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Malcolm Bruce: What signal does the Paymaster General think it sent the oil and gas industry when, having engaged in a two-year consultation about the appropriate tax regime, which the industry thought it had agreed with the Government, the Government unilaterally, without any notice, introduced a change that has shattered confidence in investment in the North sea?

Dawn Primarolo: The presence of 100 per cent. capital allowances gives a clear steer to the industry of the Government's continuing commitment to investment in the North sea.

A number of hon. Members referred to some of the anti-avoidance mechanisms that are dealt with in the Budget and in particular the question of overseas branches. I remind the House that the measure mainly affects branches in the banking system. Currently, there is no limit on debt attributed to UK operations, and large deductions for interest occur, leading to smaller profits in the UK. The Organisation for Economic Co-operation and Development has undertaken consultation on this issue. The UK's rules are separate from those of other member states such as France and Germany—they are even separate from those of the United States—and the proposals in the Budget bring our laws into line with those countries.

The hon. Member for Buckingham also referred to clause 88, which deals with controlled foreign companies. It concerns the ability to take a reserve power to protect the United Kingdom, where necessary, against harmful tax practices. I should make a few points clear to the House. The clause will give the Treasury the reserve power, if necessary, to designate jurisdictions, whereby all controlled foreign companies would automatically fall within the tax charge in the United Kingdom. It is a regulating power that is subject to affirmative resolution procedure, so the House would be required to debate the jurisdictions named, and why they are named.

30 Apr 2002 : Column 912

There is a precedent in that regard. In 1971, two double taxation treaties with dependent territories were terminated to defend the UK against tax abuse. In 1985, the then Conservative Government secured provisional powers against a unitary tax system that was an issue with California at the time. Those provisions are still on the statute book. There is therefore a considerable history of all Governments taking reserve powers to defend themselves.

My hon. Friend the Member for Wolverhampton, South-West asked a rather complex question about consumable stores. I have the answer, but given the time available it would be better if I wrote to him with it. The hon. Member for Angus complained about the lack of measures for unincorporated companies. However, if he looks at the Budget and the Government's record, he will see that—in addition to further suggested reforms to the VAT system—the 40 per cent. first-year allowances, the 100 per cent. capital allowances, the over-indexation of the 10p starting rate, the cut in the basic rate of tax, the maximum for quarterly payments on pay-as-you-earn, and the discount for small employers paying tax credits are all about helping small, unincorporated companies. It is not a question of the Government making companies choose between incorporation or unincorporation—a point raised by the hon. Member for Fareham—but of demonstrating clearly the steps to help businesses, whether incorporated or unincorporated, and of allowing them to make that decision.

Much of this evening's discussion has concentrated on the world competitiveness of the UK economy. Today, the Institute of Management Development released its annual competitiveness report. Not only does it show that the UK is now in 16th place; most importantly, on other indicators it demonstrates how the UK has fared better. The UK has the third most resilient economy, ahead of the USA and Germany, but behind Australia and Norway. It is the largest direct investor abroad, followed by France and the USA, and it attracts the third largest amount of inward investment.

Mr. Edward Davey rose

Dawn Primarolo: The IMD states that the United Kingdom has better withstood the uncertainties of the global economy. The Government have put in place a comprehensive set of measures aimed at raising competitiveness and closing the UK's productivity gap with our major competitors.

This is a Finance Bill that takes forward investment in our families and communities, in those who are disadvantaged, in enterprise, in the future growth of the British economy, and in the national health service. I commend it to the House.

Question put, That the amendment be made:—

The House divided: Ayes 142, Noes 360.

