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Mr. Francois:
I thank the hon. Gentleman for giving way before I was tempted to intervene on him. He is trying to play games with the statistics. He said that the scheme had only a 4 per cent. take-up, but that is nonsense. I have already provided one example of an organisation that saw take-up of 16 per cent. and it has been at that level or higher for a number of organisations. The take-up among employers pushing the scheme has been very healthy and I have already argued that the scheme was about to take off with other organisations—[Interruption.] I have to ask Government Members who are intervening from sedentary positions why, if the scheme was so bad, both the Department of Trade and Industry and the Department for Work and Pensions were about to roll it
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out for their own employees. Perhaps some Government Member could stand up and answer that question. I will gladly give way to anyone prepared to do so. Silence.
Perhaps the greatest problem in the whole sorry saga is the effect on individuals who have benefited from the scheme. I have already explained how even their benefit will be time-limited. In order to understand how they will be affected, I cite the example of one HCI provider, the company Futuremedia, which established a website to allow subscribers to provide feedback on the scheme. Here are some examples from respondents outlining the benefits that they believe the scheme confers. I have taken four representative examples. One respondent said:
"I joined so that my twelve-year-old daughter would not be disadvantaged when it comes to homework, research and preparations for exams. To date it has proved to be money well spent."
"I joined because it gave me the chance to involve myself in the process of gaining new skills. This without the direct pressure of any direct work-related scheme but with help at hand and the knowledge I could work at my own pace in my own time."
"I joined as I was looking for a computer for myself but couldn't afford to buy one outright; when the offer came along I decided to apply as it was a cheap and easier way of affording a new computer."
"As a man approaching my 50th birthday I find it vital to be dragged into the 21st century learning computer skills, as more and more they become an everyday part of life."
Those are just a few of the numerous examples of how HCI was benefiting people in exactly the way intended, allowing them to gain both IT skills and the chance to learn about other subjects online and giving access to a PC to those who could probably not otherwise afford it. All that could be lost if we do not delete clause 61.
For all those reasons, we believe that the scheme needs to be retained not only for the UK IT industry, which could quite conceivably be harmed by the clause, or the 2,000 or so whose jobs could be lost, but for the many employees in the country who would have taken advantage of HCI in the future to help maintain Britain's competitiveness. We believe that not least because all the indications are that HCI was just beginning really to take off.
I now move on to options to save the scheme by producing a revised system, under which it could operate alternatively in future—
7 pm
Adam Afriyie: Just before my hon. Friend moves on to establishing his case for a revised scheme, does he agree that the low take-up of technology at home is not the only problem, because about 500,000 people will have to change their behaviour, which has associated costs? If it costs £50 or £100 to change the arrangements, that could well work out in the region of £25 million to £50 million in additional costs incurred by business.
Mr. Francois:
My hon. Friend is right. Many people entered into the arrangement in good faith, having been encouraged to do so by their employers. Indeed, they were ultimately encouraged to do so by the
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Government. Now, suddenly, that benefit is effectively being withdrawn, or will be once their individual contracts with their employers expire. Those people will understandably feel let down—[Interruption.]
Peter Luff: Will my hon. Friend give way?
Mr. Francois: I will briefly, but then I want to outline the alternative.
Peter Luff: The Paymaster General is muttering from a sedentary position something about it being for work. My hon. Friend should be allowed to answer that point, because the Paymaster General obviously does not understand the purpose of the scheme. A DTI document published in January 2004 lists among the benefits for employees' education for their children, entertainment, e-mail and purchasing goods and services; it was clearly intended for home use. It was all about spreading understanding of computing, so I repeat that the Paymaster General obviously does not understand the purpose of the scheme.
Mr. Francois: In my experience, the Paymaster General mutters a lot from a sedentary position. [Interruption.] I really think that she should go away and re-read her brief. Having heard her remarks—I shall listen, of course, to what she says in her wind-up speech—I am not certain that she realises what exactly she is abolishing.
Dawn Primarolo: On a point of order, Mrs. Heal. I have not said a dicky bird. I have been sitting in my place listening to the debate. I do not mind being criticised by the hon. Gentleman, but does he need to make things up?
The First Deputy Chairman of Ways and Means (Sylvia Heal): Order. That is not a point of order for the Chair. May I ask all those participating in the debate to concentrate on the matters in hand? Let us have a little calm.
Mr. Francois: Those who know the Paymaster General well can judge for themselves.
On the options to save the scheme, the Treasury has sought to justify the scrapping of the home computer initiative by citing abuse. On Second Reading the Paymaster General appeared to have no other defence of the Chancellor's ill thought-out decision than to make noises about iPods from a sedentary position. It is true that a loophole existed. A number of products that are entertainment rather than educational, and so are not exactly in the spirit of the scheme, such as MP3 players, game consoles and digital cameras, were ordered in some cases and qualified for the tax exemption because the HCI guidelines from 2004 gave only broad definitions. So there was a loophole which some people attempted to exploit.
However, the Treasury has produced little clear evidence, even tonight, of the extent of the abuse that it claims was occurring, which we believe was only at the margins. As I pointed out in an intervention, there was little hard evidence of the abuse in the Government's
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own regulatory impact assessment, which they produced last week in a desperate attempt to justify the abolition of the scheme.
Mr. Wills: Will the hon. Gentleman give way?
In any event, it would not be difficult to tighten up the rules by producing guidelines that give details about the items to which the tax exemption would not in future apply. It is very simple to do that if the intention is to combat the abuse. Throughout the Bill—
Mr. Wills: Will the hon. Gentleman give way?
Throughout the Bill, we will debate ad nauseam all sorts of anti-avoidance proposals that the Government have introduced in the Bill—some of which are highly complex and technical—to try to prevent what the Treasury determines to be abuse. It would be simple to produce relevant guidelines; they would be less complicated than some of the measures that we will debate on real estate investment trusts and group relief. If the Treasury wanted to maintain the scheme, it could easily produce guidelines.
There is a precedent. In Sweden, the Government have for some time operated a scheme similar to the HCI. There were similar concerns there about people seeking to exploit the tax advantages to purchase equipment outside the original spirit of spreading IT skills. However, in 2004, instead of scrapping the scheme, the Swedish Government found a workable solution, by tightening up the rules on qualifying equipment.
For example, the rules stipulated that in future only one personal computer would be allowed per employee; some had attempted to order more than one. The monitor size of those PCs was restricted to 30 in. Peripherals and accessories were divided into two categories; those primarily used connected to a PC, such as keyboards and printers, which were allowed, and those whose primary usage did not involve a PC, such as digital cameras and MP3 players, which were specifically not allowed.
Such restrictions would be relatively simple to introduce, were HMRC to produce a list of equipment that would continue to qualify, perhaps reinforced by another list of equipment that was specifically excluded from the scheme, such as iPods and MP3 players.
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