It is a pleasure to welcome you to the Chair, Mr. Illsley, on this sunny morning for our last sitting before the Whitsun recess.

I welcome clause 58 and the extension of the provisions of the Finance Act 2005, which enables securitisation companies to continue to use UK generally accepted accounting practice to draw up their accounts on an interim and temporary basis. Were they to shift to international financial reporting standards, as required by European Union regulation, their trading securities would have to be accounted for on a market-to-market basis. That would lead to significant volatility, which could undermine their credit ratings, which are so critical for such companies.

I do not propose to repeat the remarks that I made last year on the extension—very similar to this one—provided by the Finance Act 2006, save to reiterate that we are talking about a business that is worth trillions of pounds. The health of the securitisation sector is vital in maintaining a competitive edge for the City of London. It is also critical for securing financial market liquidity and keeping down the cost of business borrowing and finance. Therefore it is vital that the Committee takes care of this clause and gets the issue right. The measure extends a temporary regime, pending the adoption of a permanent framework for the taxation and accounting systems to be used by securitisation companies.

Last year, I asked the Paymaster General when she expected that long-term regime to be in place. Her response was that that was expected by January of this year. I was, therefore, pleased to note that the Taxation of Securitisation Companies Regulations 2006 were adopted by the House in December. However, the extension of the temporary regime features in the Bill because not all securitisation companies are covered by the 2006 regulations. Given the critical importance of securitisation and, in particular, of its international mobility—it could easily head offshore—I urge the Economic Secy, as I did last year, to complete the job of establishing a full regime for the accounting and taxation of securitisation companies. It would be useful if he could update the Committee on progress. How extensive is the coverage of the regulations that put in place a permanent regime for certain securitisation companies? What proportion of the securitisation market is still outside the scope of the permanent regime and thus covered by the clause?

The regulations seem only to cover companies with exclusively financial assets. When will the Government deal with other types of securitisation companies that include rental streams in their portfolios and other non-financial assets? Are the Government looking at plans to meet the needs of the insurance industry whose securitisation vehicles certainly fall outside the December regulations? I am not even sure that they are inside the temporary regulations. Will the Economic Secretary confirm the current status of insurance-related securitisation vehicles?

Proposed new subsection (7B) permits the Government to take a different approach to various types of securitisation companies. Given the importance of the issue, it would be useful if the Economic Secretary could explain how the Government propose to deal with the different types of company and how they will be divided up for the purposes of both the temporary rules and hopefully the new permanent ones? Will he set out the rationale for the differential treatment of the various types of securitisation company and explain the operation of the payments condition that determines whether a company can qualify to use the regime provided for in the December 2006 regulations?