Division No. 222
[10.4 pm


Ainsworth, Peter (E Surrey)
Amess, David
Ancram, Rt Hon Michael
Arbuthnot, Rt Hon James
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Bacon, Richard
Baldry, Tony
Barker, Gregory
Baron, John
Bellingham, Henry
Bercow, John
Beresford, Sir Paul
Blunt, Crispin
Boswell, Tim
Bottomley, Peter (Worthing W)
Bottomley, Rt Hon Virginia
Brady, Graham
Brazier, Julian
Burns, Simon
Burnside, David
Butterfill, John
Cash, William
Chapman, Sir Sydney
(Chipping Barnet)
Chope, Christopher
Clappison, James
Clifton–Brown, Geoffrey
Conway, Derek
Cormack, Sir Patrick
Cran, James
Davies, Quentin (Grantham)
Davis, Rt Hon David (Haltemprice)
Djanogly, Jonathan
Dodds, Nigel
Dorrell, Rt Hon Stephen
Duncan, Alan (Rutland & Melton)
Duncan, Peter (Galloway)
Evans, Nigel
Fabricant, Michael
Fallon, Michael
Field, Mark (Cities of London)
Flight, Howard
Flook, Adrian
Forth, Rt Hon Eric
Francois, Mark
Garnier, Edward
Gibb, Nick
Gray, James
Grayling, Chris
Green, Damian (Ashford)
Greenway, John
Gummer, Rt Hon John
Hammond, Philip
Hawkins, Nick
Hayes, John
Heald, Oliver
Heathcoat–Amory, Rt Hon David
Hendry, Charles
Hoban, Mark
Hogg, Rt Hon Douglas
Horam, John
Howard, Rt Hon Michael
Howarth, Gerald (Aldershot)
Hunter, Andrew
Jack, Rt Hon Michael
Jackson, Robert (Wantage)
Jenkin, Bernard
Johnson, Boris (Henley)
Kirkbride, Miss Julie
Knight, Rt Hon Greg (E Yorkshire)
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lansley, Andrew
Leigh, Edward
Liddell–Grainger, Ian
Lidington, David
Lilley, Rt Hon Peter
Loughton, Tim
Luff, Peter
McIntosh, Miss Anne
MacKay, Rt Hon Andrew
Maclean, Rt Hon David
McLoughlin, Patrick
Malins, Humfrey
Maples, John
Maude, Rt Hon Francis
Mawhinney, Rt Hon Sir Brian
May, Mrs Theresa
Mercer, Patrick
Mitchell, Andrew (Sutton Coldfield)
Murrison, Dr Andrew
Norman, Archie
O'Brien, Stephen (Eddisbury)
Osborne, George (Tatton)
Ottaway, Richard
Page, Richard
Paice, James
Paterson, Owen
Pickles, Eric
Prisk, Mark
Randall, John
Redwood, Rt Hon John
Robathan, Andrew
Robertson, Hugh (Faversham)
Robertson, Laurence (Tewk'b'ry)
Robinson, Mrs Iris (Strangford)
Robinson, Peter (Belfast E)
Roe, Mrs Marion
Rosindell, Andrew
Ruffley, David
Sayeed, Jonathan
Shephard, Rt Hon Mrs Gillian
Simmonds, Mark
Simpson, Keith (Mid–Norfolk)
Soames, Nicholas
Spelman, Mrs Caroline
Spicer, Sir Michael
Spink, Bob
Spring, Richard
Stanley, Rt Hon Sir John
Steen, Anthony
Swire, Hugo
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, John (Solihull)
Taylor, Sir Teddy
Tredinnick, David
Trend, Michael
Turner, Andrew (Isle of Wight)
Tyrie, Andrew
Viggers, Peter
Walter, Robert
Waterson, Nigel
Watkinson, Angela
Whittingdale, John
Wiggin, Bill
Wilkinson, John
Willetts, David
Wilshire, David
Winterton, Mrs Ann (Congleton)
Young, Rt Hon Sir George

Tellers for the Ayes:

Dr. Julian Lewis and
Mr. Desmond Swayne.


