CORPORATION TAX: DUE AND PAYABLE DATE

HC Deb 27 April 1998 vol 311 cc43-75 4.56 pm

Mr. Peter Lilley (Hitchin and Harpenden)

I beg to move amendment No. 2, in page 15, line 25, at end insert—

'Provided that a draft of the first set of regulations made under this section shall be laid before Parliament and the regulations shall not be made until the draft has been approved by resolution of the House of Commons.'. This is a tax-raising Bill: it adds to the taxes raised by the previous Finance Bill introduced last July, and the bulk of those taxes fall on business and on the savings available to businesses to finance their investment. Before the election, the Chancellor repeatedly promised that, apart from the windfall tax, the Labour party's programme would not require any extra taxation at all. The Labour party went out of its way to claim that it would be friendly to business in particular, to try to allay the fear business rightly had of a Labour Government.

Labour gave us a test to judge its tax policies. Labour's manifesto stated:

How and what governments tax sends clear signals about the economic activities they believe should be encouraged or discouraged, and the values they wish to entrench in society. That is the test that we can use to establish, on the basis of their tax record so far, what activities the Labour Government wish to discourage and what values they wish to oppose in society. What is clear is that business has been singled out for extra taxation; almost all the extra taxation introduced so far falls either directly on companies or on savings that will finance business and investment. We want confirmation from the Government today that it is their intention deliberately to send clear signals that the economic activities they believe should be discouraged are the activities of business and of saving for the purpose of financing investment, because it is on those activities that they have loaded all their taxes.

Mr. Barry Gardiner (Brent, North)

If the Government are seeking to punish businesses, why do we now have the lowest ever rate of corporation tax for small businesses?

Mr. Lilley

Because the Government have raised taxes massively with their right hand and given back a small amount with their left hand. Perhaps I should say it the other way round; it is, of course, the left hand that raises taxes, and a very small amount is being given back in the form of a lower corporation tax rate.

In total, nearly £20 billion is being raised from the business sector as a result of the extra taxes introduced in the Government's two Budgets—and that is after allowing for the reduction in corporation tax rates announced in both Budgets. That is why we say that there is an extra load on business. We should like the governing party to be more frank and honest about what it is doing. That £20 billion burden on business means that business has £20 billion less to invest, £20 billion less with which to generate jobs and £20 billion less with which to enhance the growth potential of the British economy.

5 pm

Clause 30 introduces a quarterly payment system for corporation tax. It is an unplanned baby, conceived by accident in July 1997. Its progenitors were thinking of other things when they brought it about. They had not thought what, nine months later, would flow from their actions. They thought that they were simply abolishing tax credits—an enjoyable activity for socialists, because it was a stealthy way in which to raise a huge amount of tax from savers and companies—but one thing leads to another.

Abolishing credits in July 1997 meant that foreign income dividends had to go in the Finance Act 1997. That meant that advance corporation tax ceased to be tenable, and, during the summer, the Government decided that that, too, had to go. Then they realised that they had to replace that with a quarterly payment system on corporation tax, which they announced in November 1997; and because they got that wrong, too, they had to revise it in March 1998.

We welcome the mitigation of the measures announced by the Government in November 1997, and the improvements for small companies that were introduced when they finally brought this child to birth in March. However, like the Confederation of British Industry, we condemn the overall impact of the Government's changes on the cash flow of the company sector, and of major companies in particular.

According to the Government's figures, clause 30 will raise £6.8 billion from companies this Parliament. The accompanying 1p rate cut in corporation tax will return to companies just £1.7 billion of that £6.8 billion. The net impact of the clause on corporate sector cash flow will be £5.1 billion. I should be grateful if the Paymaster General would confirm that figure now, or when he gets back to the Dispatch Box. He may not be listening, but can he confirm that the net effect of the clause is to lift £5 billion from the cash flow of the corporate sector and take it to the Treasury, as a result of bringing forward payments that companies would have to make, through the advance system of corporation tax payments, on all their profits?

Let us have no more from the Labour party about the supposed reductions in corporation tax because of changes in the corporation tax rate, such as those that the hon. Member for Brent, North (Mr. Gardiner) just mentioned. Let us have a clear statement today that, when the Prime Minister denied that there was any increase in corporate taxation, he was misinformed and was, therefore, misinforming the House. Let us have a clear admission that the Government are adding further to the burden of business, on top of the previously announced taxes, on top of the high interest rates that have been introduced in this Parliament and on top of the crippling exchange rate, all of which are already precipitating manufacturing into recession. These burdens of taxation will make it spread all the more rapidly to the rest of the business sector.

Mr. Ross Cranston (Dudley, North)

Is it not the case that the quarterly system of corporation tax payment operates in the United States, Germany, France, Australia, Canada, Japan and a host of other countries, and that we are simply coming into line?

Mr. Lilley

I was just about to say that we have no objection in principle to a quarterly payment system; it is the use of that system, by arranging the transition to bring forward into this Parliament payments that previously would have been made years ahead, that is so iniquitous and devious. If the hon. Gentleman had had the courage to admit that it was being done to raise extra taxation rather than to smooth spending over the year, I should have had more respect for him and the Labour party.

We have no objection to a system of quarterly payments—something like that became inevitable once credits, foreign income dividends and the advance corporation taxation system on dividends went—but we object to it being used as a back-door method of increasing taxes on the business sector by stealth.

Mr. Dale Campbell-Savours (Workington)

In the right hon. Gentleman's view, could we have had reduced revenue coming into the Exchequer while we had the reduced interest rates that the right hon. Gentleman has been calling for? Could we have had both together?

Mr. Lilley

I believe that, if we had encouraged, not discouraged, saving, it would have made it easier for the Bank of England to achieve a given inflation target with less emphasis on high interest rates and high exchange rates. By not taking steps to encourage consumers to save, but allowing the burden of taxation to fall on business and savings, the Government have exacerbated the problems that they diagnosed when they came to power.

Our amendment No. 1, which has not been selected for debate, would have required the Government, in introducing a quarterly payment system, to ensure that it did not result in any net take-out of companies' cash flow. It would have ensured that the effects of the system were fiscally neutral, and that the Government adjusted the timings and the transition period to ensure that.

As amendment No. 1 has not been selected, we shall vote against clause 30, and I shall invite the Committee to join us. Apart from the fact that clause 30 raises taxes by stealth, the most objectionable feature of the Bill and the clause is that they rely on the wholesale use of regulation-making powers, so that the Government can introduce complex but important measures in a way that cannot be amended, and which, in many cases, will not even be debated.

Hardly any of the key parameters of the new system of corporation tax payments are spelt out in the Bill. The Institute of Directors rightly protests: The dates on which tax is payable and any associated penalties are fundamental matters, which should be dealt with in primary legislation:' They are not. Why have not the Government spelt out in primary legislation the key parameters of the system that they are introducing, to allow hon. Members the opportunity—preferably on the Floor today, but if not, later, in Standing Committee—to examine and consider the proposals. and to reflect in that debate representations from outside the House about the detailed proposals?

Mr. Cranston

Will the right hon. Gentleman give way?

Mr. Lilley

I shall continue with this point, if I may.

It is essential that we find out the Government's intentions, or that we ascertain that, in this respect, too, they have not yet thought out their plans, just as, when they announced the abolition of tax credits, they had not thought that it would make necessary a new system. Is it further evidence of their botched, muddled failure to think through their taxes when they make their announcements?

I shall happily give way to the hon. Member for Dudley, North (Mr. Cranston). If he is true to his duty as a Back Bencher, he will want to debate such measures in detail rather than pass them on the nod in the contemptuous way in which the Government sideline Parliament whenever they have the opportunity.

Mr. Cranston

I thank the right hon. Gentleman for giving way again. Did he in his long experience, including at the Treasury, never propose legislation containing a regulation-making power?

Mr. Lilley

I cannot remember proposing a clause containing 11 separate regulation-making powers. Not a single detail of the Bill has been spelt out or published previously so that the Committee would know what regulations would be made under the clause. The amendment would ensure that Parliament saw drafts of the regulations and voted on a resolution before the regulation-making process was completed.

Labour Back Benchers are numerous and could use the time on their hands to good effect by considering legislation properly and in detail, which is what their constituents sent them to Parliament to do, rather than letting Ministers bypass them and Parliament by taking general regulation-making powers that suggest that they do not even know what they intend to do. We shall listen intently to the Paymaster General for evidence that he knows what he intends to do any more than he and his colleagues did when they started the process nine or 10 months ago.

Mr. Malcolm Bruce (Gordon)

The right hon. Member for Hitchin and Harpenden (Mr. Lilley), who leads the Conservative Treasury team, has worked himself into a synthetic stour about the clause. The Government's basic proposals have been out for consultation for several months, and, although hon. Members are entitled to ask for clarification of the legitimate concerns to which the right hon. Gentleman referred, I do not get the impression that there is enormous fulminating opposition to a measure that most business people acknowledge as reasonable in principle.

The Government's claim to want to open up the Budget process to greater debate, consultation and transparency is a genuine issue, however. The Chancellor announced the abolition of advance corporation tax and the introduction of quarterly payments in his pre-Budget statement, but did not say that there would be a substantial cash flow benefit. The Paymaster General will have to acknowledge that there will be a net flow of funds into the Treasury in the lifetime of this Parliament, and of the order of that to which the right hon. Member for Hitchin and Harpenden referred. In the interests of transparency and genuine debate, the Chancellor should have been more forthcoming about the cash flow benefit that the Government would achieve compared with the overall effect of the reduction in tax rates.

