(Except clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and schedules 5, 6, 19 and 25, and any new clauses and schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.)

Finance Bill – in a Public Bill Committee at 8:55 am on 15th May 2003.

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Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield 8:55 am, 15th May 2003

I welcome right hon. and hon. Members to the first sitting of the Finance Bill 2003. I am a tough Chairman and this will be an ordered, constructive and positive Committee. I hope that ways will be found to discuss all the important parts of the Bill, which is important not only to the House but to many people outside.

I want to make some domestic announcements. Copies of the money and Ways and Means resolutions are available in the Room and Members are encouraged to obtain copies and to study them.

There are some red boxes in the Room, perhaps in anticipation of those who aspire to high office. There is one for every Committee member, and no doubt they will wish to collect them in due course.

I want to say with every emphasis that I can muster that mobile telephones may be useful electronic devices, but I do not like their sound in this Standing Committee, so I hope that they will all be switched off.

I also want to announce, well in advance, a matter that is always stated by the Chairman—it is not my intention, or that of other Chairmen of this Committee, to call starred amendments.

I hope that I have made myself clear and that this will be a good Committee. We have a programme motion, whether we like it or not, and I hope that important matters can be debated properly in this Committee, despite those restrictions.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

On a point of order, Sir Nicholas. I noted the words ''a tough Chairman'', so it is sensible to inquire whether gentlemen may remove their jackets. I would not wish to offend you on day one.

While raising that point of order, could I, through you, Sir Nicholas, inquire of the Paymaster General whether the significance of the red boxes is that they are Labour boxes, or is she celebrating Bristol City football club and its tragic loss to Cardiff this week?

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

I cannot speculate on the latter point, but I have no doubt that the Minister will have some feelings about one of her local football clubs.

On the matter relating to the boxes behind me, I am pleased that we are proceeding with a certain amount of humour. I can only advise the hon. Gentleman that red boxes are slightly cheaper than green boxes, and Parliament is conscious of the cost to the public purse.

I am grateful to the hon. Member for Newcastle-under-Lyme (Paul Farrelly) for putting on his jacket. If Members feel uncomfortable as we move to a hotter period of the year and if jackets are hung tidily on the rear of chairs, I am happy for them to be removed at the discretion of Members.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I beg to move,

That—

(1) during proceedings on the Finance Bill the Standing Committee do meet when the House is sitting on Tuesdays and Thursdays at 8.55 am and 2.30 pm, except on Tuesday 3rd June when it shall meet at 10.30 am and at 4.30 pm;

(2) the proceedings shall be taken in the order shown in the first column of the following Table, and shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table:—

TABLE

Proceedings

Time for conclusion of proceedings

Clauses 2, 3, 6 to 8, 10 to 13 and 15 to 19, Schedule 1, Clauses 20, 21 and 23, Schedule 2, Clauses 24 to 41, 147 and 149 to 151, Schedule 26, Clauses 152 to 154, Schedule 27, Clauses 155 and 163 to 166, Schedule 30, Clause 167, Schedule 31, Clause 168, Schedule 32, Clause 169, Schedule 33, Clause 170, Schedule 34, Clauses 171 and 172, Schedule 35, Clause 173, Schedules 21 and 22

5.00 pm on Thursday 22nd May

Clauses 43 to 49, Schedule 3, Clause 50, Schedule 4, Clauses 51 to 55 and 58 to 62, Schedule 7, Clauses 63 to 68, Schedule 8, Clauses 69 and 70, Schedule 9, Clauses 71 to 78, Schedule 10, Clause 79, Schedule 11, Clauses 80 to 91, Schedule 12, Clauses 92 and 93, Schedule 13, Clauses 94 to 99, Schedule 14, Clauses 100 to 104, Schedule 15, Clause 105, Schedule 16, Clauses 106 to 115, Schedule 17, Clauses 116 to 123, Schedule 18, Clause 125, Schedule 20, Clauses 126 to 129, 136, 137 and 140, Schedule 23, Clauses 141 and 142, Schedule 24, Clauses 143 to 146