Abbott, Ms Diane
Ainsworth, Bob (Cov'try NE)
Allan, Richard
Allen, Graham
Anderson, Rt Hon Donald
(Swansea E)
Armstrong, Rt Hon Ms Hilary
Atkins, Charlotte
Austin, John
Baird, Vera
Banks, Tony
Barnes, Harry
Barrett, John
Barron, Kevin
Battle, John
Beard, Nigel
Begg, Miss Anne
Beggs, Roy
Beith, Rt Hon A J
Bell, Stuart
Benn, Hilary
Bennett, Andrew
Benton, Joe
Berry, Roger
Best, Harold
Betts, Clive
Blackman, Liz
Blears, Ms Hazel
Blizzard, Bob
Boateng, Rt Hon Paul
Borrow, David
Bradley, Rt Hon Keith (Withington)
Bradley, Peter (The Wrekin)
Breed, Colin
Brennan, Kevin
Brooke, Mrs Annette L
Brown, Rt Hon Gordon
(Dunfermline E)
Brown, Rt Hon Nicholas
(Newcastle E & Wallsend)
Brown, Russell (Dumfries)
Bruce, Malcolm
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnett, John
Burnham, Andy
Burstow, Paul
Byers, Rt Hon Stephen
Cable, Dr Vincent
Caborn, Rt Hon Richard
Cairns, David
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Rt Hon Menzies
(NE Fife)
Caplin, Ivor
Carmichael, Alistair
Casale, Roger
Caton, Martin
Chapman, Ben (Wirral S)
Chaytor, David
Chidgey, David
Clapham, Michael
Clark, Mrs Helen (Peterborough)
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Rt Hon Charles
(Norwich S)
Clarke, Rt Hon Tom (Coatbridge)
Clelland, David
Clwyd, Ann
Coaker, Vernon
Coffey, Ms Ann
Connarty, Michael
Cook, Frank (Stockton N)
Corbyn, Jeremy
Corston, Jean
Cotter, Brian
Cousins, Jim
Cox, Tom
Cranston, Ross
Cruddas, Jon
Cryer, John (Hornchurch)
Cummings, John
Cunningham, Rt Hon Dr Jack
Cunningham, Jim (Cov'try S)
Cunningham, Tony (Workington)
Dalyell, Tam
Darling, Rt Hon Alistair
Davey, Edward (Kingston)
Davey, Valerie (Bristol W)
David, Wayne
Davidson, Ian
Davies, Rt Hon Denzil (Llanelli)
Davis, Rt Hon Terry
(B'ham Hodge H)
Dawson, Hilton
Denham, Rt Hon John
Dhanda, Parmjit
Dismore, Andrew
Dobson, Rt Hon Frank
Donohoe, Brian H
Doran, Frank
Doughty, Sue
Dowd, Jim
Drew, David
Dunwoody, Mrs Gwyneth
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)
Edwards, Huw
Efford, Clive
Ellman, Mrs Louise
Ennis, Jeff
Etherington, Bill
Ewing, Annabelle
Field, Rt Hon Frank (Birkenhead)
Fisher, Mark
Fitzsimons, Mrs Lorna
Flint, Caroline
Flynn, Paul
Foster, Rt Hon Derek
Foster, Don (Bath)
Foster, Michael (Worcester)
Foster, Michael Jabez (Hastings)
Foulkes, George
Francis, Dr Hywel
Galloway, George
Gapes, Mike
Gardiner, Barry
George, Andrew (St Ives)
George, Rt Hon Bruce (Walsall S)
Gerrard, Neil
Gibson, Dr Ian
Gidley, Sandra
Goggins, Paul
Green, Matthew (Ludlow)
Griffiths, Jane (Reading E)
Griffiths, Win (Bridgend)
Grogan, John
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, David (Midlothian)
Hanson, David
Harman, Rt Hon Ms Harriet
Harris, Tom (Glasgow Cathcart)
Harvey, Nick
Havard, Dai
Healey, John
Heath, David
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hendrick, Mark
Hepburn, Stephen
Hermon, Lady
Hewitt, Rt Hon Ms Patricia
Hill, Keith
Hinchliffe, David
Hoey, Kate
Hood, Jimmy
Hope, Phil
Hopkins, Kelvin
Howarth, Rt Hon Alan (Newport E)
Howarth, George (Knowsley N)
Howells, Dr Kim
Hughes, Beverley (Stretford)
Hughes, Simon (Southwark N)
Humble, Mrs Joan
Hurst, Alan
Hutton, Rt Hon John
Iddon, Dr Brian
Illsley, Eric
Ingram, Rt Hon Adam
Irranca–Davies, Huw
Jackson, Helen (Hillsborough)
Jamieson, David
Johnson, Alan (Hull W & Hessle)
Jones, Helen (Warrington N)
Jones, Jon Owen (Cardiff C)
Jones, Kevan (N Durham)
Jones, Lynne (Selly Oak)
Jones, Martyn (Clwyd S)
Joyce, Eric
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Keen, Ann (Brentford & Isleworth)
Keetch, Paul
Kelly, Ruth
Kemp, Fraser
