House of Commons
Thursday 4 March 2004
The House met at half-past Eleven o'clock
PRAYERS
[Mr. Speaker in the Chair]
Oral Answers to Questions
TREASURY
The Chancellor of the Exchequer was asked—
Schools Investment (Wolverhampton, South-West)
1. Rob Marris (Wolverhampton, South-West) (Lab): What assessment he has made of the effects of Government capital investment in schools in Wolverhampton, South-West since 1997. [158467]
The Chancellor of the Exchequer (Mr. Gordon Brown): Since 1997, Government support for capital investment in school buildings in Wolverhampton alone has been £43 million. In England as a whole, investment has risen from £700 million to reach £5.1 billion. Because over the next 15 years we are committed to ensuring that all secondary schools in Wolverhampton are upgraded, we will announce our capital investment programme soon.
At the start of this Question Time, it may help the House to know that the Treasury will publish Lord Penrose's report into Equitable Life on Monday. We will publish the report in full and my hon. Friend the Financial Secretary will make a statement to the House.
Rob Marris: I thank my right hon. Friend for that answer, and for providing schools in Wolverhampton with £43 million of capital investment over the past six years. Coincidentally, I also had the first question at the most recent Treasury questions. On that occasion, the Chancellor announced the date of this year's Budget. Will he firmly assure me that, in his Budget, he will maintain capital investment in schools in Wolverhampton, and that he is not planning massive cuts to overall spending?
Mr. Brown: I am grateful to my hon. Friend, although every reply that I give him is very expensive. I assure him that we plan to expand our programme of capital investment over the next spending round. It would be disastrous for the country and for education if we cut capital investment in our schools. If the education budget were to be cut, there would be cuts in further and adult education, in Sure Start, in nursery education and in universities. That is the Opposition's programme.
Spirit Duty Fraud
2. Mr. Alistair Carmichael (Orkney and Shetland) (LD): If he will make a statement on the independent review of spirit duty fraud levels. [158468]
The Economic Secretary to the Treasury (John Healey): I have welcomed the review by the Comptroller and Auditor General, Sir John Bourn, of the estimates of spirits fraud. I have offered the full support and assistance of Treasury and Customs officials. The content of the review is a matter for Sir John.
Mr. Carmichael : I am grateful to the Minister for that reply, and for meeting the Scotch Whisky Association yesterday to discuss the issue of duty fraud. The association claims that the proposals that it is bringing forward would increase the tax take, and do so before the strip stamp that is being considered. The National Audit Office is also making an independent assessment of the scale of the problem. Will the Economic Secretary assure the House that we are not talking about a decision that has been made already, and that he is still listening to the industry on this question?
John Healey: The hon. Gentleman is right, and he will know that yesterday's meeting with the Scotch Whisky Association was just the latest of the many detailed discussions that my officials and I have had with the industry. The industry's alternative proposals have been worked up, and I expect to receive them at the end of the week. We will give them serious consideration, as it is clear that there is a very serious problem. No one can dispute that the public taxpayer is being defrauded of hundreds of millions of pounds that should go to the public purse. Organised criminal networks obtain large consignments of spirits that they then divert to the market through wholesalers and retailers, with the result that no one—not consumers, retailers or Customs officers—is any the wiser about the fraud that is going on. No responsible Government can do other than tackle fraud such as that in the way that is necessary.
Mr. Brian H. Donohoe (Cunninghame, South) (Lab): Does my hon. Friend agree that there are problems with strip stamps? Where they have been implemented, it has been shown that there is more fraud, rather than less. Will he say whether the alternative proposed yesterday by the industry was acceptable? He has often agreed to meet the all-party group in the past. Will he do so again, before the Budget, so that we can put to him one last plea to accept an alternative?
John Healey: It is simply not the case that strip stamps have failed in all the countries that have introduced them. More than 40 countries, including EU member states, operate strip stamp arrangements, for quality assurance as well as for the control of fraud. We have worked very closely with the trade on this matter, looking at the logistics and practical problems that might be encountered if we decided to introduce strip stamps in the UK. I shall indeed be sure to meet my hon. Friend and his colleagues on the all-party Scotch whisky group. I have done so before, and will do so again before the Budget. Since my right hon. Friend the Chancellor's announcement in the pre-Budget report, I have taken
part in a series of detailed discussions. I have met 14 separate companies in the industry. My officials and I have taken part in 38 separate meetings on these matters since the pre-Budget report. That is an unprecedented level of consultation, discussion and detailed joint working.
Angus Robertson (Moray) (SNP): Has the Minister read the letter from Glasgow-based security printers Gavin Watson Ltd., which was sent to the Chancellor on 12 December 2003, about what they say is the
- "impracticability of the proposed Tax Stamps for spirits"?
