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13 Oct 2009 : Column 51WH—continued

The withdrawal of the agricultural buildings allowance was part of a wider business tax reform announced in 2007, recognising that the rationale behind its introduction
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no longer applied. The allowances had become a selective and outdated subsidy, as I hope I will be able to persuade the hon. Gentleman-at least, I will have a go. To take one example, the allowance created a beneficial tax treatment for farmhouses but not for commercial office space or science parks. That selectivity inevitably distorted commercial decisions in a way that was clearly unhelpful.

Mr. Carmichael: I am grateful to the Minister for giving way. He is always generous in engaging in debate. He has chosen a narrow aspect of the ABA in housing. The significant impact of the changes will be on agricultural buildings such as cattle courts, pig houses and hen houses. Before he compares agriculture to other businesses, does he accept that there are much tighter margins in agriculture than in most businesses?

Mr. Timms: The question is why it is sensible to subsidise one kind of building in rural areas. Why should we subsidise agricultural buildings rather than commercial buildings or science parks? We have done that in the past and the evidence is that it distorts investment decisions in a way that is not in the interests of rural areas or communities. There is no economic sense in providing a selective tax subsidy for some buildings but not for others. The majority of commercial buildings in rural areas did not and do not receive allowances. The existence of allowances has distorted property decisions by providing tax relief that is not available for other purposes.

The ABA has long been recognised as imposing a significant compliance burden because the system is complicated. It featured in responses to the corporation tax reform consultation of 2002-05 and in the administrative burdens advisory board's list of priority irritants in the tax system. To leave ABAs in place would have meant retaining that complexity for up to 25 years. There were therefore strong simplification arguments in favour of withdrawal.

It is important to consider the withdrawal of the allowance and the Government's treatment of the agriculture sector in the context of the other forms of tax relief and Government support that are available. The Government and the devolved Administrations provide a range of direct support for agriculture. For example, farming in Scotland receives about £500 million in support from the Scottish Executive every year. The single farm payment is worth over £400 million a year, the less favoured areas support scheme more than £60 million a year and the Scottish beef calf scheme about £20 million a year. In June, the Scottish Cabinet Secretary announced increases in less favoured areas support scheme payments for the "fragile" and "very fragile" land categories-which equate broadly to the highlands and islands-of 19 per cent. for 2009 and 38 per cent. from 2010. Over two years, that should deliver an additional £15 million to active farmers in those regions. More broadly, the Scotland rural development programme budget is more than £1.5 billion for 2008-13. Such support is more appropriate than the rather ill-targeted tax relief that the allowances provided.

Some tax reliefs still exist, such as lower duty on diesel, which the hon. Gentleman mentioned, the agricultural inheritance tax and capital gains tax reliefs, the special averaging entitlements for calculating taxable profits and loss relief.


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Mr. Carmichael: I want to return to the Minister's point that the ABA is distorting decisions. The Government actions that I outlined, such as those on improving animal welfare standards and environmental standards, are also distorting decisions. We are forcing farmers into capital investment to make those changes. Surely that is the distortion that should be recognised in the tax system.

Mr. Timms: The measures that I have set out reflect those requirements and obligations.

The ABA forms only one element of the business tax treatment of agriculture. We must consider the rate of corporation tax and other capital allowances. A consideration of the overall business tax picture led the Government to announce a big package of reforms to business tax in Budget 2007. The ABA was only one plank of that. We set out the principles behind that package, the main features of which were a reduction in the main rate of corporation tax from 30 to 28 per cent., thus establishing the lowest corporation tax rate in the G7; enhancements to research and development tax credits; and a set of reforms to modernise and simplify the capital allowances system, including the abolition of ABAs and IBAs. That strong package of reforms is pro-growth and pro-investment. It has been estimated that it will add 0.2 percentage points per annum to investment above the trend rate and so strengthen the UK's global competitiveness.

We recognised in Budget 2007 that businesses would need time to plan for the changes to business tax. Therefore, IBAs and ABAs are being phased out not overnight, but over a four-year period. For each year from 2008, a business's entitlement to the allowances will be progressively reduced by one quarter. The allowances will ultimately be withdrawn in April 2011.

