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Mr. Quentin Davies: Will the hon. Lady acknowledge the reality, which is that someone who had £5,000 entirely from dividends to live on will now have £4,000? That is a catastrophic fall in income for someone who is not well off--very likely a pensioner.

Mrs. Roche: The hon. Gentleman should listen to what I am going to say about the total package. If he does, he will find out.

Conservative Members have used the new clause as another opportunity to rehearse the well-worn arguments on the issue. Why did we make the change? We wanted to remove a distortion in the corporation tax system that encouraged companies to distribute their profits as dividends rather than reinvesting them in their business. Reinvestment is essential for growth in the economy, which we want to encourage. We know what the Conservatives did to our economy and we are determined not to see it repeated. [Interruption.] Conservative Members may shout. They do not like hearing the facts, but they are going to hear them this evening.

Payable tax credits were abolished immediately for most companies and pension funds, but we recognised that there would be a period of change. By investing in the new individual savings accounts, individuals will be able to benefit for a five-year period from 1999 from the payment of a 10 per cent. tax credit on dividends from UK equities. I urge the House to reject the new clause.

I understand the concerns raised by the hon. Member for Kingston and Surbiton (Mr. Davey) about the impact of the tax system on older taxpayers, but I am not convinced that his solution is the best way to deal with the problems. The aim of the proposed certificate for older taxpayers is that those on low incomes should be given assurances that they are outside the tax system, in particular to enable them to receive income without the deduction of tax at source. The present system achieves what the certificate is designed to do. Around two thirds of older taxpayers are outside the tax system. We are proud of that record. The package of Budget measures has taken a further 200,000 older people out of the system. Many of them have no reason to contact the Inland Revenue at all unless their circumstances change and their income rises.

Mr. St. Aubyn: Is the Financial Secretary proposing that people with share savings should put them through an ISA? How much has been put into share ISAs compared to the amount put into cash ISAs since the scheme was launched?

Mrs. Roche: I would certainly not want to give advice. [Interruption.] The hon. Gentleman must learn to have

5 Jul 1999 : Column 764

some patience. I gave way to him, and I will be pleased to reply if he will wait. It is no surprise that, in the first period, the most money has gone into cash ISAs, considering that they were very much designed to appeal to those with little or no savings. I am delighted to tell the House that ISAs are a tremendous success and are proving very popular. I congratulate my hon. Friend the Economic Secretary to the Treasury on all the work that she has done.

Mr. Davies: Will the Financial Secretary give way?

Mrs. Roche: No--the hon. Gentleman had his chance. If he will forgive me, I have heard him at volume tonight. I gave him one chance.

Obviously, the hon. Member for Guildford (Mr. St. Aubyn) is no longer interested in ISAs, as he is busy talking. However, for many poorer people, ISAs have been a great boon and we are proud of them.

The £1 billion Budget package for older people included a new minimum tax guarantee for pensioners; and the age-related personal allowances were increased by up to £200, more than required by statutory indexation. [Interruption.] I am not surprised that Conservative Members do not recognise the importance of that minimum guarantee. It is certainly important for the majority of pensioners whom the Government represent.

The proposal would have the effect of increasing the personal allowance for many lower income pensioners to £6,000 a year. As I have explained, the Budget package already includes generous increases in the age-related personal allowances. [Interruption.] I do wish that Conservative Members would cease chattering. The hon. Member for Kingston and Surbiton is entitled to a reasonable reply and that is what he will get.

The idea of the certificate was put forward by the low incomes tax reform group. I can tell the hon. Member for Kingston and Surbiton that the Inland Revenue is holding discussions with the group about its ideas, and we are always willing to consider how the scheme might be improved.

Savings income, such as bank and building society interest, is already taxed favourably. It is taxed at the lower rate of 20 per cent., rather than at the basic rate of 23 per cent., until it is of a sufficient size for the higher rate of tax to apply. As part of the reform of corporation tax, dividends are taxed at 10 per cent. up to the basic rate limit.

Mr. Davies: Why?

Mrs. Roche: I will tell the hon. Gentleman why--because one of the basic tenets of the Chancellor's Budget was to encourage work and enterprise and to help families. That is what we have done.

Mr. Davies: Will the Financial Secretary give way?

Mrs. Roche: No, the hon. Gentleman has had his chance. I noticed that he took no interventions. I have taken one from him and responded to a sedentary comment.

The Conservatives' amendment, which was not costed, would cost the Exchequer an extra £1 billion a year. Once again, we see that the Conservative party is prepared to

5 Jul 1999 : Column 765

talk about public services without saying how it will spend public money. The Conservative party poses as the pensioners' friend, but it is no such thing. It is the party that in the past has undermined pensioners. I urge the House to reject the new clause.

