DEFERRED CHARGES ON GAINS BEFORE 31ST MARCH 1982

HC Deb 13 July 1988 vol 137 cc379-98

'.Schedule (Deferred charges on gains before 31st March 1982) to this Act (which provides for the reduction of a deferred charge to tax where the charge is wholly or partly attributable to an increase in the value of an asset before 31st March 1982) shall have effect.'.—[Mr. Norman Lamont.]

Brought up, and read the First Time.

Mr. Norman Lamont

I beg to move, That the clause be read a Second Time.

Mr. Speaker

With this we may take Government amendment No. 73.

Mr. Lamont

In Committee a number of my hon. Friends expressed concern that the rebasing provisions would not apply where tax on gains had been deferred between 1982 and 1988. My right hon. Friend the Paymaster General undertook to review the position and see whether something could be done to meet those cases. We have also received a number of representations on the matter.

This is an issue on which the arguments of principle cut both ways. On the one hand, the full benefit of rebasing is available where the deferral took place on or before 31 March 1982. So to give no benefit from rebasing where the deferral was between 1982 and 1988 might appear a little harsh. On the other hand, we must recognise the opposite argument, which is the comparison with those who in the same circumstances opted not to defer tax and will have already paid it in full without the benefit of rebasing. None the less, we have concluded after careful consideration that on balance there is a case for providing some relief in the circumstances that I have outlined.

A huge range of provisions provide for tax deferral in one form or another. The circumstances in which the reliefs can apply, and the potential permutations where more than one relief is involved, are numerous. Some cases—for example, where gains on business assets have been rolled over within a group of companies—will be extremely complex. In other cases, records will frequently not be available of assets on which tax has been deferred. That is because for purely practical reasons it is often unnecessary to retain such information. An example is where a gain on the disposal of a business asset has been rolled over against the cost of a replacement asset. Once the gain to be rolled over—and hence the reduced cost of the replacement asset—have been established, there is no need in practice to retain records relating to the history of the old asset. Even the Inland Revenue does not keep records for ever.

The matter presents the Government with something of a dilemma. Where a deferral has taken place since 1985, a March 1982 valuation will probably have been made for indexation purposes. Other things being equal, it would be possible to confine the tax charge to the post-1982 component of the gain, although even here only if the records of what underlies the deferred gain have been kept.

On the other hand, if the deferral took place after 1982 but before 1985, there will not have been a March 1982 valuation. In the case of a gift made during that period, there is no reason why the donee should know when the donor acquired the asset, and the donor's records might well no longer exist. Accordingly, there would be difficulties in extending rebasing to even the most straightforward case.

At the other extreme, there will frequently be more complicated cases—perhaps where there is a chain of deferrals, one asset being rolled over into another under the same or more than one provision. A business asset may have been sold in, say, 1984, the gain rolled over against a number of replacement assets with rollover relief being claimed. Some of those assets may since have been sold with tax paid at the time. Others may have been replaced, and yet others may still be held by the taxpayer. Even where full records of all the transactions are available, it would be a formidable task to identify the pre-1982 component of the gain which had not already been brought into the charge. Some of the amendments moved by my hon. Friends during the debate in the Committee of the whole House recognised that difficulty and sought to provide relief, not by extending the 1982 rebasing, but in a different way.

We have considered the matter and although it would be possible to devise rules to give the full benefit of rebasing in the more complicated cases where records are still available, those rules would be highly complex and would impose considerable costs on the Revenue, the taxpayers and their advisers. Such rules would be wholly impracticable if complete records had not been retained. Accordingly, rebasing would not be possible in the more complicated cases.

4.30 pm

Effectively, the choice was between giving the benefit of rebasing in cases where the computations can be done with an arbitrary solution for the remainder, or an arbitrary approach across the board. However, having different rules for different groups of taxpayers would involve making unfair distinctions and would lead to anomalies. In principle, all taxpayers should be treated equally and on the same basis. As I have said, even where the precise calculations could be made, the costs of doing so would be high. For that reason, we concluded that the only solution which is both practicable and equitable is that there should be an arbitrary amount of relief in all cases. That is the approach that we have adopted in the new clause and schedule.

Broadly speaking, the provisions take the deferred gain that is now in charge and halve it where it can be established that part of the deferred gain results either directly or indirectly from the disposal of an asset that was acquired before 31 March 1982. In some cases—for example, where the first asset was acquired just before 1982 the relief is undoubtedly generous. In other cases—for example where the first asset was acquired many years ago—it is less generous. Therefore, I accept that the solution that we have adopted involves a degree of rough justice. However, for the reasons that I have outlined, the only alternative was to provide no relief in those circumstances, and we received many representations on that point.

The most common provision under which tax can be deferred are the gifts and replacement of business asset reliefs. But other less common provisions also provide for tax deferral, such as equities being converted into corporate bonds. The relief that I have described will extend to those provisions as well and will be available where there has been a chain of deferrals. Like capital gains reform generally, the relief will apply to disposals on or after 6 April 1988 and will be subject to a claim. That is because the Inland Revenue will frequently be unable to identify the cases where it is due. The relief will probably cost under £50 million in a full year.

I recognise that the solution is a somewhat rough and ready one to the problems that have been identified. However, it does have some merit. Although there are arguments both ways, on balance the solution that we have adopted should be widely welcomed by those who have been affected.

Mr. Nicholas Brown

The Financial Secretary has treated the House to a candid review of the two options that the Government considered in some detail when looking at the requests that have been made to them for reform in this area. However, although he referred to it, he did not spend much time discussing the third option, which was to do nothing and to leave the situation as it would have been without the new clause and accompanying schedule. That option was worthy of consideration.

The new clause and schedule relate to giving further relief from capital gains where deferred tax charges arise. However, the Financial Secretary did not put the emphasis on further relief but dealt with the detail, and I can understand why. Although the detail holds up to examination, the strategic approach does so to a lesser extent.

I do not want to go over the areas that the Financial Secretary covered in great depth but, as he explained, deferred charges arise in broadly two circumstances. The first is where deferral is allowed on an earlier disposal by one person, but where the cost of the asset to a successor or the cost of another asset to that person is correspondingly reduced. The second is under relieving provision where what would otherwise be a gain on a disposal is instead a charge on a subsequent event.

Before setting the latest concession and generosity to capital gains tax payers in its proper context, I should like to raise some points of detail with the Financial Secretary. The first is the obvious one. The Red Book estimate does not allow for the cost of the amendments that the Government are proposing, although there must be some cost. When the Financial Secretary replies to the debate, will he tell us his estimate of the cost to the Revenue of making that concession, if he believes that there will be such a cost? I believe that there must be a cost. If there are no such estimates, how does the Financial Secretary account for that?

