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Mr. Speaker: I am sorry, because I never like to hear about job losses and redundancies in any industry. It is the job of a local Member of Parliament to put those matters on the record in the House. The hon. Gentleman has done so, and I am sure that he will find other opportunities.
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Orders of the Day

Finance (No. 2) Bill

[Relevant document: Fourth Report from the Treasury Committee, Session 2005–06, HC 994 on the 2006 Budget.]

Order for Second Reading read.

Mr. Speaker: I have to inform the House that I have selected the reasoned amendment in the name of the Leader of the Opposition.

3.39 pm

The Chief Secretary to the Treasury (Mr. Des Browne): I beg to move, That the Bill be now read a Second time.

In the Chancellor's 10th Budget, my right hon. Friend set out our position of economic stability and growing economic strength: 54 quarters of consecutive growth, inflation at the 2 per cent. target, interest rates at sustained lows and growth of 2 to 2.5 per cent. above France, Germany, Italy and Japan. The Bill will maintain that position and strike the right balance between tax, spending and borrowing. It is part of the mechanism whereby we will deliver on the wider commitment and vision of a productive, enterprising, competitive Britain.

With the pace of world economic change accelerating, the pre-Budget report, the Budget and the Bill combine to strengthen Britain for the global opportunities ahead. Through those measures, we can lead the world in the new industries and technologies that increasingly shape our future, with more highly skilled jobs with higher wages; new choices for parents to balance careers and family life; investment and reform in public services, housing and our infrastructure; building on the climate change levy to meet the energy and environmental challenge; and securing fairness for each child by investing in every child. That is our vision—equipping Britain for the global challenges ahead; it is a vision of a modern Britain that leads in enterprise and prosperity because we lead in opportunity and fairness.

Mr. John Redwood (Wokingham) (Con): Carbon emissions have been going up despite the Government's tax policies. Does the Chief Secretary think that with the changes in the Budget, they will go down?

Mr. Browne: When I deal with the Bill's provisions I will come to our expectations in terms of carbon emissions, but I can reassure the right hon. Gentleman that our climate change levy and related policies on carbon emissions will ensure that we meet our Kyoto target and will make a significant contribution to the reduction of carbon emissions.

Rob Marris (Wolverhampton, South-West) (Lab): I do not know whether my right hon. Friend is familiar with the document "Climate Change: The UK Programme 2006", published by the Department for Environment, Food and Rural Affairs. I am dismayed that less than 10 per cent. of the document deals with adaptation to climate change, on which the UK is significantly behind. It is all very well to go on about carbon emissions and so on, which is important, but the
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UK produces only 2 per cent. of greenhouse gases. We need to adapt our country to deal with rising sea levels and the other challenges caused by inevitable climate change.

Mr. Browne: I am grateful to my hon. Friend for setting the wider context for the debate in relation to climate change, and for indicating something that the House may already know: not only does the Treasury have responsibility, through provisions in the Finance Bill, for part of the programme addressing such issues, but that responsibility is shared across the Government, principally by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs and her ministerial colleagues in DEFRA. My hon. Friend is right to point out that only 2 per cent. of carbon emissions are produced in the UK. That was a significant part of the reason my right hon. Friend the Chancellor made the speech at the weekend to an international audience, explaining our international responsibilities for dealing with such issues, including protecting our environment from the effects of climate change.

I turn to the details of the Bill, and I will talk first about productivity and competitiveness. To raise our game as a nation we must meet the productivity challenge. The logic is simple. With the right long-term decisions Britain can lead in some of the fastest growing and highest value-added sectors—City and business sectors, education and health, creative and science-based industries. As my right hon. Friend pointed out, those once small sectors now cover a third of our economy and exports, and will soon see a much higher share of jobs and wealth.

