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27 Feb 2003 : Column 397—continued
Friendly Society Savings
10. Mr. Mark Lazarowicz (Edinburgh, North and Leith): What his policy is on the taxation of friendly society savings products. [99471]
The Financial Secretary to the Treasury (Ruth Kelly): The Government recognise the contribution of friendly societies in encouraging regular savings, particularly among the less well-off, and want a thriving friendly society sector in future. The Sandler report recommended a change to the tax rules that, if adopted, would affect some of the insurance policies sold by friendly societies, particularly their tax-exempt savings products. As announced in the pre-Budget report, we are considering that recommendation as part of the Budget process.
Mr. Lazarowicz : I thank my hon. Friend for her answer. When considering the proposals, will she bear in mind the fact that the abolition of tax-exempt savings products could well result in the devastation of the friendly society movement? The Association of Friendly Societies has estimated that some 50 per cent. of their members could close to new business if the proposals proceed. As my hon. Friend rightly pointed out the importance of the friendly society movement in
encouraging people on low incomes to save, I hope that she will realise the consequences of implementing the proposals as they stand.
Ruth Kelly: I know of my hon. Friend's deep interest in those issues. Of course, we are fully aware of the representations and concerns about possible implications that are regularly raised by the Association of Friendly Societies and other interested parties. However, as I said, we want to see a thriving sector in future. If my hon. Friend looks at the pre-Budget report, he will note that when designing the child trust fund another method of encouraging savings, the open market option, was preferred to licensed providers precisely because it would allow institutions such as friendly societies to offer an alternative, distinctive channel of distribution and encourage saving among the less wealthy.
Business Environment
13. Mr. Mark Field (Cities of London and Westminster): What discussions he has had in advance of the Budget with the Secretary of State for Trade and Industry on the effect of his microeconomic policies on the business environment. [99474]
The Chief Secretary to the Treasury (Mr. Paul Boateng): The Chancellor and other Treasury Ministers regularly meet ministerial colleagues across Government in advance of the Budget statement. Treasury Ministers and officials have also been conducting a programme of regional visits to listen to the views of businesses throughout the country.
Mr. Field : May I respectfully suggest to the Minister that in those discussions special attention is paid to the financial burden of our increasingly inflexible labour laws on small businesses in particular? Does he agree that one of the reasons that unemployment has been so low in this country over the past 10 years compared with Germany, for example, is the fact that we have had flexible labour laws, and that that competitive advantage of the UK is fast being undermined?
Mr. Boateng: I know that the hon. Gentleman follows these matters closely, and I well recall his contributions on the matter in the Committee that considered last year's Finance Bill, but he might usefully follow the speeches of his right hon. and learned Friend the shadow Chancellor, who, as recently as last month, was opining:
- "Our labour market is still more flexible than that in other EU countries."
Mr. Kelvin Hopkins (Luton, North): Does my right hon. Friend recall that last week Mr. Adair Turner, no less, suggested that labour market flexibility had gone far enough, and that it was not the way forward for the future if we want a high investment, high growth economy?
Mr. Boateng: We need to make sure that we get the balance right. We make no apology, however, for introducing measures dealing with fairness at work. We
make no apology for introducing the minimum wage. All those contribute to a high wage, high skill economy in which we maximise the productivity of all employees and managers.
Dr. Vincent Cable (Twickenham): Does the Minister accept that the micro-economic effects of an increase in employers national insurance must be to reduce employment, cut wages or increase prices? Which of those three does he expect to happen?
Mr. Boateng: I am afraid I do not accept the hon. Gentleman's simplistic analysis. He should tell us how he would explain not only to his hon. Friends on the Liberal Democrat Benches, but to all the readers of "Focus"—a diminishing band, I am happy to say—how the improvements in the health service are to be paid for without the increase in national insurance contributions.
