Schedule 7 - Accounting practice and related matters
Finance Bill
5:15 pm
Susan Kramer (Shadow Minister, Treasury; Richmond Park, Liberal Democrat)
It is just that we have so many of those tests that if we could avoid one it would be to the general benefit. I would rather find a way to avoid one if we can, because their intent is so utterly blurred that we will spend the rest of our lives in the courts.
I am conscious that the principle that is involved with rent factoring, particularly when people get over a 15-year benchmark and are looking at the sale of a long-term rental stream, is similar to other sorts of financing and securitisation that I suspect the Government are considering and will be looking at in the near future. That includes the securitisation of fares, for example, proposed by Transport for London as a mechanism for funding infrastructure, and potentially even the securitisation of future tax streams, which Crossrail is considering as a mechanism that presumably taxes developer gains. The Government are perhaps looking for mechanisms to securitise those things. If they go back and look at the John Lewis case, they will see that essentially the same issues are all wrapped in with rent factoring.
Coming at the subject as a banker and considering it in a broader, more holistic sense, I would be interested to hear the Minister’s comments as to whether these actions compromise and restrict other forms of securitisation and liquidity that she and the Government will be seeking to achieve, particularly in respect of infrastructure projects in future.
In the narrow sense of clause 69, our objection to sub-paragraphs (5) and (6) is that they are retrospective, not retroactive, measures. It seems that anybody who entered into a rent-factoring stream for a period greater than 15 years could have done so by being reliant on the Finance Act 2000, in a straightforward, completely honest and non-controversial interpretation of the language in the Act, which says, in section 43C:
“(1) Section 43B shall not apply to a finance agreement if the term over which the financial obligation is to be reduced exceeds 15 years.”
That is remarkable clarity in a piece of legislation. Therefore to turn today to companies that relied on a straightforward, clear interpretation of a section in the 2000 Act and say to them that by behaving in accord with the law they are now contravening it is not an appropriate way to deal with businesses.