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Dawn Primarolo: I urge my colleagues to vote against amendments Nos. 13, 14 and 19 which, in various ways, seek to stop the application of PAYE and national insurance to company share option plans granted before 9 April 2003. Let me make it clear that the Government believe that it is right that employees should pay their fair share of tax and national insurance on all forms of employment-related remuneration. Bringing options granted after 9 April 2003 within PAYE and NICs rules would mean that companies and employees who have sought to avoid paying their fair share of tax and national insurance will continue to do so.

Mr. Flight rose—

Dawn Primarolo: I will not give way to the hon. Gentleman, as I want to put this on the record.

Such a change would effectively reward employers and employees who have been using company share option plans instead of unapproved options, allowing them to be exercised early to avoid paying NICs. Companies should not be able to gain an advantage over their competitors by failing to operate their company share option plans within the spirit of the legislation. It is right that companies that have used CSOP options as a means of providing short-term, share-based remuneration should be expected to pay PAYE and national insurance. As I said in Committee, I do not accept that the change is retrospective. The hon. Gentleman is wrong to assert such a thing on the Floor of the House. The change is not retrospective. If employees hold their options for three years after grant,

1 Jul 2003 : Column 264

they will not pay tax and national insurance. That has always been so and is not changed. Where employees choose to exercise their options within three years and employers have given them that choice, they do so in the full knowledge that tax and national insurance is payable.

The proposed change in the schedule and clause means that businesses will no longer be able to gain an unfair advantage over their competitors by failing to operate within the spirit of the company share option plan legislation. It is right that companies that proceeded to use company share option plan options as a means of providing short-term share-based remuneration should be expected to pay their PAYE and national insurance. Company share option plan options have been used to undermine the principle that tax and national insurance should be paid on such employment remuneration. By tackling that and ensuring that company share option plan options exercised early are subject to PAYE and NICs for both existing and future options, we are correcting the unfair position that has arisen when employers have used company share option plan options as a substitute for unapproved options.

It is clear that in the name of fairness to taxpayers and the operation of the rules as they are expected to be operated—on the basis of fairness to all taxpayers—the hon. Gentleman seeks, through the amendments, to give a huge advantage to the few, while the rest of us pay for it. That is not acceptable. I ask the House to reject the amendments.

Mr. Flight: The Paymaster General is quite incorrect to assert that the situations that I described were about tax avoidance. They were cleared with the Revenue, the tax position was understood, and if the Government wanted a regime where employer NICs were payable on early exercise, they should have put that into the law when they changed the general rules on NICs and unapproved schemes.

What is retrospective is the NIC charge on employers. I can tell the Paymaster General that the overwhelming majority of lawyers in the City of London specialising in these matters agree strongly with that. She has made an enemy of the very type of US multinational companies that we need to go on investing in this country. She is mistaken in her views and there will no great tax gains to the Revenue as a result. We therefore intend to press the amendment to a Division.

Question put, That the amendment be made:—

The House divided: Ayes 189, Noes 309.

