Clause 65

Part of Finance Bill – in a Public Bill Committee at 5:15 pm on 16th June 2009.

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Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills) 5:15 pm, 16th June 2009

We will certainly be happy to look at those representations. No amendments have been tabled, but we will, of course, look at proposals.

The hon. Gentleman also asked why we had not relaxed the profit financing cost ratio restriction. The restriction on gearing helps to ensure that profits are  available to be distributed in the first place, which helps to protect both the Exchequer and the investor, but we will continue to talk to the BPF on the detail of the profit financing cost ratio. He made the point that stock dividends do not cost anything and asked whether there had not, therefore, been an opportunity for the Government to act. Allowing REITs to issue stock dividends as part of their mandatory income distribution could harm some investors. For instance, any investor who elected to receive cash would see their percentage stake in the company reduced by those electing to receive stock. There is a debate to be had on that proposition.