Question put, That the clause be read a Second time:--

The House divided: Ayes 149, Noes 316.

Division No. 223
[11.30 pm


Allan, Richard
Amess, David
Ancram, Rt Hon Michael
Arbuthnot, Rt Hon James
Atkinson, Peter (Hexham)
Bercow, John
Beresford, Sir Paul
Blunt, Crispin
Boswell, Tim
Bottomley, Peter (Worthing W)
Bottomley, Rt Hon Mrs Virginia
Brazier, Julian
Breed, Colin
Brooke, Rt Hon Peter
Browning, Mrs Angela
Bruce, Ian (S Dorset)
Burns, Simon
Cable, Dr Vincent
Chapman, Sir Sydney
(Chipping Barnet)
Chope, Christopher
Clappison, James
Clarke, Rt Hon Kenneth
Clifton-Brown, Geoffrey
Collins, Tim
Colvin, Michael
Cotter, Brian
Cran, James
Davey, Edward (Kingston)
Davies, Quentin (Grantham)
Davis, Rt Hon David (Haltemprice)
Day, Stephen
Dorrell, Rt Hon Stephen
Duncan, Alan
Duncan Smith, Iain
Evans, Nigel
Faber, David
Fabricant, Michael
Fallon, Michael
Flight, Howard
Fowler, Rt Hon Sir Norman
Fox, Dr Liam
Fraser, Christopher
Gale, Roger
Garnier, Edward
George, Andrew (St Ives)
Gibb, Nick
Gill, Christopher
Gillan, Mrs Cheryl
Gorman, Mrs Teresa
Gray, James
Green, Damian
Grieve, Dominic
Gummer, Rt Hon John
Hamilton, Rt Hon Sir Archie
Hammond, Philip
Harvey, Nick
Heathcoat-Amory, Rt Hon David
Hogg, Rt Hon Douglas
Horam, John
Howard, Rt Hon Michael
Hughes, Simon (Southwark N)
Jack, Rt Hon Michael
Jackson, Robert (Wantage)
Jenkin, Bernard
Keetch, Paul
Key, Robert
King, Rt Hon Tom (Bridgwater)
Kirkbride, Miss Julie
Kirkwood, Archy
Laing, Mrs Eleanor
Lansley, Andrew
Leigh, Edward
Letwin, Oliver
Lewis, Dr Julian (New Forest E)
Lidington, David
Lilley, Rt Hon Peter
Livsey, Richard
Lloyd, Rt Hon Sir Peter (Fareham)
Llwyd, Elfyn
Loughton, Tim
Luff, Peter
MacGregor, Rt Hon John
MacKay, Rt Hon Andrew
Maclean, Rt Hon David
McLoughlin, Patrick
Madel, Sir David
Malins, Humfrey
Maples, John
Mates, Michael
Maude, Rt Hon Francis
Mawhinney, Rt Hon Sir Brian
Michie, Mrs Ray (Argyll & Bute)
Morgan, Alasdair (Galloway)
Moss, Malcolm
Nicholls, Patrick
Ottaway, Richard
Page, Richard
Paice, James
Pickles, Eric
Prior, David
Randall, John
Redwood, Rt Hon John
Robathan, Andrew
Robertson, Laurence (Tewk'b'ry)
Roe, Mrs Marion (Broxbourne)
Ruffley, David
Russell, Bob (Colchester)
St Aubyn, Nick
Sanders, Adrian
Sayeed, Jonathan
Shephard, Rt Hon Mrs Gillian
Shepherd, Richard
Simpson, Keith (Mid-Norfolk)
Smith, Sir Robert (W Ab'd'ns)
Soames, Nicholas
Spelman, Mrs Caroline
Spicer, Sir Michael
Spring, Richard
Stanley, Rt Hon Sir John
Steen, Anthony
Streeter, Gary
Stunell, Andrew
Swayne, Desmond
Swinney, John
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, John M (Solihull)
Taylor, Sir Teddy
Townend, John
Tredinnick, David
Trend, Michael
Tyler, Paul
Tyrie, Andrew
Viggers, Peter
Wardle, Charles
Waterson, Nigel
Webb, Steve
Wells, Bowen
Whitney, Sir Raymond
Whittingdale, John
Wilkinson, John
Willetts, David
Willis, Phil
Wilshire, David
Winterton, Mrs Ann (Congleton)
Winterton, Nicholas (Macclesfield)
Woodward, Shaun
Young, Rt Hon Sir George

Tellers for the Ayes:

Mr. Oliver Heald and
Mrs. Jacqui Lait.


