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Dawn Primarolo: If the hon. Gentleman will forgive me, we are not discussing the Bill and the clause—I only wish we were—but his party's new clause. I will of course reply to his point at the appropriate time in Committee, and I look forward to doing so.
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Mr. Dunne: I look forward to that, too. Given that we are digressing for a moment or two, with your indulgence, Sir Michael—

The Second Deputy Chairman of Ways and Means (Sir Michael Lord): Order. The hon. Gentleman should not pray in aid my indulgence. As has been said, he must address his remarks precisely to the new clause that we are discussing.

Mr. Dunne: I am grateful, Sir Michael.

Several people, including spouses who are elderly or incapacitated by mental infirmity, will not be in a position to vary their trust arrangements or wills over the transitional period, and their estates will therefore suffer inheritance tax unnecessarily. I urge the Paymaster General to address that point specifically.

Rob Marris: As I understand it, new clause 2 suggests that everything be put on hold for two years. We may all be in some difficulty here, Sir Michael, because although this is not technically a stand part debate, the nature of the amendments means that in a sense it is. Will my right hon. Friend the Paymaster General say succinctly what the position was before 22 March and what it will be if her proposals are accepted by the Committee? For my part, and I suspect that of other right hon. and hon. Members, there is some confusion as to what the law was before 22 March and what it will be if the Government's proposals go through unamended.

Dawn Primarolo: Mr. Lord—

John Bercow (Buckingham) (Con): Sir Michael.

Dawn Primarolo: I beg your pardon, Sir Michael, and thank the hon. Gentleman very much. Would he like to come and sit on this side of the Committee?

The hon. Member for Ludlow (Mr. Dunne) accused me of misleading the Committee, as the record will show. He may disagree with me—I certainly disagree with him—but I would not be as direct as to suggest that he may be motivated by personal interest in this Chamber, nor do I expect him to accuse me of misleading the Committee when I have not. I hope that he will withdraw that remark. I appreciate that he holds views that are deeply opposed to mine, but I have presented information to the Committee and I shall continue to do that. To suggest that a Minister or any hon. Member actively seeks to mislead is utterly wrong. I hope that he will now withdraw that suggestion.

Mr. Dunne: I am delighted to clarify my remarks to the Paymaster General. I intended not to suggest that she had actively and deliberately misled the Committee but to point out that she had inadvertently misled the Committee because she had not understood the Bill's full implications.

Dawn Primarolo: That is probably as close as I shall get to receiving an apology but, when the hon. Gentleman reads Hansard, he will see exactly what he said.

I shall begin with some of the other points that the hon. Gentleman raised. He asked why no consultation had taken place and said that there was nothing wrong
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with the sort of trust that we are considering. I shall revert in a moment to the general point about trusts that the hon. Member for Grantham and Stamford (Mr. Davies) made. Let me refer to a couple of quotes. On 12 April, the Daily Mail, that well-known Labour paper, reported:

If that is not sufficient, let us consider The Sunday Telegraph of 16 April.

Mrs. Villiers: Does the Paymaster General prefer the view of the Daily Mail or that of the Law Society, the Chartered Institute of Taxation, the Society of Trust and Estate Practitioners, the Low Incomes Tax Reform Group, the Law Society of Scotland, the Institute of Chartered Accountants of Scotland, the Association of Chartered Certified Accountants and the Association of Private Client Investment Managers and Stockbrokers, which say that the trusts under attack from the proposals have nothing to do with tax and everything to do with providing responsibly for one's family?

Dawn Primarolo: I find it best to answer one question at a time, and I shall come to those organisations and the hon. Lady's opening remarks shortly. To suggest that the way in which the Government prevent the trusts from being misused somehow damages women's rights is breathtaking, and I shall deal with that shortly.

The hon. Member for Ludlow need only read The Sunday Telegraph of 16 April or The Sunday Times of 23 April, which make it clear that those trusts were being used to avoid inheritance tax by retaining control. The hon. Member for Chipping Barnet (Mrs. Villiers) mentioned transfer to the spouse. What could be more damaging to a spouse than to be told that a trust had been created that transferred the interest to her, only for her to find that she had no access to the capital and that, in three months, her interest was terminated and had passed on to somebody else, when she had been used as the shield to establish the trust, with the very purpose of avoiding inheritance tax? Even to suggest that using spouse relief in that way strikes a blow for women's independence is rather odd.

Julia Goldsworthy: I would be interested to know what evidence the Treasury had gathered of inheritance tax avoidance through the trust schemes. It is interesting to know the advice of the Daily Mail and The Daily Telegraph, but what is the evidence?

Dawn Primarolo: Of course, I shall come to that. I took part in a debate with one of the hon. Lady's colleagues earlier today and I find the Liberal Democrat position inconsistent and daft. This morning, her colleague argued that the Liberal Democrats want to narrow income inequality, yet this afternoon, she argues that she is happy for it to be perpetuated for the few who hang on to their money through the sort of wills that we are considering.

The hon. Member for Grantham and Stamford rightly asked whether the Government were against trusts. He made an important point, and I would like to
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take this opportunity to clarify the situation. Of course the Government have not suddenly taken against trusts. He knows full well that we are talking about two particular types of trust. We believe that trusts have an important role to play in helping people to manage their affairs—of course they do—but we also believe that a person's choice whether to use a trust structure should not be tax-driven. That should not come as a huge surprise to the hon. Gentleman in the light of the changes that this Government have already made to trusts in previous Finance Bills.

I hope that the hon. Gentleman would agree that it is unfair that some people exploit the trust rules in order to avoid inheritance tax. The right hon. Member for Wokingham (Mr. Redwood) made a similar point earlier. The Government are not labelling respectable people as tax avoiders. We are saying that a system has emerged in which two types of trust—accumulation and maintenance trusts, and interest in possession trusts—can, in certain circumstances, be configured to provide an unfair tax advantage at the expense of other taxpayers. That is what we are seeking to put right.

Several hon. Members rose—

Dawn Primarolo: I shall just make this point, then I will give way.

The hon. Member for Chipping Barnet said earlier—I am paraphrasing slightly—that if there was nothing in    the Bill that affected spouse exemption, the Conservatives would be happy. I would like to say that there is nothing in the Bill that affects spouse exemptions under the normal inheritance tax rules. We will come to the question of children and civil partners—all are protected. I have a feeling, however, that I shall not be allowed to stop there, so I will go into the detail of the relevant clause in order to address the points that hon. Members have raised. First, however, I shall give way to the hon. Member for Grantham and Stamford, then to the right hon. Member for Wokingham.

Mr. Quentin Davies: I am grateful to the right hon. Lady for giving way, and for addressing the points that we have raised this afternoon. She says that the Government have no agenda against trusts, and that she accepts that trust law can help people and families to organise their affairs in a rational way. She went on to say that she was worried only about tax avoidance and tax evasion. But what is the tax point involved in saying that the beneficiaries of maintenance trusts—I gave an example earlier—must have full disposal of their assets at the age of 18? Surely she can see the danger of a young person being given money in that way, and that it could be undesirable for individuals and families to have to act in that way. What is the tax point involved?

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