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Jeremy Wright (Rugby and Kenilworth) (Con): I have listened with interest to the variety of groups that the Chief Secretary has described as benefiting from the Bill. May I ask him about one that will not? Will he explain to the House why the Government concluded that pensioners needed £200 to help with their council tax last year, but not this year?
Mr. Browne: The hon. Gentleman will be aware, because it has been explained before in the House, that not only have this Government been significantly more generous in supporting local government than his party was at any time when it was in power—indeed, his party cut the support that it gave to local government—but we found additional support across Government for this year and next year, too. I was involved in that. As he will remember, the £200 was announced in two stages, in the previous pre-Budget report and the previous Budget. It was made clear that that payment was for 2005.
I want to mention not only competitiveness and productivity, but fairness, too. If Britain is to lead in the global economy, we must be not only a prosperous but a just society. That means helping those who can excel and offering a fair chance of a bright future to everyone. The Bill supports our sporting potential, but it also supports our giving potential. We are introducing measures, which are welcomed by charity representatives, to protect the integrity of reliefs for charitable giving and to assist greater collaboration by charities in trading companies.
This is all about fairness. On that theme, and following the Paymaster General's statement last July, the Bill also legislates to ensure that compensation payments paid by foreign banks to holocaust victims or their heirs are exempt from tax. Fairness is important in our society, so the Bill also legislates to clamp down further on tax avoidance and tax fraud—two activities that cheat the majority of our people who pay their fair share.
Mr. Peter Atkinson (Hexham) (Con): The Chief Secretary talks about fairness, but does he think that it is fair that the Inland Revenue should surcharge farmers who fail to pay their tax bill on time because they are owed so much money by the Department for Environment, Food and Rural Affairs?
Mr. Browne:
I am unaware of any individual case in which that has happened to a farmer. If the hon.
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Gentleman brings that issue in respect of any individual farmer to the attention of my right hon. Friend the Paymaster General, I am sure that she will look at that case.
Mr. Tobias Ellwood (Bournemouth, East) (Con): May I just go back to the issue of the £200? I want to understand why it was necessary to give £200 to pensioners before the election but it is not necessary now, when gas prices—energy prices—have increased. If ever pensioners needed support, it is now.
Mr. Browne: The hon. Gentleman asks me why one should provide support for council tax. If there is to be consistency of argument, it hardly seems logical that support for council tax payers should be a reflection of the pressure of energy prices. The specific answer to his question is that there were a number of years of rises in council tax of about 7 per cent., and at the conclusion of that, among other things, the Government offered support to pensioner households. As I have explained already to the hon. Member for Rugby and Kenilworth (Jeremy Wright), that support was first announced at £50 for households with pensioners in a certain age group, for 2005, and then increased to £200 in last year's Budget, because my right hon. Friend the Chancellor was able to find more resources for it.
Like all hon. Members, I have significant sympathy for those on fixed incomes who have to face the pressures that increased energy bills generate. However, it is unlikely that I, as a Minister, or any other Labour Member, will take any lessons from a party with such a record on VAT on energy and a lack of support for the steps that we have taken to help the poor. The answer to the hon. Gentleman's question is that year after year while we have been in power, we have supported pensioner households with specific payments to help them with their energy costs. We have given winter fuel allowances to households, and increased and maintained them. We indicated in the Budget that year on year, pensioners can look forward to such support.
Mr. John McFall (West Dunbartonshire) (Lab/Co-op): If the Minister reads the very fine report by the Treasury Committee published today to assist the House in this Second Reading debate, he will note that paragraph 116 says, in bold:
No doubt that influenced the Treasury's thinking.
Mr. Browne:
I am grateful to my right hon. Friend, as Chair of the Treasury Committee, for the report, which was published at 11 o'clock. I have a copy of it here. No doubt the fact that he has quoted part of it will give licence to many hon. Members to take advantage of the significant work that the Committee has done. He can look forward to the Government's response to the report being made in the normal manner. He is right to record that by dint of significant engagement with, and additional support to, local government, we have managed recently to sustain increases in council tax that reflect that support and indicate that there is now efficiency that was not there before.
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I am sure that hon. Members on both sides of the House agree that we have a duty to act swiftly, yet proportionately, to prevent abuses due to avoidance and fraud. After all, as we all know, such tax avoidance can undermine the funding of public services and is unfair on those who pay their fair share. Minimising its impact on the majority of taxpayers is vital. However, fraud is a complex area and our response to it must be sophisticated. For example, on missing trader fraud, the Bill provides for a change in accounting procedures for certain goods in clause 19. It clarifies the power to inspect goods in clause 20. It will also enable Her Majesty's Revenue and Customs to target businesses' record-keeping requirements to help to identify fraud. On a matter that is more widely reported, clause 2 will make it harder for smugglers to source illicit cigarettes and hand-rolling tobacco.
The tax system will be significantly simplified for small businesses by replacing the starting and non-corporate distribution rates of corporation tax with a single banding for small companies set at the current small companies rate, which will allow small companies to spend less time dealing with their tax affairs and more time growing their businesses. As the Institute of Directors noted when it welcomed the announcement, that will also increase the fairness of tax treatment between small businesses that operate in different legal forms.
