The measure is intended to compensate for the fact that when shares are bought and sold through the market in the usual way stamp duty is payable on each occasion, but no duty is payable on purchases and sales of depository receipts after shares have been converted into them. The purpose of the charge is therefore to safeguard the £600 million revenue from stamp duty on shares generally.
I thank my hon. Friend for his reply. However, is he aware that there is a widespread belief that this will put major British companies at a disadvantage when they want to raise capital on the international market? In the light of the fact that there is no reference to it in the Finance Bill, is there some hope that the Chancellor of the Exchequer has accepted the criticisms and that he will scrap the tax?
I am aware of the comments of a number of American and British companies, but we have done nothing in the Budget to prevent foreigners buying shares direct in London. We have made it proper to do so by cutting the stamp duty rate with effect from later this year. We will carefully consider representations on the matter of ADR, as we always do on all Budget measures. Those provisions were not included in the print of the Finance Bill, published yesterday, for the technical reasons that I announced on 21 March.
There is nothing in the Budget, nor will there be in the Finance Bill, to deter foreign investment in United Kingdom shares through London, and we are reducing the rate for doing so.