John Healey: I am aware of the letter, and of the reasonable concerns that exist about any system of strip stamps and the potential for counterfeiting problems. Advice from other players in the industry suggests that such a system can be introduced and the counterfeiting problem dealt with. The question for the hon. Gentleman is whether he is prepared to back the action that we have to take to stamp out the current level of spirit fraud. If the answer is yes, I look forward to his support after the Budget for the action that we ultimately take to deal with the problem.
Small Business Taxation
3. Richard Ottaway (Croydon, South) (Con): What discussions he has had with representatives of small businesses regarding proposed changes to the taxation of small incorporated businesses. [158469]
The Paymaster General (Dawn Primarolo): The Government will announce in the Budget their proposals for taxing owner-managed businesses. It would not be right to consult on proposals of this nature in the period immediately prior to the Budget.
Richard Ottaway : The Minister will be aware that since 1999 taxation policy for small businesses has been skewed in such a way that it is much more attractive for small businesses to incorporate than to remain unincorporated. She will be aware that in the past financial year the number of new incorporations went up by 43 per cent. Was that an intended consequence? If so, why has she hinted that she will reverse the policy?
Dawn Primarolo: The hon. Gentleman knows full well that the Government policy on incorporation and unincorporated companies is to introduce a series of measures that help both, for example the 40 per cent. first-year capital allowances. He will also know that the Government's policy is to ensure that incentives are focused on encouraging companies to retain profits in order to reinvest in themselves to help them grow. It is right that the Government should consider that principle now and ensure that the policies in place are delivering reinvestment in companies that are growing, providing jobs and increasing productivity and affluence.
Roger Casale (Wimbledon) (Lab): May I tell my right hon. Friend that many small businesses in my constituency have incorporated, encouraged by the prospect of stable economic growth, the ability to access research and development tax credits and the zero rate of tax on £10,000 profits? She has said that she keeps these matters under review. Will she make sure that any further changes are introduced fairly and build on the good consultation with the Federation of Small Businesses and the British Chambers of Commerce that this Government have established, in stark contrast to the deaf ears of the Tory party when it was in office?
Dawn Primarolo: My hon. Friend is right that the stable economic environment is necessary. The stability produced by this Government has ensured that regardless of companies' incorporation or otherwise, we have more companies, they are growing and they are contributing to the British economy. That stability has in part been secured by consideration of tax issues in detailed discussions with all the organisations involved, including the Federation of Small Businesses, with which we are in regular contact.
Mr. David Ruffley (Bury St. Edmunds) (Con): In 2002 the Chancellor told us that the small tax incentive for small incorporated businesses would cost not more than £265 million in the current financial year. Now independent experts tell us that it will cost the Exchequer at least four times that. As a result the right hon. Lady tells us that she is contemplating a U-turn—a change which will mean higher taxes on hard-pressed small business men and women. Will the right hon. Lady confirm that that proves that when it comes to tax, new Labour's figures simply do not add up?
Dawn Primarolo: As usual, the hon. Gentleman bases his assertions on figures that he cannot substantiate. As he well knows, the growth in jobs and in small businesses and the benefits to his constituency in seeing reductions in unemployment—down by 48 per cent.—are all part of the Government's strategy of ensuring we deliver economic stability, in which all companies, small, large, incorporated and unincorporated, can grow.
Brian Cotter (Weston-super-Mare) (LD): Does the Minister not realise that highlighting that possible change causes an enormous amount of concern to small businesses? There has been such excessive tinkering with the taxation system that instead of stability, which is what the Government said they wanted, we have instability; we are creating jobs for accountants rather than in small businesses.
Dawn Primarolo: We shall only have to wait until later today for an abject lesson in changing policies; my recollection is that the hon. Gentleman has supported every measure the Government have introduced to help small businesses, whether incorporated or unincorporated, because he realises the value of helping companies to grow, to reinvest in their business and create the jobs that we all need in our constituencies—including his.
Mr. Howard Flight (Arundel and South Downs) (Con): During the Standing Committee on the Finance Act 2002, I questioned the wisdom of the Government giving large tax increases to small businesses to incorporate and, indeed, the wisdom of favouring one legal structure over another. The Paymaster General responded very pithily to my question, in confirmation of that intent—the Chancellor might bother to listen to this—and told me that small business would not look a gift horse in the mouth.
In the light of IR591, 117 MPs signed early-day motion 501, asking the Chancellor to explain what has gone wrong with Government policy and what are now their intentions. The fact is that the Government deliberately—[Interruption.]
Mr. Speaker: Order. May I remind the hon. Gentleman that we are still only on Question 3? We must move on, but the Paymaster General can answer.
Dawn Primarolo: I am sorry to say that, as always, the hon. Member for Arundel and South Downs (Mr. Flight) is confused. The Government did not introduce tax increases; we introduced reductions in tax to help small businesses to grow so that they could contribute to economic stability and to the growth and development of our economy. As a measure of the hon. Gentleman's confusion, at that time he was forecasting a crash.
| Next Section
| Index | Home Page |