My second point goes right to the heart of the Financial Secretary's explanation and relates to the arbitrary nature of the proposals. We accept that the cut-off point in the existing legislation is somewhat arbitrary, but that is inevitable. There will always be people who could have taken advantage of taxation changes if they had known about them. That would be the case under any taxation system and indeed it would not be possible to devise a taxation system where that would not arise. However, that does not necessarily mean that any group of people who complain that they have been disadvantaged should be able to ask for a concession, yet that is what has happened in this case.

The method of relief itself is entirely arbitrary. Although an asset to be disposed of may have only one day's worth of pre-March 1982 deferred gain—that is an extreme example, but it is possible—half the gain would be untaxed, and that is on top of the indexation and annual expenditure. Giving what amounts to 50 per cent. relief of gains on rolled-over business assets could weaken the incentive to reinvest in order to get the deferral. That is another criticism of the scheme and is a point to which the Financial Secretary should respond.

There is a strategic context to the current concession which really upsets the Opposition. I am sure that the Financial Secretary is not surprised about that. Capital gains stand at record levels, yet the number of people who are paying capital gains tax has decreased from 225,000 in 1978–79 to only 120,000 in 1983–84. Funnily enough, that is the latest year for which the figures are available for comparison. That decline is significant, yet those 120,000 people—the number may be smaller now—are to be given a further concession to help them to maximise their existing advantages in relation to the taxman.

In the past year, rich taxpayers saved themselves £1.2 billion in capital gains tax. That is enough to make a substantial impact on, to take an obvious example, hospital revitalisation, or on all the areas of public expenditure to which the parliamentary Labour party is so committed, and the interests of which the Government always seem to discount.

The top rate taxpayer has probably saved some £25,000 cumulatively in capital gains tax since 1979. That concession is not going to those who most need it; it is going to those who least need it. The Opposition stand firmly against that approach. That theme has underlined each of our debates on the Finance Bill, and was carried through Second Reading.

Treasury Ministers have omitted to mention that the Budget measures will reduce the capital gains tax paid by top rate taxpayers by some £50 million in 1988–89. The Labour party cannot support such a loss of revenue.

Mr. Phillip Oppenheim (Amber Valley)

Top rate taxpayers will pay more.

Mr. Brown

I understand the sedentary intervention from the Conservative Benches, but the argument is between expenditure on public services, to which the Labour party is committed, and concessions to top rate taxpayers to which the Conservative party and the Government are still more committed. That issue divides us and goes to the heart of the debate.

Because of the definition of the tax, there can be no poor capital gains tax payers. Conservative Members seem to find that an astounding premise.

Mr. Quentin Davies (Stamford and Spalding)

I am grateful to the hon. Gentleman for giving way. I wonder if I heard him correctly. Did he speak about the reduction in the rate of capital gains tax applied to top rate taxpayers? If he did, he has missed the point completely. The rate of capital gains tax that applies to top rate taxpayers is now the top rate income tax—40 per cent.—it has gone up, not down. It seems that the last five minutes of the hon. Gentleman's speech has been completely irrelevant.

Mr. Brown

The hon. Gentleman has misunderstood me. I am talking about the take from capital gains tax as a result of the new clause. [Interruption.] I have received some very good advice from the Conservative Back Benches, which is to ignore the interventions of other Conservative Members. That is probably right. Perhaps Conservative Members are motivated by some deep personal resentment that they will not be able to take maximum advantage of the concession. If that was an unworthy remark, of course I withdraw it.

Despite unheard-of capital gains, the City of London is paying less than it should pay in capital gains tax, because of bed and breakfasting. The Exchequer is undoubtedly losing hundreds of millions of pounds because of bed and breakfasting. When we last debated this matter on the Floor of the House, the Financial Secretary said that he rather approved of bed and breakfasting and that he was not proposing measures that would stop bed and breakfasting as a taxation loophole. I do not know whether the Government's position on that has changed.

In the endeavour to put forward a constructive alternative to how the Government should spend the money that they will put into quite an important concession, I shall treat the House to the results of a parliamentary question which I put to the Secretary of State for Social Services. I asked whether he would publish tables showing the expenditure and benefit figures relating to poor families in Kensington—to take an area at random. I notice that the Chief Secretary to the Treasury has perked up. At last I have caught his interest.

The figures reveal that, contrary to the Government's assertions, the poorest households in Kensington will be net losers under the new benefit system introduced in April. They show the weekly spending power of families on low wages after tax and benefits as it would have been under the 1987–88 benefit system, if it had been maintained and updated in line with inflation, compared with what it will be under the new system. The figures are a shoddy contrast with the generosity of the Government's approach to those who pay capital gains tax. I understand that Conservative Members do not like a parallel to be drawn between those who will be advantaged under capital gains tax changes proposals and those who will be impoverished under the Government's social security proposals in Kensington and elsewhere.

4.45 pm

The theme of the Opposition's approach to the Budget, from Second Reading onwards, was that the Budget had a context. We hope to bring home that context to the country, although we realise that we will not change the Government's attitude. The figures—and they are the Government's figures—show that in Kensington a married couple with two children will be worse off if they are on wages between £70 and £110 a week. They will lose up to £1.95 a week. They will not be recipients of the Government's generosity to capital gains taxpayers.

Nor will a lone parent with two children, who stands to lose up to one tenth of his or her weekly earnings—if he or she is earning between £60 and £170 a week—as a result of the Government's benefit changes. All the one-parent families shown in the tables are net losers, losing between £2 and £8.79 a week. Those figures underestimate the loss that many families will suffer, as they do not take into account average water rates of about £1.78 a week which are no longer covered by housing benefit.

Those people do not pay capital gains tax and they will not benefit from the Government's new clause. They represent the generality of the population, rather than the 120,000 privileged few, who are privileged to have the capital gains in the first place and privileged to be able to take advantage of the new loopholes. That is what the Government are all about—capital gains tax concessions for the rich and benefit losses for the poor, particularly the poor in Kensington.

Mr. Tim Smith (Beaconsfield)

I listened with great care to the speech of the hon. Member for Newcastle upon Tyne, East (Mr. Brown), but I could not follow what relevance much of it had to new clause 23.

Ms. Marjorie Mowlam (Redcar)

That is because the hon. Gentleman was not listening.

Mr. Smith

I have just said that I listened with great care. Clearly, the hon. Lady is not listening. I did not see what relevance the hon. Gentleman's speech had to new clause 23, which is entitled Deferred charges on gains before 31st March 1982".

Mr. Nicholas Brown

Will the hon. Gentleman give way?

