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Mr. Gauke: I want to make four brief points about the proposal to abolish the HCI, which is perhaps symptomatic of the Government's approach to many forms of taxation.

First, I want to echo the point made forcefully by my hon. Friend the Member for Mid-Worcestershire (Peter Luff), in what I thought was an excellent speech, about the uncertainty created by constant tinkering with
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taxation regimes. If incentives are introduced, expanded five years later and abolished two years after that, there will always be the difficulty of businesses not being confident that they are working in a stable environment. Such a situation can impact on research and development, for example; indeed, it has had a considerable impact on productivity. This Government, and particularly this Chancellor, have a tendency to meddle and to tinker, and this is an example.

My next two points relate to the taxation of employees and employers in respect of home computers—an issue raised by my hon. Friend the Member for Rayleigh (Mr. Francois)—which are treated as a benefit in kind. One consequence of abolishing the HCI is that the question again arises of how home computers are treated. They will not be considered as a benefit in kind where their personal use is not significant, and guidance will be provided on this issue. However, businesses will obviously have to police such usage carefully. They will have to issue guidance themselves and monitor employees to ensure that computers are not used for personal purposes. However, most work computers are to some extent used for personal purposes. I suspect that most people occasionally use computers at work for personal matters and for sending personal e-mails—that is what happens in the real world—and the same applies to the use of home computers. Of course, people are supposed to use computers to complete their tax returns, but that, too, is personal use. So the clause will impose a significant bureaucratic burden on business, which is often another consequence of Government policies.

As I said, the Government are going to introduce guidance, and I suspect that there will be a generous and fairly broad definition of what constitutes insignificant use. I am slightly worried, however, at the prospect of the law saying one thing and the guidance saying another—it is saying that people need not worry. My fear is that, instead of having a tightly defined law that people should obey, we will have a loosely defined law that people will obey only sometimes, depending on the guidance. That would not be an ideal arrangement.

Rob Marris: Surely it is up to a business to decide whether such use is significant. If it is, class 1 national insurance contributions would have to be paid. If it is not, it is a benefit in kind, on which tax is paid by the employee, not the employer.

Mr. Gauke: The employer, when providing such a facility to their employees, will be expected to provide some advice. As the hon. Gentleman says, national insurance contributions would have to be paid, and the employer would need to take a view on that point. A degree of monitoring would be required.

My fourth point relates to one that the hon. Member for Wolverhampton, South-West (Rob Marris) made with characteristic candour: the lack of consultation surrounding this proposal, which was rushed out without regard for the need to examine the various arguments. The Paymaster General says that there is concern about possible abuse, but why do we not look at this proposal closely and carefully? We have heard about how other countries deal with this issue—how one can have an HCI scheme without its being abused. My hon. Friend the Member for Rayleigh and others
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referred to what I call the "Minnie the Moocher" argument: if the Paymaster General had looked at the scheme in Sweden, it would have given everything that she was needing. That did not happen, which was a great pity.

Dawn Primarolo: Is the hon. Gentleman aware that the Swedish scheme has been recommended for abolition, and for exactly the same reasons as we have abolished the HCI here?

Mr. Gauke: My understanding is that that scheme is in place. Indeed, we heard earlier that the Danish scheme was abolished and then brought back, because it was missed.

We have to ask why the HCI is being abolished. I suspect that the Treasury was looking to save a few hundred million pounds, and that the HCI caught the eye of someone there. That is a great pity, but perhaps there is also another reason. The Chancellor has been associated with various polices, such as the individual learning account. He was criticised for being very slow in identifying fraud and misuse of the ILA, and he resisted getting rid of it. I wonder whether the question of not allowing the HCI to continue was a sensitive issue for the Treasury. None the less, the Government's scrapping of that scheme was a panicky overreaction. There should have been consultation and we should have addressed the real concerns, but that has not happened.

8.15 pm

Mr. Dunne: I am grateful to you, Mr. O'Hara, for allowing me to contribute to this debate. This is a novel experience for me on two counts. This is the first time since joining this House that I have attended a debate in which the Government are insisting on scrapping a successful measure; in my experience, they usually seek to abandon failed initiatives that they have introduced during their tenure. To witness them abandoning a successful one is surprising, to say the least.

I am pleased that the Paymaster General has an opportunity today to defuse criticism of this penny-pinching, revenue-retaining measure by making a positive announcement on digital inclusion. In my experience, the Paymaster General is usually asked to defend the indefensible on the Chancellor's behalf, but today she is able to announce some good news. However, it is a classic new Labour move: on the one hand, we are debating a measure, the withdrawal of which will save the Treasury £300 million over three years; on the other, Labour is sweetening the pill with a £50 million new initiative, but it is merely a sleight of hand to try and distract attention from the bigger issue.

Having said that, I welcome the digital inclusion initiative and I should like to comment briefly on it, given that the Paymaster General introduced it into this debate. I hope that the new cross-departmental unit will address the severe shortcomings of the digital TV footprint. It is claimed that digital TV will reach 98.5 per cent. of the population. Given that the Paymaster General has taken an interest in this subject, I will send to her and to whoever is responsible for running the new unit a map that the Shropshire Star helpfully provided.
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It shows the area along the Welsh marches that would be excluded from digital TV coverage. That area includes most of the western half of my constituency and all the area classified as an area of outstanding natural beauty, which amounts to about 80 per cent. of south Shropshire district. I look forward to hearing about the measures that this magnificent new unit will implement to provide coverage for my constituents.

I want to speak to amendment No. 2 to clause 61. The home computing initiative has encouraged home-working, and before I illustrate this issue with some comments about my constituents, I want briefly to highlight some of the non-financial benefits that derive from home working of which the Paymaster General may not be aware. BT, one of the largest employers in the country, has undertaken research among its work force. It states:

So there is a happiness quotient to this issue. The research also noted that there is

among such people, on account of BT's home-working policy. These non-financial but none the less important factors are being put at risk by this penny-pinching Government measure. There are 8 million people working from home, who—

Dawn Primarolo: People working from home are not affected by this measure. The hon. Gentleman is speaking to an amendment that has not been selected and about a subject that we are not debating.

Mr. Dunne: As I said earlier, I am supporting my Front-Bench colleagues' amendment to clause 61, which we are debating and which is about home computing.

The Temporary Chairman (Mr. Edward O'Hara): Order. I must rule from the Chair that the Paymaster General is correct: amendment No. 2 has not been selected.

Mr. Dunne: I stand corrected, Mr. O'Hara, and I am grateful for that clarification.

On the general subject of home computing and the amendments that have been selected, I want to draw to the attention—

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