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Baroness O'Cathain moved Amendment No. 48:


Page 5, line 20, at end insert:
("( ) Where an employer incurs any costs specifically in order to comply with this section then for all the purposes of the Income and Corporation Taxes Acts those costs shall be treated as revenue expenses of the taxable period in which they are incurred, deductible in computing his profits or gains of that period and liable to income tax or corporation tax as the case may be.").

The noble Baroness said: This is a probing amendment to determine whether contemporaneous tax relief will be available for the extra costs which employers will have to incur to adapt their premises to fulfil obligations in the Bill.

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The fear is that for tax purposes the expenditure might not be treated as deductible revenue expenditure nor as expenditure qualifying for capital allowance. It might thus fall into the trap of unrelieved expenditure which I am told is commonly known by tax officials as "nothing". It is equally important that the tax relief should be contemporaneous and not spread over future years when it would be eroded by inflation. It would not be reasonable to expect employers to absorb costs which were then taxed in an unduly penalising way. I hope the Minister can give me some comfort over this, and I beg to move.

Lord Carter: Just on a point of drafting, presumably there must be some expenditure of a capital nature. The last but one line of the amendment talks about the profits or gains of that period—that is, capital gains. If you are talking about revenue expenditure, that means all expenditure, whether it be in the normal accounting sense either accounting or capital: everything is to be treated as revenue; but towards the end of the amendment it talks about profits or gains and of course gains refer to capital.

Baroness O'Cathain: I am very grateful to the noble Lord. The amendment needs to be looked at again in terms of drafting, because in my explanation I referred to both revenue expenditure and capital expenditure.

Lord Inglewood: I hope I can be helpful to my noble friend, although I fear I cannot agree to the incorporation of Amendment No. 48 into the Bill. Changes to tax law are not appropriate to this Bill. They are a matter for the Chancellor of the Exchequer. The relevant forum for consideration of such matters would be the Finance Bill.

However, the noble Baroness will be pleased to learn that I am informed that many of the reasonable adjustments likely to be made by employers under Clause 6 of the Bill will qualify for allowances or for deductions under the normal rules of taxation. For example, the day-to-day running costs of a business are written off for tax purposes when they are incurred. This is the point I was trying to make to the noble Lord, Lord Monson. These expenses would include salaries and wages, rent and rates, maintenance and similar costs. In so far as any expenditure under Clause 6 is a day-to-day cost of running the business, that expenditure could therefore be written off immediately for tax purposes. So, for example, a firm that employs a reader for a visually impaired employee could write off the cost of employing the reader for tax purposes.

I understand that capital expenditure on machinery and plant qualifies for capital allowances at the rate of 25 per cent. a year on a reducing balance, which allows 90 per cent. of the cost to be written off for tax within eight years. Such expenditure under Clause 6, including specially adapted lifts or toilets, specialist furniture or computer equipment, would qualify for machinery and plant capital allowances. Additionally, expenditure on the fabric of an industrial building or structure, or a qualifying hotel, which in effect most hotels are, would qualify for industrial buildings allowances of 4 per cent. a year for 25 years.

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In other words, it seems that employers would qualify for some form of allowance or deductions for much of the expenditure under Clause 6. Therefore, in the circumstances, I hope the noble Baroness will be able to feel reassured and will withdraw her amendment.

Baroness O'Cathain: I am very grateful to my noble friend the Minister. But I have just one problem, which is that normal capital expenditure in a business is used (shall we say?) over nine years. For example, new plant or new machinery would be utilised over that period, and the writing-down occurs over that period. But if you are going to have an adjustment to premises which is a one-off expenditure in order to employ a disabled person, that is not necessarily something that is going to be utilised over nine years. Certainly it is to be hoped the person is still going to be in employment over that nine years, or whatever; but it is a one-off cost which is not undertaken as part of the normal running of the business. My object was, if it were at all possible, to have that written off in the year in which it was incurred. If that could be done, it would be most helpful. Perhaps I may ask the Minister for his view on that, or perhaps he will look at it and come back in due course.

