Dawn Primarolo: That is not relevant to the schedule. The hon. Gentleman should stay focused on our proposals, which are good. We do not make outrageous claims for them, but they will assist regeneration in our local communities. We have taken advice from the Department of the Environment, Transport and the Regions on sensible figures within the schedule, and I would have hoped that the hon. Gentleman would welcome it and not pick holes in it for the sake of it.
I gave an incorrect answer about leases to the hon. Member for Croydon, South. I inadvertently said that a short-term lease was for seven years. The hon. Gentleman said it was five, and he was correct. The seven year period is the time before disposal can occur if the full benefit of the allowances is to be retained. I am sorry to have misled the hon. Gentleman.
Mr. Jack: The Paymaster General is normally generous when responding to questions. My task in asking questions was not to nit-pick but to ask questions put by the Institute of Chartered Accountants. That responsible body represents the practitioners who will have to deal with the legislation. My remarks were inspired by the representations that we have received. I seem to recall that when the hon. Lady was sitting on the Opposition Benches, she was glad to have the assistance of such bodies to ask questions of the then Government.
Dawn Primarolo: I am delighted that the institute is always on hand to help the Committee. I was not referring to the institute; I was suggesting that the hon. Gentleman would find it an advantage to read the entire schedule before asking questions about it.
Mr. Ottaway: Will the hon. Lady explain why a flat must be held for short-term letting? I have lost her reasoning. Secondly, because the hon. Lady was distracted, she inadvertently missed my question about regional variations on the values of flats. For example, a flat that might be rented for £300 in Bristol could be rented for £200 elsewhere. In Bristol, at £301, it would be disqualified; but it would not be disqualified elsewhere. It is a rather crude method. The Minister distinguishes between Greater London and elsewhere. Could not the ``elsewhere'' be regionally subdivided?
Dawn Primarolo: I think that the hon. Gentleman accepts that the rent limits have been set on advice from the Department of the Environment, Transport and the Regions. We did not want an over-complicated set of tables that gave variations across the regions, and we have been advised that the levels set will cover the sort of circumstances suggested by the hon. Gentleman. However, as I said, we would naturally keep an eye on it, and if we received representations from some parts of the country, or it if became clear to us that the advice was frustrating other issues, we would return to it. We have done our best to balance reasonably simple and straightforward provisions with the likely demand. The advice provided to us on rent levels, the availability of properties and the various areas make the table a reasonable proposition.
I think that I understand the point made by the hon. Gentleman about encouraging property back into use. By maintaining the benefit of the allowance, the schedule seeks to ensure that the property remains in use for a reasonable period of time. Those levels are set to achieve that purpose; otherwise we would gain properties only to lose them. If I have not covered exactly the question raised by the hon. Gentleman, I shall scrutinise the record and write to him and his hon. Friends if there is a further point to be made.
Mr. St. Aubyn: May I help the Minister? Did she consider using the council tax bands as the basis of the ruling? After all, council tax banding and values for flats are far more certain than their prospective rents. The banding could then be related by locality to the average council tax band in that area.
Dawn Primarolo: I understand that we considered the council tax bands, but after weighing up the options, decided that the information on market rents was a more accurate marker for what was going on. I would not want to mislead the Committee, and it is some time since I first looked into the matter, so I will check that I have given the hon. Gentleman the correct information. If I have not, I will of course write to him.
Question put and agreed to.
Schedule 19 agreed to.
Clause 68 ordered to stand part of the Bill.
Capital allowances: offshore oil infrastructure
Miss Melanie Johnson: I beg to move amendment No. 31, in page 194, line 8, at end insert
`(2) In section 57(2) of the Capital Allowances Act 2001 (available qualifying expenditure in pool includes amounts allocated to pool under specified provisions), before the entry for section 165(3) insert
``section 161C(2) (decommissioning expenditure incurred by person carrying on trade of oil extraction);''.'.
The purpose of the amendment is to remedy a drafting error, which was brought to our attention by the Institute of Chartered Accountants in England and Wales following publication of the Finance Bill. Schedule 20 introduces, among other things, proposed new section 161C to the Capital Allowances Act 2001. Subsection (2) of that new section provides that decommissioning expenditure is to be added to the appropriate pool for capital allowances purposes. However, that is not sufficient to ensure that the expenditure attracts capital allowances. A consequential amendment should have been made to section 57(2) of that Act, to add proposed new section 161C to the list of sections under which expenditure added to the pool becomes ``available qualifying expenditure'' for the purposes of capital allowances. The amendment rectifies that omission.