The measure will have a more severe impact on some businesses than on others. As regulations will be made, the Minister should say whether variations or adjustments will take account of the skewed revenue flows of some businesses, which could make quarterly payments a hardship. Most ordinary taxpayers who pay tax as they earn appreciate that paying tax substantially in arrears is beneficial because a company has use of the money on which it is liable to pay tax for a considerable period before paying it.

The Paymaster General should give hon. Members guidance, because it is difficult for some businesses to determine the outcome on which they would pay tax. Some businesses will pay additional tax over and above their liability, so it would be useful to know what negotiation and flexibility there may be in calculating quarterly rates to take account of variations.

5.15 pm

My plea to the Government is to follow through what I accept as a sincere intention to have a more genuine, open debate about taxation priorities. They have not got the balance right yet, and I had hoped for more consultation on other issues in the Bill. In their first Budget and in the pre-Budget statement, the Government introduced two substantial taxes on the corporate sector from which they have benefited substantially in revenue flows without being up-front in the Red Book or in overall projections, which would have enabled us to have had the sort of debate to which we are entitled. The Government would help hon. Members and business if they set out the real effects of the tax changes and how the balance between personal taxation and business taxation will settle.

The Paymaster General cannot be surprised that there is criticism of and cynicism about the fact that the Government thought that they could get away with substantial extra taxes on business while standing by their assurance that they would not increase the basic or higher rates of income tax. He and hon. Members will know that my party takes a different view and believes that both rates should have been increased by an agreed amount for specific purposes. [Interruption.] We have said specifically what we would do.

The Paymaster General may not have read our publication, though it must have been passed to him many times. I shall repeat what it says, at the risk of detaining the Committee—even the Prime Minister would benefit from reading the Official Report occasionally. We proposed a rate of 50 per cent. on personal incomes in excess of £100,000 and an additional 1p on the standard rate of tax to fund a reduction in tax for people on lower wages by raising thresholds and extra investment in education year on year throughout this Parliament. Labour Members would do themselves and their party good if they accepted my argument.

Mr. Campbell-Savours

Will the hon. Gentleman give way?

Mr. Bruce

Not until I have finished this point.

The Government are on record as saying that they want genuine public debate, but they are not happy when other people hold a different view from theirs and they do not always explain the full implications of their policy changes, let alone the forward projections.

The First Deputy Chairman of Ways and Means (Mr. Michael J. Martin)

Order. The hon. Gentleman is going wide of the amendment. Government policies are not being debated; there is an amendment before us.

Mr. Bruce

I accept your ruling, Mr. Martin. The amendment asks for a statement of impact, and I am balancing the argument. The Government should state the net effects of the changes and their forward projections.

Mr. Campbell-Savours

The hon. Gentleman said that 1 p should be put on the standard rate of tax and that the rate should be 50 per cent. on incomes of over £100,000 to fund a lower threshold and education spending.

The First Deputy Chairman

Order. We have the amendment before us, although it is perhaps different from the one being discussed by the hon. Gentlemen. The amendment that we are discussing mentions a draft of regulations being laid before Parliament. We should talk about that, not about what the Liberal Democrats wanted to do at the last election, which is nothing to do with the issue before us. The hon. Member for Workington (Mr. Campbell-Savours) should be seated.

Mr. Bruce

I take your strictures, Mr. Martin. I may have strayed somewhat, but I think that the Paymaster General has got the drift of my argument. The right hon. Member for Hitchin and Harpenden said that he wanted detailed regulations because he was concerned about the impact of the change and the Government's lack of transparency in introducing it. I do not think the amendment very practical; when the Conservatives were in government, we had debates on similar amendments, only they were tabled by the opposite quarter.

I hope that, from now on, the Government will recognise the need for people to know the precise impact of measures on their businesses, as well as the likely impact on the national finances. In the interests of open government and of wider debate, it would help us to have more information from the Paymaster General.

Mr. Nick Gibb (Bognor Regis and Littlehampton)

The hon. Gentleman describes the need for a wider debate on Finance Bills. May I take it from that that he and his colleagues will attend each and every sitting of the Finance Bill Standing Committee? During last year's one, they flitted in and out at whim, and I rarely saw the hon. Gentleman take part. Will he and his colleagues play the part of a proper Opposition this time round?

The First Deputy Chairman

Order. That has very little to do with the amendment.

Mr. Bruce

On a point of fact, I was not a member of the Finance Bill Committee last year, so I would have found it difficult to take part.

May we have some specific assurances from the Minister on how the regulations will affect the businesses that may encounter problems? Secondly, what will the overall impact of the regulations be?

Mr. Charles Wardle (Bexhill and Battle)

Before the hon. Member for Gordon (Mr. Bruce) outlined the shape of a Liberal Democrat Budget, he seemed to chide the Minister gently for not disclosing the cash flow benefit to the Treasury of these changes. What my right hon. Friends and I object to are the cash flow disadvantages over the next few years to companies bigger than small and medium enterprises, or SMEs.

I hope that the Minister will help to clarify a certain definition. When looking at clause 30 it has been helpful to look also at the glossy version of the Red Book, "New Ambitions for Britain". Paragraph 4.19 says that the Budget will exempt SMEs from quarterly corporation tax payments to improve their cash flows, but paragraph 4.18 implies that that refers to companies with 50 employees or fewer. The paragraph states that the Treasury says that 99 per cent. of the UK's 3.7 million businesses have 50 or fewer employees, and that those businesses account for 46 per cent. of jobs and 42 per cent. of aggregate turnover. That immediately precedes the point about exemption, but I believe that I saw in a press release at the time of the Budget a suggestion that the definition of a small company was one with profits of up to £300,000 before tax, and that a medium-sized company was one with pre-tax profits of between £300,000 and £1.5 million. I see the Minister nodding, but it would be helpful to have that clarified. It would be boring to have to wait for regulations which we may or may not have the chance to debate before finding out precisely who will benefit from the exemption.

I should like to outline two types of management problem which might affect a large number of businesses in the transition period. I accept that quarterly corporation tax payments are made in many other countries. What concerns us today is the transition period, the hit on companies, and the hitherto hidden benefit which my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) has so admirably disclosed.

The Minister and other hon. Members with management experience will appreciate the examples that I am about to describe, but I hope that they will bear with me because it is important to illustrate what problems might arise in the next four years.

My first example refers to the rapidly expanding company. Let us assume that it has got off the ground with great success. It has shot past the upper limit definition of an SME and has continued to expand rapidly. There is not a business person who does not know that the risk of company failure and receivership is at its greatest when companies embark on ambitious programmes of expansion without sufficient capital backing. Business history is littered with examples of entrepreneurs who got off to a good start with a great marketing idea for a new product that attracted sudden and rapid demand.

That company buys in more raw materials and puts more into work in progress and finished stock. As it expands, it finds that it has more money tied up in accounts receivable—in debtors—and that its suppliers are still insisting on tough terms. The company does not have a history long enough for a good credit standing, so the terms of payment for raw materials are still tough. Moreover, the bank insists on a tough overdraft limit; doubtless, the company does not have a freehold property, so there is little on which to secure an overdraft.

It is a familiar story. If companies in a period of rapid expansion are to risk becoming over-extended, cash flow is critical. Some of those companies will find that their overdraft limits are broken and that the banks are not tolerant, because they see little in the way of underlying assets. The companies will therefore be faced with receivership. Such circumstances are not uncommon.

That type of company will now be spending more management time on dealing with quarterly assessments of corporation tax payments in months seven, 10, 13 and 16—more time dealing with inquiries just when they should be fighting to consolidate themselves on a new plateau of stability following their rapid success.

Mr. Geraint Davies (Croydon, Central)

Is the hon. Gentleman suggesting that the taxpayer should bail out high-risk, fast-growth companies in circumstances when no high street bank would dream of doing so?

Mr. Wardle

I am suggesting nothing of the sort. Indeed, I am saying that the banks take their fair share of risk. I also say that this is not the time for a Government who insist that they are business-friendly to impose further pressures on rapidly expanding companies.

My second example concerns the established company with a remarkable success in export markets—there are many of them about. Because of the persistently strong pound, they find those markets eroded; whereupon, they do all the right things: trim their sales prices, suffer lower margins, trim their overheads, and possibly even let some staff go rather than tie up cash flow in stock and finished goods.

Such companies, facing those pressures in an increasingly competitive export market, will find the requirement for quarterly payments of corporation tax, introduced so rapidly, an additional burden.

Mr. Cranston

rose—

Mr. Wardle

I shall give way to the hon. Gentleman, provided that he will tell us about his business experience. I understand that he is a solicitor.

Mr. Cranston

I am not a solicitor: I am a member of the Bar. Only 2.8 per cent. of companies, 20,000 of them, will have to make the quarterly payments. It seems to me that the hon. Gentleman is making a good argument for a regulation-making power, not a piece of bland legislation, to cover all these different types of company.

5.30 pm

Mr. Wardle

No. With the typical skill of a barrister, the hon. Gentleman does not illustrate to the Committee the sort of companies involved. Those 20,000 companies represent the engine room of Britain. It is vital that companies that have been successful in export markets and are now feeling the pinch, or companies that have been expanding rapidly on the back of a good idea and have gone beyond the protection that the Minister rightly intends to provide for SMEs, should be examined by the House of Commons to see the proposals' effect on them in the crucial next three or four years.

