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R and D Tax Credit

Matthew Taylor: To ask the Chancellor of the Exchequer what consideration the Chancellor is giving to a regional enhancement to his research and development tax credit for the assisted areas; and if he will make a statement. [22467]

Dawn Primarolo: A further consultation on the design of a "volume-based" R and D tax credit for large companies was launched on 4 December 2001. It aims to inform the detailed design of the scheme. There are no plans to introduce enhanced R and D tax credits for specific regions.

Tax

Matthew Taylor: To ask the Chancellor of the Exchequer what assessment he has made of the recommendation of the Tax Law Committee's memorandum relating to the tax law on transfer of assets between spouses following separation and divorce; and what estimate he has made of the cost of extending the time period by a further two years in which assets could be transferred between separated spouses without any gain or loss of treatment as advised by the Tax Law Committee; and if he will make a statement. [22465]

Dawn Primarolo: We have noted the recommendation by the Tax Law Committee.

Matthew Taylor: To ask the Chancellor of the Exchequer what assessment his Department has made of the extent to which the lower rate of income tax has achieved its objective of reducing in-work poverty; if he will place such studies in the Library; and if he will make a statement. [22468]

Dawn Primarolo: The introduction of the 10p rate of income tax in April 1999, together with its widening in April 2001, is worth between £100 and £188 a year to taxpayers, with the largest gains going to the low paid. Together with the cut in the basic rate of income tax and the reforms to national insurance contributions introduced during the last Parliament, the 10p rate is worth £330 a year to a single person working full-time on the minimum wage. This represents a 30 per cent. reduction in their combined income tax and national insurance bill, compared to the 1997 system.

The Government's approach to tackling poverty and making work pay has been set out in the series of reports: "The Modernisation of Britain's Tax and Benefit System" published alongside Budgets and pre-Budget reports over the last four years. All of these reports are available in the House of Commons Library.

Matthew Taylor: To ask the Chancellor of the Exchequer what estimate he has made of the change in tax liability for a median taxpayer if the lower rate and basic rate of tax were amalgamated at 22 per cent.; and what estimate he has made of the savings in compliance costs from such a change to the Inland Revenue and the taxpayer. [22463]

Dawn Primarolo: The estimates requested are not available.

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Matthew Taylor: To ask the Chancellor of the Exchequer what assessment he has made of the opinion of the Tax Law Committee on the impact of the number of tax rates; and if he will make a statement. [22464]

Dawn Primarolo: The Government keep the whole tax system under review, acting where possible to change tax rules to remove complexity in line with its objective of a modern and fair tax system.

Matthew Taylor: To ask the Chancellor of the Exchequer what assessment he has made of the opinion in the memorandum on tax reform by the Tax Law Committee on the taper relief system for capital gains tax and compliance costs; what estimates he has made of the costs of compliance for taper relief; and what estimate he had made of the proportion of taxpayers who benefit from the taper. [22466]

Dawn Primarolo: Taper relief is an intrinsically simple system: the taxpayer decides whether an asset has been a business asset or a non-business asset and then applies a percentage figure from a table to reduce the amount of gain charged to tax depending on how long the asset has been held.

Our proposal to reduce the length of the business assets taper to two years will ease that calculation in many cases, and we are currently considering suggestions for further amendments to the details of the taper relief rules which have been proposed in response to our consultation on simplifying Capital Gains Tax.

The Inland Revenue has a programme of compliance cost research and will study the taper system once it has had time to settle in and data become available. The Inland Revenue estimate that about 85 per cent. of those paying Capital Gains Tax in 2002–03 will benefit from taper relief.

Uninsured Drivers

Pete Wishart: To ask the Chancellor of the Exchequer what estimate he has made of the loss incurred to public funds as a result of drivers not being insured in the past five years. [22772]

Ruth Kelly: No such estimate has been made.

Beer Duty

Mr. Stephen O'Brien: To ask the Chancellor of the Exchequer if he will make a statement on progress towards introducing a system of progressive beer duty. [22912]

Mr. Boateng: The Government have announced that they are minded to introduce a reduced rate of duty on the beer produced by small breweries. Customs and Excise are consulting with the main brewers' representatives. A decision will be announced in Budget 2002.