Fairness extends to a range of areas. For example, many employees have benefited from the home computer initiative exemption to get a computer in their homes for personal use. The initiative has worked well, but times have changed and are changing rapidly, so the Bill repeals that exemption for a loan of computers to employees for personal use. However, I make it clear that personal computers and mobile phones provided for business use are not affected by the change. If a person already has a PC, the arrangements will not be affected by the change.
We are making the change to reflect the reality on the ground. The cost of computers has fallen dramatically, and for the vast majority of those using the exemption, access to information technology has improved, too. In the interests of fairness, we must now target resources on those who need them most: the poorest groups in society, which cannot always access IT. That is why we are looking to build on the success of our UK Online centres, which now number more than 6,000 throughout the country; it is why the Department for Work and Pensions is examining how to improve access to IT for the elderly; and it is why we will continue to consider this area throughout the comprehensive spending review.
Fairness is also about giving a fair deal to hard-working families, which is why clause 156 raises stamp duty thresholds. That takes some 40,000 home buyers out of stamp duty each year and, when added to the doubling of the threshold last year, means that some 400,000 home buyers are now out of the stamp duty range.
Julia Goldsworthy (Falmouth and Camborne) (LD):
Does the right hon. Gentleman think it fair that the richest 20 per cent. pay less in tax as a proportion of their income than the poorest 20 per cent.?
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Mr. Browne: I thank the hon. Lady for her question, and take this opportunity to welcome her to her position on the Front Bench. With respect, I think that crude assertions, drawing arbitrary lines in percentages and then making comparisons, does not assist us in deciding what is fair. [Interruption.] The shadow Chancellor says from a sedentary position, "They're your figures." It is irrelevant whose figures they are; I am referring to the comparison. It is not a test of fairness to produce two sets of figures and compare them. The operation of the tax system and the various means of support that the Government provide for many hard-working families contribute to the overall fairness of the system.
Measures in the Bill will also ensure continued fairness, innovation and a level playing field for the alternative finance arrangements used in particular by the Muslim community. With clauses 103 to 146, we are introducing real estate investment trusts to improve the efficiency of our residential and commercial property markets and to allow smaller investors to access property returns.
We have also acted to change part of the inheritance tax regime for trusts, specifically bringing accumulation and maintenance trusts and interest in possession trusts into the mainstream rules for other kinds of trusts. The Bill limits the scope for people to use trusts to avoid paying inheritance tax and reduces from 25 to 18 the age at which children gain access to trust assets. In effect, that continues our work to close loopholes in the inheritance tax and trust regimes and to ensure that people pay their fair share of tax, while protecting vulnerable people.
What the Bill does not do, however, is also clear. This measure is not retrospective, and we have provided a two-year transition period to give time to reorder financial affairs if needed. Only trusts with assets above the inheritance tax threshold will have to pay any charge under the revised rules, and no one who wrote a life insurance policy in trust before Budget day will have to pay a new inheritance tax charge as a result of these changes. On the point about reducing the relevant age for those trusts, let me just say this: on reaching their 18th birthday people can vote, fight for their country and even get their child trust fund, but as things stand they may not get their trust assets for another seven years. That is an anomaly, and the Bill fixes it.
Fairness is a matter for all parts of our economy and for all industries, so let me turn briefly to oil. Sustained increases in oil prices since spring 2004 have led to an upward shift in the medium-term outlook for oil prices. The same is true of a significant unforeseen economic rent from North sea oil and gas production. That is why we are introducing a package of measures to reform the North sea fiscal regime, including an increase in the rate of supplementary charge on profits from exploitation of our oil and gas reserves. That will ensure that the regime continues to strike the right balance between oil producers and consumers. Let me be clear on this: North sea oil is a critical sector for the UK, and it is only right and fair that we should all share in the profits of increased prices—producers and consumers alike.
I turn now to productivity, competitiveness and fairness. Building on the Budget and the pre-Budget report before it, the Bill targets support in a flexible way that is more responsive to our global economy. It also increases our support for the environment. Today,
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98 per cent. of emissions occur outside Britain. Climate change is an enormous threat to Britain and to the world. It is complex but it is real, and all Governments must act. With the climate change levy we did just that.
As my right hon. Friend the Chancellor of the Exchequer said, the resulting climate change agreement and the carbon trust funded by it have reduced carbon emissions by a total 28 million tonnes. That is why we are already able to meet our Kyoto targets. What is more, in each of the next five years climate change measures will reduce emissions by more than 6 million tonnes. By 2010, that will amount to some 40 per cent. of our total carbon reductions. Given the climate change levy, more than 10,000 businesses have signed climate change agreements. Under the carbon trust, some 3,000 businesses have reduced their emissions. Enhanced capital allowances have underwritten investment in 13,000 energy-saving products.
Building on that, clause 172 will increase the rates in line with current inflation, introduced from 1 April next year. The Bill also amends the structure of company car tax and vehicle excise duty to strengthen existing incentives to use environmentally friendly vehicles.
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