How can the Minister justify quarterly payments that add to paperwork and intrude on management time that should be devoted to market success? How can he justify the hit of £1.6 billion in the first year and £2 billion on company cash flow in the next two years, if the Government are supposedly business-friendly?

Finally, I draw the Minister's attention to a point that was raised time and again on Second Reading, as well as in the financial press. Long though the Bill is, it is full of references to regulations that are to be made subsequently. Clause 30 is a classic example of that. Ministers and the Inland Revenue will have a free hand to be as creative or as repressive as they choose in making regulations. By not writing into the Bill the substance of those changes, the Government make a mockery of their accountability to the House.

Mr. Quentin Davies (Grantham and Stamford)

Before I deal with the substance and the merits, or otherwise, of the amendment and the clause, I draw to the attention of the Committee and, I hope, of an increasing number of people outside who have not yet focused on what is going on, the extraordinary degree to which the drafting of the Bill represents an invitation to Parliament to abdicate its responsibility for deciding on the taxes to be levied on the British people.

As you know, Mr. Butterfill, I have served on Finance Bill Committees for several years. On many of those Committees, I had the pleasure of serving with you. I have never read clauses that were so open-ended in providing for the Revenue to make up our tax laws as it goes on.

Clause 30 states:

The Treasury may by regulations make provision, in relation to companies of such descriptions as may be prescribed, for or in connection with treating amounts of corporation tax for an accounting period as becoming due and payable on dates which fall on or before the date on which corporation tax for that period would become due and payable". What does that mean? It simply means that the Treasury can write its own tax laws after Parliament has finished with the Bill.

Subsection (2) states:

The Treasury may by regulations make provision for or in connection with the payment to the Board of an amount or amounts determined by or under the regulations". What can be clearer than that? The Treasury may by regulations make provision for amounts to be paid to be determined under the regulations. In other words, we give a blank cheque to the Revenue.

Similarly, schedule 4, which refers to new section 59E, states:

The Treasury may by regulations make provision modifying section 826(2) in relation to companies of such description as may be prescribed. In other words, the Treasury will have the right to change existing tax law—in this case section 826(2)—and substitute more or less whatever it wants.

That is not hyperbole. It is what the Bill would allow. Such arbitrary taxation is associated with the Turkish empire, perhaps, but not with a free society and a regime in which the representatives of the governed discuss in detail, debate and determine the basis on which the public should be taxed. Parliament cannot pass the clause this evening and look itself in the face tomorrow morning.

When I read these clauses, I thought that it might be much easier if the new Labour Government, with a majority of 179 over all other parties, decided that they could do what they pleased with the House, and introduced a one-line Bill allowing the Treasury to impose such taxes as it wishes. [Interruption.] That is what is happening under the clause, which states that the Treasury shall impose such corporation taxes as it wishes.

I see some of the Labour Members who make up that absolute majority of 179 over all other parties sitting in the Committee this afternoon, not trying to take part in the debate—we have heard three contributions from the Opposition, without any interruption—but laughing. Perhaps they think that they were sent to this place to do whatever Walworth road or the Whips or No. 10 tell them, and not even to look at the implications.

The clause represents a sad and dangerous precedent. In a sense, it does not much matter what taxes we have, whether they are too high or too low, whether they are good or bad, if Parliament has considered them in detail and Parliament can subsequently amend them. However, we are invited this afternoon to hand over our own judgment to unelected officials in the Treasury and the Revenue.

We must read the Bill in conjunction with press releases from the Revenue, telling us what it might be minded to do if it were given the powers which, with the Government's majority, we know that it will be given. If one examines the Government's intentions under the clause, serious pragmatic issues for British business arise.

I reinforce the comments of my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) about the way in which the corporation tax provisions in the Bill are used to impose a surreptitious and covert increase in the burden of corporate taxation. The figures are in the Red Book produced by the Government.

The Paymaster General (Mr. Geoffrey Robinson)

indicated assent.

Mr. Davies

I see the Paymaster General nodding. I wonder whether he will have the courage to quote the figures. In all the discussions that we have had on the Bill since the Chancellor's Budget speech, the Government have never done so. They have never drawn attention to the actual increase in the burden of corporation tax. They have disingenuously implied that the Budget relieves the burden of corporation tax. It does not. Although there is an apparent reduction in the rate of corporation tax, that relief, as my right hon. Friend pointed out, is more than compensated for by the cash flow effect of introducing quarterly payments of corporation tax.

The Paymaster General is leafing through his papers. I can tell him what the figures are. In the first financial year in which the provisions will apply, 1999–2000, the net burden on industry will be £1.6 billion; businesses will pay more in corporation tax, taking into account the apparent relief through reduction of the rates but the increase in the burden because of the acceleration of payments through quarterly payment. In the following financial year—I shall give way to the Paymaster General if I am wrong in quoting from the Red Book, but he knows that I am not—the net incremental burden on business will be £2 billion. If the Labour party has the slightest respect for the facts and the slightest inclination to be straight with the British people, it should not claim that the Budget reduces the corporate tax burden. This Budget increases that burden by a significant amount of money.

Let us turn to the merits in principle, irrespective of what is raised as a result of levying corporation tax on this new basis. I agree with my right hon. Friend the Member for Hitchin and Harpenden: I do not object to quarterly payments in themselves, but quarterly payments of what? The Government are introducing for the first time in tax law quarterly payments of tax for which a company is liable in the current year. In other words, companies will have to predict their profits for the current year and pay—not just make notional provisions in their accounts—those sums of money during the year in which those profits are earned.

That is an extraordinary state of affairs. At present, income tax payers who come under schedule D make payments twice rather than four times a year, on the basis of the profits on their earnings for the previous year. They know what the position is: they have closed their books for the year in respect of which they are making payments. They know the profits or the earnings on which they will make payments and they have received those profits or earnings. That is not the position here: this is a dramatic step and a dramatic change in British tax law.

The Temporary Chairman (Mr. John Butterfill)

Order. I hope that the hon. Gentleman will start to address the substance of the amendment, as he is ranging rather wide of it at the moment.

Mr. Davies

When we are debating amendments to the Finance Bill, there is always slight confusion as to whether the Chairman will permit a subsequent clause stand part debate. If he decides not to do that because the discussion of previous amendments has ranged fairly widely and one has points that relate to the principles of clauses, one may find that one has lost the opportunity to put those points. I am in a difficult position as I know that Chairmen are sometimes reluctant to give guidance in advance as to whether they will allow a clause stand part debate. Perhaps you can help me, Mr. Butterfill.

The Temporary Chairman

I shall make that decision when I have heard what has happened during the debate. It is normally my practice to give guidance earlier if hon. Members have demonstrated that they wish to speak fairly widely on the amendments. At present, I propose that we have a clause stand part debate. Perhaps the hon. Gentleman could confine his remarks a little more closely to the clause under discussion—although I shall show a certain amount of tolerance.

Mr. Davies

I am grateful to you, Mr. Butterfill. I was trying to be guided in the extent to which I went wide of the amendment by the precedents that have been set in the discussion. I thought that I was not exceeding the margins that were established by earlier contributors, but perhaps I am in error. Nevertheless, I am sure that you would agree, Mr. Butterfill, that the essence of the clause and every amendment to it is that we are facing a dramatic—and, I believe, an extremely damaging—change to the way in which companies are taxed.

There are certain specific and pragmatic reasons why the concept cannot work in practice. That point has been made already, so I shall add to it. It will do even greater damage to the interests of British industry because it is not possible to predict what one's profits will be in the current year. Even in a relatively non-volatile market, such as retailing, one does not know whether one will have successful January or July sales. One does not know whether the car market will turn up or down: it can be affected by unpredictable changes in interest rates or in Government policy.

In other areas of business that are inherently much more volatile, profits are even more difficult to predict. For example, how could a company that has been exporting to Asia in the past year have predicted the collapse in the Asian markets? That will have had a dramatic effect on its profits. How will an insurance company know whether extraordinary claims will be made on it? It is like predicting the weather—and if a company is in the property insurance business, the weather will determine the claims on it to some extent.

There is something particularly curious about the concept of quarterly payments of corporation tax that is assessed on current year profits. It is an established fact that companies are very cautious about making profit projections for the current year. If they must pay tax to the Revenue on their profits in the current year, they cannot disguise their position from the market or from their shareholders. It is an established principle in financial markets that it is extremely dangerous to make those kinds of profit announcements, yet it follows that all British companies will have to make yearly statements on the stock exchange about their anticipated profits for the current year. As it is in the nature of things that companies will not achieve those profits—their actual profits may represent a substantial increase or shortfall on the figure predicted—the stability of financial markets will be undermined. False markets will occur and people will drive company share prices up or down for no reason. I shall give way to the hon. Member for Croydon, Central (Mr. Davies) who shares my name.

5.45 pm

Mr. Geraint Davies

I am honoured. I thank the hon. Gentleman for giving way. Is he aware that the 20,000 companies—or 2.8 per cent. of companies overall—that will be affected are large, sophisticated companies? Is the hon. Gentleman aware that the system allows a certain amount of flexibility—profit projections and re-evaluations will be conducted each quarter on a rolling basis? Companies of that magnitude of sophistication and success will obviously have their own accountants and will be able to accommodate quite easily the sorts of changes that the Government are introducing. Therefore, the single point that the hon. Gentleman has made for the past five minutes is wrong.