Abbott, Ms Diane
Adams, Mrs Irene (Paisley N)
Ainger, Nick
Ainsworth, Robert (Cov'try NE)
Alexander, Douglas
Allen, Graham
Anderson, Janet (Rossendale)
Armstrong, Rt Hon Ms Hilary
Atherton, Ms Candy
Atkins, Charlotte
Austin, John
Banks, Tony
Barron, Kevin
Battle, John
Bayley, Hugh
Beard, Nigel
Beckett, Rt Hon Mrs Margaret
Bell, Stuart (Middlesbrough)
Benn, Hilary (Leeds C)
Benn, Rt Hon Tony (Chesterfield)
Bennett, Andrew F
Benton, Joe
Bermingham, Gerald
Berry, Roger
Best, Harold
Betts, Clive
Blears, Ms Hazel
Blizzard, Bob
Bradley, Keith (Withington)
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brown, Russell (Dumfries)
Browne, Desmond
Burden, Richard
Butler, Mrs Christine
Byers, Rt Hon Stephen
Caborn, Rt Hon Richard
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Campbell-Savours, Dale
Cann, Jamie
Caplin, Ivor
Casale, Roger
Caton, Martin
Cawsey, Ian
Chapman, Ben (Wirral S)
Chaytor, David
Chisholm, Malcolm
Clapham, Michael
Clark, Rt Hon Dr David (S Shields)
Clark, Paul (Gillingham)
Clarke, Charles (Norwich S)
Clarke, Rt Hon Tom (Coatbridge)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Coffey, Ms Ann
Coleman, Iain
Colman, Tony
Connarty, Michael
Corbett, Robin
Corbyn, Jeremy
Corston, Ms Jean
Cousins, Jim
Cranston, Ross
Crausby, David
Cryer, Mrs Ann (Keighley)
Cryer, John (Hornchurch)
Cummings, John
Cunningham, Jim (Cov'try S)
Curtis-Thomas, Mrs Claire
Darling, Rt Hon Alistair
Darvill, Keith
Davey, Valerie (Bristol W)
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C)
Davis, Terry (B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Denham, John
Dismore, Andrew
Dobbin, Jim
Dobson, Rt Hon Frank
Doran, Frank
Dowd, Jim
Drew, David
Eagle, Maria (L'pool Garston)
Edwards, Huw
Efford, Clive
Ellman, Mrs Louise
Ennis, Jeff
Etherington, Bill
Field, Rt Hon Frank
Fisher, Mark
Fitzpatrick, Jim
Fitzsimons, Lorna
Flint, Caroline
Flynn, Paul
Follett, Barbara
Foster, Rt Hon Derek
Foster, Michael J (Worcester)
Galloway, George
Gapes, Mike
Gerrard, Neil
Gibson, Dr Ian
Godman, Dr Norman A
Godsiff, Roger
Goggins, Paul
Golding, Mrs Llin
Griffiths, Jane (Reading E)
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)
Grogan, John
Gunnell, John
Hain, Peter
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, Fabian (Leeds NE)
Hanson, David
Harman, Rt Hon Ms Harriet
Heal, Mrs Sylvia
Healey, John
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hepburn, Stephen
Hesford, Stephen
Hewitt, Ms Patricia
Hinchliffe, David
Hodge, Ms Margaret
Home Robertson, John
Hope, Phil
Hopkins, Kelvin
Howarth, George (Knowsley N)
Hoyle, Lindsay
Hughes, Ms Beverley (Stretford)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hurst, Alan
Hutton, John
Iddon, Dr Brian
Illsley, Eric
Jackson, Ms Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Jenkins, Brian
Johnson, Alan (Hull W & Hessle)
Johnson, Miss Melanie
(Welwyn Hatfield)
Jones, Barry (Alyn & Deeside)
Jones, Mrs Fiona (Newark)
Jones, Helen (Warrington N)
Jones, Ms Jenny
(Wolverh'ton SW)
Jones, Dr Lynne (Selly Oak)
Jones, Martyn (Clwyd S)
Jowell, Rt Hon Ms Tessa
Keen, Alan (Feltham & Heston)
Keen, Ann (Brentford & Isleworth)
Kemp, Fraser
Kennedy, Jane (Wavertree)
Khabra, Piara S
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
King, Ms Oona (Bethnal Green)
Ladyman, Dr Stephen
Lawrence, Ms Jackie
Laxton, Bob
Leslie, Christopher
Levitt, Tom
Lewis, Ivan (Bury S)
Lewis, Terry (Worsley)
Liddell, Rt Hon Mrs Helen
Linton, Martin
Livingstone, Ken
Lock, David
Love, Andrew
McAllion, John
McAvoy, Thomas
McCabe, Steve
McCafferty, Ms Chris
McDonnell, John
McGuire, Mrs Anne
McIsaac, Shona
McNamara, Kevin
McNulty, Tony
MacShane, Denis
Mactaggart, Fiona
McWalter, Tony
McWilliam, John
Mahon, Mrs Alice
Mallaber, Judy
Mandelson, Rt Hon Peter