Lord Inglewood: Unfortunately, I am not the Chancellor of the Exchequer, so I am hardly in a position to give the noble Baroness the kind of reply she is looking for. However, I understand the point she is making and I shall certainly reflect on it.

Baroness O'Cathain: I am most grateful to my noble friend the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness O'Cathain moved Amendment No. 49:


Page 5, line 20, at end insert:
("( ) Before issuing any regulations under this section, the Secretary of State shall consult such persons as he considers appropriate, including appropriate organisations representative of employers and appropriate organisations representative of disabled persons.").

The noble Baroness said: This is coming back to the consultation issue. It is again an employment one, so I think the amendment is correct. The first one should actually have brought in access as well. This says:


    ".... the Secretary of State shall consult such persons as he considers appropriate, including appropriate organisations representative of employers and appropriate organisations representative of disabled persons."

I beg to move.

Lord Inglewood: I spoke earlier about our commitments to consult widely about material issued under this Bill, be it guidance or codes of practice. Proposals for regulations will be treated no differently; they, too, will be subject to full and open consultation. In the light of this and earlier reassurances, I hope that the Committee will accept that this amendment is unnecessary. I therefore ask my noble friend if she will consider withdrawing it, bearing in mind the assurances that I have given.

13 Jun 1995 : Column 1778

Baroness O'Cathain: I thank my noble friend the Minister. He is under no illusion; I should like to have this provision on the face of the Bill. I was not given that reassurance last time round. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6, as amended, agreed to.

Lord Carter moved Amendment No. 50:


After Clause 6, insert the following new clause:

("Deductions from employer's contributions

.—(1) Regulations may make provision for any employer, who employs a person who is a qualifying employee, to make deductions from the employer's contributions payments in accordance with the regulations and in prescribed circumstances.
(2) In this section "qualifying employee" means a disabled person under section 1 of this Act.
(3) In this section "prescribed circumstances" shall include the recruitment and retention of a qualifying employee.").

The noble Lord said: I am not sure that we can deal with this amendment as briskly as we did the last one. However, I shall attempt to be brief.

As Members of the Committee will realise, this amendment puts forward a proposal to extend the employers' national insurance contributions holiday in the Jobseekers Bill to employers recruiting or keeping a disabled employee.

As all who are in the Chamber know—since we all worked on the Bill—the Jobseekers Bill provides for a one-year national insurance contributions holiday for employers recruiting a long-term unemployed person. That Bill defines a qualifying employee as someone who has been signing on for jobseeker's allowance for at least two years. This amendment would enable anyone defined as a disabled person under the provisions of the Bill to be a qualifying employee for their employer to receive a contributions holiday.

During the passage of the Jobseekers Bill, amendments were tabled to extend the definition of a qualifying employee to include a disabled person. I believe that I myself moved those amendments. The proposal was rejected by the Minister on the grounds that the main target group was the long-term unemployed. However, on Report, the Minister stated that he would not rule out extending the definition further in some way if it became clear that there was value in doing so—(Hansard, 16/5/95; col. 542.)

We feel that the disability Bill is an ideal opportunity to raise the matter again, particularly in view of the arguments for limiting disabled people's employment rights because of the additional costs faced by employers—an argument that was advanced. If an NIC holiday is considered to be sufficient incentive for employers to recruit a long-term unemployed person, it is unlikely that it will be any less of an incentive for employers to recruit a disabled person.

To take the average earnings for all occupations, to an employer a year's NIC holiday could be worth £1,217 on female earnings, or £1,657 on male earnings. Those figures are based on the New Earnings Survey and not on contracted-out contributions.

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For all those reasons, I hope that the Minister can feel that this amendment would provide a useful incentive to employers to recruit disabled employees. I beg to move.


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