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Venture Capital

10. Mr. David Kidney (Stafford) (Lab): What steps the Treasury takes to ensure that there is adequate access to venture capital in all regions. [197393]

The Economic Secretary to the Treasury (John Healey): The UK has one of the largest venture capital markets in Europe, but that national strength does not always mean that enterprises in all regions can access the finance that they need, especially in small amounts. We have therefore introduced a number of programmes, including nine regional venture capital funds, to ensure that firms in every region can get the investment capital that they need to start up and grow.

Mr. Kidney: My worries are graduate retention in my Stafford constituency and the availability of venture capital for new business start-ups and the moving up of successful businesses. Does my right hon. Friend agree that the Treasury's support for regional venture capital has stimulated the development of sub-regional venture capital funds, such as North Staffordshire Risk Capital Fund plc, which is ably chaired by David Gage? Does the Treasury welcome that development, and will it support that in the future?

John Healey: It certainly is. I congratulate my hon. Friend on the interest that he takes in such matters and in the operation of the north Staffordshire fund.

My hon. Friend is right. The introduction of the nine regional venture capital funds has also spawned, with some public money, significant sums of private investment. That is partly why 300,000 new businesses have come into existence in our economy since 1997. I hope that, as we prepare for next week's national enterprise week—the first to encourage entrepreneurial activity—we will have support from hon. Members on both sides of the House for the progress that Britain's small businesses are making under a Labour Government.

Adam Price (East Carmarthen and Dinefwr) (PC): Notwithstanding the success of the regional venture capital funds in England, does the Economic Secretary accept that there is still an imbalance between the supply of venture capital and other private sector investment capital vis-à-vis the south-east of England and the rest of the country? Will the Treasury consider other measures, such as tax incentives for venture capital companies in other parts of the United Kingdom?

John Healey: On the contrary, there is a good balance in respect of the public money that is used to prime the investment of private sector money. A couple of weeks ago, I was with the chairman of the Welsh Development
 
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Agency, who told me about the progress that is being made in Wales, not just in setting up regional venture capital funds, but in using the tax reliefs available under the enterprise investment scheme and the venture capital funds. Public money is leveraging in billions of pounds of private sector investment to support Britain's small businesses so that they start up and grow.

Mr. George Mudie (Leeds, East) (Lab): The Treasury Committee heard as recently as Tuesday this week that, although the regional fund is working, 47 per cent. of the investment still goes into London and the south-east. Only something like 8 per cent. goes to Yorkshire. Will the Minister consider meeting the banks and investment houses to persuade them, by one method or another, to become more proactive in the regions, where there are great projects but insufficient interest from the finance houses?

John Healey: My hon. Friend gives distinguished service on the Treasury Committee and puts his finger on one of the long-standing problems. Investment capital has generally been available to firms typically in the south-east and to those that want to make larger investments. Those are the equity gaps that we have tried to fill with our regional venture capital funds. He will know, because he takes a close interest in Yorkshire, that the fund there has been in existence for nearly two years with a total value of £25 million. Although it is still getting up and running, it is already making investments in Yorkshire-based small businesses.

My hon. Friend invites me to meet a delegation. I shall meet any group, whether it invests nationally in the south-east or concentrates on stronger investment in the Yorkshire region.

Tax Credits

11. Norman Lamb (North Norfolk) (LD): If he will make a statement on the recovery of overpayment of tax credits. [197394]

The Paymaster General (Dawn Primarolo): Overpayments of tax credits are collected from continuing payments of tax credits wherever possible. There are limits on the amounts by which current payments can be reduced, depending on the claimant's circumstances. If there are no continuing payments, the money is collected direct and payments can be made over a 12-month period.

Norman Lamb: I am sure that the Paymaster-General accepts that the recovery of overpayments can seriously affect the finances of low-income families, yet all attempts to discover the scale of the chaos have been stonewalled. It affects 455,000 families. The Auditor-General concluded that the scale of the errors is unacceptably high, which led him to qualify his audit opinion. Will she accept his demand to provide full information far earlier than July next year, which is her current plan, and preferably before the next general election.

Dawn Primarolo: The hon. Gentleman raises three points. First, the final figures for overpayments in the system will be produced when we have completed the
 
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process. They are still based on the estimated income of those who will not submit their figures until January. Those figures will be available from National Statistics in spring 2005, when there has been a complete cycle of the tax credits.

The hon. Gentleman's second point was about the National Audit Office's comments on a system failure. As he knows, they appear in the NAO report at paragraphs 2.10 and 2.11, which refer specifically to system error that occurred in the early period of the tax credits. The Chairman of the Public Accounts Committee was notified and sums paid to some 373,000 households were written off.

The hon. Gentleman's third point—

Mr. Speaker: Order. There should not be a third point.

Mr. Bill Tynan (Hamilton, South) (Lab): Tax credits have been an unqualified success for the Government and for the people in my constituency who have benefited. However, I ask the Paymaster General to examine the manner in which deductions to recover overpayments of tax credits are made from people's income, which—in a few cases—is causing considerable problems in my constituency. If that is done compassionately and considerately, the system will be very good indeed.

Dawn Primarolo: Mr. Speaker, whenever an hon. Member puts more than one question to me, I shall reply to only one. For all this time, I had not appreciated that I was allowed to choose which one.

My hon. Friend's point is important. He acknowledged that few families are affected by overpayment, but for those few we need to ensure that the Inland Revenue deals with their inquiries and settles their cases as quickly as possible to minimise disruption to the family. I have raised the matter with the Inland Revenue and I assure him that I shall deal with it as quickly as I can.

Inheritance Tax

12. Mr. Michael Jack (Fylde) (Con): If he will make a statement on legitimate ways available to avoid paying inheritance tax. [197395]

The Financial Secretary to the Treasury (Mr. Stephen Timms): No inheritance tax is paid on the first £263,000 of any estate. There is a range of additional exemptions—for example, to help people to make gifts to charity or leave assets to their spouse. We have taken steps to prevent avoidance of inheritance tax through artificial schemes that are designed to get around the rules.

Mr. Jack: Is the Financial Secretary entirely comfortable with the structure and configuration of a tax if those with wealth can buy advice to avoid it, but those with houses affected by house price inflation worry about the amount that they can leave to their loved ones? Has not the time come to re-examine the structure
 
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of inheritance tax—to raise the starting point and thereafter to have a low marginal rate but with no exceptions made on amounts that are subject to the tax?

Mr. Timms: I am satisfied with our approach. We had to take steps to close several avoidance schemes and I believe that that was the right thing to do. A big change in the threshold or reduction in the rate would lead to cuts in public services. I was struck by the comment made by the hon. Member for Buckingham (Mr. Bercow), who is reported in an interview published last week as saying:

"I certainly do not meet many people who tell me that their main priority is a cut in inheritance tax."

I think that he is right—it is not a high priority for most people. Most people want continuing investment in public services and, as it stands, inheritance tax is making an important contribution to that.

Rob Marris (Wolverhampton, South-West) (Lab): I urge my hon. Friend to hold fast to that answer. The right hon. Member for Fylde (Mr. Jack) talked about house price inflation affecting people's liability for inheritance tax, but for the vast majority of those people that is wholly unearned income—merely the result of inflation. I urge the Government to hold fast on inheritance tax.

Mr. Timms: I agree with my hon. Friend. Only about 32,000 estates—5 per cent. of the total and thus a very small proportion—are likely to pay inheritance tax this year. I think that the balance on inheritance tax is about right.
 
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