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Businesses (Taxation)

4. Mr. David Jones (Clwyd, West) (Con): What recent discussions he has had with the Chancellor of the Exchequer on the effects of taxation on businesses. [128950]

The Secretary of State for Trade and Industry (Mr. Alistair Darling): I discuss a wide range of issues with the Chancellor.

Mr. Jones: I am grateful for that answer. Most enterprises in my constituency, and in Wales as a whole, are small businesses, primarily in the non-capital intensive service sector. Could the Secretary of State explain how such small companies are expected to develop and grow when they are to be subjected to an additional tax burden of 3p in the pound, and indeed will be taxed at a higher rate than when Labour to power in 1997?

Mr. Darling: First, I am glad that the hon. Gentleman found my answer so helpful. On his second point, about small companies, one of the problems that became apparent was that an increasing number of people were incorporating and becoming small companies to avoid paying tax and national insurance. Any Chancellor must have regard to a pattern of behaviour that leads to people avoiding payment of tax when it is not right that they should do so. The answer to the hon. Gentleman’s friends is, first, that
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incorporated businesses will benefit from the reduction in corporation and, secondly, that unincorporated businesses will benefit from the reduction in the basic rate of income tax. Firms that invest will benefit from the allowance of up to £50,000 that the Chancellor announced yesterday. All in all, I believe that the changes are welcome and I am surprised that the hon. Gentleman did not welcome them, especially as the shadow Chancellor gave the distinct impression earlier in the week that he wanted to see those changes, too.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): Unless I am very much mistaken the Scottish National party Whip is sitting next to me and has been there for 10 minutes. Incidentally, there is not one Scottish Labour Back Bencher in the Chamber—people in glasshouses.

To reinforce the point that has already been made, 90 per cent. of employment in Wales is in the small business sector. All the baloney about R and D is absolute nonsense, because only one in five ever have an interest in taking it up.

Mr. Darling: But should we not be encouraging more companies to invest in research and development? The hon. Gentleman must know that our future lies in our ability to innovate and to undertake research and development, yet we have it officially from Plaid Cymru that it is all baloney. Surely, that is no way to build a successful Wales or a successful Britain. The changes we announced yesterday in relation to reducing the rate of both corporation tax and basic income tax will help businesses. On top of that, the fact that we are simplifying allowances, making sure that there is relief and help for companies that invest up to £50,000, demonstrates the differences between Labour and the hon. Gentleman’s party: we want to encourage enterprise and innovation.

Peter Luff (Mid-Worcestershire) (Con): In the bipartisan spirit that is appropriate for the Chairman of the Select Committee on Trade and Industry, may I urge the Secretary of State to reflect with more care on the answers he has just given? I am deeply concerned that the service sector—small businesses in particular—can take no advantage of the reliefs that are offered in the Budget and face massive increases in their basic corporation tax bill. Indeed, the one relief they might have been able to claim—for cars, which are very important for getting around and meeting suppliers and customers—is specifically excluded from the new annual investment allowance, so I have deep concern that the Budget is actually rather bad news for the vast majority of small businesses in this country.

Mr. Darling: I do not agree with the hon. Gentleman. The changes that we announced yesterday will be beneficial both for large companies—those paying corporation tax will see their rate reduced—and for small companies, which are taxed on their income, because the basic rate of income tax will come down. It is absolutely right that we have a more up to date system of allowances; at the moment, it is nonsense that people can claim allowances for investing in foreign plantations yet not for investing in a science park, for example. I would have thought—again in the bipartisan spirit in which the hon. Gentleman approaches these things—that we should have an up to
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date system of allowances rather than relying on a system that was largely put in place after the second world war when we were more interested in reconstruction than in dealing with the problems we face at the beginning of the 21st century.

Alan Duncan (Rutland and Melton) (Con): The Budget delivered by the Chancellor yesterday had the net effect of piling an extra £1 billion in tax on to UK business next year. Is that bad news for business the result of the Secretary of State having no influence at all around the Cabinet table or, now that he no longer expects to be Chancellor himself, is it the result of him choosing not to use what little influence he seems to have?

Mr. Darling: The reduction in corporation tax is a tremendous help. Indeed, businesses and companies have for a long time called for a reduction in that tax. Interestingly, on Monday the shadow Chancellor—he had clearly thought up his new corporation tax policy at the weekend—said that he wanted to reduce corporation tax. He said:

Yet he reached the judgment that it was worth getting rid of those reliefs—we are introducing new capital reliefs, while the Tories are not proposing any.

Alan Duncan: We welcome the fact that the Chancellor has been listening to our advice by reducing the headline rate of corporation tax, but will he not accept that, behind his headline rate, tax on business will still increase by £1 billion and that small businesses will be hit most severely by his 3p in the pound increase in tax rates?