11.25 am on Tuesday 10th June

Clauses 156 to 158, Schedule 28, Clauses 159 to 162, Schedule 29, Clauses 174 and 175, Schedule 36, Clauses 176 and 177, Schedule 37, Clauses 178 to 180, Schedule 38, Clause 181, Schedule 39, Clauses 182, 183 and 200, Clauses 185 to 192, Schedule 40, Clause 193, Schedule 41, Clauses 194 to 197, Schedule 42, Clauses 198, 199 and 201 to 213, Schedule 43, Clause 214, new Clauses, new Schedules, any remaining proceedings on the Bill.

5.00 pm on Thursday 12th June

Good morning, Sir Nicholas. On behalf of the Committee, may I welcome you and Mr. McWilliam, your co-Chair, to the proceedings of the Finance Bill? I am sure that I speak for the whole Committee in saying that we welcome your expertise and know that you will keep us on the straight and narrow while not allowing us, however much we may be tempted, to stray on to matters that are not strictly relevant. I know that you will have a light but firm touch—I hope that that is not a contradiction in terms—so long as the Committee conforms to the required conduct.

The Economic Secretary and I will be doing our best to assist the Committee in the progress of business.

I welcome the hon. Member for Arundel and South Downs (Mr. Flight) to the Committee, as shadow Chief Secretary to the Treasury and as the leader of Her Majesty's Opposition in this Committee. He has participated in three previous Finance Bills. He has

always conducted business in a good-humoured but none the less incisive way while leading the Opposition team. His wealth of knowledge and experience, along with that of his hon. Friends, bodes well for the Committee and the debate.

I welcome the right hon. Member for Fylde (Mr. Jack), who is an experienced member of the Committee having been Financial Secretary to the Treasury under the previous Government. He has served on all the Finance Bills since 1997. He, too, brings great knowledge and understanding to our proceedings. I know that he will participate fully by challenging Ministers in his distinct and effective way.

I welcome the hon. Members for Eddisbury (Mr. O'Brien) and for Hertford and Stortford (Mr. Prisk). This is their first Finance Bill as Opposition spokespersons, and I hope that they enjoy their new posts and find the Finance Bill challenging, edifying and enjoyable.

I welcome the many talented and able Government Members to the Committee. I am reasonably confident that they will provide the Government with appropriate support.

I welcome for the first time to the Finance Bill the hon. Member for Yeovil (Mr. Laws), who is leading for the Liberal Democrats. The hon. Member for Torridge and West Devon (Mr. Burnett), who is a veteran of previous Finance Bills, will also bring his great knowledge to our proceedings.

I welcome Hansard, the Officers of the House, the Clerk and the police, who will do everything in their power to ensure that we make progress in an orderly fashion and that our proceedings are properly recorded.

The Finance Bill in Committee is an enjoyable experience, but perhaps that is something that Members will want to reflect on at the end of the process. Notwithstanding the fact that there will need to be detailed and sometimes controversial debates, the hallmark of these Committees has always been that they have been conducted in a proper and, where appropriate, good-humoured but none the less meticulous fashion.

The motion sets out the clauses and schedules to be considered in the Standing Committee. Clauses will be taken together with their related schedules to facilitate debate. The programming of the Committee provides certainty about the time at which clauses will be taken, to help all those involved in the process to prepare for debates and to support our wish for the Finance Bill to be considered properly. For example, hon. Members will see that the clauses on modernised tax, stamp duty and land tax have been specifically scheduled for the week following the Whitsun recess. The date on which the Committee will report its business to the House is given in the motion. The Government will make no attempt to curtail discussion on clauses. I should say at the outset that the Programming Sub-Committee will be able to reconsider the number of sittings timetabled, should it decide that that is necessary.

My hon. Friend the Economic Secretary and I look forward to the coming weeks and to being able to

respond in detail to the very detailed questions that hon. Members will, quite rightly, want to put to us on the contents of this year's Finance Bill.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury

Sir Nicholas, may I warmly welcome you to the Chair this morning and, in their absence, Mr. McWilliam and Mr. Gale? We all know of your expertise and are glad to hear of the discipline with which you will guide us. It is particularly splendid that we have a Chairman of such gentlemanly and courtly conduct. Thank you very much for chairing us.

