RELIEF FOR INVESTMENT IN CORPORATE TRADES (Hansard, 12 July 1983)

§ Mr. Robert Sheldon

Clause 5 deals with the business expansion scheme. The Committee will recall the generosity with which we allowed so much of the Finance Bill to go forward before the end of the previous Parliament. In particular, schedule 5 to the Finance Bill 1983 was an example of generosity almost unparalleled by any Opposition. We allowed more than 13 pages of business expansion schemes, which were passed with the minimal amount of discussion because of the exigencies of time. We considered it to be so important that small businesses were assisted that we permitted this measure to proceed, although we expressed our grave disquiet about the way this type of legislation was being brought forward. That disquiet was justified.

We have here a range of further enactments that deal with some of the errors in that hasty legislation. There is the relief as it applies to shares issued after 5 April and the need to ensure that the residence requirement remains throughout the year and that the operation is one within the United Kingdom.

In total nine provisions were omitted from the previous Finance Bill. I wish that I could say that they are all the errors in that legislation. However, I fear that many more will come to light, because we still have not given the 829 legislation the necessary scrutiny and investigation. It is the task of the Standing Committee on the Finance Bill, normally sitting upstairs, to examine the Bill in great detail and to question the Ministers concerned. But this kind of examination must await next year's Finance Bill. There will not be the opportunity this year. I am sure that there will be more measures of this kind, if only to close certain loopholes that will be discovered and which will be considered by the Standing Committee on the Finance Bill sitting upstairs.

What information does the right hon. Gentleman have on the numbers of these business expansion schemes and their cost as of now? Can he give us something of an interim report? Obviously, it will be only sketchy, but I would not expect anything detailed. Anything that can add to our informaton and understanding of these matters will always be welcome. I am sure that if the right hon. Gentleman can give us that information he will be happy to do so.

§ Mr. Ridley

I pay tribute to the Opposition for their —I am not sure that "unparalleled generosity" are the right words — public spiritedness in allowing this legislation to reach the statute book before the election. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) rightly said that it was untried and untested. I am genuinely grateful to him for allowing that, because this is an important relief which may be fruitful for industry and, therefore, for the creation of jobs.

I accept that it was not proper for the measure not to be subject to parliamentary debate, amendment and question. I was pleased that we were able to tackle a Ways and Means resolution on this clause and schedule which opened up the subject of business expansion schemes for amendment and debate. It is the only Ways and Means resolution which is not restrictive. It would have enabled all matters about the business start-up scheme to be discussed.

8.30 pm

Although I am sure that the Committee will appreciate that we tried to keep the Bill to a minimum and restrict new clauses by the tight bounding of resolutions, we nevertheless made it wide in this case for the reason that the right hon. Member for Ashton-under-Lyne gave. I freely admit that it is a fairly major piece of complex legislation and that we made some errors in the drafting of the Finance Act 1983. It seems right today to take the opportunity to do two things—first to open the subject up for debate and, secondly, to put right the errors that have been identified.

I shall willingly explain those matters when we come to the schedule. The right hon. Gentleman has tabled two amendments which will enable me to do that. There are a number of wider issues—technical rather than drafting — in relation to the business expansion scheme about which hon. Members have asked. They could have raised them today. I do not take the fact that there are no such amendments as an endorsement of universal approval of the business expansion scheme, but I draw attention to the fact that the Government have given that opportunity. We shall certainly be listening to any advice and opinions and will be ready to consider any suggestions in time for next year's Finance Bill in the absence of any amendments to this Bill.

It is an advantage to have the scheme on the statute book and that people should have the benefit of starting 830 expansion investments during the current financial year. If more defects come to light, we shall have to be ready to try and remedy them next year. Of course what some people see as a defect, the Government see as one of their major safeguards. So I am not giving a blanket undertaking that we shall give way on everything that is put before us. However, we are ready to consider any suggestions.

The right hon. Gentleman also asked about the effect so far of the business expansion scheme. I cannot give him any concrete information because the scheme has been in operation for a relatively short time only. The scheme requires taxpayers to make claims usually in the year after they make the investment. The scale of the claims that will be made for business expansion scheme investment, some of which may not be allowed, will not be clear until perhaps more than a year after the close of a financial year. We are in no position to give firm figures, but so far as we know, the cost is running at about £15 million. It was partly because that amount was disappointingly small and partly because the defect of requiring the company to be new became plain, that my right hon. Friend thought it was right to expand the scheme to cover all unquoted companies. There is no doubt that that major expansion of the scheme will result in considerably greater expenditure and greater tax relief being granted. The memorandum accompanying the Budget contained an estimate for that purpose of £75 million a year for a full year.

I hope that that information, which is the latest that we have, is of some help to the right hon. Gentleman. I undertake to let him have more accurate information as soon as it becomes available.