in which both British and multinational businesses are going about their work.
I urge Ministers not simply to rush out a press release that looks as if it has been cobbled together not after a full consultation but after a rather short consultation,
saying that they will delay implementation of the measure, perhaps thereby helping a few firms. I hope that the Government will go much further and say that they will fully re-consult British industry, think again, and return to the House with other measures that will tighten up on abuse--if there is abuse; I do not think that the Paymaster General has very effectively made the case that there is--but not threaten the underlying health of many of the United Kingdom's greatest companies.
Mr. Beard: I think that the quality of debate from Opposition Members tonight has been as low as I have ever heard it. That is well evidenced by the call for greater consultation on the basis of nothing more than tittle-tattle in back rooms which does not stand up against the analysis given by my hon. Friend the Paymaster General.
Mr. Letwin: I am sorry to interrupt the hon. Gentleman so early in his speech, and it is gracious of him to give way at this point. However, I do so because he referred to tittle-tattle. Does he think that the commentary from the CBI, the Institute of Directors, the Chartered Institute of Taxation and six of the major world accountancy firms counts as tittle-tattle?
Mr. Beard: We have already heard from my hon. Friend the Paymaster General the extent of the consultation that has taken place, including that with the CBI. The arguments put earlier by the hon. Member for West Dorset (Mr. Letwin), particularly those about the financial impact on these companies, were little more than tittle-tattle. He has not produced one scintilla of evidence in the whole debate to justify any of the excessive numbers that he mentioned. The nearest he came to a fact was to say that the starting date for my hon. Friend's analysis was not the one that he would have chosen.
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