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Mr. Prisk: I am happy for the Chief Secretary to correct his figures.
Mr. Boateng: Let me deal with this. I well remember our debate upstairs on stamp duty land tax. It was a good debate, and there was honest disagreement among hon. Members on both sides of the Committee about the desirability of those measures. We took the view that it was important to introduce the reform. We took the view that a potential could be realised given the contribution to regeneration of the assistance provided by the measures that we proposed. As I said during my speech and as has been said in the debates on the Budget generally, we have reached the view that we can better focus the relief, and that is what we have done.
On the figures, I appreciate the care that the hon. Gentleman takes with such matters. Table C8 of the Red Book shows that stamp duty receipts are projected to increase by about £0.8 billion as result of the forecast effect of the Budget measures from 2004–05 to 2005–06. That includes receipts from residential, commercial and, indeed, share transactions. Hon. Members who were upstairs in Committee at the time—it was a couple of years ago—will remember that we also discussed share transactions.
The Treasury's best estimate is that there will be a £220 million reduction in receipts from residential property and a £580 million increase from commercial property, including the £340 million to which the hon. Gentleman refers in the Red Book that will arise from the measures that we have taken in the Budget and the Bill. Those estimates are approximate.
The hon. Gentleman will know, too—indeed, as I said in my contribution and as he correctly identifies—that those figures are also based on the full package of Budget measures and the forecast effects. I simply say that for the purposes of clarity. He is quite right to point out—in no way do I intend to resile from it—that those sums come from the full package of measures. I hope that that clarifies the situation.
Mr. Prisk: I am grateful to the Chief Secretary for that clarification. He said £220 million; I think that he meant £250 million. That is certainly what is stated in the Red Book for the stamp duty land tax. I am referring to table 1.2, and without wishing to be too pedantic—although I already have a significant reputation for it on this tax—I think that the figure for the domestic change is £250 million.
Mr. Prisk:
That is super. Given the £90 million balance between the two sums and the additional
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£20 million that relates to tax avoidance, the Chancellor is obviously ahead by about £110 million in revenues because of the various changes. That is an important point to get on to the record.
To return to the principle of the disadvantage tax relief on commercial sites, my instinct and personal preference would be to have fewer little tinkering reliefs. If we had clearer, simpler, lower taxes, we would all be better off. I suspect that we can have that philosophical debate on another occasion. I am not personally wedded to the longevity of that relief. However, given the way that the Chancellor tinkers with such things every year, my concern, as ever, is that companies are put off engaging in the changes in their activity that the Government seek to encourage simply because they do not believe that the reliefs will be around next year, so why should they bother to go through the paperwork and so on? That is a very important point to make in terms of the way in which taxation has been dealt with under this Government.
I always hear from Labour Members how they are not willing to lecture us, but I remember the occasion when they were happy to regale us—indeed, they lectured us—with the fact that they passionately believe in consultation before making changes. Where was the consultation on this? It was done overnight. The Minister may refer to confidentiality and the fact that the Government must not allow anyone to take advantage, but a point of fairness is involved. The large property companies have lawyers and advisers who are able to move quickly. I appreciate that the concept of a lawyer moving quickly is perhaps a strange one, but that is what lawyers have been able to do on this occasion. Given that the provision is about disadvantaged areas, my worry is that small companies—the small fry, the family businesses and the enterprises that were considering the proposal—do not have such resources immediately available to them. They are not able to adjust their arrangements accordingly. The way in which the reliefs are offered, taken away and adjusted, tinkered and meddled with is significantly to the disadvantage of small firms. In principle, it is bad taxation policy.
That leads me on to several other thoughts about smaller enterprises and how the Bill and its larger brother might affect them. The first relates to clause 13 on the charmingly termed "non-corporate distribution rate for small companies". I am told by the Bill that it will remain at 19 per cent. That phrase is far from being as innocent as it appears. It masks a history in which a tax was once promoted by the Paymaster General. Sadly, she is not with us today, but she told us that small businesses should consider the change that the Government were making to try to reduce their tax burden to 0 per cent. It was a gift horse that small businesses should not look in mouth. I forget the exact words, but the point was the same. However, two years later, when the Government discovered that the number of corporates being created was far in excess of what they anticipated and that the poor, old Chancellor was losing money faster than he expected, they needed to change it. Businesses that were previously encouraged to take up the provision—such was the Government's benevolence—were suddenly told that it was wicked and shameful behaviour. It was a form of tax avoidance on which they needed to clamp down. None the less, it was the same policy.
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This constant attempt to rotate policies—to try something and, if it does not work, to adjust it—seriously damages small businesses. Sadly, and all too often, the Government do not understand the distinction between a "firm" and a "company", but they have encouraged many firms to become incorporated because that is how the firms thought that they were meant to arrange their affairs. They do that to keep their tax bills at a reasonable level, but they are then told that that is wicked and nasty. They are nasty tax avoiders who must be clamped down on.
Such behaviour by the Government makes most entrepreneurs say, "Forget it. I'll give up setting up my next business to create the next set of jobs and the next tranche of wealth and I'll go and enjoy my villa in Portugal. I wasn't planning to go there now, but I will do so because I'm fed up with the way that the Government treat things." That is one aspect of the way in which the Government deal with small businesses.
The last aspect of the Bill to which I wish to refer is an omission as much as anything else. I refer to the way in which the self-employed—not companies—are dealt with. Earlier, I mentioned the Chancellor of the Duchy of Lancaster. When trying to explain away the awkward figures on the fall in certain incomes, he said that they were irrelevant because they had been skewed by the self-employed, who were less relevant to the central question.
The Chancellor of the Duchy of Lancaster said that the incomes of the self-employed were entirely global, and I appreciate that he was self-employed for only a short time when he was able to spend more time with his family. For those of us who were self-employed for 10 or 11 years and who actually understand the principles behind the figures, the idea that the majority of the self-employed are globetrotting entrepreneurs who are on and off jets each and every hour is complete bunkum. That demonstrates both his economic ignorance and, frankly, the Government's unwillingness to understand the smallest of our entrepreneurs—the self-employed.
I am disappointed that the Paymaster General is not in the Chamber because the classic example of that attitude is, of course, the infamous IR35. When the measure was introduced, we were told that it would deal with wicked practice and tax avoidance that should not take place. We were told that £400 million would come back to the UK Government that was rightly theirs. Here we are, two or three years later in 2005. When we make inquiries of the Inland Revenue to find out how many cases have been brought, we are told that the number is 200 or more. We then inquire how many of the cases have succeeded and how much of that £400 million revenue has actually come pouring through the doors of the Treasury. I am told that roughly two of the 200 cases have been successful, so 198 have failed.
The frustrating aspect of the situation is that all the other self-employed souls who had to try to change their arrangements to comply with the legislation have suffered cost and a waste of their time only to find that the measure does not work. It has not brought in the revenue that we were told that it would and it has created a bureaucratic nightmare for the law-abiding majority who have tried to comply with it. The situation shows that, as is so often the case with the Government, they are all talk and no action.
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I have worries about this Bill and the Bill that we should have considered, but I have hopes for the Bill that I know we will consider under a Conservative Government in just a few weeks. The Bill is ill considered and has been poorly drafted in a rush with little care, consideration or consultation, but that is typical of the Government. It is frankly incomplete.
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