Mr. Darling: As I said to the hon. Member for Clwyd, West (Mr. Jones) earlier, we are making changes to the taxation of small businesses because we need to deal with the growing problem of people who are incorporating to avoid paying tax. If the hon. Gentleman is saying that that is all right by the Tories, I do not agree with him. It is far better to move to a simpler system with two rates of allowances running at the same time so that we can encourage businesses to invest. Increased allowances of up to £50,000 are being made available, but the lower rates of corporation tax and income tax will help businesses. That is exactly what is needed to meet the long-term challenges that we face in the future.

Surface Mining

5. Mark Pritchard (The Wrekin) (Con): What discussions he has had with UK Coal on the future of surface mining in England and Wales. [128951]

The Minister for Science and Innovation (Malcolm Wicks): My noble Friend the Minister for Energy met Gerry Spindler, the chief executive of UK Coal, on 22 February and the future of surface mining in the UK was among the topics discussed. The issue has also been discussed in the Coal Forum, of which they are both members.

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Mark Pritchard: Where does the Minister think surface coal mining fits within the so-called renewable energy policy of the Government? Given that research and development into clean-coal technology is at a very early stage, does he share my concern about UK Coal’s plans to extract 900,000 tonnes of coal from an area of outstanding natural beauty in Huntington and New Works in my constituency? Would he like to elaborate on his conversation with the chief executive, specifically on that point?

Malcolm Wicks: The hon. Gentleman will know that, quite properly, I cannot comment on a particular project that is going through the planning process. That would not be the right thing to do. All these matters are, of course, considered very carefully on environmental grounds. We hope that UK coal production has a significant future in Britain—an issue discussed in the Coal Forum. UK production amounted to some 9.4 million tonnes of deep-mined coal and 8.6 million tonnes of surface-mined coal. The hon. Gentleman will understand that that makes a not insignificant contribution to energy supplies. Given the difficulties in world markets, we need to produce more of own energy in Great Britain. We need a balanced and rational approach to the issue, but none of my comments relates to the particular project in the hon. Gentleman’s constituency.

Judy Mallaber (Amber Valley) (Lab): After last week’s appalling decision to allow UK Coal to ruin the beautiful countryside at the Lodge House site in my constituency and a recent similar decision at Longmoor in the constituency of my hon. Friend the Member for North-West Leicestershire (David Taylor), will the Minister urgently discuss with his colleagues in the Department for Communities and Local Government how to stop planning inspectors totally misinterpreting the original intention of the revised MPG3—mineral planning guidance—guidelines and how to reassert the presumption against open-casting? As stated in those guidelines, local authorities know best about the balance of local factors and it is not environmentally acceptable to state that immediate appalling damage can conceivably be put right by dubious assertions about the long-term restoration of a site. Will the Minister also have urgent discussions with—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. That is a statement.

Malcolm Wicks: I do understand the question. Although I gave the figures for across our countries, in fact less than 1 million tonnes was produced through surface mining in England. There are tight planning controls—

Alan Duncan (Rutland and Melton): What!

Malcolm Wicks: We have talked about skills, and I am happy to educate the shadow Secretary of State on this matter. There is a presumption against development if the proposal is not environmentally acceptable or cannot be made so by conditions or obligations attached to a consent, or does not offer local or community benefits to offset the adverse impact. I will not ask the hon. Gentleman to repeat that, but that is the situation. I hope that my hon. Friend the Member for Amber Valley (Judy Mallaber) will forgive me, but it would be inappropriate for me to comment on a particular planning decision.

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Marine Renewables Deployment Fund

6. Mr. Alistair Carmichael (Orkney and Shetland) (LD): If he will make a statement on the operation of the marine renewables deployment fund. [128952]

The Secretary of State for Trade and Industry (Mr. Alistair Darling): The Department’s £50 million marine renewables deployment fund was established to assist the continued development of wave and tidal-stream energy technologies.

Mr. Carmichael: I am surprised that the Secretary of State did not also tell us that since the fund was opened for applications in February last year, it has received only two applications, both of which were rejected. Does he share my concern that the fund might not be as effective as we would both wish in retaining the world lead in the development of marine renewables? Now that a year has passed, will he review the access criteria for funding applications, with a view to introducing more flexibility in the fund in order to allow more companies to get more devices into the water?

Mr. Darling: I suspected that the hon. Gentleman would raise that point—and I am worried that there have been only two applications. The difficulty is that in order to qualify for the grant a project has to have been operating in the sea for three months. In other words, the idea was to help projects that had significantly proved themselves to be a real possibility for development. There are other grants around, however, to help with development at a far earlier stage. I am reluctant to reopen this matter, because it is important that we encourage projects that have a real chance of success. If it appears that no projects have reached that stage, however, perhaps we ought to look at some other form of assistance. The hon. Gentleman and I both agree that marine generation of electricity is important, and there are good examples of such work being carried out in his own constituency. The reason why this grant is difficult to get is that it sets quite high criteria for eligibility.

Citizens Advice Bureaux

7. David Taylor (North-West Leicestershire) (Lab/Co-op): What recent discussions he has had with ministerial colleagues in the Treasury on the future funding of front-line services provided by citizens advice bureaux; and if he will make a statement. [128954]

The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): I have had no recent discussions with ministerial colleagues on the future funding of front-line services provided by citizens advice bureaux. However, the DTI and the Treasury work closely together on the administration of the £47.5m face-to-face debt advice project that is funded from the Treasury’s financial inclusion fund.

