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Lord Avebury: My Lords, the noble Lord, Lord Janner, asked about smoking in the Palace of Westminster. Will the Minister consult with the Chairman of Committees on whether this matter has been discussed in any of the committees of your Lordships' House in the hope that a conclusion may have been reached which would satisfy the noble Lord?

Baroness Jay of Paddington: My Lords, that is a question for those who are in charge of the organisation of the House rather than for Ministers with departmental responsibilities. I understand that a committee of the House has been established precisely on that question and that my noble friend Lord McIntosh of Haringey is chairing it.

Viscount Tenby: My Lords, will the Minister undertake not to publish the names of those people serving on such a committee on the ground of personal safety?

The Earl of Lauderdale: My Lords, are the Government prepared to publish any hints on giving up smoking? I ask the question because I gave up smoking 40 years ago at my third attempt.

Baroness Jay of Paddington: My Lords, we should probably take lessons from the noble Earl rather than the other way round.

Lord Stoddart of Swindon: My Lords, is the Minister aware that experience has shown that far from

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persuading people to reduce their smoking, or stopping children taking up smoking, the intolerant attitude of anti-smokers does exactly the reverse, as is revealed by the figures referred to by my noble friend Lord Janner? Would it not be better if the Government encouraged tolerance for those who smoke and for those who do not? That would be the attitude that I would expect in a really democratic society.

Baroness Jay of Paddington: My Lords, the Government, the Department of Health and the medical profession have a responsibility to try to reduce the impact of those factors which kill people prematurely. It is clear that avoiding smoking would prevent one third of UK cancers every year; and that is a target we are prepared to pursue vigorously.

Baroness Gardner of Parkes: My Lords, on what is World Osteoporosis Day, will the Minister confirm that smoking is a predisposing cause of osteoporosis?

Baroness Jay of Paddington: My Lords, the noble Baroness rightly draws attention to the fact that it is not simply cancer which smoking can cause. There are a number of other diseases, interestingly, in particular, those which predominantly affect women, where smoking is an important cause. One of the most disturbing facts to emerge from the latest figures is the number of young women who are taking up smoking.

The Earl of Carlisle: My Lords, does the noble Baroness have an estimate of the cost to the National Health Service of the treatment of illness caused by smoking?

Baroness Jay of Paddington: My Lords, those figures are difficult to acquire, but I shall try to supply them to the noble Earl in writing. I can tell him that every year smoking kills 120,000 people prematurely in the United Kingdom. Presumably the cost to the National Health Service can be calculated in terms of their clinical treatment, but it is difficult to do so.

Lord Chesham: My Lords, in the light of comments about the nanny state, will the Minister say whether the Government have any plans for restrictions on advertising, promotion and sponsorship of, say, alcohol, confectionery, motor cars, drugs, fireworks or even dangerous sports such as soldiers going on the tops of mountains?

Baroness Jay of Paddington: My Lords, one can always try to make fun of this very serious problem. The fact remains that smoking kills 120,000 people prematurely; it is responsible for at least two-thirds of the excess mortality rate among the poor; and it therefore contributes greatly to inequalities in health which we see among our population. It causes 90 per

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cent. of lung cancer and 20 per cent. of heart disease. Those factors should be taken into account by any responsible Department of Health.

Lord Rix: My Lords, can the Minister confirm that a number of pregnant women who smoke give birth to lightweight babies who in turn develop many handicaps and disabilities in future life?

Baroness Jay of Paddington: My Lords, yes, I am happy to confirm that. It is one of the reasons why one of the most active anti-smoking campaigns is conducted among pregnant women. As I said in response to the noble Baroness, Lady Gardner, one of the greatest concerns is the number of women of child-bearing age who are new smokers.

Capital Gains: Indexation

2.52 p.m.

Lord Bethell asked Her Majesty's Government:

    Whether, in view of the recent rise in inflation, they will reconsider their proposal to abolish indexation in the taxation of capital gains.

