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“as if contained in an Act of Parliament”.
That provision has been regularly used by Governments of different persuasions. I will discuss with the Chairman of the Procedure Committee whether he is content for me to place a copy of my letter citing such precedents and examples in the Library.
My hon. Friend the Member for Wolverhampton, South-West delivered a clinical and comprehensive demolition of the Opposition’s amendment and arguments. I hope that I can persuade him to serve on the Bill Committee, although Opposition Members—and perhaps the hon. Member for Falmouth and Camborne in particular—may not be too pleased if he does. On climate change, he made a persuasive and coherent argument. He was an early advocate of the importance of taking into account adaptation to the impact of climate change, and I am glad that, as he said, his private Member’s Bill has largely been incorporated into our draft climate change Bill.
The hon. Member for Hornchurch (James Brokenshire), who, I am disappointed to see, is not in his place, is a former tax lawyer, and I hope that we will see him on the Bill Committee, although I do not wish to do the Opposition Whips’ job for them. He maintained that small companies would have difficulty taking advantage of the tax reliefs because of their
complexity. However, the Institute for Fiscal Studies, in its reaction to the Budget, said:
“This is a genuinely simplifying Budget...a cause for congratulation rather than criticism.”
It is true that the annual investment allowance makes tax simpler for small businesses. Clearly, it is a simplification, effectively giving small businesses, incorporated and unincorporated, a cash flow tax, which has been welcomed by many, including the Federation of Small Businesses, the chairman of whose tax committee said:
“The Annual Investment Allowance will be significant for small businesses, both incorporated and unincorporated, when it comes in from April 2008. It should allow what is in effect free depreciation for small businesses on plant and machinery, and has the added benefit of being a simplification.”
Small firms often say that volatility in cash flow is one of their major headaches and risks. The AIA will offer significant help to make purchasing new assets more affordable.
My hon. Friend the Member for Stoke-on-Trent, South (Mr. Flello) chairs the Staffordshire taskforce and talked with some expertise about the importance of skills and jobs in his local economy. I will make sure that the chairman of Advantage West Midlands is aware of his points about investment, particularly in office accommodation in his area.
The right hon. Member for Wokingham treated us to a tantalising taste of the report that he is preparing for his leader. We look forward to the Redwood report on economic reform. I encourage him and those on his Front Bench to take up the idea of publishing it chapter by chapter, and to make sure that it is a question of when and not if.
I was glad to see the hon. Member for South-West Hertfordshire (Mr. Gauke) make a contribution and keep the Treasury Committee’s end up in the debate. He was particularly concerned about the Olympics and the impact of capital allowances. We do not expect the reforms to business tax to have the negative impact that he and some other members of the Committee might fear. As he will be aware, the changes to capital allowances have a largely temporary timing effect. Those will be more than outweighed by the dominant effect of the cut in the main rate that the Bill and Budget introduce. Overall, we expect the Budget changes to have a positive impact on investment levels, including in relation to the Olympics.
The hon. Member for Ludlow (Mr. Dunne), who sadly and surprisingly is not in the Chamber, wanted to discuss in detail aspects of sideways loss relief. The Committee is probably the place to do that, not a Second Reading debate at this hour.
The hon. Member for Dundee, East (Stewart Hosie) quoted the Federation of Small Businesses. I shall come on to the business tax reforms and explain why they are likely principally to assist small businesses rather than to hinder them as he fears. He made the argument—although that perhaps flatters him slightly—that the announcements in the Budget would mean R and D tax credit benefits to very few. That is not true at all. The measure in the Bill extends the small and medium-sized enterprises R and D tax credit to companies with up to 500 employees, but the Chancellor’s announcement in the Budget, for which we will legislate next year, means that all companies
will benefit from an increase in the value of the SME and the large company R and D tax rate from 2008. To date, there have been more than 23,000 claims under the R and D tax credit from between 6,000 and 8,000 companies. That is scale of those who stand to benefit.
My hon. Friend the Member for Swansea, East (Mrs. James) brought some of the contributions back to reality. She was so clear and so right when she argued that tax credits are an important part of many families’ monthly income. Take-up is now 90 per cent. for those on incomes lower than £10,000. More than 6 million families and 10 million children are benefiting. She said that they are afraid of having to do without their tax credits. Those fears would certainly be realised if the Opposition ever got their way.
