There are no large-scale public sector capital projects in my constituency, but with a number of my colleagues I am opposing a large-scale capital project by the Humberside county council costing £5·5 million —an ice rink for Hull which will be paid for not by the ratepayers of Hull but by the ratepayers in the rest of Humberside.
The hon. Member for Colne Valley (Mr. Wainwright) said that if one has to pay tax on interest received it is just and equitable that tax relief should be available on all interest paid. I agree with him 100 per cent. The hon. Gentleman is a chartered accountant, and I am a member of the same profession. All chartered accountants accept that view. It was the law up to 20 years ago, but the law was changed by a Labour Government and it would be interesting to know how the Liberals voted at that time. The hon. Gentleman made a relevant point which I commend to my Front Bench.
In general I welcome the Bill, but I am a little disappointed that it does not deal with the taxation of holiday flats. That problem is important in my constituency and to all holiday or tourist resorts. The problem arises because in the last year or 18 months in certain parts of the country the Inland Revenue has changed from taxing that income under schedule D, case 1, as a trade to taxing it under schedule D, case 6, as investment income. That means that some holiday fiat investors are subject to investment income surcharge. More important, owners have not been able to claim capital gains retirement relief and relief for the replacement of business assets.
My hon. and learned Friend the Member for Fylde (Sir E. Gardner) endeavoured to put that right when he tabled a new clause to the Finance Bill which was abridged because of the general election. My learned Friend withdrew the new clause after undertakings from the Financial Secretary, who said:
We have decided, as a result of the strong and persuasive representations by my hon. Friends, to change the law in the way that they want. At a suitable opportunity we intend to bring forward proposals to change the law so that those carrying on a business of furnished holiday lettings will, in general, be able to claim capital gains tax retirement relief and relief on replacement of business assets, and to have their income from such a business treated as earned income, whether or not they are carrying on a trade.
I regret that it is not possible to bring the new clause into effect in the Bill, but the Committee will know the reason why that is so. The Bill's life is not likely to be as long as it should be before it becomes an Act, when the necessary complicated, technical drafting could be done."—[Official Report, 11 May 1983; Vol. 42, c. 841.]
I should have thought that the Bill provided a suitable opportunity for the Government to honour that commitment, but I am told that the Treasury draftsmen have not had sufficient time to deal with the matter. I have a sneaking feeling that the Inland Revenue is putting up a strong fight to prevent such a clause becoming law. However, I accept the Minister's point that one reason for not including such a clause was that the Government did not want Parliament to sit through August. If that is the case, I am prepared to accept it. However, I hope that my right hon. Friend, when he replies, will give a firm commitment to include such a clause in the Finance Act 1984 and that the operator's income for the current year will not be affected.
I welcome the Bill, which would not have been necessary were it not for the Opposition's vindictiveness in not allowing certain clauses in the previous Bill to go through. In particular, I was surprised at their refusal to accept the lifting of the tax limit on mortgage relief to £30,000. It showed once more the Labour party's innate opposition to the expansion of home ownership.