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Miss Johnson: Perhaps I could come back to that, because I am not sure what point the hon. Gentleman is raising.

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New clause 4 also backdates the effect of the relief for transfers of local authority housing to registered social landlords. Clause 129 relieves these transfers from stamp duty with effect from Royal Assent. New clause 4 extends this relief to transfers after 21 March. This affects transfers under the large-scale voluntary transfer programme that has taken place since the date of the Budget announcement.

New clause 5 is a response to representations from the financial markets. It concerns transfers between depositary receipt systems and clearance systems. Its purpose is to make the stamp duty and the stamp duty reserve tax reliefs for transfers between these systems more comprehensive to cope with market developments. Transfers of United Kingdom shares within depositary receipt systems or clearance systems are free of duty, in return for the payment of a 1.5 per cent. charge when the shares first enter the system. That is usually described as a season ticket charge. There are reliefs which ensure that no stamp duty charge arises when shares are transferred from one season ticket system to another of the same type. The new clause extends the reliefs to include transfers from one type of season-ticket system to another.

Government amendments Nos. 108 to 125 deal with stamp duty group relief. The new clauses and amendments align the definition of "stamp duty group" with the definition of "group" for the purposes of corporation tax group relief. One of the effects of the new clause is that, when there are arrangements in place for a company to be sold out of the group, it ceases to be a group member. That provision blocks group relief for the transfer of assets between that company and the rest of the group, and it is needed to prevent assets from being transferred into the company leaving the group.

I have received representations expressing concern about the blocking of relief for transfers from the company about to leave the group to another group member--in other words, when the company leaving the group is the transferor. I am persuaded that there are commercial situations in which an asset is transferred to another group company after arrangements are in place for the transferor company to leave the group; in a sense, therefore, the asset never leaves the original group. I am willing to make a concession for such cases, which will be useful to businesses, as their legal advisers have suggested.

I have some worry that it might be possible to construct avoidance devices from the concession, so I have asked the Stamp Office to monitor carefully the use of the relief. If the concession is abused, the Government will not hesitate to act swiftly.

As I said, the new clauses and amendments have been tabled in response to representations about the effect and timing of the measures in the Bill. They meet a range of reasonable concerns expressed to us on these matters--some of them by Conservative Members in Standing Committee.

I commend the new clauses and amendments to the House.

Mr. Howard Flight (Arundel and South Downs): The Government amendments are welcome, as they deal with situations where no transfer of beneficial ownership takes

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place. A major aspect of some of the exemptions is that they will not get in the way of company reorganisations, but that will apply only when the transfer takes place entirely within the group. Company reorganisations involving joint ventures, for example, will attract full stamp duty at a likely rate of 4 per cent.

Not long ago, I recall the Chancellor standing at the Dispatch Box and referring to the McKinsey report. He spoke about a difficulty in improving productivity that stemmed from the existing legislation in respect of property and planning. The report referred specifically to problems and delays in obtaining planning consents, and to the costs of property transactions. Those costs have now been increased still further, and there is an element of hypocrisy in that.

I put it to the Government that, if the aim is for greater productivity and greater flexibility of property use in business, the amendments could go a lot further. The proposals amount to a major stealth tax on business.

In essence, the later amendments deal with securities that move between depositary receipt systems and that contain exemptions as a result. That is the territory of the business of the City of London. I should declare an interest in that respect, as should all hon. Members who are members of the House of Commons pension scheme.

I have a question for the Economic Secretary. At a public meeting two years ago, I asked Lord Simon, who was then Minister for Trade and Competitiveness in Europe, whether the Government were aware of the business that was being lost to Frankfurt as a result of the stamp duty that applies on securities in this country, and whether the Government intended to do anything about it. He responded that the Government were well aware of the issue and intended to address it.

It is ironic that I am asking this question on the very day on which the Government have announced a massive and cynical splurge to buy votes ahead of an election. It is an age-old game to tighten taxation in the first three years in power and then splurge a year or so before an election. That tactic is as old as the hills.