On the business tax reform, the Leader of the Opposition said:
“Somebody needs to tell the Prime Minister that there are two rates of corporation tax, and the one for small businesses is going up. It will be paid by every firm in the country.”—[ Official Report, 28 March 2007; Vol. 458, c. 1492.]
Somebody needs to tell the Leader of the Opposition that the UK has 4.3 million small businesses. Of those, more than three quarters are self-employed. They do not pay corporation tax and are not affected by the changes in the Budget. Of those that remain, around a quarter do not pay any corporation tax because they do not declare profits. Of those that remain, we estimate that the majority have incorporated with the purpose of reducing their tax and national insurance liabilities.
In all the changes that we have made to small business tax rates and policy, we have done so with a view to having a tax system that ensures that we get greater levels of investment and innovation and a fairness in the system. That was the purpose also of our consultation in 2004. However, the lower rates of tax have resulted in a significant number of people incorporating to take advantage of them, not to invest in business, but simply to extract the company profits in a way that reduces their personal tax and national insurance liabilities. They are doing that while still carrying out the same economic activity that they carried out before they incorporated. The tax break is clearly being subsidised by those companies that are following the rules and by ordinary taxpayers.
We are therefore refocusing the provision of investment incentives on small businesses. The increase in the small companies rate will reduce the differential in tax paid between the incorporated and the self-employed. The annual investment allowance will target assistance directly on those firms, incorporated and unincorporated, that invested their profits. The Budget is good for business, with the lowest corporation tax rate in the major economies, a small companies rate that will still be lower than the rate when we came to office in 1997, tax incentives focused on businesses that invest and innovate, and a fair deal for the self-employed.
Over the past decade, Britain’s economy has been at the forefront of jobs, stability and growth, and the Bill will help to maintain our competitive economy for the future. Since 1997, Labour has introduced the new deal and tax credits for working families, and has seen more
than 2.5 million more jobs in the British economy. The Bill increases the rewards for work and support for families. In the last 10 years, we have seen the United Kingdom lead on international arguments and action to tackle climate change. Now the United Kingdom, almost alone, is set not just to meet our Kyoto targets but to double them. The Bill introduces further measures to protect the environment and to reduce climate change emissions.
A strong economy, a just society, a duty to future generations in protecting the environment—this is a Labour Finance Bill, and I commend it to the House.
Question put, That the amendment be made:—
The House divided: Ayes 168, Noes 283.
AYES
Afriyie, Adam
Ainsworth, Mr. Peter
Amess, Mr. David
Ancram, rh Mr. Michael
Arbuthnot, rh Mr. James
Atkinson, Mr. Peter
Barker, Gregory
Barrett, John
Beith, rh Mr. Alan
Bellingham, Mr. Henry
Bercow, John
Beresford, Sir Paul
Binley, Mr. Brian
Bone, Mr. Peter
Bottomley, Peter
Brady, Mr. Graham
Brazier, Mr. Julian
Brokenshire, James
Browne, Mr. Jeremy
Browning, Angela
Burt, Alistair
Cable, Dr. Vincent
Carmichael, Mr. Alistair
Carswell, Mr. Douglas
Cash, Mr. William
Chope, Mr. Christopher
Clappison, Mr. James
Clarke, rh Mr. Kenneth
Clifton-Brown, Mr. Geoffrey
Cox, Mr. Geoffrey
Curry, rh Mr. David
Davies, David T.C. (Monmouth)
Davies, Philip
Davis, rh David (Haltemprice and Howden)
Djanogly, Mr. Jonathan
Duddridge, James
Duncan, Alan
Dunne, Mr. Philip
Evans, Mr. Nigel
Evennett, Mr. David