Khabra, Piara S
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
Kirkwood, Archy
Knight, Jim (S Dorset)
Ladyman, Dr Stephen
Lamb, Norman
Lammy, David
Laws, David
Laxton, Bob
Lazarowicz, Mark
Leslie, Christopher
Levitt, Tom
Lewis, Ivan (Bury S)
Lewis, Terry (Worsley)
Liddell, Rt Hon Mrs Helen
Linton, Martin
Lloyd, Tony
Llwyd, Elfyn
Lucas, Ian
Luke, Iain
Lyons, John
McAvoy, Thomas
McCafferty, Chris
McCartney, Rt Hon Ian
MacDonald, Calum
McDonnell, John
MacDougall, John
McFall, John
McGuire, Mrs Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
Mackinlay, Andrew
McNamara, Kevin
McNulty, Tony
Mactaggart, Fiona
McWalter, Tony
Mahon, Mrs Alice
Mann, John
Marris, Rob
Marsden, Gordon (Blackpool S)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Marshall–Andrews, Robert
Martlew, Eric
Meacher, Rt Hon Michael
Meale, Alan
Merron, Gillian
Michael, Rt Hon Alun
Milburn, Rt Hon Alan
Miliband, David
Miller, Andrew
Mitchell, Austin (Gt Grimsby)
Moffatt, Laura
Mole, Chris
Moonie, Dr Lewis
Moore, Michael
Morgan, Julie
Morley, Elliot
Mudie, George
Mullin, Chris
Munn, Ms Meg
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Naysmith, Dr Doug
O'Brien, Bill (Normanton)
O'Brien, Mike (N Warks)
O'Hara, Edward
Olner, Bill
O'Neill, Martin
Organ, Diana
Osborne, Sandra (Ayr)
Owen, Albert
Palmer, Dr Nick
Pearson, Ian
Picking, Anne
Pickthall, Colin
Pike, Peter
Plaskitt, James
Pond, Chris
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Prescott, Rt Hon John
Price, Adam
Primarolo, Dawn
Prosser, Gwyn
Purchase, Ken
Quin, Rt Hon Joyce
Quinn, Lawrie
Rapson, Syd
Raynsford, Rt Hon Nick
Reed, Andy (Loughborough)
Reid, Alan (Argyll & Bute)
Reid, Rt Hon Dr John (Hamilton N)
Rendel, David
Robertson, Angus (Moray)
Robertson, John
(Glasgow Anniesland)
Robinson, Geoffrey (Cov'try NW)
Rooney, Terry
Ross, Ernie
Roy, Frank
Ruane, Chris
Russell, Bob (Colchester)
Russell, Ms Christine (Chester)
Salter, Martin
Sanders, Adrian
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheridan, Jim
Short, Rt Hon Clare
Simpson, Alan (Nottingham S)
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)
Smith, Angela (Basildon)
Smith, Geraldine (Morecambe)
Smith, Jacqui (Redditch)
Smith, Llew (Blaenau Gwent)
Smith, Sir Robert (W Ab'd'ns)
Soley, Clive
Southworth, Helen
Spellar, Rt Hon John
Squire, Rachel
Starkey, Dr Phyllis
Steinberg, Gerry
Stewart, David (Inverness E)
Stewart, Ian (Eccles)
Stoate, Dr Howard
Strang, Rt Hon Dr Gavin
Stuart, Ms Gisela
Sutcliffe, Gerry
Tami, Mark
Taylor, Rt Hon Ann (Dewsbury)
Taylor, David (NW Leics)
Taylor, Matthew (Truro)
Taylor, Dr Richard (Wyre F)
Thomas, Gareth (Clwyd W)
Thomas, Simon (Ceredigion)
Thurso, John
Timms, Stephen
Tipping, Paddy
Todd, Mark
Touhig, Don
Turner, Dennis (Wolverh'ton SE)
Turner, Neil (Wigan)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Tyler, Paul
Tynan, Bill
Vaz, Keith
Ward, Ms Claire
Wareing, Robert N
Watson, Tom
Watts, David
Webb, Steve
Weir, Michael
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Rt Hon Alan
(Swansea W)
Williams, Mrs Betty (Conwy)
Williams, Roger (Brecon)
Willis, Phil
Winnick, David
Winterton, Ms Rosie (Doncaster C)
Wishart, Pete
Woolas, Phil
Worthington, Tony
Wray, James
Wright, Anthony D (Gt Yarmouth)
Wright, David (Telford)
Wright, Tony (Cannock)
Younger–Ross, Richard

Tellers for the Noes:

Mr. John Heppell and
Mr. Graham Stringer.

Question accordingly negatived.

30 Apr 2002 : Column 916

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading):—

The House divided: Ayes 358, Noes 141.

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