Mr. Smith

I shall give way to the hon. Gentleman in a moment, but first I should like to deal with some of the points that he raised. He referred to the fact that the number of capital gains tax payers had fallen in the past 10 years. Contrary to what he was suggesting, many people under the last Labour Government who were by no means wealthy had to pay capital gains tax. One of the welcome changes that the Government have made is to increase the threshold substantially to a level of £5,000 a year, which has reduced the number of capital gains tax payers but has not made a significant change to the yield from capital gains tax, which is still very substantial, and certainly will be next year, with the new 40 per cent. rate.

In regard to the change proposed in new clause 23, the hon. Gentleman suggested that it might be possible for a person to have held an asset for only one day before 31 March 1982. That is true, but it is equally true that a person might have held an asset for 17 years before that date. As I pointed out during our debate in Committee, the injustice of the previous situation was underlined by the fact that, during that 17-year period, inflation was 450 per cent. Many people were required to pay tax on gains that were not real. They were totally inflationary. A total of 450 per cent. had to be discounted from any gain before getting to the real element. I recall the debate when my hon. Friends the Members for Croydon, South (Sir W. Clark) and for Bournemouth, West (Mr. Butterfill) raised that point.

My right hon. Friend the Financial Secretary put forward a balanced view. He dealt with the merits of the argument, which is not entirely on one side. I understand the point he made about the fact that some people did not defer their gain and realised their asset before 1988. They could argue that they had been placed at a disadvantage. Everybody must recognise that, however they plan their tax affairs—they may take the best advice—they may be disadvantaged by changes in the net Budget.

There is a strong case for making a change and I congratulate my right hon. Friend the Financial Secretary on the formula he has suggested. As he said, there seems to be an element of rough justice in this. I can see that in the absence of satisfactory records that has to be the case. Although it is only a short time since the Inland Revenue published a press release on the subject—I think it was on Friday—I have had a response from one tax partner in Deloitte Haskins and Sells. He said: So far as roll over relief is concerned, the news is excellent and I think that the Government have devised a very equitable and practical way of dealing with a difficult problem. He said that he felt that in the case of holdover relief it might be possible to go a little further because usually only one asset is involved. However, my right hon. Friend said that even there, the records might not be available. I can see that this is the best solution in both cases and I welcome the new clause.

Mr. Nigel Griffiths (Edinburgh, South)

We are entitled to know what the cost of the new measure will be to the community and other taxpayers who are paying ordinary rates of taxation. The Financial Secretary gave a figure of £50 million. That is in addition to the sum already prised from him on 18 December in response to a question from my hon. Friend the Member for Dunfermline, East (Mr. Brown). It appears that the Government estimate that since 1979 the community has already lost £1.2 billion in capital gains tax and an additional £250 million has been forfeited by the Treasury in relaxations in capital transfer tax and inheritance tax. It is possible that the top 5 per cent. of taxpayers have enjoyed cumulative gains of about £25,000 each in the decade from such changes.

What is more disturbing is the evidence that the Government, in their headlong drive to reward the rich, have not included the cost of the Budget proposals to reduce capital gains tax in this financial year in the financial statement published in March. On 9 May the Financial Secretary said: it is estimated that under the Budget proposals the reduction in capital gains tax on gains realised in 1988–89 by the top 5 per cent. of income tax payers will be rather less than £50 million."—[Official Report, 9 May 1988; Vol. 133, c. 30] Page 40 of the Red Book shows that no such figure is included. It is incumbent on the Financial Secretary to explain that to us.

We also know from what the Financial Secretary has told us that a further £50 million is now to be sacrificed by the wider community to bring relief to the undeserving rich. It is a matter of concern to everybody that the new clause will give a further perk to the most wealthy. We know that the Chancellor has estimated that British people today can receive £1 million salaries and that by tax management, which involves, according to another answer, a mortgage of £30,000, a business expansion scheme investment of £40,000, an investment of £810,000 in the new enterprise zone unit trusts and a contribution to a retirement annuity scheme of £195,000, they can pay nothing in tax. Against that background it is inexplicable how a further new clause can be introduced which will give further handouts to the rich.

Already this year, following the Budget, £1.5 billion is being lost to the Exchequer in top rate tax allowances for the rich and a further £2 billion is being lost by Budget handouts to the top 1 per cent. of earners. We are entitled to a better justification from the Government than that given today. We are entitled to have the questions asked by my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) answered in full by the Financial Secretary. We deserve a proper explanation and I hope that the Government will consider withdrawing new clause 23.

Mr. Oppenheim

My right hon. Friend the Financial Secretary said that disallowing relief to people who had amassed pre-1982 gains but rolled those over into another asset was rough justice. I should like to go a stage further and say that it is very rough justice. Many people rolled over their assets through no fault of their own but because they were forced to do so, perhaps under threat of compulsory purchase or because their property had been compulsorily purchased. If it is technically possible to allow 50 per cent. relief against pre-1982 gains on the rolled-over assets, why is it not possible to allow 100 per cent. relief? I do not see what the technical or administrative difference is.

The Opposition Front Bench spokesman, the hon. Member for Newcastle upon Tyne, East (Mr. Brown), calls this clause a tax concession for the rich. I invite the hon. Gentleman to come to my constituency. He will be made most welcome. I will introduce him to a gentleman who will be surprised to hear himself called rich or super rich. He is a very small dairy farmer who is farming over the border of my constituency in Nottinghamshire. He was under threat of compulsory purchase by British Coal some years ago because it wanted to grab his land for opencast mining. He was forced to sell it to British Coal on disadvantageous terms. He rolled that money over into a new farm.

He is far from being rich. He does not drive a Range Rover, wear a huskie or green wellington boots. He is being severely disadvantaged by the fact that his pre-1982 gains are being allowed relief at 50 per cent. If the hon. Member for Newcastle upon Tyne, East would care to see me in the Lobby afterwards we can make a date. I shall buy him half a lager and he can explain to that gentleman why he regards him as rich. He will probably receive a dusty response.

Mr. Nicholas Brown

I accept the hon. Gentleman's invitation. I should love to visit his constituency and his constituents and meet the dairy farmer to whom he referred. Perhaps at the same time we could have discussions about everything the Government have done for dairy farmers.

Mr. Oppenheim

I am glad that the hon. Gentleman has graciously accepted my invitation. He will be made welcome. Perhaps we can liaise afterwards.

It is worth mentioning that, although there has been criticism and talk about the Government cutting tax for top rate taxpayers, it is worth remembering that the corollary of that is not only that they have wiped out a lot of perks that wealthier people used to enjoy, but top rate taxpayers will be paying more capital gains because they will pay capital gains on the same band as their income tax. Many people will be paying 40 per cent. capital gains instead of 30 per cent. Therefore, many people whom Opposition Members do not like—the rich and super-rich—will be paying more in capital gains. It is worth recognising that fact, because I suspect that that is in line with Labour's philosophy.