Mr. Quentin Davies

I think that the hon. Gentleman's comments would cause surprise—and possibly even derision—in most boardrooms in this country with which I am familiar. One is able to predict one's profits not because one has sophisticated company management but because one is able to predict the factors that will determine those profits. I have given several illustrations of that point already—I can give more, but I might go slightly beyond the margins that you have laid down, Mr. Butterfill.

The Temporary Chairman

Order. The hon. Gentleman has already gone so far outside those margins that the chances of a clause stand part debate are diminishing by the minute.

Mr. Davies

I see that I shall be blamed for anything that goes wrong in the debate. However, I am at least released from some of the constraints that were imposed on me a few moments ago.

The fact is that no company can predict what will happen in its markets. Every company deals with uncertainty. Companies may have complete control of everything that it is in their power to control, but they cannot control the behaviour of their customers, what happens to interest rates or the general economic and physical climates. Few companies feel able to make profit projections for their shareholders—or for any other purpose—or public statements of what their profits are likely to be 12 months ahead. The reference to the 20,000 companies that will be affected has cropped up several times in the discussion: several Labour Members have intervened to cite that figure. I suppose that it must be in the Walworth road handout about this clause. It represents a certain naivety.

If the clause were designed simply to impose a new corporate tax regime on the Financial Times 100 companies—the top 100 companies-it would have a considerable economic impact. Those companies already deliver a substantial proportion of the United Kingdom's gross domestic product. However, the provision is not confined to the FT 100, 500 or 1,000; it applies to the top 20,000 companies. If a Government want a particular tax regime to have a major economic effect, they will want to levy it on the top 20,000.

It is extraordinary that the hon. Member for Croydon, Central should have been deceived by the Walworth road handout into asking such a question. The hon. Gentleman knows well that the majority of companies are one-man or one-woman businesses, and that the output of such companies may be very small.

The clause is drafted so as to undermine the responsibility of Parliament for the aspect of taxation to which it relates. It is—

Mr. Cranston

Will the hon. Gentleman give way?

Mr. Davies

I shall not give way. I want to encourage the hon. Gentleman, if he really has something to say in this debate, to say it in his own speech. Labour Members have come to the Chamber with a Walworth road handout and have made, in many instances, ill-thought-through comments. They have not yet made a substantive contribution to the debate. Indeed, they have not shown the slightest inclination to want to do so.

We are faced with extremely bad tax law. If Parliament accepts the precedent that has been put before it, Parliament should be ashamed. The clause will lead to an additional general burden of corporate taxation, which is the last thing that the country needs. It will also impose on companies the complete absurdity and artificiality of having to predict their profits, when, by definition, profits cannot be predicted because they are subject to uncertainties outside the control of companies. That is, by definition, unreasonable and unfair. I look forward to hearing whether there is a rationale for any of the extraordinary proposals that are set out in the clause. Will Labour Members tell us what that rationale is?

Mr. Gibb

Clause 30 is the latest stage of incompetence in a saga that stems from the July Budget, when the Chancellor of the Exchequer decided to abolish the repayment of dividend tax credits to taxpayers generally and to pension funds in particular.

That decision was designed to raise about £5 billion a year by the back door, and in a way that the Government hoped would not be noticed by the public. However, it has been noticed by the public, because it is the public who have to pay. They will have to pay, on average, an extra £200 a year in higher pension contributions. Gavyn Davies, in his evidence to the Treasury Select Committee in March, said that the abolition of dividend tax credits has been paid for by the household sector. He said:

The ACT change has fallen, eventually I believe, on the household sector. We have scored that as a household tax increase in our rankings. Clause 30 has been introduced to clear up the problems that have been created by that decision.

When the Government announced the end of the repayment of dividend tax credits they realised that it would lead to a spate of payments of foreign income dividends. That was because if pension funds were no longer to receive the tax credit, they might as well receive FIDs. As a result, FIDs were introduced to enable companies to pay dividends to their shareholders out of foreign earned profits without having to account for ACT. This ACT could not generally be offset against a company's mainstream corporation tax liability because there is generally no UK tax that is payable on such profits as a consequence of double tax relief.

As no ACT is paid on FIDs there is no tax credit available to the recipient of a FID. Until last July, therefore, pension funds were not very keen on receiving FIDs. They needed to be able to claim the tax credit. However, after July, FIDs became attractive since the repayment of dividend tax credits has been abolished in any event.

The Government recognised that there was a potential long-term problem. That being so, they announced that FIDs would be abolished. There was an outcry from Britain's multinational companies. Already there are £7 billion of unreclaimed ACT at cost to British industry. The Government are effectively saying now that those moneys can never be reclaimed. After various non-starter proposals made by the Paymaster General in the debates that followed the Government's decision, the only solution that the Government could come up with was to abolish the entire ACT system—the entire imputation system that had been in place since 1972. That, of course, would lead to a huge cash-flow cost if companies' advance payments of corporation tax were abolished. That is why we had the consultation document in November on the proposals that we now see in clause 30 for quarterly payments of corporation tax.

Unfortunately, that is not the end of the tale of incompetence and of ill-thought-through proposals. I believe that there is a serious shortage of competent Ministers in this Government. Those who are competent find themselves doing more and more work so as to carry their less able colleagues. Thus mistakes, or errors, proliferate even among the few competent Ministers that the Government have. I see the Paymaster General nodding. I wonder which category he sees himself falling into.

The supplementary memorandum from the Treasury is to be found at page 82 of the fourth report of the Select Committee on the Treasury. It points out that the Treasury had underestimated the number of FIDs that would be paid instead of normal dividends as a result of the July changes in ACT. The memorandum reads:

Although the July 1997 forecast allowed for a rise in the use of FIDs by companies with surplus ACT, following the abolition of tax credits to pension providers the subsequent use of FIDs was greater than expected. It was clear to everyone—

Mr. Quentin Davies

I listened to my hon. Friend's quotation with some interest. It is obvious that the Revenue is not particularly good at forecasting the revenue that it will receive at the end of any given current year. That being so, why does my hon. Friend suppose that the Revenue should expect companies to be better at forecasting their revenues?

Mr. Gibb

My hon. Friend makes a telling point. It is incredible that the Revenue failed to predict that there would be more FIDs paid as a result of the decision that was made last July. Everyone knew that there would be more and more FIDs and that there would be a rush to use FIDs as it was no longer possible to reclaim tax credits on ordinary dividends. Why did the Government underestimate the effect of their decision?

Mr. Cranston

Will the hon. Gentleman comment on a quotation from an accountant, John Whiting, tax partner at Price Waterhouse, who commented on the point raised by the hon. Member for Grantham and Stamford (Mr. Davies) when he would not let me intervene. Mr. Whiting said:

This is a pain—but the whole scheme is much fairer. It does show that they"— the Government—

have listened to some of the arguments put during consultation. What is the comment of the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) on that?

Mr. Gibb

The hon. Gentleman will be aware of other leading tax accountants, who say that we are getting perilously close to some constitutional issues by the fact that the Government are legislating a major reform to the corporation tax system through regulation. Such a reform is unprecedented, and the accountancy profession is dismayed at what is happening.

The underestimate of the amount of FIDs paid is not tiny or minor. Indeed, it amounts to about £2 billion. Errors or mistakes seem to proliferate in clause 30 and in the consultation document that heralded it. Paragraph 4.28 of that document refers to charging interest to taxpayers from the date that the Inland Revenue receives funds from taxpayers. Should not that be interest charged until the Inland Revenue receives the funds? That is a minor error, but one which is indicative of the competence level and lack of attention to detail that reflect on the Government and on the consequences of what they are proposing. Perhaps that is why clause 30 contains no details of the workings of the new corporation tax system but only paves the way for future Treasury regulations. The Chancellor hyped the reform to the corporate system as a once-in-a-lifetime, fundamental reform, so it is astonishing that it is not included in the Finance Bill.

6 pm

The Government's intention to legislate for a new corporation tax system through secondary legislation, subject only to the negative resolution, is a disgrace. It is unprecedented for changes in tax legislation, other than details of administration, to be enacted other than directly through an Act of Parliament. The introduction of a new corporation tax system does not constitute merely an administrative matter but goes to the very heart of how much a company will pay and when.

Legislating through statutory instruments on this matter is widely condemned by leading figures in the accountancy profession, the tax faculty of the Institute of Chartered Accountants in England and Wales, by the Institute of Directors and others. My former boss, Mr. Ian Barlow, head of tax at KPMG, said that regulations were normally used for detail and:

This sort of material should be in primary legislation. Richard Collier-Keywood, a partner at Coopers and Lybrand, said:

I think we are getting perilously close to some constitutional issues. The Institute of Directors said:

The dates on which tax is payable and any associated penalties are fundamental matters which should be dealt with in primary legislation. Only if they are in primary legislation can Parliament debate them properly and make amendments as appropriate. According to the Financial Times, the reason for wanting to use regulations is that Ministers do not want to be seen to be making U-turns, but it is a bit late for that. However, what does that say about the competence of Treasury Ministers? Proposals, flawed as they are, were announced in a consultation document in November, some six months ago. Is not that an admission that the Government have yet again produced tax proposals which are not acceptable to those whom they affect, just as they are not acceptable to those who administer and understand the tax system or to the wider public?