Mr. Carmichael: Can the Minister say how many farmers pay main rate corporation tax?

Mr. Timms: I am happy to check that figure, but I do not have it in front of me.

As part of the package, we introduced a new £50,000 annual investment allowance, which allows 95 per cent. of businesses to write off their expenditure on plant and machinery, other than cars, in the year in which it is
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made. Plant and machinery used on farms and in agricultural buildings will qualify for that allowance. It will provide a direct tax benefit to farmers for the tax year in which the money is spent.

To ensure that the agriculture sector is able to benefit from the full range of tax assistance that is available following the withdrawal of the ABA, Her Majesty's Revenue and Customs has engaged proactively to help the agriculture industry to maximise its claims to plant and machinery capital allowances, and to the £50,000 annual investment allowance in particular. Pig farming is particularly equipment intensive, so HMRC is working on specialised guidance for the pig industry to explain what allowances are due and what types of expenditure qualify. HMRC wants to engage with the agriculture industry to ensure that it can make the most of the new arrangements. The guidance has been received positively by the National Farmers Union, to which the hon. Gentleman paid tribute, and the National Pig Association. HMRC is awaiting wider feedback before considering whether to expand the initiative, possibly by giving additional guidance to the agriculture sector more generally.

That work and the package of spending and tax measures demonstrates the Government's continued support for the agriculture sector. That is further underlined by the new measures that were introduced in response to the downturn, such as increased funding for farm diversification, the development of micro-businesses, targeted support for the dairy sector and rural community broadband, which is of particular interest to me as the Minister responsible for Digital Britain.

The real benefit of the business tax reform package will be felt through its impact on business investment. It will benefit all sectors of the economy and increase the investment that will be important for economic recovery and long-term growth. This year, we introduced a first-year allowance that doubles the rate of tax relief on new business investment in plant and machinery, which will support about £50 billion of investment when the need for extra help is at its greatest. I commend the Government's reforms, such as the simplification of capital allowances-including the ABA and IBA-the reduction of the main rate of corporation tax to the lowest ever level and the introduction of the annual investment allowance, which will provide the platform to encourage investment in the UK this year and for the future.


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Energy Production

1 pm

Mr. Ian Liddell-Grainger (Bridgwater) (Con): I am delighted to be serving under you yet again, Sir Nicholas. It seems slightly strange to go from farm building allowances to nuclear building. I am sure there is a synergy somewhere, but I cannot think what it is-perhaps we should have corporate breaks.

I am fortunate to have obtained this debate. The future of nuclear power is vital both to my constituency and to the whole of the United Kingdom. As a nation, it is no secret or surprise that we are running out of capacity to generate electricity. Our power plants are growing old and have to be replaced within the next seven years or the lights will start to go out-in other words, an urgent situation is looming.

My premise today is to try to urge the Government to hear that ticking clock and to recognise that we cannot afford any more delays and we must take action. In Bridgwater, nuclear power has been providing reliable electricity to the grid since 1970 through four reactors, two of which have been decommissioned at A station. B station, which has had a five-year extension, is now owned by EDF Energy. We know how well nuclear power works and, more important, how safe it is. We have a whole generation of local experts who are closely involved in the building and management of it and, as I said, the decommissioning of our first power station has taken place at Hinkley A.

Where I come from, there is an acute understanding of the technicalities. Bridgwater college is pioneering specialist training for the important task of decommissioning our ageing nuclear power stations. I would like to thank the Minister because, two days ago, we got the go-ahead to build the first nuclear academy in the United Kingdom at Bridgwater. I am grateful to Geoff Russell at the Learning and Skills Council, to the regional development agency and Harry Studholme, and, of course, to the principal of Bridgwater college, Fiona McMillan, and her team. That is fantastic news and I am sure that the Minister would agree that it is good for the country.