I understand that the Government's objective in banding capital gains with income tax rates is to prevent distortions. I put it to my right hon. Friend that there are still distortions. If one makes a capital loss on a bond but makes a profit from the income of that bond, one cannot be offset against the other. Therefore, it is at least debatable that there is still a distortion in the system. I ask my right hon. Friend to address himself to that point.

I am conscious that I have already taken up enough of the time of the House and that I have to make extensive arrangements for the official reception in my constituency of the hon. Member for Newcastle upon Tyne, East, so I shall pause in my oration.

5 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I apologise in advance for my ignorance. I did not serve on the Committee, so I am coming fresh to some of the arguments.

First, I reiterate the plea for more information from the Treasury about the cost implications of the concession, because that is important. If it is true that the Red Book guidelines do not reflect any charge, expenditure or change in the Government's Budget proposals as a result of this concession, that would certainly be important. My view of the new clause is not based on the principle; it is a question of balance and fine tuning. The amounts of money involved are an important factor in deciding whether the Government's judgment is right.

Some of the comments made by Labour Members cause me concern. From my experience in my constituency, I know that small business men and farmers have been severely prejudiced by previous provisions. The Minister may help the House if he can tell us whether he has received any proposals from the small business community and whether any farming institutions have made representations to him.

The Government's policies on farming—and particularly cereal farming—have required family farmers to make decisions about the disposal of their farms. I am sure that dairy farmers in Amber Valley are in the same position. Perhaps we should organise a bus run and the hon. Member for Amber Valley (Mr. Oppenheim) can buy us all half pints of lager. Perhaps we should all go to study the effects of Government policy on farmers.

Can the Minister give us a little more objective information about the people who will receive the concessions? Will they be people who could afford to pay, or will they be people who should benefit from the concessions? Is there a wider implication for small business men and farmers?

Capital taxation is not as important as direct and indirect taxation. Labour Members properly argue for a redistribution of wealth. However, the redistribution of wealth should be tackled by direct and indirect taxation. Capital taxation, if it is organised properly, should be part of the wealth-creating process. I should be grateful if the Minister would clarify some of those points. His answers will influence me in deciding whether to support the new clause.

Mr. Alistair Darling (Edinburgh, Central)

We shall wait with interest to see what the Social and Liberal Democrats will do. We shall be waiting with bated breath. I am also interested that the trip being arranged by the hon. Member for Amber Valley (Mr. Oppenheim) is gathering support. Perhaps we should all go, suitably fortified by a half pint of lager, to see the plight of the unfortunate farmer.

When the new clause was tabled we debated why it was necessary and desirable to wipe out gains made before 1982. The Government told us that there was an element of rough justice and that it was an arbitrary date. They said that it was difficult to find records before 1982, and apparently records could be found after that. They gave no satisfactory answer. The Opposition were left with the impression that the Government simply wanted to lift the burden from those who would have been liable to pay capital gains tax. Many people have made gains that were not accounted for because of inflation prior to 1982 and will receive great benefits under the proposals.

I disagree with the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) in his assessment of the importance of capital taxation. It is very important, and the longer the Government remain in office, the more important it will be. There is no doubt that the amassing of capital and the building of capital will play an important part in the assembling of wealth, and we shall have to consider that.

At first sight, new clause 23 does not generate much excitement. We had rehearsed in Committee all the arguments about why we thought that the proposals were bad, both because of the amount of tax forgone, which could have been better spent on the Health Service and because they were indicative of the Government's general policy to help the wealthy. I accept that there are many people who pay capital gains whom one would not call very wealthy or even wealthy. However, the main thrust of the Bill is to help those who are better off. That contrasts dramatically with the Government's attitude to those who receive social security and those on low incomes or with no income at all, whom they do not seem to accommodate in the same way.

I have two questions for the Financial Secretary. First there is always an element of rough justice in fiscal changes, but why did the Government decide to benefit those who, by definition, have had a tax advantage some time ago? As I understand it, people who took advantage of rollover relief some time after 1982 on a gain incurred prior to 1982 will now receive the added bonus of a 50 per cent. exemption. They have already taken advantage of a tax break by getting rollover relief. Why are the Government helping those people any more than those unfortunate enough to have given away their asset before 1988—they may have divested themselves of an asset to a relative or sold it—without the benefit of rollover relief and who have to pay capital gains tax?

The Financial Secretary to the Treasury knows of a constituent of mine, who is a doctor, who gave away an asset in 1985. I expect that he will want to know why he will not get the benefit of any favours. I made no bones about the fact that I was not particularly sympathetic to him, and that I do not like retrospective legislation in principle—although I accept that it is occasionally necessary in special circumstances. Why do the Government seek to help people who have already taken advantage of a tax break? If rollover relief was designed to ease the tax burden, that should have been enough in itself. Why do the Government propose to reduce capital gains tax in such cases by half?

There is the added point that the gain prior to 1982 could have been a minuscule part of the whole gain. Someone may have acquired the asset a few weeks or months before the 1982 cut-off date. Why should such people be able to take advantage of the whole reduction?

I shall quote example 4 in the Treasury press release to illustrate my argument: 1980 Taxpayer A acquires a business asset 1983 A replaces the asset and claims deferral under Section 115 Capital Gains Tax Act 1979. 1987 The replacement asset is given to B, and deferral is claimed under Section 79 Finance Act 1980. 1989 B emigrates"— no doubt to sunnier climes— and the gain deferred in 1987 is brought into charge under Section 79 Finance Act 1981.> The gain deferred in 1987 is in part attributable indirectly to the disposal by A in 1983 of an asset which A acquired before 31 March 1982. The point is that this particular taxpayer has already on two occasions taken advantage of existing legislation to mitigate the amount of tax that he had to pay. It is now proposed that he should have an added advantage. That is all very well and I do not begrudge anybody who is fortunate enough to be in that position that advantage, but it contrasts with the shameful treatment meted out to other taxpayers and others in receipt of money from the state.

Such a concession is not granted on social security matters or to ordinary basic rate taxpayers, who have been hard hit. It is only this special category who receive this advantage, and I suspect that a great deal of lobbying has been done on their behalf by professionals and accountants. It is unfair, but rather typical of the way that the Government have dealt with the Finance Bill. They bend over backwards to help people who, generally speaking, are not in need of the same degree of help as those who have fallen on the wrong side of the Government's fence.

I hope that the Financial Secretary will tell us why people who have already been catered for are being catered for again. Can he say whether in future the Government will be so charitable to those who so far have felt nothing but the wrong side of the Government's hand in terms of their tax treatment?