I thank the Paymaster General for her kind remarks. I fear that the drafting of this year's Bill might defeat any incisiveness that I have left, but her comments are greatly appreciated and I return them. I think that this is her ninth Finance Bill, which must be one reason for the mastery with which she has grasped tax law and the operation of the Inland Revenue. As I have commented before, I was first a member of a Government tax consultative committee in the early 1980s, and I have been involved, off and on, with a number of Financial Secretaries and Paymaster Generals. I certainly feel that this Paymaster General has the best grasp of tax law of any whom I have encountered in 20 years. Dare I say that the wicked thought crossed my mind that there would be a highly remunerated job for her as a tax adviser in the City of London?

The Opposition are also pleased to debate the Bill with the Economic Secretary. I believe that the Chief Secretary to the Treasury will be participating as well as all the Committee members. I am honoured to be joined by a first-rate Opposition Front-Bench team, which includes my hon. Friend the Member for Eddisbury, the shadow Paymaster General, and my hon. Friend the Member for Hertford and Stortford, the shadow Financial Secretary. As the Paymaster General commented, we have the services of the right hon. Member for Fylde, who has enormous expertise that he gained in government and from a pure intellectual fascination with the challenges of tax law. We also have an outstanding team in my hon. Friends the Members for Tatton (Mr. Osborne), for Huntingdon (Mr. Djanogly) and for Billericay (Mr. Baron), who bring with them enormous legal and financial expertise.

I add my welcome to the Liberal Democrat Front-Bench team and recognise the expertise that the hon. Members for Yeovil and for Torridge and West Devon bring to the Committee. Dare I say that, given their views on such important matters as tax, they should be part of the Conservative team? I also welcome the Whips. It is a tireless and thankless task that they do, which is carried out by extremely decent chaps—[Interruption.] Oh, we have a lady Whip as well—they are decent chaps and chapesses. I welcome the Clerk, the police and the officers. I thank the Clerk for the help that he provides the Opposition with the tabling of amendments.

I have already made it clear that the Opposition oppose the timetable, particularly the knives within it. We feel strongly that 14 sittings are not sufficient, and the knives could cause a lot of problems. During the past three years we have shown that we can behave in

a thoroughly responsible manner when dealing with the Finance Bill in Committee, and we have not wasted time. We feel that it is unfortunate that the Government have chosen to over-organise matters this year. It has attracted some criticism from professionals outside the House.

The Bill is complex. It contains 180 pages of new drafting relating to stamp duty and the new laws for employee share schemes. The stamp duty arrangements in particular—the new short lease arrangements—could add dramatically to the costs of small businesses. As I said on the Floor of the House, the rewriting of tax law relating to enterprise and options has been incomprehensibly drafted, and it runs the risk of leaving many share schemes in a considerable mess if there is inadequate scrutiny. The real risk is that poor drafting will pass into law if there is not the opportunity for further consideration in the other place.

Dare I quote some of the comments of outside professionals? The Law Society has commented that a significant proportion of the Bill

''consists of complex legislation which had not been previously published. This might not have been a concern, had agreed policy intentions been translated into clearly worded drafting. Regrettably, this appears not to be the case in a number of areas. These failings are compounded by the extremely limited time available for consideration both by professionals and by Parliament and the poor quality of many of the Explanatory Notes.''

The Institute of Chartered Accountants has similarly commented that it is

''concerned at the length and complexity of this Finance Bill. Many of the clauses were not made available for earlier consultation''.

Particularly in the area of VAT clauses and the stamp duty land tax, it is concerned about the conflict with EC law and human rights legislation.

The Chartered Institute of Taxation has made similar comments. It feels that

''much of the legislation has not been the subject of consultation, eg the legislation on employee shares . . . This is very much to be regretted, and is against the Code of Conduct on Consultation. Whilst we can understand that consultation is not easy where anti-avoidance measures are concerned''—

as the Paymaster General said—some 75 pages of complex legislation are likely to receive inadequate scrutiny.