If the Government believe that the corporation tax proposals in the consultation document, as amended, are flawed, and if they wish to change them, they should do so. A change on the lines urged by Conservative Members and by industry would be widely favoured. Sneaking changes through by statutory instrument will not reduce criticism that the Government have yet again produced an ill-thought-out proposal which they were forced to change. If, on the other hand, the Government do not intend to change their proposals, legislating through regulation will not enable them to get away with introducing bad law without public criticism from the Opposition and from industry. They will achieve nothing from these antics, so I urge them to stop undermining the House, stop listening to their spin doctors, to put democratic procedure before presentation and sheen, and to accept the amendment.

Mr. Cranston

The hon. Gentleman is generous in giving way a second time. Has he consulted the draft regulations, which are available, and will he be commenting on them?

Mr. Gibb

I have not yet consulted the draft regulations, but, like industry, I look forward to examining them in great detail.

The errors that I have catalogued have led eventually to the quarterly corporation tax system and the abolition of ACT. When the repayment of dividend tax credits was abolished, FIDs had to be abolished. Their abolition has been causing huge problems with unrelieved ACT, and the only answer that the Government could come up with was the abolition of ACT. How were the Government to solve the problem that that created—the cash-flow cost to the Treasury arising from no more advance payments of corporation tax?

The answer, for the Government, is the quarterly corporation tax payment system set out in the consultative document, "A Modern System for Corporation Tax Payment". Of course, it is not modem at all; it has been a long-established practice in several countries. The proposals have been widely condemned, as one might by now have been expected, judging from the Government's track record on their tax proposals.

The Institute of Chartered Accountants said of the abolition of ACT:

We accept that in order to maintain Government revenues there will have to be a compensating acceleration of the payments of companies' normal corporation tax liabilities. We are, however, concerned that the detailed procedure for payment of corporation tax by instalments, as proposed in the consultative document, would be neither fair nor practical. They are the words of the body that represents chartered accountants in this country.

The Government have already performed one U-turn on this issue by exempting small and medium companies from the burdensome proposals, but large companies remain subject to them. As my hon. Friend the Member for Grantham and Stamford (Mr. Davies) said, the consultative document and the notes on clauses state that the term "large" includes those companies whose profits are £1.5 million a year or more. That means 20,000 companies, some of which most people would not regard as being especially large.

Those companies will have to pay their corporation tax bills in four quarterly payments, beginning halfway through months seven, 10, 13 and 16. Therefore, for a December year end company, which is the most popular accounting period, the first instalment will be on 14 July and the second on 14 October, both payments being before the year end. The third and fourth payments will be in January and April after the year end. There are transitional rules in place which limit the amount of corporation tax payable, but the changes will have serious cash flow effects on companies, notwithstanding the fact that they are being phased in over three years.

The new rules will affect accounting periods ending on or after 1 July 1999. For example, a December year end company will have to make the first quarterly payment, representing 60 per cent. of its annual tax bill, on 14 July 1999. On 1 October 1999, it will have to pay the whole of its corporation tax bill for 1998, and on 14 October—14 days later—it will have to pay the second quarterly instalment of its 1999 tax bill. That represents 130 per cent. of the company's annual tax bill being paid within just one year. That is why the Government are not only making up their cash flow shortfall as a result of the abolition of ACT, but accelerating its cash flow for the next four years as my hon. Friend the Member for Grantham and Stamford said—by £1.6 billion in 1999–2000, by £2 billion the following year, and by £3.1 billion the year after. It is cash that British industry will have to find and, in most instances, will have to borrow. As the Institute of Chartered Accountants said in response to the consultative document, this proposal

would require the company to pay tax on profits which it has not yet earned in cases where profits increase sharply towards the end of the accounting period. This would be a particular problem if there is a large capital gain close to the year-end, for example on disposal of a major subsidiary. Even if such an event could be predicted in month 7 (which is unlikely), we regard it as unreasonable to expect the company to pay tax on the gain, or to charge interest if it does not, before the proceeds have even been received. The Red Book figures, which reveal £6.8 billion extra revenue for the Government over the lifetime of this Parliament, show just how the Government are using the change surreptitiously to raise further taxes, and significant further taxes. It is one of Labour's stealth taxes, and it will do nothing to help investment, nothing to encourage enterprises and nothing to encourage the creation of new jobs but everything to reduce investment and destroy jobs. Before the regulations are passed by an overwhelming majority, I hope that these criticisms will be taken into account.

Mr. Gardiner

Will the hon. Gentleman confirm that for small and medium companies that have been paying dividends—companies that he has been careful not to mention—the abolition will mean a net cash flow benefit of £1 billion?

Mr. Gibb

I did not refer to that point because we are debating large companies which constitute a substantial proportion of British industry. If one were to examine the aggregate turnover of those companies, I suspect that one would find that it represented more than half the turnover of all companies in this country.

One of the worst aspects of the proposed system is that it is based on a company's current year profits. Companies will have to calculate their first two instalments on the basis of their annual profits when the year has not been completed. As the Institute of Chartered Accountants said,

The difficulty with this arrangement is that it is, of course, impossible to predict the tax liability for the current accounting period with any accuracy, at least until the period has ended. The problem is particularly acute for businesses such as property investment companies, whose profit is liable to rise to a significant extent from a small number of large transactions, whose timing relative to the next year-end may be unpredictable. Of course, such unpredictable events can affect any company. It would make far more sense to base the quarterly payments on the company's prior year results and the statutory instrument should specify that, as does the income tax system for the self-employed and for sole traders.

The consultation document and the notes on clauses cite a number of overseas jurisdictions as examples of quarterly payment systems—Australia, Canada, France, Germany, Japan and the United States. However, the systems used in all those countries except Australia and the United States base instalments wholly or mainly on the previous year's tax liability.

Even in Australia and the United States, the system is not as uncompromising as that proposed in the Bill. For example, in the United States there are options to base instalments on the prior year's results with a top-up when the company files its tax return. There are also other methods for determining quarterly payments when companies have uneven revenues and expenses throughout the year. For example, there is what is known as the annualised method and the seasonal adjustment method for companies that generally earn at least 70 per cent. of their income in the second half of the year.

Mr. Quentin Davies

My hon. Friend will correct me if I am wrong, but is it not the case that in the United States there is no suggestion under any regime that chargeable gains would be included in the estimate on which quarterly tax payments had to be made? However, the new Labour Government appear to have included that in their proposals.

Mr. Gibb

I defer to my hon. Friend's expertise on that issue and I hope that the Paymaster General will note his comments, albeit that the regulations appear already to have been published.

It may be asked what difference will it make if a company underpays or overpays based on an inaccurate estimate as it can always increase or decrease subsequent payments accordingly. However, there is a penalty in that interest will be charged on any underpaid tax. Of course, it will also be paid on any overpayment, but there is a difference between the rates.

The consultation document originally referred to a gap of 3.5 percentage points. That gave rise to widespread criticism and the notes on clauses now say that

the interest on overpaid and underpaid corporation tax will be brought more closely into line with commercial rates of interest". However, I understand that the interest charged on underpaid tax will still be 2 per cent. above base rate, which is very high, particularly for large companies that can usually borrow much more cheaply. Of course, the proposals apply to large companies. I hope that the Government will reconsider the issue and announce a more realistic commercial rate of interest, although the regulations have been published.

Mr. Geraint Davies

I have two quick questions for the hon. Gentleman. First, is he suggesting that it would be better to base the taxation of a company on the figures for the previous year than on the forecast figures? If so, under the hon. Gentleman's proposals, a company facing declining profitability due to exchange rates, for example, would face penal taxation. Secondly, does he agree that an interest rate differential is a good idea as it encourages large companies to make accurate returns instead of giving them an incentive to underestimate their profits and, therefore, gain cash flow benefits from the taxpayer?

Mr. Gibb

I am grateful to the hon. Gentleman for that intervention. If a company's profits were less than those of the previous year, it could opt for the current year basis. The Government's proposals are uncompromising as they are based on current year profits and that is the end of the story. As for the percentage gap between the two interest rates, there will be a tendency for companies to overpay their corporation tax as a cushion against penal rates of interest. That will provide more revenue to the Government and put more of a cash flow burden on industry.

Basing quarterly payments on current year profits will clearly be unworkable and cumbersome for many companies. It will involve considerable uncertainty. The experience of jurisdictions that have a quarterly payment tax system is that companies tend to cushion the payments by paying more than they would otherwise to avoid penal rates of interest. The Government should avoid that.

Why are the Government so determined to go ahead with a system based on current year profits? Is it because they want to raise more revenue from the cushion, or is it because Treasury Ministers simply will not stand up to the Inland Revenue?

6.15 pm

The Financial Times says that tax experts believe that the Inland Revenue's large company anti-avoidance division has been instrumental in resisting pleas from companies not to shift to the current year basis.

It goes on to explain:

Tax inspectors are likely to monitor the payments, and sudden drops in tax liability will trigger investigations. This will act as an early warning system to spot anti-avoidance schemes. In other words, the determination by the Government and the Inland Revenue to base payments on current year profits rather than the previous year's figures is driven by convenience. All the burdens and cash flow problems it will impose on British industry are simply to make the job of the Inland Revenue that much easier.