Mr. Norman Lamont

The hon. Member for Newcastle upon Tyne, East (Mr. Brown) said that we had not considered seriously enough another option, which was to do nothing. Perhaps I did not make the case clear enough: that would have been wrong in terms of justice. We have said that we think it wrong that people should be paying capital gains tax on highly inflationary gains made in the 1970s, which is why we introduced rebasing. Once we introduced that, it was logical to extend something similar to people who are deferring capital gains.

Deferral is a long-standing system, not a tax dodge as the hon. Member for Edinburgh, Central (Mr. Darling) seems to think. People defer tax, but must ultimately pay it. If within that rolled-over or deferred gain there is an element of inflationary gain, that is pre-1982. Given that we have already decided that we would do something about the pre-1982 gain, there is obviously a case for considering this for the rolled-over or deferred gain.

I shall come to the details shortly. Part of this applies to businesses. This is a normal commercial transaction and it has been allowed in the tax system for a long time. It follows logically that if one is to rebase, one should look at the case for doing it with rolled-over gains as well.

Mr. Darling

I did not say that this was a tax dodge and I do not remember using those words. But without doubt it is a concession and an advantage not to have to pay capital gains tax when it would otherwise fall. That advantage is rollover relief, which both parties supported; that having been given, why is a further benefit to be given?

Mr. Lamont

Rollover relief, which is a long-standing feature of the CGT system, applies in carefully defined circumstances. It applies to businesses, but not to equity investment—I think rightly, although I have not managed to convince all my hon. Friends of that. Once there is rollover relief and if one is to give a degree of remedy for inflationary gain in the normal taxation of capital gains, obviously one should also consider the position of deferred gains.

The hon. Member for Newcastle upon Tyne, East ignored some recent developments and Budget provisions. He ignored the fact that we have increased CGT for higher rate taxpayers to 40 per cent. and that the threshold for capital gains is to be reduced to £5,000. I know that Opposition Members think that that is far too generous. Earlier they made it clear that they wanted to abolish the exemption completely and to bring 10 million people into CGT for the first time. They do not seem to know that one third of CGT payers are basic rate payers. They are not the super-rich who seem so to obsess the hon. Member for Wrexham (Dr. Marek).

Some Opposition Members seem to think that the CGT yield is declining, but the opposite is true. The yield has increased four times since 1979. We are moving into a fairer world in which people are prepared to unlock their assets and pay tax. That is why the yield from all capital taxes has increased under this Government, unlike what happened under the Labour Government with their punitive rates on other capital taxes. The take from CGT is £2 billion a year—just enough to pay for the increases in social security, which hon. Gentlemen somewhat irrelevantly but consistently mentioned.

5.15 pm

Hon. Gentlemen asked about the cost. I said that the cost of the concession might be £50 million, of which £20 million would go to companies. There is no mystery about it not being in the Red Book. It was in the press release and in the notes on clauses that I made available and about which I wrote to the hon. Member for Dunfermline, East (Mr. Brown).

Mr. Nicholas Brown

I know that the Minister will tell us what the overall cost to the Exchequer will be more definitively and I am enjoying his rumbustious speech, as always. But he is misrepresenting the Labour party's position when he refers to abolishing thresholds entirely. That is not our position.

Mr. Lamont

That is what appeared to be said when we debated this subject on the Floor of the House.

Mr. Nicholas Brown

This argument has been made mischievously and I am sure in a light-hearted vein from the Government Front Bench before. It was put to the Minister as a possible option which the Government should have considered. It most certainly was not put to him as a final and definitive statement of our policy.

Mr. Lamont

As I understand it, the hon. Gentleman is not saying that the Labour party is definitely committed to bringing an extra 10 million people into CGT, but it is considering that seriously and will get its policy review to study it.

My hon. Friend the Member for Amber Valley (Mr. Oppenheim) thought that perhaps this was too rough justice. His argument was: if we could have 50 per cent. relief, what was the technical difficulty about having 100 per cent. relief? There is no technical difficulty. It is just that it would be inappropriate. The alternative to 50 per cent. is not 100 per cent. It is to give a separate concession to those with precise records. I explained carefully and at length why that was not possible. I repeat that although we have decided to make this concession, I strongly believe that this is a matter of balance. The case is not overwhelming.

Some people are receiving a retrospective benefit which they did not expect when their gains were established perhaps some time ago. For some this will be more advantageous and for others it will be disadvantageous. If we ran two systems and allowed people to choose between what we are proposing and another system, where perhaps those with precise records could choose, it would undoubtedly be a one-way bet and those for whom the concession was in a sense over-generous would certainly make their decisions that way.

My hon. Friend the Member for Amber Valley raised the subject of rollover relief coming from compulsory purchase. One must be sympathetic to that. I see his point, but we could not run a different system for different types of capital gains. In any case, even with something that arose from compulsory purchase, the same problems of trying to apportion the gain before and after 1982 would still arise, and there might be a complicated interaction, with the proceeds of the compulsory purchase going into different assets. It would not be easy.

My hon. Friend also referred to losses on the sale of bonds not being offsetable against income from bonds. That is true. Leaving aside the general issue of allowing capital losses against income, which would be expensive and which we have always resisted—it would run into billions of pounds—my hon. Friend will be aware that bonds are generally outside the CGT net altogether. One of the effects of this concession will be to allow rollover relief into convertibles. I stress to my hon. Friend that we are not integrating income tax and capital gains tax. We have aligned the rates, but we are not moving towards complete integration of the two taxes.

Mr. Oppenheim

I may be wrong, but I had understood that most types of gilts were outside the capital gains net; but other types of bonds, such as Eurobonds and a variety of other fixed interest instruments, would come within the net. I did not mention gilts; I specifically mentioned bonds for that reason.

Mr. Lamont

The concession goes beyond gilts. If my hon. Friend wants me to be more precise about that, I shall have to let him have further details later.

Although this solution is somewhat rough and ready, we have addressed a real problem. When people have given gifts with deferred and accrued gains, or when they have rolled over assets, it is right that there should be some relief for them against inflationary gains, just as we have introduced that for taxpayers generally for pre-1982 inflationary gains. I cannot see why the Opposition should regard that as so unjust. It follows from what we put forward in the original Budget measures. I believe it will be widely welcomed, especially by the business community.

I have given the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) the figure for businesses, but I cannot give him the figure for small businesses. I invite my right hon. and hon. Friends to support the new clause.

Dr. Marek

It was refreshing to hear the Financial Secretary giving a balanced view of the new clause and being honest about what he thought of it. He said that there were arguments in both directions but that he was persuaded by the arguments and representations that had been made to him. It will come as no surprise to him to learn that, having listened to the arguments from Conservative Members and others, we have come to the conclusion that, on balance, the new clause should not be part of the Bill.

