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Mr. David Heath: I listened with incredulity to the Financial Secretary's response. His arguments became steadily more preposterous as he went on. That might suggest that we have been right all along and that the impost has been cobbled together at short notice and is half thought through. That is why justifications for the levy are so lacking.

Mr. Timms: I am sorry to hear the hon. Gentleman say that. Will he at least acknowledge--as he did not in his opening remarks--that the sustainability fund and the £35 million that will be available will provide an opportunity to tackle some of the local quarrying issues that he referred to earlier?

Mr. Heath: I would do that if we knew what the sustainability fund will do. One of the arguments that the Financial Secretary adduced for not accepting the new clause was the fact that he did not yet know the precise detail of the environmental measures that it might encompass. Nevertheless, he is prepared to go ahead with

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imposing a tax on the industry without knowing the precise details--indeed, any details--of the sustainability fund. That is extraordinary.

The only lacuna that the hon. Gentleman could identify in my remarks related to some sort of concept of a retrospective planning permission being applied by tax rebate, so that those quarries that happened to be in the wrong place would be taxed out of the market in favour of those that happened to be in the right place. It would be interesting to know the exact mechanism that he had in mind and how it would play in terms of European competition law and the Human Rights Act 1998.

The Government have been very clear about what they consider to be the principles of good environmental taxation. They include the fact that an economic instrument must deliver environmental gains cost effectively and must not threaten the competitiveness of UK business. All of us accept that there is an imbalance between the needs of the quarrying industry--the motive for which is to build our infrastructure--and the environmental effects of quarrying. Those of us who represent the areas involved and who have been involved in discussions for more years than we care to remember know that there is a difficult balance to reach. We certainly do not turn our face against the need to provide for economic and environmental instruments to achieve the best balance possible.

We simply say that a tax mechanism that fails to differentiate between environmentally sound and environmentally unsound operations is not such an instrument. Because the Government are going ahead without knowing what they will do, we can conclude only that the most important thing for them is appearing to be doing something that is of environmental benefit rather than actually doing something that is of environmental benefit to quarrying areas.

The most sensible thing that the Financial Secretary could have said was that he would take the tax away and return with it next year, when it has been properly designed and is in a correct form with a rebate system. We could then all agree that we had an economically and environmentally sound scheme. Instead, we have something which, frankly, is nonsense.

We are keen to discuss other groups of amendments in the limited time available--so, for that reason alone, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 6

Extension of carry back of trading losses

'(1) Section 393A Income and Corporation Taxes Act 1988 (set-off of trading losses against profits of previous three years) shall be amended in accordance with subsections (2) and (3) below.

(2) In subsection (2), after "(2A)", and before "below", insert the words "and (2D)".
(3) After subsection (2C), insert the following new subsection--
"(2D) this subsection shall have effect in relation to any loss incurred by a company which is not large (as defined by SI 1998/3175 as subsequently amended)--
(a) as if in subsection (2) above, the words 'three years' were substituted for the words 'twelve months'; and

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(b) which is incurred in any accounting periods ending in the period beginning on 1 April 2000 and ending on or before 31 March 2003.".'.--[Mr. David Heath.]

Brought up, and read the First time.

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

Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following: New clause 7--Extension of carry back of excess interest costs--

'(1) Chapter II of Part IV of the Finance Act 1996 (loan relationships) shall be amended in accordance with subsections (2) and (3) below.
(2) In paragraph 3(7) of Schedule 8 (permitted period of twelve months for carry-back of deficits), after "means" and before "the period" insert "subject to paragraph 3(7A) below".
(3) After paragraph 3(7) of Schedule 8, insert the following new paragraph--
"3(7A) This paragraph shall have effect in relation to a deficit, incurred by a company which is not large (as defined by SI 1998/3175 as subsequently amended)--
(a) as if in paragraph 3(7) above, the words 'three years' were substituted for each case of the words 'twelve months'; and
(b) which is incurred in any accounting periods ending in the period beginning on 1 April 2000 and ending on or before 31 March 2003.".'.

New clause 8--Relief for furnished holiday lettings--

'(1) Section 504 of the Income and Corporation Taxes Act 1988 (Letting of furnished holiday accommodation treated as a trade, supplementary provisions) shall be amended in accordance with subsections (2) and (3) below.
(2) In subsection (3)(6) the figure "70" shall be replaced by the figure "30".
(3) This section shall only apply for accounting periods ending in the period beginning on 1 April 2001 and ending on or before 31 March 2002.'.

Mr. Heath: These new clauses allow the House, should it wish--even at this late stage of this Parliament--to do something effective for businesses seriously affected by the foot and mouth crisis. Businesses in my constituency and in many rural constituencies throughout the country that have been affected by the crippling economic consequences of the disease simply do not understand why the Government are deaf to their need to survive this year.

The epidemic has been awful for the livestock industry. However if--and it is a big "if" because, in my own county of Somerset, new cases are being reported every day, so we are by no means sure that the epidemic is over--we are drawing to the end of the animal disease epidemic, I assure hon. Members that we are entering an epidemic of business failures in rural areas. Businesses in rural parts of Britain such as the south-west all say that they have suffered an extraordinary reduction in turnover in the past few months. I am sure that that also applies to the north-west and the north-east, where foot and mouth has done its worst, and even areas passed over by the epidemic, which have suffered in the same way from the downturn in economic circumstances and tourism. It is not just businesses directly associated with agriculture or

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tourism that have suffered; a huge spectrum of businesses in every sector in every town and village throughout rural Britain has been affected.

Mr. Paul Tyler (North Cornwall): Does my hon. Friend agree that, although a devastating tragedy has hit many livestock farms, particularly smaller family farms, at least they have some cash flow coming through? Businesses that are indirectly affected, however, are the hidden victims of this terrible scourge and have no prospect of any cash flow improvement in the coming months. They are having a desperate time in making a good case to their bank managers to keep going.

Mr. Heath: My hon. Friend is right. The consequential losses, which no one could have expected, are quite extraordinary, and a range of businesses are involved. I have mentioned in the House before a garden centre in my constituency whose takings are down by 80 per cent. A dealer in lawnmowers and similar equipment has had his takings reduced by two thirds. A marquee manufacturer in my constituency has as its principal clients the major agricultural shows, all of which have been cancelled; the Royal Bath and West show, for example, is not happening. The firm is having to lay off workers because it no longer has any orders. Another such firm is a laundry whose trade is mainly with the hotel industry. It must now shut up shop. I even have in my constituency an animal incinerator which must close its doors because no one can bring animals to be burned, because of the foot and mouth restrictions. These are serious matters which are affecting the rural economy in a big way. What is so disappointing is the paucity of ideas and the lack of urgency on the part of Government in dealing with these issues.

Mr. Letwin: I am grateful to the hon. Gentleman for giving way. Every hon. Member of whatever party who represents a rural constituency would agree with him. Does he agree that we probably face an increase in the problems to which he alluded as we come to the summer months? That is the time on which many of our tourism-related industries in rural areas depend for the great bulk of their income, and that is when we shall see the crisis magnified, long after, as we all hope, the disease has virtually disappeared.

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