|Previous Section||Index||Home Page|
Mr. George Mudie (Leeds, East) (Lab):
I welcome the main thrust of the Chancellors announcement, but I would like to return to the item raised by the Chairman of the Treasury Committee, on life insurance. The Chancellor has indicated that he accepts that the issue is
complex and he appears to accept that there are real difficulties for the life insurance industry. As we are nearing the end of January, and the new rules will operate from 1 April, can he give that industry, which is clearly worried about the proposals, any hope of some help before April?
Mr. Darling: As I said to our right hon. Friend the Member for West Dunbartonshire (John McFall) and others, and as I said in the statement, I am aware of the issue, which has been raised with me by the Association of British Insurers and individual insurers. If we can, we would like to try to help them. As I said to our right hon. Friend, however, it is not immediately obvious that the particular problem raised can be easily resolved. I have asked my officials, however, to speak to the industrys representatives, and they will do so over the next few days and beyond. I hope that we can find a resolution, but I do not want to raise hopes because the issue is quite complex.
Julia Goldsworthy (Falmouth and Camborne) (LD): My hon. Friend the Member for Twickenham (Dr. Cable) raised the question earlier, but I am not sure that I caught the Chancellors response. Can he confirm that second-home owners will see a cut in their CGT bills? Was that an intended or unintended consequence of his proposals?
Mr. Darling: If there is a single rate, and we move away from the old system of a number of rates, does it not follow that some people will gain? Because we have a single rate of 18 per cent., that is less than some people might have paid on previous occasions.
Ms Patricia Hewitt (Leicester, West) (Lab): I am sure that my right hon. Friends statement will be warmly welcomed by many small business owners in my constituency. He will be aware, however, that at the time of his initial proposal real concern was expressed that the simplification measures, although otherwise welcome, might disadvantage employee share ownership plans. Is he satisfied that the proposals that he has announced today will encourage companies to maintain, and indeed extend, their employee share ownership plans?
Mr. Darling: As I said earlier, the average gain under such employee schemes is between £2,000 and £3,000. Everybody in the country has an annual exemption for capital gains tax of £9,200every yearso the vast majority of people would come nowhere near paying CGT. The number of people who benefit from capital gains tax exemption in such schemes is growing, because more people are in such schemes. I want to encourage that; I have always believed that employee share ownership schemes should be supported. My proposals will help small businesses, and the annual exemption, which will go up again in April, will ensure that many of the people about whom my right hon. Friend is concerned will be more than covered.
Mr. Andrew Mackay (Bracknell) (Con):
As todays statement, far from complementing the previous proposals, is clearly a retreat, what lessons has the Chancellor learned from this sad affair? For instance, in future will
he properly consult business before putting forward such tax proposals, which have caused such chaos and uncertainty?
Mr. Darling: Of course we will listen to what businessessmall and large alikehave to say. It is important that we introduce the right tax regime. What I propose today is right. We have introduced an overall simplification, but we recognise the particular circumstances of small businesses, which we want to encourage to grow. That is why I have introduced the measures.
David Taylor (North-West Leicestershire) (Lab/Co-op): Is the Chancellor convinced that people are being given adequate time to plan their affairs, particularly if we are dealing with the disposal of businesses as opposed to liquid assets such as quoted shares? Is there not a risk that forced disposals will take place, and that people will be disadvantaged because of the decisions taken at this time? Could taper relief not be extended, at least for a period? There is no requirement for it to end at midnight on 5 April, is there?
Mr. Darling: No, but the overall thrust of what people are saying is that they want certainty as to what the regime will be from April. To add a further uncertainty by putting it off for a year or so would not have been particularly helpful. What I propose now means that people know exactly the position and can plan accordingly. As my hon. Friend will know, it is not uncommon in Budgets for the tax changes to take place that evening. What is needed is some degree of certainty, and that is what I have provided today.
Mr. Mark Prisk (Hertford and Stortford) (Con): This statement is as inadequate as the Chancellor has proved himself to be incompetent on the issue. Many owners of small businesses have said to me that, after 15 weeks delay, as many right hon. and hon. Members have said, entrepreneurs will still lose £700 million. It will only be the smallest firms who will be spared, and then only if they remain the smallest. What kind of message does that send to the ambitious entrepreneurthe real wealth and job creators? What place do they now have in Labours Britain?