I listened to the Financial Secretary seriously and with interest. It is a surprise to hear his hon. Friends on the Back Benches, who always seem to be pleading special cases, probably on behalf of clients sitting in the Gallery. The Register of Members' interests shows that the hon. Member for Amber Valley (Mr. Oppenheim) has two directorships—of What to Buy plc and of World Opinion Ltd. Presumably he will not recommend that his clients buy farm land.

The hon. Member for Beaconsfield (Mr. Smith) also spoke. I see that he is a consultant to Price Waterhouse, Accountancy Age, the Financial Intermediaries, Managers and Brokers Regulatory Association, Rediffusion Business Electronics Ltd. and British Venture Capital Association. I make no complaint about that. I just wonder whether the sort of people to whom he is a consultant have an interest in the new clause being passed and in the gains that they would make if it were.

The Register of Members' Interests can be referred to by any hon. Member. It is possible to question whether the hon. Member for Beaconsfield speaks from the heart and really believes what he says or whether, given that in another walk of life he advises people how to avoid paying tax, he sees an opportunity here to please his clients.

Mr. Oppenheim

It is comforting to think that the hon. Gentleman has gone to the trouble of doing some research into my business background. It is a shame that his research was not more thorough. If he had done it properly he would have discovered that What to Buy put out a publication that looks into office equipment and information technology—so it is highly unlikely that it would recommend that its subscribers buy farmland.

Dr. Marek

I am pleased to hear that. My research was done quickly by consulting the Register of Members' Interests that lies on the Table. No doubt the hon. Gentleman will enter his directorships and consultancies in it so that we can have a better idea of them when he rises in future debates on financial matters.

When Conservative Back Benchers talk about avoiding distortions of the tax system I get the message that they regard paying any tax as a distortion. If their supporters could pay no tax there would be no distortion. My hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) gave the numbers of capital gains tax payers, I believe for 1983–84, when there were 120,000 of them. They are the better-off people in society. Many of my constituents would not know what capital gains were, let alone have to pay tax on them. A small band of privileged people exercise their patronage through their power, wealth and ability to make capital gains. No doubt they see their interests clearly and will write to the Financial Secretary about them.

Mr. Norman Lamont

Are the one third of capital gains tax payers who pay tax at the basic rate an exception to what the hon. Gentleman is saying?

Dr. Marek

I shall make that clear later. [Interruption.] If the hon. Member for Beaconsfield can contain himself until then, I shall deal with that point later. Of course, capital gains tax can be paid by people who are only moderately wealthy, but it is also paid by the super-rich. There are cases such as that mentioned by the hon. Member for Amber Valley in which a person is genuinely hard done by because of forces outside of his or her control. In that case British Coal wanted to buy the land and the person, although he wanted to, could not continue farming. There are such cases, but the solution does not lie in what the Government propose. The solution is to deal with the problem of enabling people to pass down businesses. The Government should have turned their attention to that.

There are problems in firming and they should be solved by the Government turning their attention to enabling farmers to pass on their farms as working concerns to other people without having to leave the industry or being penalised any more than they should be by capital gains tax.

I agree with my hon. Friend the Member far Edinburgh, Central (Mr. Darling) that people should pay capital gains tax if they make capital gains, and that is the central point. The problem with the clause is that the Government decided to rebase the gains and to give a tax giveaway to the rich, but missed out some of the rich. Those whom they missed out wrote to the Financial Secretary and said, "Look here, what is going on? Your are giving all these people, because of rebasing—never mind whether it is because of inflation—a tax handout that you are not giving me." I give the Government their due; they recognise their own. The Financial Secretary immediately took it to heart and said, "Yes, there must be more pig swill in the troughs so that everyone can put their snouts into it." That is precisely what they have done.

5.30 pm

Mr. Tim Smith

The hon. Gentleman can do better than this.

Dr. Marek

I will. I am being objective.

When an error was discovered in the figures for pension payments, an error that resulted in pensioners not receiving—[Interruption.] Having lost the argument, Tory Members are not able to come back with any genuine point on what I am saying and instead are diverting the attention of the House by making irrelevant comments. I wish they would not.

When the Government made a mistake in the pension payment figures and were underpaying pensioners by about £1 million a year, did they increase the pension for those who had lost money because of that error?

Mr. Neil Hamilton (Tatton)

Boring.

Dr. Marek

It may be boring for the hon. Gentleman, but it was not for the pensioners who lost money because of that error. I accept that that error was not made deliberately. However, instead of giving the money back to the pensioners and putting up the pensions by 0.1 per cent. or 0.2 per cent. above the usual uprating, the Government gave that money to charity.

That treatment of ordinary working men and women was completely different from the treatment given to people who make capital gains and pay capital gains tax. If people are rich and pay capital gains tax, they expect and receive all the benefits and the attention of the Government to ensure that they do not go without anything that someone else already has. The Government are not especially interested in the ordinary person on the street, the pensioner or someone with not a great deal of money, so all they promised was that the money would be given to charity. They are not interested in increasing the pensions more than they have to.

Mr. Norman Lamont

Will the hon. Gentleman now answer my earlier question? Are the one third of capital gains taxpayers who are basic rate income taxpayers an exception to the remarks that he is making?

Dr. Marek

Only the top 5 per cent. of taxpayers pay the top rate of income tax, so not many people will pay 40p in the pound. It is precisely those people about whom I am talking—those who are rich and have far more wealth, patronage and power than the ordinary man in the street and more money than almost all of my constituents even dream about. That is a clear answer to the Financial Secretary's question.

The Opposition are not enamoured of the new clause. We believe that it is yet another concession of £50 million or £20 million, or whatever the Financial Secretary said. I have forgotten now, but I will read it in the Official Report tomorrow. That money could have been given to renovating our schools, to funding fully the nurses' pay award, to getting our infrastructure into better shape, to building our roads or railways, to building more hospitals or to almost any other sphere of public life that desperately needs more money. Instead, the Government have chosen to give it to the rich who have already been given more money than ever before. We cannot support the new clause and I urge my right hon. and hon. Friends to vote against it.

Question put, That the clause be read a Second time:—

The House divided: Ayes 287, Noes 173.

