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Lord Shore of Stepney: My Lords, will my noble friend give way on that point? I would indeed have his assurance that he does not look upon withholding tax, or the avoidance of withholding tax, as in any sense tax evasion, and therefore legitimate and to be preserved in the interests of the United Kingdom.

Lord Simon of Highbury: My Lords, if I may continue with my reply my noble friend may receive an answer to that question. The Chancellor called today at ECOFIN for other countries to tackle the problems of banking and banking secrecy. Having studied the draft directive on withholding tax, we believe that it is fundamentally flawed. In particular, it would be very damaging to the Euro-bond industry, as indeed our noble Lord Mayor informed us. The British Euro-bond market has earnings of £5 billion and employs nearly 11,000 people. So clearly the withholding of tax as presently proposed is unacceptable. The Chancellor has made it clear that exchange of information between banks and tax authorities is a much better solution, and I am sure he is right. We would not accept a directive including Euro-bonds, as the Chancellor made clear in Brussels today. If it remains unchanged, we will use our veto--

Lord Shore of Stepney: My Lords, when my noble friend uses the word "unacceptable" in reference to withholding tax and to the present position of London, to whom does he think it is unacceptable--the European partners or the United Kingdom?

Lord Simon of Highbury: My Lords, I cannot speak for all the partners. He was speaking for the United Kingdom, but I guess that some of us believe that it is also unacceptable to some of our partners.

With that, I hope I have clarified both the principle and the key issues behind the tax questions that have been raised.

I do not know whether noble Lords are aware that, at dinners in the City, normally there is a book running at this stage on how long the wind-up will take. I am constantly aware that by using the words "wind-up", I am in some danger, in the new British language, of being accused of overdoing it.

It has been a wide-ranging debate, and in conclusion I wish to return to the overall theme of the gracious Speech. This Government will continue with economic policies which steer a course of stability through a world economic slowdown. Our objective is that Britain not only steers a stable course but that, by building our long-term strength, is equal to any difficulty the global economy presents.

Because British inflation has been brought down to its target of 2.5 per cent., and because we have set in place a long-term monetary framework, with the independence of the Bank of England, Britain is better placed than in the past to meet these global challenges.

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Having reduced borrowing by £20 billion, we shall continue to pursue our prudent and sustainable expenditure plans. We shall invest in education, healthcare and our infrastructure to equip our country for the future. We will stay within prudent borrowing limits and maintain our aim to keep public expenditure below 40 per cent.

We will push ahead with measures to improve productivity, to expand opportunity and to encourage investment and entrepreneurship. This Government are steering a stable course, prudently investing in the future and continuing in their drive to increase productivity and provide support for enterprise.

This is the programme for which the British people voted. This is the programme we are delivering.

Baroness Amos: My Lords, on behalf of my noble friend Lady Hayman, I beg to move that the debate be now adjourned until tomorrow.

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Moved, That the debate be now adjourned until tomorrow.--(Baroness Amos.)

On Question, Motion agreed to, and debate adjourned until tomorrow.

City of Westminster Bill [H.L.]

The Chairman of Committees acquainted the House that pursuant to the resolution of 18 November last the Bill had been deposited in the Office of the Clerk of the Parliaments together with the declaration of the agent; the Bill was presented, read a first time, passed through all its remaining stages pro forma and sent to the Commons.

        House adjourned at 17 minutes past eleven o'clock.

1 Dec 1998 : Column 485

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