Division No. 265
[6:12 pm


AYES


Ainsworth, Peter (E Surrey)
Allan, Richard
Amess, David
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Bacon, Richard
Baker, Norman
Baldry, Tony
Barker, Gregory
Baron, John (Billericay)
Barrett, John
Beggs, Roy (E Antrim)
Beith, rh A. J.
Bellingham, Henry
Bercow, John
Beresford, Sir Paul
Blunt, Crispin
Boswell, Tim
Bottomley, rh Virginia (SW Surrey)
Brake, Tom (Carshalton)
Brazier, Julian
Breed, Colin
Brooke, Mrs Annette L.
Browning, Mrs Angela
Burnett, John
Burns, Simon
Burnside, David
Burt, Alistair
Butterfill, John
Cable, Dr. Vincent
Calton, Mrs Patsy
Cameron, David
Campbell, Gregory (E Lond'y)
Campbell, rh Menzies (NE Fife)
Cash, William
Chapman, Sir Sydney (Chipping Barnet)
Chidgey, David
Chope, Christopher
Clappison, James
Clarke, rh Kenneth (Rushcliffe)
Clifton-Brown, Geoffrey
Collins, Tim
Conway, Derek
Cotter, Brian
Cran, James (Beverley)
Curry, rh David
Davies, Quentin (Grantham & Stamford)
Davis, rh David (Haltemprice & Howden)
Djanogly, Jonathan
Dodds, Nigel
Duncan, Peter (Galloway)
Duncan Smith, rh Iain
Evans, Nigel
Ewing, Annabelle
Fabricant, Michael
Fallon, Michael
Field, Mark (Cities of London & Westminster)
Flight, Howard
Flook, Adrian
Forth, rh Eric
Foster, Don (Bath)
Fox, Dr. Liam
Francois, Mark
Garnier, Edward
George, Andrew (St. Ives)
Gibb, Nick (Bognor Regis)
Gidley, Sandra
Gillan, Mrs Cheryl
Goodman, Paul
Gray, James (N Wilts)
Grayling, Chris
Green, Damian (Ashford)
Green, Matthew (Ludlow)
Greenway, John
Grieve, Dominic
Gummer, rh John
Hague, rh William
Harris, Dr. Evan (Oxford W & Abingdon)
Hawkins, Nick
Heath, David
Heathcoat-Amory, rh David
Hendry, Charles
Hermon, Lady
Hoban, Mark (Fareham)
Holmes, Paul
Horam, John (Orpington)
Howard, rh Michael
Howarth, Gerald (Aldershot)
Hunter, Andrew
Jack, rh Michael
Jackson, Robert (Wantage)
Jenkin, Bernard
Keetch, Paul
Key, Robert (Salisbury)
Kirkbride, Miss Julie
Kirkwood, Sir Archy
Knight, rh Greg (E Yorkshire)
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lamb, Norman
Lansley, Andrew
Laws, David (Yeovil)
Leigh, Edward
Letwin, rh Oliver
Lewis, Dr. Julian (New Forest E)
Liddell-Grainger, Ian
Lidington, David
Lilley, rh Peter
Llwyd, Elfyn
Loughton, Tim
Luff, Peter (M-Worcs)
McIntosh, Miss Anne
Mackay, rh Andrew
Maclean, rh David
McLoughlin, Patrick
Malins, Humfrey
Maples, John
Maude, rh Francis
Mawhinney, rh Sir Brian
May, Mrs Theresa
Mitchell, Andrew (Sutton Coldfield)
Moore, Michael
Moss, Malcolm
Murrison, Dr. Andrew
Norman, Archie
O'Brien, Stephen (Eddisbury)
Öpik, Lembit
Osborne, George (Tatton)
Ottaway, Richard
Page, Richard
Paice, James
Portillo, rh Michael
Price, Adam (E Carmarthen & Dinefwr)
Prisk, Mark (Hertford)
Pugh, Dr. John
Randall, John
Redwood, rh John
Reid, Alan (Argyll & Bute)
Rendel, David
Robertson, Angus (Moray)
Robertson, Laurence (Tewk'b'ry)
Robinson, Peter (Belfast E)
Roe, Mrs Marion
Rosindell, Andrew
Ruffley, David
Russell, Bob (Colchester)
Salmond, Alex
Sanders, Adrian
Sayeed, Jonathan
Shephard, rh Mrs Gillian
Shepherd, Richard
Simmonds, Mark
Smith, Sir Robert (W Ab'd'ns & Kincardine)
Soames, Nicholas
Spelman, Mrs Caroline
Spicer, Sir Michael
Spink, Bob (Castle Point)
Spring, Richard
Stanley, rh Sir John
Streeter, Gary
Stunell, Andrew
Swire, Hugo (E Devon)
Taylor, Ian (Esher)
Taylor, John (Solihull)
Taylor, Dr. Richard (Wyre F)
Thomas, Simon (Ceredigion)
Thurso, John
Tonge, Dr. Jenny
Tredinnick, David
Trend, Michael
Trimble, rh David
Turner, Andrew (Isle of Wight)
Tyrie, Andrew
Viggers, Peter
Waterson, Nigel
Watkinson, Angela
Webb, Steve (Northavon)
Weir, Michael
Whittingdale, John
Widdecombe, rh Miss Ann
Wiggin, Bill
Willetts, David
Williams, Hywel (Caernarfon)
Wilshire, David
Winterton, Ann (Congleton)
Wishart, Pete
Yeo, Tim (S Suffolk)
Young, rh Sir George
Younger-Ross, Richard

Tellers for the Ayes:


