The Financial Secretary to the Treasury (John Healey): It is a pleasure to follow the hon. Member for West Suffolk (Mr. Spring) for the first time from the Dispatch Box and to respond to such a good debate: 20 Back Benchers have spoken, including nine who made their maiden speeches. I am not sure whether the Whips on either side have told those Members who made their maiden speeches that a speech on Second Reading is normally an indication of volunteering for service on the Standing Committee. They say that every Member should serve at some time on a Standing Committee that considers a Finance Bill; they also say that the wise ones do so only once.
I welcome the Conservative Front Benchers' recognition of the important role of anti-avoidance legislation. I welcome their decision not to vote against the Bill. I also welcome their intention rightly to subject its provisions to close scrutiny in Committee. I was interested by the remarks of the hon. Member for Runnymede and Weybridge (Mr. Hammond) who claimed in his speech and on his website and the Conservative website that the Bill will put at risk investment into Britain. He said that it could harm British business and deter investment.
I must say that I welcome that interest in investment. It is certainly true that, beyond entrenching Britain's long-term economic stability, probably the greatest imperative for our future prosperity is securing the sustained increases in investment, from both public and private sources, that will drive the improvements in productivity that will ensure that this country and our companies retain and improve their competitiveness in future. That is why, compared with 1997, we are now investing £1 billion more in science, £9 billion more in transport and £27 billion more in education and training.
Perhaps we can also look forward to a warmer recognition of the important tax reforms that the Government have put in place to promote private investment: the research and development tax credit; permanent first-year capital allowances; the cut in corporation tax from 33 to 30 per cent. and from 23 to 19 per cent. for small firms; and, of course, the cut in capital gains tax from 40 per cent., where it had been for many years, to 10 per cent. now. We will continue to consider other measures to boost business investment, and to the extent that we can do so with support from the Opposition, so much the better.
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): Would the hon. Gentleman not admit that the real mark of an economy's competence is the amount of foreign investment that a country gains? Under Margaret Thatcher, there was a time when we were gaining 40 per cent. of all inward investment from the European Community. That figure is now down to almost 10 per cent. Is that not a mark of the European Community's confidence in this economy?
In recent years this country has done extremely well at attracting direct foreign investment,
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and we still do. We lead many other European countries on foreign direct investment into the European Community. Business investment has also been rising recently.
I look forward to the detailed debates on the Bill's specific provisions that I will no doubt have with the hon. Member for Runnymede and Weybridge, but in keeping with this Second Reading debate, I propose to respond to two of his principal questions now. He raised a concern connected with insurance companies about business transfers and apportionment under clause 42. He said that fundamental changes would be made through secondary rather than primary legislation, and that point was also made by the hon. Members for Chipping Barnet (Mrs. Villiers) and for Wimbledon (Stephen Hammond). The regulation-making power about which the hon. Member for Runnymede and Weybridge is worried will allow continuing consultation on the detail of the new rules with the insurance industry. The industry is actively involved in the process. It wanted more time for consultation and accepted that the way to achieve that would be to implement the provisions in secondary rather than in primary legislation. I think that it also accepts that that is a sensible way of ensuring that we can change provisions of tax legislation if the Financial Services Authority changes the regulatory regime.
The second principal point of concern that the hon. Member for Runnymede and Weybridge raised was what he described as retrospection. The Bill contains several provisions that were pre-announced in either the pre-Budget report 2004 or the Budget 2005. It is standard practice to make anti-avoidance provisions effective from the date of their announcement to prevent individuals and companies from taking advantage of the gap between the dates of their announcement and implementation in legislation. He and his colleagues will recognise that that is standard practice because it was done by the previous Government and has continued to be done by this Government.
The hon. Member for Eastleigh (Chris Huhne) acknowledged that macro-economic policy is a sound backdrop to the Bill. I welcome the fact that he brings a strong European perspective to our debates, as does the hon. Member for Chipping Barnet. He and the hon. Member for Richmond Park (Susan Kramer) made serious points about self-invested personal pensions and the scope to put property into pension funds. They both promised to give those provisions close scrutiny during the passage of the Bill, and I look forward to that because those measures are not in the Billthey were legislated for in last year's Finance Bill.
The hon. Member for Richmond Park also raised alternative funding mechanisms, which are well beyond the scope of the Bill. She may know that the Government are considering as part of the package of proposals put forward by the Barker review the possibility of a planning-gain supplement, which might address her point.
I turn to the admirable and entertaining maiden speeches to which the House has been treated. My hon. Friend the Member for Newport, East (Jessica Morden) gave us the model of a maiden speech. She, like her predecessor, will clearly be a committed and diligent MP. She set out the challenges that she wants to tackle as a Member of the House and made it clear how much
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progress her constituency has made under a Labour Government. I am pleased to say, however, that she will not be making a submission to the boundary commission to propose renaming her constituency "New Newport, East", despite the fact that she has given good service to new Labour in several roles, most recently as a regional director in Wales.
My hon. Friend the Member for North Ayrshire and Arran (Ms Clark) made an impressive maiden speech with no speech notes, but lots of passion. She clearly brings a strong political family history and pedigree to the House and I look forward to the strong contribution that she will make to our debates in the future.
My hon. Friend the Member for Bristol, East (Ms McCarthy) treated us to one of a number of humorous maiden speeches made today. As she said, she follows several distinguished predecessors who have represented her constituency, but she brings significant experience of economic and financial matters to the House and, hopefully, to our debates on economic matters, too.
I was pleased to be present when the hon. Member for Braintree (Mr. Newmark) delivered a courteous and kind tribute to his predecessors, including Alan Hurst. The hon. Gentleman treated us to a very interesting and entertaining maiden speech and talked about the history of his constituency and in particular the history of a local market, which dates back to the early 1200s under King John. That reminded me that King John introduced the first national customs service, although I do not know whether he did so with some of the hon. Gentleman's local markets in mind at the time.
The hon. Gentleman made a couple of rather strident political points, as did the hon. Member for Beverley and Holderness (Mr. Stuart). Both tried to take the Government to task over our approach to support for pensioners. May I just say that means-testing is necessary for means targeting, and targeting resources on our poorest pensioners through pension credit means that the poorest third of pensioners now receive £32 a week more than they would have done had we simply raised the basic state pension in line with earnings since 1997? The pension credit now pays more than £6 billion a year to our poorest pensioners, guaranteeing them now a minimum income of £109 for a single pensioner and £167 for a pensioner couple.
Mr. Davies: That is very kind. Does the Financial Secretary think it right that pensioners in the category that he has just described should be paying an effective marginal tax rate of 40 per cent? What does he think imposing such a marginal tax rate on pensioners with small savings or other incomes does to the incentive to save among people on modest incomes during their working lives?