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Mr. Swire: There was a seminar this morning on how to renew seaside and coastal towns, some of which have suffered over past years. One of the problems in several of our seaside towns is the proliferation of charity shops, which happens because retail units are empty. Surely we should make it easier for people to take offices and encourage them to do so rather than implementing the Bill's measures, which would represent a move in the opposite direction.
Mr. Simmonds: My hon. Friend makes a good point. Skegness is part of my constituency, so I was hoping to attend the seminar. Unfortunately, it clashed with the time when I had to go to the Public Bill Office to hand in the title of my ten-minute Bill. I have asked the Chief Secretary's office for any information that emanated from the seminar.
The main driving force behind the proliferation of charity shops is the fact that they do not pay rates, which means that they have fewer overheads than normal retailers. Although I am not suggesting that we change that situation, charity shops have a competitive advantage that allows them to go into weaker retail pitches than normal retailers that do not enjoy that tax break.
8.15 pm
I shall emphasise the importance of retail employment throughout the United Kingdom.
Fortunately, a document with which the House of Commons Library provided me provides information on the constituencies of the Chief Secretary, the Paymaster General and myself on the same page. In my constituency, 15 per cent. of the work force are employed in retail—that figure excludes the motor trade. In the Chief Secretary's constituency, 10 per cent.—5,000 people—are employed in the retail sector. Twelve per cent. of the work force in the Paymaster General's constituency of Bristol, South are employed in retail. Those statistics are on the high side but they are fairly average. I shall cite a few extremes. In East Ham, 23 per cent. of the work force are employed in retail. The figure is 21 per cent. in Hendon and 24 per cent. in Thurrock—one in four people are employed in the retail trade.Retail makes a massive direct and indirect contribution to local communities and economies. Enormous numbers of people rely on a successful, thriving, flexible and expansive retail sector for their economic well-being. The Government's muddled and ill-thought proposals put that at risk. I hope that Labour Members will be prepared to return to their constituencies and explain that the policy to place an additional tax burden on retailers led directly and indirectly to the loss of people's jobs in the retail sector.
Mr. Djanogly: It is important to make the point that the costs will be passed on. Customers and consumers will also be hit because the prices in the shops that they visit will be higher.
Mr. Simmonds: My hon. Friend makes an extremely good point, as always. The measures will impact on jobs and job creation, but the implication is that they could also be inflationary. Perhaps only this Government could achieve such a unique combination of negative impacts.
It is clear that the Government's methodology is confused and no matter what the Chief Secretary says, they are introducing a virtually new tax, not a modernisation. The measures on stamp duty will have a negative impact: first, they will reduce tenant movement in the market; secondly, they will make it more difficult to refurbish buildings; thirdly, they will reduce investment by tenants; fourthly, they will depress the value of land; fifthly, they will increase building obsolescence; and, sixthly, they will lead to buildings being unoccupied. If the Government do not want to be responsible for those negative impacts, they must listen carefully to the professional organisations that they are supposed to be consulting.
Mr. Swire: My hon. Friend mentioned the serious implications for pension funds earlier, although he did not include that in his list. I suspect that the Treasury has not taken that fully into account as it eyes up money for a smash-and-grab raid.
Mr. Simmonds: My hon. Friend makes a good point. The closure of the tax loophole, which I am not necessarily defending, will have an immediate impact on pension funds because £200 million will be taken out almost immediately. That will have a detrimental
impact on the performance of pension funds, which will affect everyone in the United Kingdom with a pension fund.I have spoken for long enough, but I want to raise two final points. I mentioned sale and leasebacks, sub-sales and securitisation on Second Reading but I cannot find any clarification on those matters from the Bill or discussions in Committee. No one seems to have addressed those technical, complex and serious matters. It is completely unacceptable to deal with those matters using delegated legislation because there will be no proper discussion or scrutiny and, probably, no vote. They should be included in the Bill.