Marsden, Gordon (Blackpool S)
Marsden, Paul (Shrewsbury)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Martlew, Eric
Maxton, John
Meacher, Rt Hon Michael
Meale, Alan
Michie, Bill (Shef'ld Heeley)
Milburn, Rt Hon Alan
Mitchell, Austin
Moffatt, Laura
Moonie, Dr Lewis
Moran, Ms Margaret
Morgan, Ms Julie (Cardiff N)
Morley, Elliot
Morris, Ms Estelle (B'ham Yardley)
Mullin, Chris
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Naysmith, Dr Doug
O'Brien, Bill (Normanton)
O'Hara, Eddie
Olner, Bill
O'Neill, Martin
Organ, Mrs Diana
Osborne, Ms Sandra
Palmer, Dr Nick
Pearson, Ian
Pendry, Tom
Perham, Ms Linda
Pickthall, Colin
Pike, Peter L
Plaskitt, James
Pollard, Kerry
Pond, Chris
Pope, Greg
Pound, Stephen
Powell, Sir Raymond
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Prescott, Rt Hon John
Primarolo, Dawn
Prosser, Gwyn
Purchase, Ken
Quinn, Lawrie
Rammell, Bill
Rapson, Syd
Reed, Andrew (Loughborough)
Reid, Rt Hon Dr John (Hamilton N)
Robertson, Rt Hon George
(Hamilton S)
Roche, Mrs Barbara
Rooker, Jeff
Rooney, Terry
Rowlands, Ted
Roy, Frank
Ruane, Chris
Ruddock, Joan
Russell, Ms Christine (Chester)
Ryan, Ms Joan
Salter, Martin
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheldon, Rt Hon Robert
Simpson, Alan (Nottingham S)
Singh, Marsha
Skinner, Dennis
Smith, Angela (Basildon)
Smith, Rt Hon Chris (Islington S)
Smith, Miss Geraldine
(Morecambe & Lunesdale)
Smith, Jacqui (Redditch)
Smith, Llew (Blaenau Gwent)
Snape, Peter
Soley, Clive
Southworth, Ms Helen
Spellar, John
Squire, Ms Rachel
Starkey, Dr Phyllis
Steinberg, Gerry
Stevenson, George
Stewart, David (Inverness E)
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stoate, Dr Howard
Stott, Roger
Strang, Rt Hon Dr Gavin
Straw, Rt Hon Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Gerry
Taylor, Rt Hon Mrs Ann
Taylor, Ms Dari (Stockton S)
Taylor, David (NW Leics)
Temple-Morris, Peter
Thomas, Gareth (Clwyd W)
Thomas, Gareth R (Harrow W)
Timms, Stephen
Tipping, Paddy
Todd, Mark
Trickett, Jon
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Turner, Dr George (NW Norfolk)
Twigg, Derek (Halton)
Vaz, Keith
Vis, Dr Rudi
Wareing, Robert N
Watts, David
White, Brian
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Alan W (E Carmarthen)
Williams, Mrs Betty (Conwy)
Winnick, David
Winterton, Ms Rosie (Doncaster C)
Wise, Audrey
Wood, Mike
Worthington, Tony
Wray, James
Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)

Tellers for the Noes:

Mr. Keith Hill and
Mr. David Jamieson.

Question accordingly negatived.

5 Jul 1999 : Column 768

New Clause 10

Capital allowances: road fuel gas

'.--After section 36 of the Capital Allowances Act 1990 (definition of "motor car" etc.) insert--


36A.--Where a person, while carrying on a trade, incurs expenditure--
(a) on the provision of machinery or plant intended to act as a filling point for the supply of road fuel gas, or
(b) on the installation of such machinery or plant,
and where such expenditure is wholly and exclusively for the purposes of the trade, a deduction equal to the whole of the expenditure shall be allowed in taxing the trade for the chargeable period.
36B.--Where a person, while carrying on a trade, incurs expenditure on the provision of machinery or plant for the conversion of the engine of a motor car so that the motor car is capable of being propelled, wholly or partly, by road fuel gas, and where such expenditure is wholly and exclusively for the purposes of the trade, a deduction equal to the whole of the expenditure shall be allowed in taxing the trade for the chargeable period.".'.--[Mr. Jack.] Brought up, and read the First time.

Mr. Jack: I beg to move, That the clause be read a Second time.

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