The House will remember the cycle that ended in 1997, and productivity is estimated to have grown at a rate of 2.59 per cent. over the first half of the current economic cycle—higher than the growth of 2.04 per cent. over the previous economic cycle. After decades of being behind, Britain has caught up with Germany in productivity, is ahead of Japan and has halved the gap with France. We must not put that opportunity at risk.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): The Chief Secretary has just explained how well he thinks Britain is doing in terms of growth in the economic cycle, but will he explain why our balance of payments is getting so much worse month by month? What can be done to halt that trend?

Mr. Browne: Of course the hon. Gentleman recognises that we are a trading nation and that our ability to trade will significantly contribute to our future. If he had listened to the last few chapters—or rather, paragraphs—of my contribution, he would know that I have set out clearly which sectors we in government have identified as providing the growth in our trade, and I had not understood that there was any difference across the House on the sectors where growth and improved productivity are possible and ought to be encouraged. Indeed, I have shared television studios with the shadow Chancellor of the Exchequer when he has made the very same point.

Our duty is to support such growth for years to come, and the Bill delivers on that promise, by targeting support to the cutting-edge sectors of our economy, to
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the creative industries—to our athletes, indeed—and to business. It is both a flexible and a tailored response. It introduces and builds on generous film tax relief for the production of culturally British films, with an eye on the benefits that those films bring, by replacing the existing relief and providing a new foundation to ensure the proper taxation of film production companies in general.

We have extended the research and development tax credit, by which £1.8 billion of support has been already claimed by companies that undertake research and development, and to support our high-tech cutting-edge industries clause 29 will expand their qualifying costs. To bolster business, the Bill will introduce a temporary increase in the amount of first-year allowances for small enterprises, thus enhancing support for new investors and increasing first-year capital allowance from 40 to 50 per cent.

Stewart Hosie (Dundee, East) (SNP): The Chief Secretary mentions an increase in the R and D tax credit and the total sum awarded so far. However, in February 2005 the Paymaster General said that £670 million would be available for the R and D tax credit in 2004–05. When the Financial Secretary wrote to me in October last year, he told me that only £290 million had been allocated—so what confidence can we have that all the money set aside for the R and D tax credit will in fact go to that cause?

Mr. Browne: Of course the hon. Gentleman well knows that the Government make available resources for certain purposes, and that those are drawn down. I do not have the detail available to respond to his specific question about the numbers—I apologise to the House for that, Mr. Speaker—but I will seek to ensure that that issue is addressed before the debate is closed.

Chris Bryant (Rhondda) (Lab): My right hon. Friend referred to the package of measures for the film industry. He will know that it is particularly important for the film industry to know some considerable time in advance what package of measures will be provided for it. When measures have changed suddenly in the past, British films have suddenly collapsed, so I wonder whether he will say how long-term he expects this set of measures to be.

Mr. Browne: I am sure that hon. Members on both sides of the House agree with the point that my hon. Friend makes. If people are to make long-term investments, they need a degree of long-term certainty, and I understand that these provisions are intended to be long-term.

Clause 91 also doubles the annual limit for investments under the enterprise investment scheme to £400,000. That will incentivise greater investment in small growth companies across our economy. We have boosted support for effective venture capital, too. Financial services in general and the City in particular are crucial sources of wealth and prosperity for the UK, and venture capital plays an invaluable role in investing in our businesses and promoting economic growth.

To ensure that the industry has a solid foundation for stable fundraising and continued growth, the Bill guarantees the rate of income tax relief for investments
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in venture capital trusts at 30 per cent. for the rest of this Parliament. The chief executive of the British Venture Capital Association, Peter Linthwaite, has backed that. He said that it means that we have

Enterprise, productivity and competition can be no better symbolised than by the Olympics and the Paralympics, which we have the honour of hosting in 2012. Those games will be a once-in-a-lifetime event for this country, and we can do our bit with the Bill by delivering on the commitments that we made as part of the original bid. Among other things, the measures exempt the London Organising Committee of the Olympic games from corporation tax and provide powers to ensure that the International Olympic Committee will not have a taxable presence in the UK.

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