However, given the strength of the revenues, if there were any desire to protect them, the near future would be the time to address this issue. Unless stamp duty on securities is phased out, there will be a massive loss and haemorrhaging of business in security transactions away from the United Kingdom and to the other centres in Europe, especially Frankfurt, where no stamp duty applies. When will the Government honour the pledge that the previous Minister for Trade and Competitiveness in Europe gave on this issue? Have they considered the potential total loss of revenue if that issue is not addressed?

Mr. Burnett: It might help the Economic Secretary if I mention that my earlier intervention related to exemptions on transfer into settlement. Let us make the question absolutely clear: is that exemption available only when there is no consideration and no passing of beneficial ownership?

The Finance Act 1998 contained many anti-avoidance provisions for stamp duty and for stamp duty reserve tax. At that time, the Government trumpeted the effect of the anti-avoidance measures. Unfortunately, they were not very successful under that Act, and because transactions were channelled through American depositary receipts, significant amounts of revenue were lost to the Exchequer.

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I understand that in three major transactions--involving, I believe, BP Amoco, Vodafone and one other--some £1.5 billion was lost to the Treasury. To what extent does the Inland Revenue believe stamp duty and stamp duty reserve tax are being avoided, especially in international transactions? The Economic Secretary has told the House that the Stamp Office is monitoring transactions for avoidance. What has been the cost to the Government of avoidance of stamp duty since March 1998?

Miss Melanie Johnson: I am interested by some of the remarks that Opposition Members have made, which do not entirely relate to the amendments. However, I shall do my best to answer them. In his earlier intervention, the hon. Member for Torridge and West Devon (Mr. Burnett) asked the question that he has now reiterated, which was whether the exemption to clause 119 is available when there is a nil consideration. The answer is yes, the exemption takes the transaction out of the scope of clause 119, whatever the consideration, including a nil consideration.

Mr. Burnett: Does that mean that there is no change in the beneficial ownership, or can the exemption apply if there is no consideration but there is a change in the beneficial ownership?

Miss Johnson: I shall await some further thoughts on that matter.

The hon. Member for Arundel and South Downs (Mr. Flight) said that many opportunities for joint ventures will not be helped by the group relief. The relief will apply where a joint venture falls within the scope of the group relief provisions. The new clauses have not changed the rules for joint ventures.

The new clauses and amendments are all about anti-avoidance measures and making those measures work properly, ensuring that they are effective but not too tight. None of the existing arrangements is changed, although it is always tempting for hon. Members to think otherwise.

Mr. Flight: The key point is that the cost of the tax to business is enormously higher than it was three years ago. The rules may not have changed, but they are a far more powerful deterrent to corporate modernisation than they were.

5.30 pm

Miss Johnson: The only change in the Budget was to increase the upper limit to 4 per cent., and that has affected only those making transactions involving more than £500,000. That is a sizeable sum, so we are talking about large deals and not smaller businesses or individuals, unless they are quite wealthy. The Budget leaves 95 per cent. of stamp duty effects completely unchanged. I understand that the proportion of stamp duty revenue from shares and from property transactions has remained more or less constant.

The hon. Member for Arundel and South Downs spoke about the changes in stamp duty reserve tax and the arrangements for depositaries to ensure that we reflect changes that we understand are likely to take place in the business environment. This has not been an issue for business to date. We are enabling a flexibility in the system which has not hitherto existed but which we believe will be necessary in the future.

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The hon. Gentleman asked about the future of stamp duty reserve tax in general, which is not directly relevant to the new clauses and amendments. We consider these matters every year in the Budget. We have not identified any need for action this year, so it was not a feature of the Budget or the Bill, but we always keep these matters under review.

On the hon. Gentleman's little splurge of an attack on so-called splurge, let me remind him that it is the Government's prudence in managing the economy and public expenditure that has enabled us to announce today some very generous investment in public services. Instead of spending 42p in the pound of extra money on social security and debt repayment, as the previous Government did, we have brought the figure down to only 17p. I caution the hon. Gentleman not to return to the earlier discussion, because we would be delighted to have a further debate on those subjects.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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