Hugh Robertson and
Mr. Robert Syms


NOES


Abbott, Ms Diane
Adams, Irene (Paisley N)
Ainger, Nick
Ainsworth, Bob (Cov'try NE)
Alexander, Douglas
Allen, Graham
Anderson, rh Donald (Swansea E)
Anderson, Janet (Rossendale & Darwen)
Armstrong, rh Ms Hilary
Atherton, Ms Candy
Atkins, Charlotte
Austin, John
Bailey, Adrian
Baird, Vera
Banks, Tony
Barnes, Harry
Battle, John
Bayley, Hugh
Beard, Nigel
Begg, Miss Anne
Bell, Stuart
Bennett, Andrew
Benton, Joe (Bootle)
Berry, Roger
Best, Harold
Blackman, Liz
Blizzard, Bob
Boateng, rh Paul
Borrow, David
Bradley, rh Keith (Withington)
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brown, Russell (Dumfries)
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Byers, rh Stephen
Caborn, rh Richard
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Caplin, Ivor
Casale, Roger
Cawsey, Ian (Brigg)
Challen, Colin
Clapham, Michael
Clark, Mrs Helen (Peterborough)
Clark, Dr. Lynda (Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, rh Tom (Coatbridge & Chryston)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann (Cynon V)
Coffey, Ms Ann
Cohen, Harry
Coleman, Iain
Connarty, Michael
Cook, Frank (Stockton N)
Cook, rh Robin (Livingston)
Cooper, Yvette
Corbyn, Jeremy
Corston, Jean
Cousins, Jim
Cox, Tom (Tooting)
Cranston, Ross
Cruddas, Jon
Cryer, Ann (Keighley)
Cryer, John (Hornchurch)
Cummings, John
Cunningham, rh Dr. Jack (Copeland)
Cunningham, Jim (Coventry S)
Cunningham, Tony (Workington)
Curtis-Thomas, Mrs Claire
Dalyell, Tam
Davey, Valerie (Bristol W)
David, Wayne
Davidson, Ian
Davies, rh Denzil (Llanelli)
Davies, Geraint (Croydon C)
Davis, rh Terry (B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Denham, rh John
Dhanda, Parmjit
Dismore, Andrew
Dobbin, Jim (Heywood)
Donohoe, Brian H.
Doran, Frank
Dowd, Jim (Lewisham W)
Drew, David (Stroud)
Dunwoody, Mrs Gwyneth
Eagle, Angela (Wallasey)
Efford, Clive
Ellman, Mrs Louise
Etherington, Bill
Field, rh Frank (Birkenhead)
Fisher, Mark
Fitzpatrick, Jim
Fitzsimons, Mrs Lorna
Follett, Barbara
Foster, rh Derek
Foster, Michael Jabez (Hastings & Rye)
George, rh Bruce (Walsall S)
Gerrard, Neil
Gilroy, Linda
Godsiff, Roger
Goggins, Paul
Griffiths, Jane (Reading E)
Griffiths, Win (Bridgend)
Grogan, John
Hain, rh Peter
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, David (Midlothian)
Hamilton, Fabian (Leeds NE)
Hanson, David
Harman, rh Ms Harriet
Harris, Tom (Glasgow Cathcart)
Havard, Dai (Merthyr Tydfil & Rhymney)
Healey, John
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hendrick, Mark
Hepburn, Stephen
Heppell, John
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, Keith (Streatham)
Hinchliffe, David
Hoey, Kate (Vauxhall)
Hood, Jimmy (Clydesdale)
Hoon, rh Geoffrey
Hope, Phil (Corby)
Hopkins, Kelvin
Howarth, George (Knowsley N & Sefton E)
Howells, Dr. Kim
Hughes, Beverley (Stretford & Urmston)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hurst, Alan (Braintree)
Hutton, rh John
Iddon, Dr. Brian
Illsley, Eric
Irranca-Davies, Huw
Jackson, Glenda (Hampstead & Highgate)
Jackson, Helen (Hillsborough)
Jenkins, Brian
Johnson, Miss Melanie (Welwyn Hatfield)
Jones, Helen (Warrington N)
Jones, Jon Owen (Cardiff C)
Jones, Lynne (Selly Oak)
Kaufman, rh Gerald
Keen, Alan (Feltham)
Keen, Ann (Brentford)
Khabra, Piara S.
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby)
King, Ms Oona (Bethnal Green & Bow)