Therefore, we are opposed to the timetabling motion and will be obliged to vote against it. That is a great pity. Notwithstanding that, I am sure that the Committee's proceedings will, as ever, be conducted in good humour. Opposition Members will do our best to ensure that, in the limited and inadequate time available, scrutiny of the Bill is as good as possible.

Photo of David Wilshire David Wilshire Conservative, Spelthorne 9:15 am, 15th May 2003

I want to make one or two comments for the avoidance of doubt. I suspect that there will be occasions when we disagree on certain matters, probably about programming. So that we do not have an unnecessary debate, may I make it clear that the official Opposition opposed this motion from the beginning? Indeed, in the Programming Sub-

Committee there were votes against it. Therefore, we do not need to have that argument.

When such important legislation is guillotined, there is a danger that spending time on matters that the Government believe to be less important is considered to be wasting time. I believe that it is the duty of Her Majesty's Opposition to deal with everything that matters to somebody. Just because a few clauses are less important to the Government, it does not mean that someone out there in the British economy is not deeply affected. Therefore, I hope that we will not get locked into arguments such as ''You shouldn't be using time on that, because this is far more important''. We will not be apologetic about addressing matters that do not bother the Government but which concern people outside the House.

Similarly, there is a real risk—this is not an attempt to filibuster—that certain matters will remain unconsidered. The Paymaster General said in her opening remarks that there is no attempt to curtail debate. I am afraid that there is, because this is a programme motion, and programme motions curtail debate. She said that the number of sittings is a matter for discussion, but ultimately it is not, because the House has fixed an out date. Although it may be possible for the usual channels to juggle things within that, there is a fixed out date, and we would have to go back to the House, not the Programming Sub-Committee, to change that.

Therefore, although I welcome the Paymaster General's conciliatory approach when she says that she does not wish to curtail debate and has an open mind on the number of sittings, which sounds good, it is not accurate. There is a programme motion; we oppose that programme motion. There is some flexibility, but not much. As the other place does not consider the Bill, there is a real danger on this occasion that matters will pass into law that have not been scrutinised. I am not sure why I am trying to save the Government from falling flat on their face, but there is a real risk that, if some of this stuff is not considered properly, they will drop the most almighty clanger and do serious damage to the British economy.

That is the general sense in which I approach the motion. There is just one matter that may be of interest to my colleagues and perhaps—dare I say it—to Labour Members. The Programming Sub-Committee, in its wisdom, stated that on the day after the Whitsun recess the Committee will meet at half-past 10 in the morning. I put it on record again that I, on behalf of my hon. Friends, am very willing to do some negotiating, so that if the majority of members of the Committee are keen not to be here at half-past 10 on that morning, provided that we can find an alternative time, the door is wide open on the Conservative side to reach an arrangement that enables people to enjoy a slightly longer holiday.

Several hon. Members rose—

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

Order. May I help the Committee? We have about 10 minutes left for this debate. I hope that those whom I call will bear that in mind, so that all those who wish to participate can do so.

Photo of David Laws David Laws Shadow Chief Secretary to the Treasury

Thank you, Sir Nicholas. I am sure that that is good guidance for all our proceedings. I wish to begin by welcoming you to the Chair and by joining the Paymaster General and the shadow Chief Secretary in saying that we are confident that you will be extremely effective and robust, as you always are.

I thank the Paymaster General for her welcome to the Committee and appreciate the large amount of experience that she brings to the job. We hope that the shadow Chief Secretary's suggestion that she might at some stage be poached for some highly paid job will not turn out to be the case. I also welcome the Economic Secretary who has already engaged in robust debate, not least with me, on various subjects. We look forward to his contributions as well as those of all the Government Members who are, no doubt, looking forward with enthusiasm to participating in our proceedings during the next few weeks.