Mr. Gardiner

Will the hon. Gentleman give way?

Mr. Gibb

No. I have given way a number of times and I want to finish my speech.

We all want tax avoidance clamped down and companies to pay their tax according to the legislation, but there must be a balance between facilitating Inland Revenue inquiries and placing burdens on business. Requiring a quarterly payment to be calculated on the basis of current year profit is too great a burden.

One of industry's main concerns about the use of current year profits is that of market sensitivity, and calculating quarterly payments on the basis of estimated and unpublished future annual profit figures may well result in information leaking into the public domain and increase the scope for insider dealing. Companies may not prepare taxable profits estimates except to calculate their quarterly payments. Giving such figures to outside bodies such as the Inland Revenue may well have that result. That is not my concern but that of British industry, including the British Retail Consortium.

There is enormous concern right across industry about the proposal to use current year profits and I hope that the statutory instruments will take that into account. I hope that the Government will listen to the Institute of Directors, which points out that a small underestimate of profit can lead to a failure to pay instalments because a company did not regard itself as large. When it eventually reaches the year end, it suddenly finds that it has made more than £1.5 million in profit. If it is a large company and does not make the quarterly payments, it is liable to pay a very large amount of interest. That view is echoed by the Institute of Chartered Accountants which states:

the definition of 'large' could itself be related to the size of the current-year tax liability and hence a relatively modest but unforeseen increase in profit close to the year end could result in a company being treated retrospectively as having been liable for payments on account of months seven and ten. I wish to make one final point on the proposals that I hope will be borne in mind when the regulations are drafted. Although the Chancellor gave a commitment during the Budget statement that he would not raise corporation tax above the new 30 per cent. rate, we are all aware of the commitments that he gave before and during the general election campaign and the ease with which they were breached, rewritten and reinterpreted. "We have no plans to raise tax" became a commitment not to raise income tax when the July Budget revealed a £5 billion a year pensions tax. A commitment not to raise income tax became a commitment not to raise the basic and higher rates of income tax once a decision had been made to reduce the value of the married couple's allowance which increased millions of people's income tax bills.

The commitment on the rate of corporation tax is hardly worth the paper on which it is printed, particularly in view of the Treasury's surreptitious decision not to fight the European Commission's proposals to harmonise business taxes. The only commitment that Treasury Ministers now give is to harmonise personal tax rates. They have dropped any reference to business taxes.

My concern, which is shared by the Institute of Chartered Accountants, is that calculating quarterly payments is rendered uncertain not only because it is based on future results but because, under the current proposals, its payments on account could be rendered insufficient retrospectively if an increase in the tax rate is announced that affects all or part of the current accounting period. Other changes in tax law could have the same effect. Will the Paymaster General confirm that if an under-payment is a result of a change in the rate of corporation tax or a change in the law, no interest, overdue tax or other penalties will be charged? Will he ensure that that is incorporated in the statutory instruments?

I have raised one or two concerns that are shared by those outside the House. It is wrong that a major change should be introduced through secondary legislation. I hope that the Paymaster General will confirm that the regulations will be debated on the Floor of the House, as proposed in the amendment, or, at the very least, in Standing Committee. I hope that the concerns raised by me and others about the proposals set out in the consultation document will be reflected in the statutory instruments.

Mr. Geoffrey Robinson

I fear that I shall be unable to reply to all the points that Opposition Members have raised, although if such a wide-ranging debate on the amendment means that we are not to have a clause stand part debate, I could range more widely.

The Temporary Chairman

In view of the wide-ranging speeches that we have heard, it would not be appropriate to have a clause stand part debate.

Mr. Robinson

In that case, I can reply more widely. I am grateful for your guidance, Mr. Butterfill.

The right hon. Member for Hitchin and Harpenden (Mr. Lilley) bemoaned the fact that amendment No. 1 has not been selected. I congratulate him on tabling an amendment on this occasion. When we started proceedings on our first Budget and were debating the windfall tax, it was beyond the competence of the Opposition to table even one amendment.

The hon. Member for Gordon (Mr. Bruce) made the point, which was reiterated several times by other Opposition Members, that there is something surreptitious about the way in which we are introducing the measure.

Mr. Malcolm Bruce

There is a lack of transparency.

Mr. Robinson

The hon. Gentleman may say that, but all the figures were published not only in the Red Book but in the pre-Budget statement in November, when we set out clearly, for consultative purposes, our plans for advance corporation tax. I refer the hon. Gentleman to section 9 on page 19 of that consultative document, issued by the Inland Revenue on 25 November 1997. I also point out that the figures in that document were higher than those subsequently published in the Red Book.

The hon. Member for Grantham and Stamford (Mr. Davies), who has not been on top form this afternoon, said that there was something surreptitious or covert about the introduction of this legislation; but that could not be wider of the mark. We not only consulted but gave the figures on which we would consult so that there would be no lack of transparency and no misunderstanding. We reached broad agreement on that proposal.

Mr. Lilley

rose—

Mr. Quentin Davies

rose—

Mr. Robinson

I shall give way first to the right hon. Member for Hitchin and Harpenden, and then to the hon. Member for Grantham and Stamford.

Mr. Lilley

If the Paymaster General is being open and transparent, will he confirm here and now, on the record, that the net cash raised for the Treasury over the next four years—the lifetime of this Parliament—as a result of the clause will be just over £5 billion? Or he is trying, like his colleagues, to slip out of putting that on the record?

Mr. Robinson

The right hon. Gentleman is being nothing short of ridiculous. We published higher figures for the cash flow impact in the transitional period. There is bound to be a cash flow impact when moving from the present system of advance corporation tax to an instalment system. We made that clear and did not try to dodge the issue. We discussed the matter with the CBI and industry, and with international as well as domestic companies. They could see that it was a principled reform with inevitable consequences in the transitional period. They understood that we had a long-term interest in stability and low taxation rates and that reducing the rate of corporation tax for large companies and small companies to 30 per cent. and 20 per cent. respectively—the lowest figures ever—would have a major net present value to the companies. That is why we have had considerable support for our proposals.

Mr. Davies

My complaint was not that the figures were not published in the Treasury's document—I said in my speech that they were in the Red Book, which I quoted—but that although the figures were there for those who wanted to find them, the Government, and not only the Paymaster General, were disingenuously pretending that the effect of the Budget was to relieve the corporate sector of part of the existing burden of taxation when the reality was the exact reverse. My complaint was not about the figures in the Treasury's document, but about the deceptive spin put on them by the hon. Gentleman and his colleagues.

Mr. Robinson

The hon. Gentleman misses the point. Not only did we try not to present the measure in that way, but we consulted on figures that clearly showed what the transitional impact would be. One could not be more straightforward or transparent than that.

Mr. Lilley

The Paymaster General could be more straightforward and transparent and not dodge the question. Is it correct that the extra tax raised as a result of the clause will be £5.1 billion over the next four years? Is that true or false? Will he confirm that? Why is he dodging the question? Why is he refusing to put that answer on the record?

Mr. Robinson

Even the right hon. Gentleman can read. He can read the Red Book, just as everyone else can—although he may not know the difference between cash flow and tax. To be precise, this is not a tax. The taxes are being reduced and the cash flow impact is negative. We made the effect clear back in November. That gives the lie also to Conservative Members' claim that the two parts of the major corporate tax reform were not seen as a whole.

Mr. Lilley

rose—

Mr. Robinson

I shall not give way again because the right hon. Gentleman will only repeat, ad nauseam, the silly little point that he is trying to make. He knows that it is a silly little point and he knows that the figures were published and consulted on. He hates the fact that we have the CBI's agreement for the measure and that our relations with industry are very good, and much better than those of the Conservatives in opposition or in government, but he must accept that. The right hon. Gentleman should be aware that the director general of the CBI wrote praising us for the fact that we had consulted and that we had removed medium companies from the instalment systems and made other adjustments.

The director general is clear that the principles of the reforms are accepted and supported by the large majority of companies in this country. That is what the right hon. Gentleman hates, but I regret to tell him that the Opposition have to learn that the Government—as we will discuss later when we come to individual savings accounts and other matters—are prepared to consult, to listen and to change policy, as we have done. That is nothing of which we should be afraid or ashamed. We recommend that the Opposition learn from that. Had they behaved more properly in that respect when they were in government, they would not have suffered such a disastrous defeat.

Mr. Quentin Davies

Will the Paymaster General give way?

Mr. Robinson

I have given way several times. I shall do so once more, but I hope that it will be a relevant point.

Mr. Davies

It is a relevant point, and I hope that the Paymaster General will deal with it. There is no point in the Government consulting unless they are prepared to explain why they are introducing measures. Why have the Government decided that it is appropriate for income tax under schedule D to be charged on a previous year basis, but corporation tax on a current year basis?

6.30 pm

Mr. Robinson

We took that decision because we felt that, on the whole, it would be much more reliable and more appropriate for companies to forecast quarterly on a revolving basis. I do not know on which boards the hon. Gentleman sits or used to sit, but the idea that a company does not make a clear annual forecast against which there is monthly and quarterly reporting is just unbelievable.

Mr. Davies

rose—

Mr. Robinson

I have given way an awful lot and we must move on. I always give way to the hon. Gentleman, as he knows—although, quite honestly, I found some of the things that he said today utterly amazing. I shall now deal with some other points that were made in the debate and need some attention.

