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Shropshire was the home of the first industrial revolution, and it is also the home of the current home working revolution. I represent the southern part of the county and am delighted to say that it is second only to the Isles of Scillyand the House will not be surprised that there is significant amount of home working therein terms of the number of home workers per head of the population. In my area, 15 per cent. of self-employed people now work from home.
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Mr. Dunne: The relevance is that home working is put at risk by the Government's proposal to scrap the home computing initiative, which has meant that people, especially in rural areas, now have improved access to broadband, for example. It has also improved access to work for those people in deprived rural areas who lack public transport and job opportunities. Even people with their own transport have to travel a long way to work in such areas.
Rob Marris: At the risk of detaining the House, will the hon. Gentleman say more about his statistics? Labour Members usually understand the term "home working" to mean the gross exploitation of labour, such as paying people piece rates to pack Christmas crackers at home. It is not taken to mean the wonderful world of telecommuting by computer.
Mr. Dunne: I shall give the House a specific example of the sort of effective and high-tech home working that goes on in my constituency and across the country. A company called Premier Medical processes insurance policy claims, and about half of its staff work from home. The hon. Gentleman is a neighbour of mine and, if he is interested, I should be delighted to take him to meet the magnificent managers who have relocated the business to my area from the south-east.
Mr. Francois: It falls to me sum up this interesting and sometimes vigorous debate on the future of the home computing initiative and clause 61. A number of contributions were made and I am sorry that time constraints mean that I cannot refer to all of them individually, but I shall attempt at least to genuflect to some where I can.
I welcome the Paymaster General's commitment that HMRC, in consultation with industry, will issue guidelines to define what constitutes a "not significant" use of a computer. We have pressed the Government on that quite hard over the past week. We tabled amendments on the subject, and I am pleased that the Government have listened to us and agreed to produce a definition. I hope that it will remove doubt, but I repeat that it would be better to delete clause 61 from the Bill, so that the problem would not arise in the first place.
First, in her opening speech the Paymaster General did not provide a convincing rationale for abolishing the scheme. She talked vaguely about a few websites that provide examples of inappropriate equipment, but was unable to quantify that or to put clear figures on the extent of the abuse. If the Government's argument is
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based on the claim that abuse has been widespread, I should have expected the right hon. Lady to have been able to give firmer examples.
Secondly, we have argued that the scheme could be saved by being more tightly defined. The abuse that the Government claim is going on could be prevented if they were to produce an inclusive list of the products that would continue to qualify, and an exclusive list of those that would not. We have referred to the other countries that have done exactly that, and I point out to the Paymaster General that although a debate is taking place in Sweden about whether the scheme there should continue, it is still in force and is likely to remain so. It is incorrect to say that the Swedes have decided to scrap it: they are debating what to do.
Peter Luff: My understanding is exactly the same as my hon. Friend's. I left the Chamber to check what was happening in Sweden, and was told by a person in that country that the scheme is not going to be scrapped. If the Paymaster General has contradictory information, she should share it with the House.
Mr. Francois: I agree with my hon. Friend, the Chairman of the Trade and Industry Committee. We have used Sweden as a specific and empirical example of how guidelines could be produced to allow the scheme to survive, were the Government so minded. The problem is not one of definition; it is that the Government wants the money.
Thirdly, the Treasury's own regulatory impact assessment confirms that a more tightly defined scheme could be continued at a reduced cost to the taxpayer. Option 2 of the Treasury's RIA is entitled "Refocus the Exemptions"exactly what we have argued. The Treasury estimates that a refocused scheme would cost £190 million a year to 201011, compared with the £370 million a year that the scheme would cost were it to continue unaltered. I refer the Paymaster General to the table printed below paragraph 76 of the RIA.
It is therefore possible to refocus the scheme, keep it alive and save all its benefitsand save money for the taxpayer in the process. That has to be a win-win proposition and the House would be wise to adopt it. Arguments in the scheme's defence have been made by the CBI and the TUC, other Government Departments such as the DTI, employers that have implemented it at the Government's behest, companies that were set up to support it and the people who are benefiting. However, given the attitude exhibited by the Paymaster General and the other Labour Members who have contributed to the debate, I fear that the Government have closed their ears and minds to them all. To put it bluntly, they are minded to take the money instead.
This is a poor decision. It will be detrimental to our long-term competitiveness in the 21st century, not least in respect of countries such as China and India. Moreover, as my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) noted, the next time that the Government launch a scheme to promote information technology and look to business and the unions to support it, who on earth will believe them? Effectively, they are canning this scheme after only two years of operation. How will major multinationals looking to invest in IT projects and facilities in this country view that?
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We all know what has happeneda decision was taken just before the Budget to take the money. Under pressure, the Government have been desperately scrabbling around for a way to justify that decision. This evening, they have suddenly come up with the digital inclusion team as a fig leaf that they hope will do just that. The Government's proposal marks a sorry decision, so I genuinely make one last plea to the Committee, including the Labour Members who have expressed reservations about the measure: join us in the Lobby and save the home computing initiative from that awful, mistaken proposal. I move that clause 61 be deleted from the Bill
I assure the hon. Member for Ludlow (Mr. Dunne) that no amendments have been selected. If he looks at the annunciator screen, he will see that it says, "Clause 61 stand part". There has been no attempt to amend the clause, which would be almost impossible due to the definitional problems. Furthermore, the clause has nothing to do with home working, so I shall park all those points.
"We hope this new measure will encourage business to loan computers to their employees and that it will be as successful as a similar scheme developed in Sweden . . . There are real benefits to business, employees and the wider community from increasing access to computers."
The digital strategy launched in April 2004 was assessed by the Prime Minister's strategy unit, with a foreword by the Prime Minister and the Secretary of State for Trade and Industry. The assessment stated:
"The conclusions in this report will be implemented by government and will play a crucial role in improving the cohesion of our society, the wealth of our economy and the quality of the life of our people."
The HCI was underpinned by a tax exemption, which can be found at section 320 of the Income Tax (Earnings and Pensions) Act 2003. It allowed an employer to lend a computer to an employee for private use, tax free. If an agreement between the employer and the employee was in effect a hire purchase agreement, the tax exemption did not apply and any direction issued by the Office of Fair Trading would not cover it. That means that the tax exemption does not apply where the computer equipment has been bought, whether for a mother or otherwise. That is quite clear.
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As Members have pointed out, the HCI was modelled on a Swedish scheme introduced to increase home computer ownership. The evidence from Sweden shows that between 1996 and 2001 home computer penetration rose by 29 per cent. to 56 per cent., a compound annual growth rate of about 14 per cent. However, over the same period, UK household penetration increased from 27 per cent. to 44 per cent., a compound annual growth rate equivalent to 12 per cent. So the UK achieved a comparable rate of growth in home computer take-up when the HCI was barely used, demonstrating that the HCI itself has not had a strong impact. I am not saying that it has not helped, but other issues have been involved, such as competition and liberalisation.
With regard to other international comparisons, a similar HCI scheme was introduced in the Netherlands but it was scrapped several months ago, citing the same sort of reasons as those in the UK. In Sweden, the Agency for Public Management, which is responsible for efficient public administration and promoting e-government, recommended abolishing the scheme in August 2005, as its positive effects had declined while its costs remained high. The Swedish Finance Minister is considering action at present.
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