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Dawn Primarolo: As the hon. Gentleman said, one can serve one's country in the armed forces at the age of 18, when one can also get married, start a business and vote. Insurance policies are but one example of what people can inherit, and many people who are younger than 25 inherit outside a trust. Will he adduce examples and evidence on those who inherit at 18, 19, 20, 21, 22, 23, 24 or 25, which, I believe, is the age of the hon. Member for Falmouth and Camborne (Julia Goldsworthy)? Is he suggesting that 25 is an inappropriate age, and where is the evidence suggesting otherwise?
The argument is subjectiveI believe one thing and the right hon. Lady believes something elsebut I know from my experience that 18 is too young an age at which to inherit and that 25 is a more mature age. When I was in private practice, I used to discuss those issues. The point about insurance premiums on vehicles is important, because it is a clear and objective statement by insurance companies that they regard hazards to younger people as being much greater than those faced by others.
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Although the Paymaster General has sought to clarify the rules proposed in the Finance Bill, I put it to her that they are currently unclear. The Treasury may think that the rules are clear, but the professionthose who write insurance policies and those who write wills and trustsdoes not know exactly what to expect. Much more clarification is required before the Standing Committee reaches clause 157 and schedule 20. The Treasury Committee has also made that point, and, regardless of what else they do, I hope that the Government accept it. The Government say that the measure will provide £15 million a year, but by my understanding every will must be rewritten, so it is essential that the matter is clarified.
Dr. Richard Taylor (Wyre Forest) (Ind): About two hours ago, I was despairing at ever being called to speak in this debate. In the 61st minute of the contribution by the hon. Member for Wolverhampton, South-West (Rob Marris), I finally heard something that I agree withhe said that the Finance Bill is not perfect.
Like other hon. Members, I welcome some aspects of the Bill, such as the increase in tobacco duty, the measures to address tobacco smuggling, the clampdown on intra-community fraud, the independence of the Office for National Statistics and, as long as they are as fair to our industries as they are to industries on the continent, the measures to control emissions. However, I bemoan the complexity of the Bill, which will make me vote against Second Reading because I am not that confident that the Standing Committee will make it, in the word of the hon. Member for Wolverhampton, South-West, "perfect".
I am delighted that hon. Members on both sides of the House have mentioned the national health service, because I was wondering how I could drag the NHS into this debate. The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) has mentioned more investment in medical technology. For example, there is a complete lack of proton beam therapy for spinal tumours in this country, and we are still sending people to Boston in the States, to Paris and to Switzerland.
The right hon. Member for Wokingham (Mr. Redwood) mentioned NHS deficits, and an example was mentioned to me today. As a consequence of NHS deficits and the mismanagement of Herceptin, a
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cancer network in the midlands has had to freeze the use of one of its four linear accelerators for the treatment of cancer to reserve money for Herceptin.
I am going to speak mostly about clause 157 and schedule 20. I am not as fortunate as the right hon. Member for North-West Hampshire (Sir George Young), in that I have to declare an interest because I am sure that a trust that I have set up is caught by the Bill.
I do not regard myself as one of the super-richI am an inhabitant of middle England in every sense of the termyet I believe that I am caught by this provision. Those of us who saw the list of the 1,000 super-rich in The Sunday Times yesterday and were appalled that such a high proportion of them made their money in the gambling industry have no objection to such people being caught for extra taxation.
An accountant who is a constituent of mine wrote to me on behalf of a large number of clients of his firm, many of whom are also my constituents. Many hon. Members made his point very well, but I will quote him because he puts it so succinctly:
"These proposals will force my clients either to rearrange the perfectly legitimate steps they have taken to safeguard their children's futures (with all the costs that this will entail), or, they will be forced to distribute trust funds to their children at 18providing them with access to significant funds at an early age."
I agree with the hon. Member for South-West Hertfordshire (Mr. Gauke), who intervened on the hon. Member for Gosport (Peter Viggers) to say that this is a family decision and that parents and grandparents should know at what age they think that their children and grandchildren can take on this large responsibility.
I wrote to my constituent for details, and he told me that 35,000 clients of this particular group are likely to be caught by the provision. When I asked whether they were the sort of people who are the middle rich from middle England, he said:
"Such a client might typically own a house worth say £400,000 and have other assets amounting to a further £400,000hardly in the category of the super rich but nevertheless faced with a significant potential IHT liability. His/her income upon retirement is likely to be modest compared with income whilst in work."
"My point is that the creation of trusts of this nature is sensible and legitimate tax planning and not primarily tax avoidance and is carried out by a large section of the population who have prudently saved throughout their lifetime as surely they should be encouraged to do."
"The Chancellor has spoken of alleviating the inheritance tax burden for middle-income families yet is penalising those who thought they had a secured a future for their family. The measure is retrospective for many trusts, laying to waste . . . carefully laid plans".
I am listening carefully to the hon. Gentleman's argument. He seems to be saying that those who made plans not to pay inheritance tax as the rules require should be allowed not to pay that tax, whereas the vast majority of people pay it if they are liable, although only about 6 per cent. of estates pay it over the threshold of £285,000. I do not know how many of his
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constituents have assets of £800,000the figure that he quotedbut why does he think that that amount should be sheltered from inheritance tax?
Dawn Primarolo: As the hon. Gentleman will know, inheritance tax is paid only on death, so the idea that it is retrospectivethat we are going back to people who have already diedis clearly preposterous. The Bill is clear in terms of the protection that it offers. I put it to him again: why does he believe that £800,000 or more should be sheltered from inheritance tax?
Dr. Taylor: I do not think that the Minister quite understands what I mean by retrospectiveperhaps I put it badly. One needs to be able to change something that one has done in the knowledge that the rules were in a certain form. The fact that having to do that now will cost a great deal of moneya great deal more than will be raisedmakes it undesirable, to say the least.
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