Division No. 40]	[5.35 pm
AYES
Alexander, Richard	Burt, Alistair
Alison, Rt Hon Michael	Butcher, John
Allason, Rupert	Butler, Chris
Alton, David	Butterfill, John
Amess, David	Campbell, Menzies (Fife NE)
Amos, Alan	Carlisle, John, (Luton N)
Arbuthnot, James	Carrington, Matthew
Arnold, Jacques (Gravesham)	Carttiss, Michael
Ashby, David	Cash, William
Atkins, Robert	Chapman, Sydney
Atkinson, David	Clark, Hon Alan (Plym'th S'n)
Baker, Rt Hon K. (Mole Valley)	Clark, Dr Michael (Rochford)
Baldry, Tony	Clark, Sir W. (Croydon S)
Batiste, Spencer	Clarke, Rt Hon K. (Rushcliffe)
Beaumont-Dark, Anthony	Colvin, Michael
Beggs, Roy	Coombs, Anthony (Wyre F'rest)
Bellingham, Henry	Coombs, Simon (Swindon)
Bendall, Vivian	Cope, Rt Hon John
Bennett, Nicholas (Pembroke)	Couchman, James
Bevan, David Gilroy	Cran, James
Biffen, Rt Hon John	Critchley, Julian
Biggs-Davison, Sir John	Currie, Mrs Edwina
Blaker, Rt Hon Sir Peter	Curry, David
Body, Sir Richard	Davies, Q. (Stamf'd & Spald'g)
Boscawen, Hon Robert	Davis, David (Boothferry)
Bottomley, Peter	Day, Stephen
Bottomley, Mrs Virginia	Dickens, Geoffrey
Bowden, A (Brighton K'pto'n)	Dicks, Terry
Bowden, Gerald (Dulwich)	Dorrell, Stephen
Bowis, John	Douglas-Hamilton, Lord James
Boyson, Rt Hon Dr Sir Rhodes	Durant, Tony
Braine, Rt Hon Sir Bernard	Dykes, Hugh
Brandon-Bravo, Martin	Eggar, Tim
Brazier, Julian	Emery, Sir Peter
Bright, Graham	Evans, David (Welwyn Hatf'd)
Brittan, Rt Hon Leon	Evennett, David
Brooke, Rt Hon Peter	Ewing, Mrs Margaret (Moray)
Brown, Michael (Brigg & Cl't's)	Fallon, Michael
Browne, John (Winchester)	Favell, Tony
Buck, Sir Antony	Fenner, Dame Peggy
Burns, Simon	Finsberg, Sir Geoffrey

Fookes, Miss Janet	Marshall, John (Hendon S)
Forman, Nigel	Marshall, Michael (Arundel)
Forsyth, Michael (Stirling)	Martin, David (Portsmouth S)
Forth, Eric	Mates, Michael
Fowler, Rt Hon Norman	Maude, Hon Francis
Fox, Sir Marcus	Maxwell-Hyslop, Robin
Franks, Cecil	Meyer, Sir Anthony
Freeman, Roger	Michie, Mrs Ray (Arg'l & Bute)
French, Douglas	Miller, Sir Hal
Fry, Peter	Mills, Iain
Gale, Roger	Miscampbell, Norman
Gardiner, George	Mitchell, Andrew (Gedling)
Garel-Jones, Tristan	Mitchell, David (Hants NW)
Gill, Christopher	Moate, Roger
Goodhart, Sir Philip	Monro, Sir Hector
Goodson-Wickes, Dr Charles	Montgomery, Sir Fergus
Gower, Sir Raymond	Morrison, Sir Charles
Greenway, Harry (Ealing N)	Moss, Malcolm
Greenway, John (Ryedale)	Mudd, David
Gregory, Conal	Neale, Gerrard
Griffiths, Sir Eldon (Bury St E')	Needham, Richard
Griffiths, Peter (Portsmouth N)	Nelson, Anthony
Grist, Ian	Neubert, Michael
Ground, Patrick	Nicholls, Patrick
Gummer, Rt Hon John Selwyn	Nicholson, David (Taunton)
Hamilton, Neil (Tatton)	Nicholson, Emma (Devon West)
Hanley, Jeremy	Onslow, Rt Hon Cranley
Hannam, John	Oppenheim, Phillip
Hargreaves, A. (B'ham H'll Gr')	Page, Richard
Hargreaves, Ken (Hyndburn)	Paice, James
Harris, David	Patnick, Irvine
Haselhurst, Alan	Patten, John (Oxford W)
Hayhoe, Rt Hon Sir Barney	Pawsey, James
Heathcoat-Amory, David	Peacock, Mrs Elizabeth
Hicks, Mrs Maureen (Wolv' NE)	Porter, David (Waveney)
Hicks, Robert (Cornwall SE)	Portillo, Michael
Higgins, Rt Hon Terence L.	Powell, William (Corby)
Hill, James	Price, Sir David
Hind, Kenneth	Raffan, Keith
Holt, Richard	Raison, Rt Hon Timothy
Hordern, Sir Peter	Rathbone, Tim
Howarth, G. (Cannock & B'wd)	Redwood, John
Howell, Rt Hon David (G'dford)	Rhodes James, Robert
Howells, Geraint	Riddick, Graham
Hughes, Robert G. (Harrow W)	Ridley, Rt Hon Nicholas
Hunter, Andrew	Ridsdale, Sir Julian
Hurd, Rt Hon Douglas	Roberts, Wyn (Conwy)
Irvine, Michael	Roe, Mrs Marion
Irving, Charles	Rost, Peter
Jack, Michael	Rowe, Andrew
Jackson, Robert	Rumbold, Mrs Angela
Janman, Tim	Ryder, Richard
Johnson Smith, Sir Geoffrey	Sackville, Hon Tom
Johnston, Sir Russell	Sainsbury, Hon Tim
Jones, Gwilym (Cardiff N)	Salmond, Alex
Jones, Ieuan (Ynys Môn)	Sayeed, Jonathan
Jones, Robert B (Herts W)	Shaw, David (Dover)
Jopling, Rt Hon Michael	Shaw, Sir Giles (Pudsey)
Kellett-Bowman, Dame Elaine	Shaw, Sir Michael (Scarb')
Kennedy, Charles	Shelton, William (Streatham)
Key, Robert	Shephard, Mrs G. (Norfolk SW)
King, Roger (B'ham N'thfield)	Shepherd, Colin (Hereford)
Kirkwood, Archy	Shepherd, Richard (Aldridge)
Knapman, Roger	Shersby, Michael
Knight, Dame Jill (Edgbaston)	Sims, Roger
Knox, David	Skeet, Sir Trevor
Lamont, Rt Hon Norman	Smith, Sir Dudley (Warwick)
Lang, Ian	Smith, Tim (Beaconsfield)
Lawrence, Ivan	Soames, Hon Nicholas
Lightbown, David	Speed, Keith
Lilley, Peter	Speller, Tony
Livsey, Richard	Spicer, Michael (S Worcs)
Lloyd, Peter (Fareham)	Squire, Robin
McCrindle, Robert	Stanbrook, Ivor
MacGregor, Rt Hon John	Stanley, Rt Hon John
Maclean, David	Steel, Rt Hon David
Maclennan, Robert	Steen, Anthony
McLoughlin, Patrick	Stern, Michael
Major, Rt Hon John	Stevens, Lewis
Malins, Humfrey	Stewart, Allan (Eastwood)