Fallon, Mr. Michael
Featherstone, Lynne
Field, Mr. Mark
Francois, Mr. Mark
Fraser, Mr. Christopher
Garnier, Mr. Edward
Gauke, Mr. David
Gibb, Mr. Nick
Goldsworthy, Julia
Goodman, Mr. Paul
Gove, Michael
Gray, Mr. James
Grayling, Chris
Green, Damian
Greening, Justine
Greenway, Mr. John
Grieve, Mr. Dominic
Hammond, Mr. Philip
Hancock, Mr. Mike
Hands, Mr. Greg
Harper, Mr. Mark
Harvey, Nick
Hayes, Mr. John
Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Herbert, Nick
Hoban, Mr. Mark
Hogg, rh Mr. Douglas
Hollobone, Mr. Philip
Holloway, Mr. Adam
Horam, Mr. John
Hosie, Stewart
Howarth, Mr. Gerald
Hughes, Simon
Huhne, Chris
Hurd, Mr. Nick
Jack, rh Mr. Michael
Jenkin, Mr. Bernard
Johnson, Mr. Boris
Jones, Mr. David
Kawczynski, Daniel
Key, Robert
Kirkbride, Miss Julie
Lait, Mrs. Jacqui
Lamb, Norman
Lancaster, Mr. Mark
Lansley, Mr. Andrew
Leigh, Mr. Edward
Letwin, rh Mr. Oliver
Lewis, Dr. Julian
Liddell-Grainger, Mr. Ian
Lidington, Mr. David
Lilley, rh Mr. Peter
Llwyd, Mr. Elfyn
Loughton, Tim
Luff, Peter
Mackay, rh Mr. Andrew
Maclean, rh David
Main, Anne
Malins, Mr. Humfrey
Maples, Mr. John
Mates, rh Mr. Michael
Maude, rh Mr. Francis
May, rh Mrs. Theresa
McIntosh, Miss Anne
McLoughlin, rh Mr. Patrick
Mercer, Patrick
Miller, Mrs. Maria
Milton, Anne
Mitchell, Mr. Andrew
Moss, Mr. Malcolm
Murrison, Dr. Andrew
Neill, Robert
O'Brien, Mr. Stephen
Osborne, Mr. George
Ottaway, Richard
Paice, Mr. James
Paterson, Mr. Owen
Pelling, Mr. Andrew
Penning, Mike
Prisk, Mr. Mark
Pritchard, Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Rifkind, rh Sir Malcolm
Robathan, Mr. Andrew
Robertson, Hugh
Rogerson, Mr. Dan
Rosindell, Andrew
Ruffley, Mr. David
Russell, Bob
Sanders, Mr. Adrian
Shepherd, Mr. Richard
Smith, Sir Robert
Soames, Mr. Nicholas
Spicer, Sir Michael
Spink, Bob
Spring, Mr. Richard
Steen, Mr. Anthony
Stuart, Mr. Graham
Stunell, Andrew
Swayne, Mr. Desmond
Swire, Mr. Hugo
Syms, Mr. Robert
Taylor, Mr. Ian
Tyrie, Mr. Andrew
Vaizey, Mr. Edward
Vara, Mr. Shailesh
Viggers, Peter
Villiers, Mrs. Theresa
Walker, Mr. Charles
Wallace, Mr. Ben
Waterson, Mr. Nigel
Weir, Mr. Mike
Whittingdale, Mr. John
Wiggin, Bill
Willetts, Mr. David
Williams, Stephen
Willott, Jenny
Winterton, Ann
Winterton, Sir Nicholas
Wright, Jeremy
Yeo, Mr. Tim
Young, rh Sir George
Younger-Ross, Richard
Tellers for the Ayes:
Michael Fabricant and
Mr. Robert Goodwill
NOES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Allen, Mr. Graham
Armstrong, rh Hilary
Atkins, Charlotte
Austin, Mr. Ian
Austin, John
Bailey, Mr. Adrian
Baird, Vera
Balls, Ed
Barlow, Ms Celia
Barron, rh Mr. Kevin
Bayley, Hugh
Beckett, rh Margaret
Begg, Miss Anne
Berry, Roger
Betts, Mr. Clive
Blackman, Liz
Blears, rh Hazel
Blizzard, Mr. Bob
Blunkett, rh Mr. David
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Burnham, Andy
Butler, Ms Dawn
Byers, rh Mr. Stephen
Byrne, Mr. Liam
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Challen, Colin
Chapman, Ben
Chaytor, Mr. David
Clark, Ms Katy
Clark, Paul
Clarke, rh Mr. Charles
Clarke, rh Mr. Tom
Clelland, Mr. David
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cook, Frank
Cooper, Yvette
Corbyn, Jeremy
Crausby, Mr. David
Creagh, Mary
Cruddas, Jon
Cryer, Mrs. Ann
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Darling, rh Mr. Alistair
Davidson, Mr. Ian
Davies, Mr. Dai
Dean, Mrs. Janet
Denham, rh Mr. John
Devine, Mr. Jim
Dhanda, Mr. Parmjit
Dismore, Mr. Andrew
Dobbin, Jim
Dobson, rh Frank
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Dunwoody, Mrs. Gwyneth
Eagle, Angela
Efford, Clive
Ellman, Mrs. Louise
Ennis, Jeff
Farrelly, Paul
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, Caroline
Follett, Barbara
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Godsiff, Mr. Roger
Goodman, Helen
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Hamilton, Mr. Fabian
Harris, Mr. Tom
Havard, Mr. Dai
Healey, John
Henderson, Mr. Doug
Hendrick, Mr. Mark
Heppell, Mr. John
Hesford, Stephen
Hewitt, rh Ms Patricia
Hill, rh Keith