The hon. Member for Bexhill and Battle (Mr. Wardle) mentioned rapidly growing companies. There are precise provisions—I shall point them out—for rapidly growing companies that relate to whether they were smaller companies in the previous year or whether profits were as high as £10 million. That is a totally adequate provision.

I hasten to add that the hon. Member for Bexhill and Battle should not be seen as encouraging overtrading by companies. It is wise to be prudent in such respects. The question is again only one of cash flow impact. If a company were in so much trouble that it had to borrow from the Inland Revenue at 2 per cent. over base— I would not wish it on any company—it would not get a bad deal at that rate. It is worth pointing out that we have reduced the differential between the borrowing and lending rate of the Inland Revenue and companies from the 5 per cent. that prevailed under the Conservative Government for 18 years and was never touched, to a much more reasonable 2 per cent. At that rate, there is not a great deal for the Opposition to grumble about.

The general mix that we have come up with reflects what we thought was the best judgment of the situation. I do not think that anyone in the House—at least, no hon. Member has declared himself in such a light so far—rejects the principle of what we have done. The Opposition are trying to accept it in principle, but, having willed the end, they will not will the means. That is why the amendment is confusing.

We cannot make regulations under clause 30 without first laying them before the House of Commons. The regulations published on Friday are already in the Library and available to hon. Members. They have to be laid before the House so that we can scrutinise them before they come into effect. Not surprisingly, we do not need the amendment to require that.

The second reason anybody who looks at the amendment is bound to be very puzzled is that it will require instalment regulations to be made under the affirmative resolution procedure. That is the point that the right hon. Member for Hitchin and Harpenden is trying to make in tabling the amendment. Indeed, he went on to say, when challenged, that he could not remember in his experience in the Treasury—I think that he served successively as Financial Secretary and Economic Secretary—the Conservative Government doing anything of the kind that we are proposing. Perish the thought.

In the light of that damascene conversion, why, if the Conservatives did not like regulations being made under the negative resolution procedure, did they not change it during the 18 years that they were in office? I shall tell the right hon. Member for Hitchin and Harpenden what the Conservatives did in those years and give a few figures to substantiate my comments.

The Conservatives were responsible for hundreds of sets of tax regulations that were introduced under the negative resolution procedure, including nearly 200 on direct taxes over the three years to March 1997. The right hon. Member for Hitchin and Harpenden said that the Conservative Government never did any such thing. Perhaps he did not know what they were doing. Perhaps he did not know what he was doing when he was in the Treasury. Above all, perhaps he did not know what the right hon. and learned Member for Rushcliffe (Mr. Clarke) was doing when he was Chancellor. I am sure that the right hon. and learned Gentleman very often did not know about such detail.

In 1993, the Conservatives quite happily made new regulations covering the deduction from the pay-as-you-earn scheme—tax from employees' wages and salaries—under the negative resolution procedure. What does the right hon. Member for Hitchin and Harpenden have to say about that? Those regulations affected tens of millions of people and tens of billions of pounds of tax. The simple fact is that the right hon. Gentleman did not know what he was talking about then, did not know what the right hon. and learned Member for Rushcliffe was doing, and neither of them knew what the Government were doing.

The amendment is inappropriate and unnecessary and I of course urge the Committee to reject it.

Mr. Lilley

I shall endeavour to be brief so that we can move on to the other two amendments to clause 30.

The hon. Member for Gordon (Mr. Bruce) said that there had been relatively little detailed criticism of the clause. The reason is, of course, that there is rarely detailed criticism until regulations and details are published. They were not published until Friday, they are not yet in the Vote Office or available to hon. Members, and they have not been seen by the outside world ahead of this debate. Consequently, there was no possibility of people making informed submissions that could be considered by Conservative Members or, if they were remotely interested, by Labour Members. That is what is so wrong with the procedures and mechanisms that the Government are pursuing in this matter.

There has been quite a lot of opposition to the fact that the Government are proceeding with the use of regulations on an unprecedented scale. Regulations have always had a place, but when everything is delegated to regulations and none of the detail is in the Bill or published in time for consideration in Committee, that is wrong. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), in a powerful speech that will pay the Paymaster General dividends if he reads it, quoted a series of accountants to the effect that what is proposed is perilously close to a constitutional abuse—and so it is.

My hon. Friend the Member for Grantham and Stamford (Mr. Davies) made a characteristically compelling speech in which he asked the Government why they had not simply drafted a one-clause Bill stipulating that the Treasury should have the power to introduce any tax by whatever measures it thought appropriate in the appropriate regulations. I fear that he is putting ideas into their heads. I saw many of them perk up at the thought.

The process moves from paying tax in arrears to paying it in advance. Inevitably, that involves a period of double taxation. After beginning blusteringly by saying that he would be transparent and open, the Paymaster General dodged answering the question of how much extra tax will be raised by the clause. We are used to his dodging his taxes; now he is dodging telling us how much other people will have to pay in taxes as a result of his measures. That is not satisfactory. We will come back to this time and again. He pretends that industry is happy with the proposals. The CBI welcomed the mitigation of his original, more onerous proposals—

The Second Deputy Chairman of Ways and Means (Mr. Michael Lord)

Order. The right hon. Gentleman has just mentioned tax dodging. I am not sure that that is the right phraseology to use, and I would be grateful if he withdrew it.

Mr. Lilley

Of course I withdraw. The Paymaster General is well known for dodging answering questions about either his own taxes or the taxes that he is imposing on others. That is a well-established fact. We believe that the Government should come clean on the amount of tax involved and recognise that industry does not welcome the extra tax that it is having to pay. What they propose will be welcomed even less when it accumulates with the other burdens they are imposing on business, which threaten a manufacturing recession that is likely to spread in due course to the whole economy.

Amendment negatived.

Mr. Lilley

I beg to move amendment No. 3, in page 16, line 29, at end insert—

'(c) for special payment arrangements for companies making seasonal profits, enabling such companies to pay instalments based on actual tax-adjusted results for the previous six month period.'. The quarterly process will inevitably increase taxes on business by requiring companies to forecast their future profits and pay taxes on them before they have been earned. If companies underestimate, they will have to pay interest on the underpayment at a rate designed to discourage understatement. That is a particularly tough requirement on the many firms with highly seasonal business; retailers, for example, who depend on the Christmas season to make any profit at all will have to pay taxes on quarters three and four before they have earned anything at all. The amendment would allow such companies to pay less in the first half of the year.

International experience shows that corporation tax systems can be reformed to help seasonal businesses. In the United States, for example, businesses pay tax by quarterly instalments, but the system is modified to allow seasonal traders to pay each instalment of tax according to the proportion of annual profits earned at each payment date, using previous years' estimates. Seasonal businesses are not looking for any preferential treatment, but for a corporation tax system that acknowledges their distinctive trading patterns.

It must be wrong to force seasonal businesses to pay tax in advance of earning enough revenues to have any profit at all over the year as a whole. Retailers have come to me with detailed suggestions about how to resolve the problem. The Paymaster General should listen to them and act on what they have to say.

To be eligible to use the method we propose, retailers suggest that a company's profits earned in the first six months of the accounting period must be consistently less than their profits earned for the complete financial year. In the US, the proportion is set at 30 per cent. or less of total profit for the year. It would be easy to determine the estimates by looking at established trading patterns over the previous five years, as disclosed in published interim reports. I hope that the Paymaster General will seriously consider the amendment, which should not be costly for the Treasury to accept and introduce and would meet a valid concern of which he should take due note.

Mr. Malcolm Bruce

I support the amendment. Some companies—in agriculture, farming and fruit, for example—have business that is exclusively summer or Christmas related, and it is reasonable to suggest that the Bill should take some account of that. Otherwise, the cash flow benefit to the Treasury may be significant, but the difficulties for individual companies may be real. If the Conservative party intends to divide the Committee on the amendment, we will support it.

Mr. Dafydd Wigley (Caernarfon)

I, too, support the amendment. I represent a constituency where there is a considerable seasonal distortion to economic activity. Tourism is one of the major industries in my area; agriculture—when it is not going through a depression, as it is now—is the other.

The fact that major companies in the tourism sector have large amounts of money coming in over a limited period and then have low levels of activity the rest of the year leads to knock-on effects on a host of service industries associated with the demand from the tourism sector. In Llandudno, for example, the population goes up from 20,000 to 200,000 in the summer. That gives an indication of the impact of seasonal business on the business fraternity in the area. The amendment would be helpful in terms of cash flow for such companies, and I hope that the Government will seriously consider it.

6.45 pm

Mr. Geoffrey Robinson

The Committee is rightly considering the amendment in a reasoned tone. Like the right hon. Members for Hitchin and Harpenden (Mr. Lilley) and for Caernarfon (Mr. Wigley), the Government have received representations on it. We met the British Retail Consortium, which suggested something similar to the amendment; it would confine the measure to companies consistently making less than 30 per cent. of their profits in the first half of the year.

The amendment might help a few large companies, but there cannot be too many firms that make upwards of 70 per cent. of their profits in the second half of the year. The Committee will realise that the amendment would add considerable complexity to the rules. The right hon. Member for Hitchin and Harpenden refers to the American situation, but I am sure that he is aware that, in other respects, the American system is less favourable. The whole of the tax, as opposed to half, is paid in the year in question. I do not think that the British Retail Consortium, or anybody else, would want that because it would be so disadvantageous. We would not have received the support that we have received for the changes over a four-year transitional period if we were to move to the American system as a whole.