My second point is allied to that concern and relates to clause 57, which enables properties in deprived areas to avoid stamp duty. In principle, I do not have a problem with that. It sounds sensible and commendable, but surely it cannot have been the Government's intention to increase the value of some commercial assets in deprived areas by up to £50 million. Meadowhall shopping centre, which is outside Sheffield, is in a deprived residential area. As a result of removing the 4 per cent. charge, £50 million is added to its value—10p of the share value of the company that owns it and 1 per cent. of the net asset value of the whole company. That is ludicrous. Almost the whole of central Birmingham, central Manchester and Canary Wharf are exempt. Is that a proper and justifiable use of taxpayers' money? I think that it should be spent elsewhere and not used in such a way.
The evidence to back that is clear when one considers that the analysis of the deprived areas is based purely on the affluence—or lack of it—of residents, not on the economic and business activity that occurs in a particular ward. I shall not go into the detail of what happens when ward boundaries change, because that is an argument for another day, but none of those things seems to have been discussed, never mind set out in black and white. That is a further argument for decoupling residential and commercial property.
I was pleased and impressed when the Paymaster General responded in a constructive and helpful manner to points that I raised on Second Reading. She said:
- "the Government have sought to protect small businesses in a variety of ways through thresholds, which the hon. Member for Boston and Skegness will have ample time to discuss. I should be happy to give him the detail."—[Official Report, 6 May 2003; Vol. 404, c. 630–31.]
Mr. Flight: I want specifically to address amendments Nos. 15, 16, 17 and 18, which relate to a section of the Bill that comes after the measures on stamp duty. Before doing so, I pay tribute to the most professional and important contributions by my hon. Friends the Members for Hertford and Stortford (Mr. Prisk), who made a forensic analysis of much of the Bill's shoddiness, and for Boston and Skegness (Mr.
Simmonds). I hope that the Chief Secretary and, more particularly, his advisers listened carefully to what was said.It was only some 13 years ago, when we were in power, that we were forced to reduce and suspend stamp duty to keep the residential property market afloat. In addition to the unresolved problems, the Government's proposals are inviting, at a particular time in the cycle, major damage to the sector. Again, I think with horror of the virtual halving of the equity assets of pension funds. Their property assets could also be severely damaged. Pensioners would never forgive the Administration responsible for that.
The four amendments relate to the objection in principle, as I mentioned in Committee, to the final paragraph in schedule 20, which gives further powers to the Treasury to amend and repeal primary legislation on stamp duty and stamp duty land tax by negative resolution regulation. In the light of what the Chancellor said subsequently, we are especially concerned that the Government may use the powers to implement their policies further to raise taxation, and stamp duty and stamp duty land tax on home owners, as part of their professed objective to ensure greater convergence of the UK housing market with the market in continental Europe. On that subject, we agree with the Governor of the Bank of England that the greater availability of longer-term mortgages is unlikely to have much impact. However, bearing in mind the bubble in prices of the past three or four years, it is possible that higher taxes and stamp duties on homes could have a major impact on house prices.
There are similar references in clause 123(2), which states:
- "The Treasury may by regulations make such other amendments and repeals as appear to them appropriate in consequence of the"
Regrettably, it has become only too apparent that the electors view the Government as not to be trusted. Our amendments would write into schedule 20 specific limits on the powers to change stamp duty and stamp duty land tax in accordance with the description given by the Chief Secretary of why the powers are being provided. The amendments tighten the powers in line with the Chief Secretary's response. They also change the negative resolution to a positive resolution.
It is unlikely that we will muster the majority to win if the amendments are put to a vote, but we want the Chief Secretary to give a clear and simple confirmation that the various measures that give the Treasury power to change the rate of stamp duty and stamp duty land tax by negative resolution and secondary legislation are
specifically concerned with transitional arrangements and will be used only in relation to those arrangements. We also want him to confirm that they are not a devious sleight of hand to enable the Chancellor to have a crackpot scheme to change dramatically the taxation of people's homes, motivated by questionable schemes to achieve convergence with EU property markets.
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