Hodge, rh Margaret
Hodgson, Mrs. Sharon
Hoey, Kate
Hood, Mr. Jimmy
Hoon, rh Mr. Geoffrey
Hopkins, Kelvin
Howarth, rh Mr. George
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Iddon, Dr. Brian
Ingram, rh Mr. Adam
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Alan
Keen, Ann
Kemp, Mr. Fraser
Khan, Mr. Sadiq
Kidney, Mr. David
Kilfoyle, Mr. Peter
Knight, Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, Mr. David
Laxton, Mr. Bob
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Mackinlay, Andrew
MacShane, rh Mr. Denis
Mactaggart, Fiona
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Marshall, Mr. David
Marshall-Andrews, Mr. Robert
McAvoy, rh Mr. Thomas
McCabe, Steve
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McDonnell, John
McFadden, Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGuire, Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
McNulty, Mr. Tony
Meacher, rh Mr. Michael
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh David
Miliband, Edward
Miller, Andrew
Mitchell, Mr. Austin
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Morden, Jessica
Morley, rh Mr. Elliot
Mountford, Kali
Mudie, Mr. George
Munn, Meg
Murphy, Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
O'Brien, Mr. Mike
Olner, Mr. Bill
Owen, Albert
Palmer, Dr. Nick
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, James
Raynsford, rh Mr. Nick
Reed, Mr. Jamie
Reid, rh John
Robertson, John
Rooney, Mr. Terry
Roy, Mr. Frank
Ruddock, Joan
Russell, Christine
Ryan, Joan
Seabeck, Alison
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Angela E. (Basildon)
Smith, Geraldine
Smith, rh Jacqui
Smith, John
Snelgrove, Anne
Soulsby, Sir Peter
Southworth, Helen
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stewart, Ian
Strang, rh Dr. Gavin
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Taylor, Dr. Richard
Thornberry, Emily
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Truswell, Mr. Paul
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Ussher, Kitty
Vaz, rh Keith
Walley, Joan
Waltho, Lynda
Ward, Claire
Wareing, Mr. Robert N.
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, Mr. Michael
Winnick, Mr. David
Winterton, rh Ms Rosie
Woodward, Mr. Shaun
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Tellers for the Noes:
Mr. Michael Foster and
Jonathan Shaw
Question accordingly negatived.
Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on second or third reading), and agreed to.
Bill accordingly read a Second time.
That—
(1) Clauses 1, 3, 7, 8, 12, 20, 21, 25, 67 and 81 to 84, Schedules 1, 18, 22 and 23, and new Clauses relating to microgeneration be committed to a Committee of the whole House;
(2) the remainder of the Bill be committed to a Public Bill Committee; and
(3) when the provisions of the Bill considered by the Committee of the whole House and the Public Bill Committee have been reported to the House, the Bill be proceeded with as if it had been reported as a whole to the House from the Public Bill Committee.— [Mr. Timms.]
delegated legislation
Mr. Speaker: With permission, I shall put together motions 2 to 6 together.
Motion made, and Question put forthwith, pursuant to Standing Order No.118(6) (Standing Committees on Delegated Legislation),
That the draft Serious Organised Crime and Police Act 2005 (Amendment of Section 76(3)) Order 2007, which was laid before this House on 8th March, be approved.
That the draft Representation of the People (National Assembly for Wales) (Access to Election Documents) Regulations 2007, which were laid before this House on 7th March, be approved.
That the draft Government of Wales Act 2006 (Consequential Modifications and Transitional Provisions) Order 2007, which was laid before this House on 26th March, be approved.
That the draft Community Legal Service (Asylum and Immigration Appeals) (Amendment) Regulations 2007, which were laid before this House on 14th March, be approved.
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