I also thank the Conservative shadow Chief Secretary for his comments. He underlined the fact that there is some common ground between my party and his on some aspects of tax, and we certainly have three economic liberals among the Liberal Democrats on the Committee. Unfortunately, I cannot take up his generous offer to join the Conservative party. I am far too ambitious for that, as are my hon. Friends the Members for North Norfolk (Norman Lamb) and for Torridge and West Devon, who are limbering up even as I speak to join the detailed debates that we will have in the next few weeks.

I also pay tribute to some of the other members of the Committee, including the right hon. Member for Fylde, who will help to enlighten us and bring to the Committee a depth of experience from his time at the Treasury. On your earlier comments, Sir Nicholas, about red boxes, I note that some Conservative Members—for example, the hon. Member for Tatton—have betrayed their intentions for the future in seizing control of the red boxes at this very early stage.

I also welcome the hon. Member for East Carmarthen and Dinefwr (Adam Price), who will draw to our attention the interests of Scotland when they come up in our proceedings. [Laughter.] And Wales—I have betrayed the fact that geography was not one of my strong points at school. Fortunately, I shall not have to deal with that subject on this Committee.

I wish briefly to thank the tax advisory groups who do much to bring those of us who do not have the experience of other Members up to the required standard on aspects of the Finance Bill—if not geography—to enable us to participate more meaningfully in the proceedings. The representations of the tax law committee of the Law Society, the taxation faculty at the Institute of Indirect Taxation and the Chartered Institute of Taxation were immensely useful, not least to those of us in the Opposition.

I hope that we will be able to use the proceedings to focus on the substantive issues that are still to be debated while, as the Conservative Whip, the hon.

Member for Spelthorne (Mr. Wilshire), mentioned, not ignoring matters that are of interest to different groups in the economy. I shall now take your guidance, Sir Nicholas, on the time available and conclude my comments.

Photo of Michael Jack Michael Jack Conservative, Fylde

Sir Nicholas, it is a great pleasure to serve under your chairmanship. You follow in the proud tradition of north-west Members who have chaired this Committee, and the same thing could be said of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who was equally robust in her chairmanship of the Committee some years ago. I am also delighted to note that more than 20 per cent. of members of the Committee come from seats in the north-west of England. I have no doubt that that will bring a resolute and down-to-earth approach to our proceedings.

I thank hon. Members for their generous comments about what they hope will be my contribution. The Paymaster General has shown a very good grasp of tax matters over the years. She served an honourable apprenticeship on the Opposition side of the Committee and has distinguished herself in her two Treasury posts. Like me, she will realise that at the heart of one's contribution is the quality of the briefing and information that one gets, either from experts or, in her case, from Treasury and Inland Revenue officials. I am but the humble creature of the advice that I receive, but I will do my best to put it to good effect.

I hope that in trying to scrutinise that which we are able to scrutinise Ministers will try to explain why they want to do what they want to do, what its economic effects will be, and, importantly, whether the Inland Revenue will have the resources to cope with the implementation of the measures. Only this morning, I awoke to the news that yet another problem has beset the Inland Revenue over matters connected with pension contributions and national insurance. Now is not the time to debate those issues, but they underscore the fact that for the Revenue implementation requires resources and knowledge.

I, too, am disappointed that the programme motion includes knives that bite. The one thing that has always typified the Finance Bill has been the agreement across both sides of the Committee that it will be considered in a timely fashion. Perhaps part of the reason why we have such a motion before us is that, for as yet no publicly-given reason, the Budget was something like a month late. I welcome the Paymaster General's observation about the possibility of flexibility on the number of sittings that we may have, but, as my hon. Friend the Member for Spelthorne told us, there is ultimately an inescapable barrier.

May I conclude by congratulating my hon. Friends the Members for Arundel and South Downs and for Eddisbury on their excellent performances on the Floor of the House on the Bill? I am overwhelmed by the number of files that my hon. Friend the Member for Eddisbury has already accumulated. On that basis, I am sure that we will have an extremely well informed debate on the clauses that we have time to consider in detail.