Mr. Darling: The tax regime in this country, whether it is the lowest corporation tax rates that we have ever haddue to come down again in Aprilthe capital gains tax regime, or the incentives provided through enterprise investment schemes or venture capital trusts, has a whole range of measures that have helped businesses. On top of that, we have been able to maintain a strong and stable economy, with low levels of inflation, which has also encouraged long-term investment. That is very different from the situation 15 or 20 years ago.
Chris Bryant (Rhondda) (Lab):
Analysis of the economy in my constituency shows that it contains about a third of the number of businesses in the average constituency in the land. That is partly because of the devastation wreaked on the economy in south Wales by another political party, but will the Chancellor confirm that he will do more to encourage entrepreneurship in former coalfield areas, and that he will ensure that the enterprise
investment scheme and venture capital trusts really do deliver more jobs and more small businesses in those peripheral economies?
Mr. Darling: My hon. Friend is right: the Tory party paid scant attention to communities like his that were devastated when the mines were shut in the 1980s. The situation in many parts of the country has changed almost unrecognisably since then.
We have introduced a range of measures, including regional venture capital funds and specific arrangements to assist people through reduced income tax, corporation tax and capital gains tax. That has helped businesses, which is why, as I said, there are more than 760,000 more small and medium-sized enterprises in the country than there were 10 years ago. But yes, we will continue to do all we can to encourage small businesses, because they are the engines of future growth. Ninety per cent. of businesses that are likely to take advantage of my announcement next year will pay the 10p rather than the 18p ratewhich, of course, is infinitely better than the 40 per cent. rate with which they were confronted more than 10 years ago.
Adam Price (Carmarthen, East and Dinefwr) (PC): Does the Chancellor not understand that offering a tax break to second-home owners will make investment in second homes even more financially attractive and will put further pressure on house prices, especially in rural areas, making them even less affordable than they are now? Are the Government not making the same mistake that they made with self-invested personal pensions? Having originally proposed to include second homes as a qualifying asset, they then had to withdraw the proposal because of precisely the objections that are being made now.
Mr. Darling: I think the real answer to the problem that the hon. Gentleman has raisedand the shortage of housing is undoubtedly a problem in rural areas, as it is in urban areasis for us to recognise the need to increase the supply of housing as a whole. I hope that Members in all parts of the House will support the Governments measures both to encourage more housing and to reform the planning laws; otherwise we shall continue to experience the problem of far more people needing housing than there are houses, which will force prices up. It is important for us to recognise the fundamental problems that we face in this country.
Jim Cousins (Newcastle upon Tyne, Central) (Lab): I understand my right hon. Friends motives, but new reliefs will mean new opportunities. Tax changes behaviour. Can my right hon. Friend assure us that firm measures will be taken to prevent income being switched to capital and the real benefits going not to business angels but to money magicians?
Mr. Darling: I said in my statement that I would keep that under review. If there is any sign of abuse of this or, indeed, any other part of the tax system, the Government will be ready to take the appropriate action.
Mr. Douglas Hogg (Sleaford and North Hykeham) (Con):
Will the right hon. Gentleman confirm my understanding that his October proposals, as modified today, involve the removal of the indexation of the
acquisition costs in respect of a number of years from the early 1980s to the end of the 1990s? If so, is that not a form of retrospective taxation which should be deeply deplored, depriving people of a reasonable expectation in regard to acquisition costs? Perhaps I should add that I come into one of those categories.
One of the many changes that we have made in an attempt to simplify the system relates to indexation. I understand the right hon. and learned Gentlemans point, but the tax system does change from time to time, especially in relation to capital gains. It is quite possible that something may be acquired long before a particular tax measure is introduced. Capital gains tax is a relatively new tax: it was only introduced in 1965.
I am trying to simplify the tax system, which is something that people in the House and outside have asked successive Chancellors to do. I readily accept that once we do start to simplify a tax, we soon hear from those who did not want that particular simplification.
Mr. Mark Harper (Forest of Dean) (Con): Many Members have commented that the combination of the changes announced today and those announced in the pre-Budget report represents a tax increase of £700 million, and the Chancellor has not denied that. For the avoidance of doubt, will he confirm that it is indeed the case?
Mr. Darling: If the hon. Gentleman cared to look at the figures that we published in the pre-Budget report, he would see exactly what the changes meant. It is hardly a secret; it is in documents published at the time of the pre-Budget report.