Airline Industry

Chris Grayling: To ask the Chancellor of the Exchequer, pursuant to the answer of 5 December 2001, Official Report, column 328W, on the airline industry, if he will extend the scheme beyond January. [23237]

Mr. Andrew Smith: The UK replacement insurance scheme for the aviation industry has been extended until 22 January 2002, in line with European guidelines. EC

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guidelines say that Government schemes may run until the end of January, with a final deadline for schemes of the end of March 2002.

The Government have no intention of intervening permanently in the aviation insurance market. The temporary Government scheme was set up with the objective of encouraging the return of commercial insurance at an appropriate market rate. The scheme will be withdrawn as more commercial insurance becomes available.

Inward Investment (US)

Mr. Bercow: To ask the Chancellor of the Exchequer what steps he is taking to assure US investors that public-private partnerships in the UK are attractive investment opportunities. [15269]

Mr. Andrew Smith: Public-private partnerships (PPPs) are undertaken to deliver value for money services for the taxpayer, combining the complementary skills and experience of the public and private sectors.

Extensive information on individual PPPs is made available by departments to interested parties through the Official Journal of the European Communities and other channels, and appropriate opportunities for public-private partnerships are promoted by Partnerships UK.

Public Spending

Matthew Taylor: To ask the Chancellor of the Exchequer what factors underlay the decision to review the consistency of (1) incentives to budget holders with guidance to budget holders through the Green Book, as described in the Treasury document, 'Planning sustainable public spending', paragraph 61; and if he will make a statement; [22500]

(2) guidance to budget holders through the Green Book with best practice as described in the Treasury document, 'Planning sustainable public spending'; and if he will make a statement. [22499]

Mr. Andrew Smith: As paragraph 61 of the document referred to sets out, the purpose of the review is to ensure that the project appraisal and capital approval system embodies best practice.

Development Assistance

Dr. Tonge: To ask the Chancellor of the Exchequer what development assistance spending has been as a percentage of gross national product in each of the last 20 years. [18189]

Mr. Boateng [holding answer 27 November 2001]: The ODA/GNP ratio is an input target whose elements are set by the Development Assistance Committee (DAC). The Government remain committed to reaching the 0.7 target of Overseas Development Assistance as a percentage of GNP, we are steadily increasing the DfID budget—45 per cent. in real terms by 2003–04, the largest UK development assistance budget ever in real as well as cash terms. Development assistance as a percentage of GNP will rise to 0.33 per cent. in 2003–04, up from 0.26 per cent. in 1997.

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DfID's publication "Statistics on International Development" (ISBN 186192397X), shows the UK's ODA/GNP ratio for the last 25 years.

Capital Gains Tax

Mr. Laws: To ask the Chancellor of the Exchequer what his estimate is of the reduction in the level of capital gains tax receipts in each of the next five years as a result of the reduction in the capital gains tax rate from 40 per cent. to 10 per cent. for assets held for longer periods; and if he will make a statement. [22475]

Dawn Primarolo [holding answer 13 December 2001]: The total costs of capital gains tax taper relief for business and non-business assets for 2000–01 and 2001–02 are given in the Tax Ready Reckoner and Tax Reliefs, which was published on 27 November 2001. These are £360 million and £580 million respectively. Estimates for future years are highly dependent on assumed growth in asset values.

Mr. Laws: To ask the Chancellor of the Exchequer what his estimate is of the effect on the yield from the upper income tax rate of 40 per cent. as a consequence of the introduction of a capital gains tax rate of 10 per cent.; and if he will make a statement. [22476]

Dawn Primarolo [holding answer 13 December 2001]: The proposed modifications to the taper relief rules for business assets are not expected to diminish the income tax yield to any significant extent because the effective capital gains tax rate of 10 per cent. will not be reached until the asset in question has been held for two years, and because there are rules already in place ensuring that income is charged to income tax.

We shall, however, be keeping the position under close review and will not hesitate to take action to protect the income tax yield if tax avoidance schemes for turning income into capital are introduced.

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