I shall ask the Minister for some advice and it would be delightful if we could get some straight answers. Some people say that one deals only with yokels in Somerset, but I would like to think that that is not true. The people of Bridgwater are listening and watching. They have a true attention to detail and a real knowledge of their subject. I am afraid the Minister cannot pull the wool over my constituents' eyes. They have been interested in this matter for too long, and in Somerset, fudge and waffle do not come on to our agenda.

Hinkley Point is far from invisible. I do not know if the Minister has had a chance to come and see it, but it sits like a concrete castle overlooking the Bristol channel and dominates the skyline in one of the loveliest parts of this country. Hinkley Point has always provided valuable employment, but it has also attracted and bred considerable expertise. Some of the people who planned the very first reactor and went on site in 1959 still live nearby. They have seen Hinkley B, which is still operational, do its job equally well, and they may live to see the dawn
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of the latest generation of reactors at Hinkley C and D. However, that will happen only if the Government push for that and support it.

The plan is to construct a pair of new power stations-pressurised water reactors, which are tried, tested and, more important, used all over the world-that are capable of pumping out enough electricity to satisfy 4 million customers in the United Kingdom. I make no bones about it-this is a big-scale operation. The biggest civil building programme in the south-west to date is Hinkley A and B. The biggest civil programme of building in the south-west in the future will be Hinkley C and D, which will provide 700 permanent jobs per station. Many thousands of other jobs will be created to build it. The overall impact on our local economy has, of course, been totally positive. I am absolutely delighted to say that it has been good for us and will continue to be good for us.

The programme demands painstaking research, costly studies and a huge amount of essential consultation, so that everyone involved knows exactly what is involved and how to get it right. I suspect that if Her Majesty's Government-I do not mean just this Government, but any Government-were solely responsible for doing it, the idea would never have got off the drawing board. However, as the Minister knows full well, the nuclear industry in this country goes about its task with enormous efficiency and, of course, attention to detail. Important geological surveys are going on right now, EDF is on site, there are holes everywhere and it is pushing for the information it needs to be able to submit an application.

The latest phase of consultation-the second round-involves public meetings in village halls and begins today. The company seeking to build Hinkley C is EDF Energy, which is France's No. 1 power firm. It has already secured the land it needs and has spent months-actually, it seems more like years-discussing the small print with everyone. EDF has sent an absolutely fascinating detailed breakdown of what it wants to do at Hinkley. I will give it to the Minister at the end of the debate, because I cannot deal with it all in only a quarter of an hour.

There have been two other phases of public consultation. British Energy used to run both Hinkley A and B. Subsequently, it ran only Hinkley B, which has been taken over by EDF Energy, as the Minister is fully aware. It spent months asking for opinions about the matter and when EDF bought British Energy out, it began consultations of its own, which is absolutely right and proper-there are no problems with that. Schemes of such importance should never be pushed through on the quiet. No one would put up with that-I would not do so as an MP and neither do I expect my constituents to.

The consultation is far from over. Some 37 miles of cabling are required to get the electricity out of the new power station and on to the grid, so we need new pylons. The consultation is ongoing in relation to where those pylons should go. Unfortunately, the existing system, on which the National Grid has opened the consultation, must have new heavy-duty power lines that will go up to Avonmouth through a new switch system just outside Bridgwater. The patient work of seeking views is being undertaken by the National Grid and is ongoing. I am delighted to say that the local authorities most affected by the prospect of the new
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station are being kept fully informed by both the Government and EDF. In fact, so much information is out there, even a hermit crab could not get away with not hearing about what is going on.

So, what is the next step? This is where the debate might become awkward. Everybody accepts that it would be unfair to leave big planning decisions such as this to a local council. Somerset is the smallest district council in the United Kingdom and it knows that it could not cope-we accept that. We have a tripartite system between Sedgemoor district council, Somerset district and Somerset county council to ensure not only that we keep the Government informed, but that they keep us informed. We do have talented planners in our town halls, but the issues surrounding the building of a nuclear power station go much wider. Of course, Hinkley C raises local issues-for example, we need our councils to ensure that new roads are planned carefully. We desperately need a new road to bypass Bridgwater and that is one of the subjects on which EDF is in discussion.

