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Clause 1 — Main rate of corporation tax for financial year 2011

Part of Finance Bill – in the House of Commons at 7:45 pm on 12th July 2010.

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Photo of Stephen Timms Stephen Timms Shadow Financial Secretary, Shadow Minister (Digital Britain) 7:45 pm, 12th July 2010

I am grateful to the Exchequer Secretary for his kind remarks on my return to the Dispatch Box. He, along with many Members of all parties, was good enough to write to me after I was attacked and injured. I greatly appreciated all the messages of good will that I received, and I would like to put on record my thanks to all those from across the House who got in touch; I think that those messages have accelerated my recovery. I am grateful to the Exchequer Secretary for his words.

My hon. Friend Chris Leslie, in an excellent speech when moving the amendment, raised some important points. I was also encouraged by the comments of Andrew George. I am pleased that he described himself as free ranging, and I hope that his freedom of ranging includes joining us in the Lobby. I am particularly keen to have the opportunity to vote on amendment 34.

The Chancellor told us in his Budget speech that he was being tough on the banks. Listening to some Conservative Members' speeches, I wonder whether they heard that part of his speech. He explained rightly:

"The failures of the banks imposed a huge cost on the rest of society, so I believe that it is fair and right that in future banks should make a more appropriate contribution, reflecting the many risks that they generate."

At that stage, it could well be that the Chancellor's words were consistent with the comment in the Red Book, to which Matthew Hancock drew our attention. It states:

"The levy will result in a rebalancing of the burden of taxation between banking and other sectors."

Who knows to what a "rebalancing of the burden" amounts? It could mean something pathetic and small. However, the Chancellor went further in his Budget speech. He said that the introduction of the bank levy would entail

"a greater contribution from the banking sector-one that far outweighs any benefit that it will receive from the lower tax rates that I have just announced." -[ Hansard, 22 June 2010; Vol. 512, c. 175.]

The Chancellor told the House that the cost of levy to the banks would "far outweigh" any benefit that the banking sector received. Listening to the speeches of Sajid Javid, I do not think that they heard that part of the Chancellor's speech.

My hon. Friends the Members for Nottingham East and for North Durham (Mr Jones) queried whether the levy, in so far as we know about it-the hon. Member for St Ives told us something about it-would fulfil the Chancellor's words and far outweigh any benefits that the banks receive from the reduction of corporation tax. It is odd, as my hon. Friend the Member for Nottingham East pointed out, that for all the appearance of toughness in the Chancellor's speech, bank shares actually went up after his announcement.

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