Photo of Mark Prisk Mark Prisk Shadow Financial Secretary

May I say how delighted I am to serve under your chairmanship, Sir Nicholas? I am aware of the short time available to me. As this is my first Finance Bill, the prospect of 447 pages, 214 clauses and 43 schedules seems remarkable and daunting. In facing the challenge, I draw some comfort and inspiration from the painting behind you, Sir Nicholas. It is entitled ''Alfred inciting the Saxons to prevent the landing of the Danes.''

Photo of George Osborne George Osborne Opposition Whip (Commons)

So, my hon. Friend is Alfred.

Photo of Mark Prisk Mark Prisk Shadow Financial Secretary

I sincerely hope so.

May I draw the Committee's attention to the impact that the programme will have on the stamp duty land tax? The tax is new and therefore needs particular consideration and scrutiny. There are 82 clauses and 17 schedules related to it. As such, the programme motion compounds a particular problem regarding the tax. Many outside experts believe that the proposal as it is currently drafted is incomplete. For example, sale and leasebacks, which are a very complicated aspect, have been left to secondary legislation.

I am principally concerned not just because we need time to consider the unintended consequences, but because there are many outside experts in taxation, law and property who want to contribute to the process. The programme motion is too short and inconsiderate. It will not allow us to examine the tax, never mind the Bill, in the thorough and professional manner that people outside the House would expect.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

So far so good. A very pleasant atmosphere prevails. I trust that that will continue.

Question put:—

The Committee divided: Ayes 18, Noes 10.

Division number 1 Adults Abused in Childhood — (Except clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and schedules 5, 6, 19 and 25, and any new clauses and schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.)

Aye: 18 MPs

No: 10 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly agreed to.

Resolved,

That—

(1) during proceedings on the Finance Bill the Standing Committee do meet when the House is sitting on Tuesdays and Thursdays at 8.55 am and 2.30 pm, except on Tuesday 3rd June when it shall meet at 10.30 am and at 4.30 pm;

(2) the proceedings shall be taken in the order shown in the first column of the following Table, and shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table:—

TABLE

Proceedings

Time for conclusion of proceedings

Clauses 2, 3, 6 to 8, 10 to 13 and 15 to 19, Schedule 1, Clauses 20, 21 and 23, Schedule 2, Clauses 24 to 41, 147 and 149 to 151, Schedule 26, Clauses 152 to 154, Schedule 27, Clauses 155 and 163 to 166, Schedule 30, Clause 167, Schedule 31, Clause 168, Schedule 32, Clause 169, Schedule 33, Clause 170, Schedule 34, Clauses 171 and 172, Schedule 35, Clause 173, Schedules 21 and 22

5.00 pm on Thursday 22nd May

Clauses 43 to 49, Schedule 3, Clause 50, Schedule 4, Clauses 51 to 55 and 58 to 62, Schedule 7, Clauses 63 to 68, Schedule 8, Clauses 69 and 70, Schedule 9, Clauses 71 to 78, Schedule 10, Clause 79, Schedule 11, Clauses 80 to 91, Schedule 12, Clauses 92 and 93, Schedule 13, Clauses 94 to 99, Schedule 14, Clauses 100 to 104, Schedule 15, Clause 105, Schedule 16, Clauses 106 to 115, Schedule 17, Clauses 116 to 123, Schedule 18, Clause 125, Schedule 20, Clauses 126 to 129, 136, 137 and 140, Schedule 23, Clauses 141 and 142, Schedule 24, Clauses 143 to 146

11.25 am on Tuesday 10th June

Clauses 156 to 158, Schedule 28, Clauses 159 to 162, Schedule 29, Clauses 174 and 175, Schedule 36, Clauses 176 and 177, Schedule 37, Clauses 178 to 180, Schedule 38, Clause 181, Schedule 39, Clauses 182, 183 and 200, Clauses 185 to 192, Schedule 40, Clause 193, Schedule 41, Clauses 194 to 197, Schedule 42, Clauses 198, 199 and 201 to 213, Schedule 43, Clause 214, new Clauses, new Schedules, any remaining proceedings on the Bill.

5.00 pm on Thursday 12th June