Lord McIntosh of Haringey: No, my Lords.

Lord Bethell: My Lords, I am grateful to the Minister for that Answer. However, has he taken into account the fact that a saver can make a modest capital gain on an investment, but nevertheless find himself obliged to pay capital gains tax on what is a loss in real terms? Does the Minister consider that to be fair?

Lord McIntosh of Haringey: My Lords, what the Government have done--and they did so following the approval of Mr. Peter Lilley before publication of the Budget--is to replace indexation with a taper. The effect differs according to the extent to which we succeed in controlling inflation and promoting real growth. Nevertheless, the change will be of benefit to almost everyone.

Lord Marsh: My Lords, should not the Government's target be to try to encourage people to hold shareholdings long term rather than short term? Does not the system fly directly in the face of that?

Lord McIntosh of Haringey: My Lords, on the contrary; it is exactly the encouragement of holding shares in the longer term which is provided by the taper. The benefit increases with the length of the holding. I am sure that the noble Lord will be the first to acknowledge that this is a great extension of benefits for business assets; in other words, for those people who hold assets as individuals carrying on a trade or who hold a shareholding in particular in a small business as an employee. I hope that the noble Lord will agree that that is much to the benefit of enterprise.

Baroness Gardner of Parkes: My Lords, does the Minister agree that pensioners in particular will be

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greatly disadvantaged by the new tapering relief because there will be no benefit for three years? Furthermore, in order to achieve maximum benefit one must hold the assets for a further 10 years. There is no retrospection, so many pensioners who have based their retirement on the basis of selling small capital amounts annually may not live long enough to benefit. Does not the Minister believe that the system is particularly harmful for pensioners?

Lord McIntosh of Haringey: My Lords, no, the rules are the same for pensioners as for anyone else. Far from there being retrospection, any assets which were held on 17th March, the date of the Budget, are counted as being held for the whole year before 5th April. Therefore, in effect, a bonus of almost a year is being given before the start of the new system.

Lord Barnett: My Lords, unusually, I find myself in total agreement with my noble friend. Will he confirm that those in receipt of small pensions who wish to realise a little gain each year will have no problem with the existing system as they will not pay the capital gains tax because of the amount of relief available?

Lord McIntosh of Haringey: My Lords, that is true, but questioning from the other side implied that we were abolishing the indexation. Of course, indexation from 1992 to 1998 still exists. It is frozen at that date as it is replaced by the tapering, but it is still there.

Lord Clark of Kempston: My Lords, in view of the fact that it is the responsibility of the Chancellor of the Exchequer to control inflation, would the Minister think it right that indexation should be abolished because it means that a taxpayer would be paying tax on inflation, which is the responsibility of the Chancellor? Surely that must be wrong.

Lord McIntosh of Haringey: My Lords, I do not believe that the noble Lord said quite what he meant to say. He actually said that indexation should be abolished, which is what we have done. We have frozen indexation. If the noble Lord reads Hansard I believe that he will find that he said the opposite of what he intended. The important point about the change that we have made is that it encourages enterprise and small businesses. It makes for a great deal of simplification in the calculation of capital gains tax liabilities.

Lord Mackay of Ardbrecknish: My Lords, in response to my noble friend Lord Bethell, the Minister prayed in aid my right honourable friend Peter Lilley. Will he therefore take on board one of the planks which Peter Lilley had in mind; namely, to reduce the tapering to zero after 10 years? Will he incorporate that in addition to the other aspects of Mr. Lilley's suggestion which he appears to favour?

Furthermore, will the Minister reconsider his answer to the noble Lord, Lord Marsh? Under this system, if a small businessman sells a shop, a small business of a modest size, in order to fund his retirement he will be

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asked to pay more in capital gains tax, whereas a well-off person, perhaps making a large gain by selling a large business, will pay less. Are the Government content with that?

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