Mr. Mark Field (Cities of London and Westminster) (Con): Like many Members, in these sorry circumstances I support the proposal, although it flies in the face of the simplicity that was the whole idea of the original statement in October.
It is important to have a sense of perspective. I think that between 1945 and 2002 most business owners would have been delighted at the prospect of not having to pay tax on 82 per cent. of their earnings, but that is partly a function of being in a global economy. Does the Chancellor not recognise, and will he not confirm, that this climbdown will require yet more anti-avoidance measures?
Mr. Darling: I am grateful to the hon. Gentleman. He has endeavoured to give a fair assessment of what I am proposing, and he is the first Conservative Member to say that it might actually merit support. He is right: obviously the tax rates have changed over the years. I do not think many people apart from the hon. Member for Twickenham (Dr. Cable) believe that capital gains should be taxed at 40 per cent. I think that a lower rate is right, and our rate is comparable with international rates.
I believe that this measure will help small businesses. I believe that all Members believe that people who take the trouble, put in the effort and have the initiative to set up and develop such businesses ought to be supported, and that is what I am trying to do.
Tuesday 29 JanuaryDebate on the treaty of Lisbon provisions relating to fighting cross-border crime; justice; policing; human trafficking; and asylum and migration policy, followed by consideration in Committee of the European Union (Amendment) Bill [1st Allotted Day].
Tuesday 5 FebruaryDebate on the treaty of Lisbon provisions relating to human rights, followed by continuation of consideration in Committee of the European Union (Amendment) Bill [3rd Allotted Day].
Wednesday 6 FebruaryDebate on the treaty of Lisbon provisions relating to the single market, followed by continuation of consideration in Committee of the European Union (Amendment) Bill [4th Allotted Day].
Mrs. Theresa May (Maidenhead) (Con): I thank the Leader of the House for giving us the forthcoming business. Today the House finally sees the motions for Mondays debate on procedure relating to the European Union (Amendment) Bill and debates on the Lisbon treaty. Labour Back Benchers, however, have had this knowledge for days, courtesy of a document circulated by the Government Chief Whip. The Leader of the House has given us two weeks business, but according to the list that I have, Labour Back Benchers know the dates of business until the end of February. If they know, why does the Leader of the House not have the courtesy to tell the whole House?
This morning the Home Secretary appeared on the Today programme giving details of the Counter-Terrorism Bill before it was published for Members of the House. Yet again, the Government have put the
media before Parliament. Every week the Leader of the House tells us that she puts Parliament first, and every week her colleagues treat Parliament with disdain.
if there is a bandwagon, she will jump on it and if there is a myth, she will peddle it.[ Official Report, 17 January 2008; Vol. 470, c. 1079.]
In view of the recent downturn in international financial markets, may I suggest the state of the British economy as a subject for a future topical debate? On Monday the Secretary of State for Defence announced that the Ministry of Defence had lost a laptop containing the bank details of 3,700 Army applicants. It lost a further two laptops containing personal data on Tuesday, and yesterday the Ministry of Justice announced that it had lost four CDs containing the restricted data of court defendants, witnesses and victims. When will we have a debate on the Governments systemic failure to protect our personal information?
Given this record on data managementor mismanagementit is no surprise that within two weeks, the Prime Minister has changed his mind and delayed the introduction of the identity card scheme; and we have learned today that two companies have pulled out of the procurement process for the scheme, including Accenture, the very company the Minister for Borders and Immigration used to work for. This is a shambles. The scheme is clearly in administration and should be liquidated. When will the Home Secretary come to the House and make a statement on the ID card scheme?
As a London MP, the right hon. and learned Lady will be aware of the concern being raised about the Mayor of London. Does she not find it extraordinary that the Mayor has defended his senior staff using their paid time to run a smear campaign against Trevor Phillips? May we have a debate on the abuse of power by Mayor Livingstone?
The Prime Minister has written a book about courage: it was clearly not an autobiography. He did not have the courage to sign up to the EU reform treaty alongside other leaders, he did not have the courage to vote for the Bill on the treaty on Second Reading, and he has not had the courage to give the British people a referendum. So can we have a debate on courage and leadership?
We have a Prime Minister who dithers, delays and dodges on matters of crucial importance to our country. When will he finally get a grip and start running the country, instead of running away from difficult decisions?
|Next Section||Index||Home Page|