Welfare Services
15. Mr. Jim Cunningham (Coventry, South): If he will make a statement on the consequences of the changes to VAT charges for welfare services provided by state-regulated private welfare agencies. [99476]
The Economic Secretary to the Treasury (John Healey): From 31 January, all state-regulated private welfare agencies have been able to exempt their welfare services, including home care, from VAT. That means that 60,000 sick, elderly and disabled people will no longer have to pay VAT on their home care costs. Those least able to look after themselves should find it easier to remain independent and to remain in their own home.
Mr. Cunningham : Has my hon. Friend any plans to extend the exemption from VAT to welfare companies?
John Healey: The VAT exemption applies to state-regulated welfare agencies that provide commercially delivered services. It covers home care agencies, foster
agencies and adoption agencies. It puts them on the same VAT-exempt footing as public agencies and charities have always been. It has been widely welcomed because of that. When we announced that, the chairman of the United Kingdom Homecare Association said:
- "This exemption will make services more affordable for more people."
- "will be straightforward for providers to implement and readily understood by care users."
Small Businesses
17. Mr. Andrew Mitchell (Sutton Coldfield): What discussions he has had in advance of the Budget with the Secretary of State for Trade and Industry regarding new taxes and regulations affecting small businesses. [99478]
The Paymaster General (Dawn Primarolo): The Chancellor regularly meets my right hon. Friend, at which time he discusses a full range of relevant issues, including the Government's success in reducing corporation tax on companies and introducing such reforms as the research and development tax credit and improvements to the capital gains tax regime.
Mr. Mitchell : When those Ministers meet, why do they not hang their heads in shame at the dreadful effect of their policies? On tax, have they not put £37 billion on businesses? On regulations, have there not been 3,866 every year under this rotten Government?
Dawn Primarolo: I do not know where the hon. Gentleman has been, but this Government have cut small business tax and cut corporation tax. We have reformed capital gains tax so that we have the most competitive system and introduced research and development tax credits. As the Organisation for Economic Development and Co-operation has pointed out, we have an entrepreneurial base and the best environment of any economy.
Business of the House
12.30 pm
Mr. Eric Forth (Bromley and Chislehurst): Will the Leader of the House please give us the business for next week?
The Leader of the House of Commons (Mr. Robin Cook): The business for next week will be as follows:
Monday 3 March—Motion to approve the Anti-terrorism, Crime and Security Act 2001 (Continuance in force of Sections 21 to 23) Order 2003, followed by debate on the Intelligence and Security Committee report on the terrorist bombings in Bali on a motion for the Adjournment of the House.
Tuesday 4 March—Conclusion of remaining stages of the Communications Bill.
Wednesday 5 March—Progress on remaining stages of the Local Government Bill.
Thursday 6 March—Debate to mark international women's day on a motion for the Adjournment of the House. I suspect that the right hon. Member for Bromley and Chislehurst (Mr. Forth) will take an acute interest in that debate.
Friday 7 March—Private Members' Bills.
The provisional business for the following week will include:
Monday 10 March—Conclusion of remaining stages of the Local Government Bill.
Tuesday 11 March—Estimates [2nd Allotted Day]. Subject to be confirmed by the Liaison Committee.
At 7 pm the House will be asked to agree all outstanding estimates.
Wednesday 12 March—Proceedings on the Consolidated Fund (No. 2) Bill, followed by debate on Welsh Affairs on a motion for the Adjournment of the House.
Thursday 13 March—The day will include a debate on flood and coastal defence policy on a motion for the Adjournment of the House that was delayed from today.
Friday 14 March—Private Members' Bills.
I should also like to inform the House that the business in Westminster Hall for March will be:
Thursday 6 March—A debate on weekend voting and increasing voter turnout.
Thursday 13 March—A debate on the report from the Treasury Committee on the financial regulation of public limited companies.
Thursday 20 March—A debate on the convention on the future of Europe.
Thursday 27 March—A cross-cutting question session on older people, followed by a debate on the joint report of the Defence, Foreign Affairs, International Development and Trade and Industry Committees on strategic export controls.
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