Amendment agreed to.
Schedule 20, as amended, agreed to.
Clause 69 ordered to stand part of the Bill.
Capital allowances: minor amendments
Question proposed, That this schedule be the 21st schedule to the Bill.
Mr. Ottaway: As you are aware, Mr. O'Hara, I tabled an amendment to schedule 21 yesterday. It is, of course, a starred amendment. However, as we are ahead of the clock, I hope you will allow me to mention it in the stand part debate.
The Chairman: It is common sense to allow debate on subjects covered by the clause stand part debate.
Mr. Ottaway: Thank you, Mr. O'Hara. I will not detain the Committee for long. This relates to the £12,000 restriction on the use of a business car. If a business buys a car costing more than £12,000, capital allowances are restricted to £3,000 per annum if the car is used wholly for business. However, the whole cost of the car will eventually be allowed to the business. The limit was raised in 1992 from £8,000, and has not been increased since then. It would result in considerable simplification of tax computations if full tax relief were available on the purchase or hiring of cars. Alternatively, as suggested in our probing amendment, the £12,000 limit could be adjusted in line with inflation. The Economic Secretary will no doubt say that it might cause difficulties for accounting. It has not been adjusted since 1992, so the previous Government must accept equal responsibility, but I look forward to hearing what the Economic Secretary has to say.
Miss Melanie Johnson: Indeed, the £12,000 limit was set in the second Finance Act of 1992. It had been set at £8,000 since 1979. I shall not invite the Committee to support the amendment, because it would lead to unnecessary complexity and anomalies.
Tax relief is available for the full commercial depreciation on cars. Section 74 of the Capital Allowances Act 2001 limits cars costing more the £12,000 to an annual allowance of £3,000. When the car is sold, an adjustment is made to bring the total allowances into line with the actual commercial depreciation. The effect of the limit is to delay the allowance, so the benefit is only one of timing.
The amendment would greatly increase the complexity of the current rules. The £12,000 limit is well known and it would be more difficult for practitioners and others to have a variety of limits changing every year. That would be the consequence of accepting the amendment. A single round sum limit is preferable.
Furthermore the amendment does not achieve what it was designed to do. It would lead to an anomaly because it would raise the £12,000 limit, but not the £3,000 annual allowance, in line with inflation. Beneficiaries would be limited to those who purchased a car costing between £12,000 and any increased limit. No similar amendment is proposed to the rules restricting allowances for leased cars in section 578A and 578B of the Income and Corporation Taxes Act 1988.
The amendment would bring no benefit to businesses with leased cars and would break the link between the capital allowances limit and restrictions for leased carsa link that has been in place for more than 30 years. Finally, the amendment does not specify when the increase should be made or over what period of RCI the adjustment should be calculated. For all those reasonsI realise that it is a probing amendmentI urge the hon. Gentleman not to press it to the vote.
Mr. Ottaway: The Minister says that it would add to the complexity of the preparation of accounts. In fact, the recommendation came from the accounting profession and was intended to simplify the accounting, so we shall have to differ on that. Otherwise, I am grateful to the Minister for responding to a starred amendment and I accept what she said. Because it is starred, I do not need to withdraw it.
The Chairman: The question of withdrawal does not arise, but we must consider whether to approve schedule 21.
Schedule 21 agreed to.
Vice-Chamberlain of Her Majesty's Household (Mr. Graham Allen): I beg to move, That further consideration be now adjourned.
With your agreement, Mr. O'Hara, and with that of the Committee and, of course, the right hon. Member for Fylde, I propose that we adjourn until Thursday at 9.30 am.
Mr. Jack: I am delighted that the Government Whip has now seen fit to seek the approval of Opposition Back Benchers and I am delighted to give my views.
The Chairman: In which case, the right hon. Gentleman knows which way to vote.
Question put and agreed to.
The following Members attended the Committee:
Adjourned accordingly at twenty-six minutes to Seven o'clock till Thursday 3 May at half-past Nine o'clock.
O'Hara, Mr. Edward (Chairman)
Campbell, Mr. Ronnie
Johnson, Miss Melanie
St. Aubyn, Mr.
Taylor, Mr. David
Taylor, Mr. Matthew