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, David
Lawrence, Mrs Jackie
Laxton, Bob (Derby N)
Lepper, David
Leslie, Christopher
Levitt, Tom (High Peak)
Lewis, Ivan (Bury S)
Lewis, Terry (Worsley)
Linton, Martin
Lloyd, Tony (Manchester C)
Love, Andrew
Lucas, Ian (Wrexham)
Luke, Iain (Dundee E)
Lyons, John (Strathkelvin)
McAvoy, Thomas
McCabe, Stephen
McCafferty, Chris
McDonagh, Siobhain
MacDonald, Calum
McDonnell, John
MacDougall, John
McFall, John
McGuire, Mrs Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
Mackinlay, Andrew
McNulty, Tony
Mactaggart, Fiona
McWalter, Tony
Mahmood, Khalid
Mahon, Mrs Alice
Mallaber, Judy
Mann, John (Bassetlaw)
Marris, Rob (Wolverh'ton SW)
Marsden, Gordon (Blackpool S)
Marshall, David (Glasgow Shettleston)
Martlew, Eric
Meacher, rh Michael
Meale, Alan (Mansfield)
Mercer, Patrick
Merron, Gillian
Michael, rh Alun
Miliband, David
Miller, Andrew
Moffatt, Laura
Mole, Chris
Morgan, Julie
Mountford, Kali
Mudie, George
Mullin, Chris
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Naysmith, Dr. Doug
O'Brien, Bill (Normanton)
O'Brien, Mike (N Warks)
O'Hara, Edward
O'Neill, Martin
Osborne, Sandra (Ayr)
Palmer, Dr. Nick
Picking, Anne
Pickthall, Colin
Pike, Peter (Burnley)
Pollard, Kerry
Pope, Greg (Hyndburn)
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Ken
Quinn, Lawrie
Rammell, Bill
Reed, Andy (Loughborough)
Reid, rh Dr. John (Hamilton N & Bellshill)
Robertson, John (Glasgow Anniesland)
Robinson, Geoffrey (Coventry NW)
Roche, Mrs Barbara
Rooney, Terry
Ross, Ernie (Dundee W)
Roy, Frank (Motherwell)
Ruane, Chris
Ruddock, Joan
Russell, Ms Christine (City of Chester)
Ryan, Joan (Enfield N)
Salter, Martin
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Sheridan, Jim
Shipley, Ms Debra
Short, rh Clare
Singh, Marsha
Skinner, Dennis
Smith, rh Chris (Islington S & Finsbury)
Smith, Geraldine (Morecambe & Lunesdale)
Smith, Jacqui (Redditch)
Smith, John (Glamorgan)
Soley, Clive
Southworth, Helen
Starkey, Dr. Phyllis
Steinberg, Gerry
Stevenson, George
Stewart, David (Inverness E & Lochaber)
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stoate, Dr. Howard
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Gerry
Tami, Mark (Alyn)
Taylor, Dari (Stockton S)
Thomas, Gareth (Clwyd W)
Thomas, Gareth (Harrow W)
Timms, Stephen
Tipping, Paddy
Touhig, Don (Islwyn)
Trickett, Jon
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr. Desmond (Brighton Kemptown)
Turner, Neil (Wigan)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Tynan, Bill (Hamilton S)
Vaz, Keith (Leicester E)
Vis, Dr. Rudi
Walley, Ms Joan
Ward, Claire
Wareing, Robert N.
Watson, Tom (W Bromwich E)
Watts, David
White, Brian
Whitehead, Dr. Alan
Williams, rh Alan (Swansea W)
Williams, Betty (Conwy)
Wills, Michael
Wilson, Brian
Winnick, David
Wood, Mike (Batley)
Woodward, Shaun
Woolas, Phil
Worthington, Tony
Wray, James (Glasgow Baillieston)
Wright, Anthony D. (Gt Yarmouth)
Wright, David (Telford)
Wright, Tony (Cannock)

Tellers for the Noes:


Mr. Fraser Kemp and
Margaret Moran

Question accordingly negatived.

1 Jul 2003 : Column 268

It being more than five and a half hours after the commencement of proceedings on the first Ways and Means motion relating to the Bill, Madam Deputy Speaker, pursuant to Order [this day], proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.


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