Hinkley C is, of course, a national issue. The old planning system allowing major projects such as motorways and airport expansion to be considered by public inquiries has gone. On the face of it, that system seemed the fairest way to deal with such schemes as it gave everyone a say in front of a learned judge or appointee, who would then compile a report and leave the final yes or no to the Minister. The big downside to that way of doing things was time. Public inquiries too often became rambling and rowdy debates. The precise details could not be dealt with because so many activists wanted to argue the moral theories first. That is why years were wasted on the rights and wrongs of aviation, rather than the exact plans to expand Heathrow-and that is just one example. Such a situation is like a hijack-people think such inquiries will settle a planning question, but they end up being involved with a woolly argument that drags on for years and solves nothing. Of course, the only real winners in such a situation are the lawyers.

From bitter experience, I know a lot about the subject of planning. For my sins, I sat on the Parliamentary Committee set up to examine Crossrail, and I still bear the scars. It was an immensely controversial subject involving vast numbers of witnesses-or stakeholders as they are now called-and we were obliged to call them all. Some of the stakeholders wanted to waste time by bleating on about literally anything, including one lady who was worried about helicopter noises in tunnels. We listened and we heard, but we were still not sure of the arguments. That went on for two and a half years. It was very worrying that most of those people-and I do mean most-lived nowhere near the tunnels and would not have been affected by the proposed development at all, but felt that they had to have a say. My Committee colleagues were sorely tempted to drive stakes through the hearts of some of those people. However, that process did show that we had the ability to do the work by having a narrow remit, and we were not expected to come up with anything other than a yea or nay. It was not a big deal, but it was a lot more efficient than subjecting the whole thing to a public inquiry.

I understand why the Government want to alter the existing planning rules-I make no bones about that-but what they are introducing is not right. The idea is that huge projects such as Hinkley C will be placed before a brand new quango called the IPC, but this is too
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important to get wrong, and the Minister knows that. Eyes are beginning to glaze over, but let me assure people that the IPC is not to be confused with the IPCC -the Independent Police Complaints Commission-and neither is it to do with the International Publishing Corporation, the International Paralympic Committee, the international primary curriculum or international patent classifications. Those all have the same initials, and I am afraid that we have them here too. I suppose that Her Majesty's Government is overusing those initials to create a quango that can be hidden among others.

In this case, the brand new IPC, which has been operational only since the start of October, stands for-it is quite a mouthful, and quite a job-the Infrastructure Planning Commission. The new system is meant to work in this way: a planning application for a new nuclear power station would have to be submitted to the IPC-I hope that the Minister will correct me if I am wrong-and applicants would be expected to demonstrate that they had consulted the community properly in advance. The IPC would then consult local authorities and other organisations before making a decision, which would take into account the Government's national policy statement on nuclear power.

That all sounds clear and simple-I hope that everyone agrees-but one crucial aspect is missing. Imagine building a nuclear power station and forgetting to order the uranium, Sir Nicholas. You see, there is not yet a national policy statement on nuclear power. It does not exist; it has not been made. It cannot be nailed to a perch, or push up daisies, let alone go "Pretty Polly". It is far less use than a dead parrot. It might be a good idea to have a national policy statement on nuclear power and a national policy statement on wind or wave power-and perhaps one on solar power too; I do not know-but the Government have not got around to making any national policy statements on these issues or anything else. As things stand, if EDF Energy submitted an application to the new IPC, the IPC would be quite unable to reach an effective decision.

I would not insult the Minister by trying to teach him to suck eggs, but I hope that he will not mind me reminding him just how expensive it is to build a nuclear power station. It will not come as any surprise to hear that it costs billions. EDF wants to build four such power stations in the UK, and it has already spent millions on planning and consultation, but it does not have a bottomless pit of money; nobody does. A few days ago, EDF said that it was considering selling its UK electricity distribution network to reduce £36 billion of debt. It is also looking for investors to take a 20 per cent. stake in its UK nuclear business. Two German companies are also in line to build a pair of nuclear power stations in the UK, but the word is that they are becoming impatient with the indecision of the Government and this country.


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