Stewart, Andy (Sherwood)	Waller, Gary
Stokes, Sir John	Walters, Sir Dennis
Stradling Thomas, Sir John	Ward, John
Sumberg, David	Wardle, Charles (Bexhill)
Summerson, Hugo	Watts, John
Taylor, Ian (Esher)	Wells, Bowen
Taylor, John M (Solihull)	Welsh, Andrew (Angus E)
Taylor, Matthew (Truro)	Wheeler, John
Taylor, Teddy (S'end E)	Whitney, Ray
Tebbit, Rt Hon Norman	Widdecombe, Ann
Temple-Morris, Peter	Wiggin, Jerry
Thompson, Patrick (Norwich N)	Wigley, Dafydd
Thorne, Neil	Wilkinson, John
Thornton, Malcolm	Wilshire, David
Thurnham, Peter	Winterton, Mrs Ann
Townend, John (Bridlington)	Winterton, Nicholas
Townsend, Cyril D. (B'heath)	Wood, Timothy
Tracey, Richard	Woodcock, Mike
Trotter, Neville	Yeo, Tim
Twinn, Dr Ian	Young, Sir George (Acton)
Waddington, Rt Hon David
Wakeham, Rt Hon John	Tellers for the Ayes:
Walden, George	Mr. Mark Lennox-Boyd and Mr. Kenneth Carlisle.
Walker, Bill (T'side North)
Wallace, James

NOES
Adams, Allen (Paisley N)	Fields, Terry (L'pool B G'n)
Allen, Graham	Flannery, Martin
Armstrong, Hilary	Flynn, Paul
Ashley, Rt Hon Jack	Foot, Rt Hon Michael
Barnes, Harry (Derbyshire NE)	Foster, Derek
Barron, Kevin	Fyfe, Maria
Bell, Stuart	Galbraith, Sam
Benn, Rt Hon Tony	Garrett, John (Norwich South)
Bennett, A. F. (D'nt'n & R'dish)	Garrett, Ted (Wallsend)
Boyes, Roland	Godman, Dr Norman A.
Bradley, Keith	Gould, Bryan
Bray, Dr Jeremy	Graham, Thomas
Brown, Gordon (D'mline E)	Grant, Bernie (Tottenham)
Brown, Nicholas (Newcastle E)	Griffiths, Nigel (Edinburgh S)
Buchan, Norman	Griffiths, Win (Bridgend)
Buckley, George J.	Grocott, Bruce
Caborn, Richard	Hardy, Peter
Callaghan, Jim	Harman, Ms Harriet
Campbell, Ron (Blyth Valley)	Hattersley, Rt Hon Roy
Campbell-Savours, D. N.	Healey, Rt Hon Denis
Canavan, Dennis	Heffer, Eric S.
Clark, Dr David (S Shields)	Henderson, Doug
Clarke, Tom (Monklands W)	Hinchliffe, David
Clay, Bob	Hogg, N. (C'nauld & Kilsyth)
Clelland, David	Holland, Stuart
Clwyd, Mrs Ann	Home Robertson, John
Coleman, Donald	Hood, Jimmy
Cook, Frank (Stockton N)	Howarth, George (Knowsley N)
Cook, Robin (Livingston)	Howell, Rt Hon D. (S'heath)
Corbett, Robin	Hughes, John (Coventry NE)
Corbyn, Jeremy	Hughes, Roy (Newport E)
Cousins, Jim	Hughes, Sean (Knowsley S)
Cox, Tom	Illsley, Eric
Cryer, Bob	Ingram, Adam
Cummings, John	Janner, Greville
Cunliffe, Lawrence	John, Brynmor
Dalyell, Tam	Jones, Martyn (Clwyd S W)
Darling, Alistair	Kaufman, Rt Hon Gerald
Davies, Ron (Caerphilly)	Leighton, Ron
Davis, Terry (B'ham Hodge H'l)	Lestor, Joan (Eccles)
Dewar, Donald	Lewis, Terry
Dixon, Don	Litherland, Robert
Dobson, Frank	Lloyd, Tony (Stretford)
Doran, Frank	Lofthouse, Geoffrey
Duffy, A. E. P.	McAllion, John
Dunnachie, Jimmy	McAvoy, Thomas
Dunwoody, Hon Mrs Gwyneth	McCartney, Ian
Eastham, Ken	Macdonald, Calum A.
Evans, John (St Helens N)	McKay, Allen (Barnsley West)
Ewing, Harry (Falkirk E)	McKelvey, William
Fatchett, Derek	McLeish, Henry
Faulds, Andrew	McNamara, Kevin
Field, Frank (Birkenhead)	McTaggart, Bob

McWilliam, John	Rogers, Allan
Madden, Max	Rooker, Jeff
Mahon, Mrs Alice	Ross, Ernie (Dundee W)
Marek, Dr John	Rowlands, Ted
Marshall, David (Shettleston)	Sedgemore, Brian
Marshall, Jim (Leicester S)	Sheerman, Barry
Martin, Michael J. (Springburn)	Sheldon, Rt Hon Robert
Martlew, Eric	Short, Clare
Maxton, John	Skinner, Dennis
Meacher, Michael	Smith, Andrew (Oxford E)
Meale, Alan	Smith, C. (Isl'ton & F'bury)
Michael, Alun	Snape, Peter
Michie, Bill (Sheffield Heeley)	Soley, Clive
Millan, Rt Hon Bruce	Steinberg, Gerry
Mitchell, Austin (G't Grimsby)	Stott, Roger
Morgan, Rhodri	Strang, Gavin
Morley, Elliott	Straw, Jack
Morris, Rt Hon A. (W'shawe)	Thompson, Jack (Wansbeck)
Morris, Rt Hon J. (Aberavon)	Turner, Dennis
Mowlam, Marjorie	Vaz, Keith
Mullin, Chris	Wall, Pat
Murphy, Paul	Wardell, Gareth (Gower)
O'Brien, William	Wareing, Robert N.
O'Neill, Martin	Welsh, Michael (Doncaster N)
Orme, Rt Hon Stanley	Williams, Rt Hon Alan
Parry, Robert	Williams, Alan W. (Carm'then)
Patchett, Terry	Wilson, Brian
Pike, Peter L.	Winnick, David
Powell, Ray (Ogmore)	Wise, Mrs Audrey
Prescott, John	Worthington, Tony
Primarolo, Dawn	Wray, Jimmy
Quin, Ms Joyce
Radice, Giles	Tellers for the Noes:
Reid, Dr John	Mrs. Llin Golding and Mr. Frank Haynes.
Richardson, Jo
Robertson, George

Question accordingly agreed to

Clause read a Second time, and added to the Bill.