David Taylor: DTI backing for face-to-face advice is most welcome. The Minister will know that Citizens Advice annually provides a vital, trusted, value-for-money lifeline to about 2.5 million people, with 6 million problems, nationwide. It also helps to deliver
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the Government’s agenda of eliminating poverty, preventing homelessness, improving health and well-being and reducing reoffending. Does my hon. Friend agree, however, that there is still a significant unmet need for telephone, weekend and online services, and that continued support for—and strategic Government investment in—Citizens Advice will lead to major social and economic benefits?

Jim Fitzpatrick: I certainly agree with my hon. Friend, and I am sure that all right hon. and hon. Members admire and respect the work that the citizens advice bureaux undertake. I can advise my hon. Friend that, last week, the Economic Secretary to the Treasury announced a new financial inclusion fund for the next spending period. The DTI will be part of a cross-departmental ministerial working group that will determine fund priorities and publish a detailed action plan after the comprehensive spending review. I am sure that my hon. Friend will supply details of the difficulties that he has outlined, and that the working party will look at them so that they can be resolved in due course.


8. Greg Mulholland (Leeds, North-West) (LD): What progress has been made in discussions on the role of Postwatch in scrutiny of the post office closure process. [128955]

The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): The Government’s consultation on the post office network ended on 8 March. We have received more than 2,500 representations, and are grateful to those who took time to participate in the process. We are giving full consideration to the comments received and hope to be able to announce our final decisions in May. Discussions are in progress between Post Office Ltd and Postwatch, and we expect to set out Postwatch’s role in developing local area closure proposals in our decision.

Greg Mulholland: Does the Minister agree that when the Government are about to embark on a huge post office closure programme, which he has acknowledged will have a massive impact on consumers throughout the country who rely on that important service, the idea of simultaneously abolishing the Post Office watchdog is madness?

Jim Fitzpatrick: We have included specific provisions in the Consumers, Estate Agents and Redress Bill, which had its Second Reading this week, to ensure that the new national consumer council has a role, as Postwatch does now, in advising on the number and location of post offices and their accessibility to users. We are also involved in ongoing discussions between Post Office Ltd and Postwatch to make sure that the arrangements are as robust as they need to be.

Mr. David Drew (Stroud) (Lab/Co-op): I am glad to hear how many organisations and individuals took the trouble to take part in the consultation; I hope that their contributions will be read carefully and listened to. However, does my hon. Friend agree that one simple way of making sure that communities have a voice and are able to retain their services is to accept the Sustainable Communities Bill, which is going through the House?
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What it provides would be much better than any regulator, because communities would have their own voice and their own means of retaining their services.

Jim Fitzpatrick: I am sure that the Sustainable Communities Bill will provide adequate opportunities to enable communities best to defend themselves. As my hon. Friend knows, we have just completed Second Reading of the Consumers, Estate Agents and Redress Bill, which we believe offers the appropriate place to integrate the Postwatch service, and which will provide consumer protection for those who use any of the services of Royal Mail Group.

Mr. Peter Bone (Wellingborough) (Con): The Secretary of State has said that 2,500 post offices will be closed with compensation, but the national access criteria will allow thousands more post offices to close. How does the Under-Secretary reconcile those two facts?

Jim Fitzpatrick: The hon. Gentleman has participated in many of our debates on the future of Post Office Ltd. There is clear recognition that the estimated £4 million a week that the Post Office loses is unsustainable, and there is consensus across the board that something must be done to put the post office service on a more sustainable footing for the future. That is agreed by the National Federation of SubPostmasters and by the Select Committee on Trade and Industry, and we are doing our best to ensure that that happens. As I said, my right hon. Friend the Secretary of State will make his announcement in due course—in May—and we hope that as a result of that, the future of Post Office Ltd will be more secure.

Science Funding (York)

9. Hugh Bayley (City of York) (Lab): What support his Department provides to science in York. [128957]

The Minister for Science and Innovation (Malcolm Wicks): The Department’s primary support for science is through grant in aid to the eight UK research councils. Colleagues will have noted the very good settlement for UK science announced in the Budget yesterday. In 2006, UK research councils funded £17.8 million in research grants to York university. In addition, £35.9 million has been invested jointly with the Department for Education and Skills under the two rounds of the science research investment fund to update and renew university research infrastructure, and £7.8 million has been invested under the higher education innovation fund and its predecessors to facilitate knowledge transfer from science research.

Hugh Bayley: I warmly welcome yesterday’s Budget announcement that funding for science will increase by 25 per cent. by 2010—an additional £1,300 million pounds. My hon. Friend will be aware that Science City York and the other five English science cities have put proposals to the Treasury on promoting science and technology as a driver of economic development. Will those proposals benefit from some of the additional funding for science, and will the Government consider the proposals and respond?

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