I have a couple of quick comments to make. The Government’s tax information and impact note and explanatory notes say that major reforms to the rules on stamp duty reserve tax for collective investment schemes were rejected after formal consultation in 2007, but the Government are now going ahead with minor changes after informal consultation since then.
The consultation embarked on in 2007 by the previous Government was very thorough. There were two separate consultations, one beginning in February and a follow-up in August. The conclusion was that there should be no major reforms of the legislation. Will the Minister provide more information about the informal consultation undertaken recently by the Treasury? Who was consulted and in what circumstances, and what was the scope of the consultation? As a result of responses received to that consultation, were any of the views set out in the original formal consultation of 2007 contradicted? What assessment has been made of the change in tax revenues resulting from the measure?
It is a pleasure to serve under your chairmanship, Mr Gale.
The hon. Member for Bristol East is right to point out that the previous Government undertook a consultation on whether schedule 19 should be abolished. We concluded, as did our predecessors, that there was a fiscal cost attached to abolition, which, in the circumstances we face, made it an unattractive option. We have been working with the investment management industry over the past year to identify measures with a relatively small fiscal cost, which will continue to make the UK a more attractive location for investment management activities.
The hon. Lady may be aware that there is a series of discussions taking place in Europe around the uses of directives, and there are industry changes going on, which, if we simply left schedule 19 as it was, would make the UK a less attractive place for investment management activities. Having gathered views from the investment management community—including the Investment Management Association, the major trade body in the area—and individual firms, we have sought to make the regime slightly more modern and responsive to those changes. In that context, the cost of the changes is relatively small. The changes will make it easier to have fund-to-fund businesses here. We will lose 2% of the revenue raised under schedule 19, which is a relatively small amount, but they will ensure that London continues to be an attractive place for investment management firms to be based.
I hope that that reassures the hon. Lady on the cost of the measure. We have engaged in informal but thorough consultation with the investment management industry and its representatives.