It is unwise to cherry pick—to have one bit from America and another bit from France—as we would end up with a mish-mash that would not achieve the principled reform we are looking for. I am not inclined to accept the amendment or the proposal from the British Retail Consortium, but we will consider the matter carefully and return to it.

Mr. Lilley

I am grateful to the Paymaster General for that assurance; we will not press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Lilley

I beg to move amendment No. 4, in page 16, leave out lines 37 and 38.

We have drawn attention to the fact that clause 30 in particular—like the Bill in general—makes excessive use of regulation-making powers. I invite the House to consider particularly the proposed new section 59E(5), which states:

Regulations under this section—

1. (a) may make such modifications of any provisions of the Taxes Acts, or
2. (b) may apply such provisions of the Taxes Acts,

as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section. It is, in short, a Henry VIII clause—a clause that enables the Government, by regulation, to change primary law elsewhere without proper consideration by the House.

We know that the other place has found such legislative provisions particularly abhorrent, but it will not have the chance to vote on the Finance Bill. We should eliminate that subsection and ensure that if the Government want to change primary legislation, they must bring the change to the House in an open and democratic fashion by the normal procedures of the House and may not publish regulations that cannot be amended or debated.

Mr. Geoffrey Robinson

This is, quite simply, a wrecking amendment, and the right hon. Gentleman is again suffering from a fairly severe bout of amnesia. It is quite normal for tax regulation-making powers to permit modifications of this sort. Given the authors of the amendment—people who have served in distinguished positions in the Treasury—the House may be interested to learn that the previous Government's last three Finance Bills provided more than a dozen sets of regulation-making powers covering direct taxes alone, three quarters of which included the power to modify existing provisions of the Taxes Acts.

The only practical effect of the amendment would be to prevent regulations from being made to introduce quarterly instalment payments of corporation tax by large companies. If that is the Opposition's intention—clearly it is—I recommend that we proceed to a vote on the clause as a whole.

Mr. Lilley

The Paymaster General said that the Conservative Government's last three Finance Bills contained 12 sets of regulation-making powers, but this clause alone has 11 and includes the obnoxious subsection that the amendment would delete. On any basis, that should make the Committee wary of allowing the clause to stand part of the Bill—we shall recommend that it votes against doing so.

Amendment negatived.

Question put, That the clause stand part of the Bill:—

Committee divided:Ayes 275, Noes 121.

Division No. 255]	[6.49 pm
AYES
Abbott, Ms Diane	Atkins, Charlotte
Adams, Mrs Irene (Paisley N)	Ballard, Mrs Jackie
Ainsworth, Robert (Cov'try NE)	Banks, Tony
Alexander, Douglas	Bayley, Hugh
Allan, Richard	Begg, Miss Anne
Allen, Graham	Bell, Martin (Tatton)
Anderson, Janet (Rossendale)	Bell, Stuart (Middlesbrough)
Armstrong, Ms Hilary	Benn, Rt Hon Tony
Ashton, Joe	Bennett, Andrew F

Benton, Joe	Galloway, George
Best, Harold	Gardiner, Barry
Betts, Clive	George, Bruce (Walsall S)
Blackman, Liz	Gerrard, Neil
Blizzard, Bob	Gibson, Dr lan
Borrow, David	Godman, Dr Norman A
Bradley, Peter (The Wrekin)	Godsiff, Roger
Bradshaw, Ben	Golding, Mrs Llin
Breed, Colin	Gorrie, Donald
Brinton, Mrs Helen	Griffiths, Jane (Reading E)
Brown, Rt Hon Nick (Newcastle E)	Griffiths, Nigel (Edinburgh S)
Brown, Russell (Dumfries)	Hall, Mike (Weaver Vale)
Bruce, Malcolm (Gordon)	Hall, Patrick (Bedford)
Burden, Richard	Hanson, David
Burgon, Colin	Harris, Dr Evan
Butler, Mrs Christine	Heal, Mrs Sylvia
Byers, Stephen	Heath, David (Somerton & Frome)
Campbell, Mrs Anne (C'bridge)	Henderson, Ivan (Harwich)
Campbell, Ronnie (Blyth V)	Hepburn, Stephen
Campbell-Savours, Dale	Heppell, John
Canavan, Dennis	Home Robertson, John
Cann, Jamie	Hoon, Geoffrey
Caplin, Ivor	Hope, Phil
Casale, Roger	Hopkins, Kelvin
Caton, Martin	Howarth, George (Knowsley N)
Chapman, Ben (Wirral S)	Howells, Dr Kim
Chidgey, David	Hoyle, Lindsay
Chisholm, Malcolm	Humble, Mrs Joan
Clark, Dr Lynda	Hurst, Alan
(Edinburgh Pentlands)	Hutton, John
Clark, Paul (Gillingham)	Iddon, Dr Brian
Clarke, Charles (Norwich S)	Jackson, Helen (Hillsborough)
Clarke, Eric (Midlothian)	Jamieson, David
Clelland, David	Jenkins, Brian
Clwyd, Ann	Johnson, Alan (Hull W & Hessle)
Cohen, Harry	Johnson, Miss Melanie
Coleman, lain	(Welwyn Hatfield)
Connarty, Michael	Jones, Barry (Alyn & Deeside)
Cook, Frank (Stockton N)	Jones, leuan Wyn (Ynys Môn)
Corbyn, Jeremy	Jones, Ms Jenny
Cotter, Brian	(Wolverh'ton SW)
Cousins, Jim	Jones, Jon Owen (Cardiff C)
Cranston, Ross	Jones, Martyn (Clwyd S)
Crausby, David	Jowell, Ms Tessa
Cryer, Mrs Ann (Keighley)	Kaufman, Rt Hon Gerald
Cummings, John	Keeble, Ms Sally
Cunliffe, Lawrence	Keen, Ann (Brentford & lsleworth)
Cunningham, Jim (Cov'try S)	Kennedy, Jane (Wavertree)
Dalyell, Tam	Kidney, David
Darling, Rt Hon Alistair	Kilfoyle, Peter
Davidson, Ian	King, Andy (Rugby & Kenilworth)
Davies, Rt Hon Denzil (Llanelli)	Kingham, Ms Tess
Davies, Geraint (Croydon C)	Kirkwood, Archy
Davis, Terry (B'ham Hodge H)	Ladyman, Dr Stephen
Dean, Mrs Janet	Lawrence, Ms Jackie
Denham, John	Laxton, Bob
Dewar, Rt Hon Donald	Lepper, David
Dobbin, Jim	Leslie, Christopher
Drew, David	Levitt, Tom
Drown, Ms Julia	Livingstone, Ken
Eagle, Angela (Wallasey)	Llwyd, Elfyn
Eagle, Maria (L'pool Garston)	Lock, David
Edwards, Huw	Love, Andrew
Ellman, Mrs Louise	McAllion, John
Ennis, Jeff	McAvoy, Thomas
Etherington, Bill	McCabe, Steve
Fatchett, Derek	McCafferty, Ms Chris
Feam, Ronnie	McCartney, lan (Makerfield)
Fisher, Mark	McDonnell, John
Fitzpatrick, Jim	McGuire, Mrs Anne
Flynn, Paul	Mclsaac, Shona
Foster, Rt Hon Derek	McKenna, Mrs Rosemary
Foster, Michael Jabez (Hastings)	Mackinlay, Andrew
Foster, Michael J (Worcester)	McNamara, Kevin
Foulkes, George	McNulty, Tony
Fyfe, Maria	McWilliam, John

Mallaber, Judy	Savidge, Malcolm
Mandelson, Peter	Sawford, Phil
Marsden, Gordon (Blackpool S)	Sedgemore, Brian
Marshall, David (Shettleston)	Sheerman, Barry
Marshall—Andrews, Robert	Sheldon, Rt Hon Robert
Maxton, John	Simpson, Alan (Nottingham S)
Meacher, Rt Hon Michael	Skinner, Dennis
Michael, Alun	Smith, Rt Hon Andrew (Oxford E)
Michie, Bill (Shef'ld Heeley)	Smith, Angela (Basildon)
Michie, Mrs Ray (Argyll & Bute)	Smith, Miss Geraldine
Mitchell, Austin	(Morecambe & Lunesdale)
Moffatt, Laura	Smith, John (Glamorgan)
Moonie, Dr Lewis	Smith, Sir Robert (W Ab'd'ns)
Moran, Ms Margaret	Southworth, Ms Helen
Morgan, Ms Julie (Cardiff N)	Spellar, John
Morris, Ms Estelle (B'ham Yardley)	Starkey, Dr Phyllis
Morris, Rt Hon John (Aberavon)	Steinberg, Gerry
Mudie, George	Stevenson, George
Murphy, Denis (Wansbeck)	Stewart, David (Inverness E)
Murphy, Jim (Eastwood)	Stewart, lan (Eccles)
Murphy, Paul (Torfaen)	Stinchcombe, Paul
O'Brien, Mike (N Warks)	Stott, Roger
Olner, Bill	Strang, Rt Hon Dr Gavin
O'Neill, Martin	Straw, Rt Hon Jack
Organ, Mrs Diana	Stringer, Graham
Osborne, Ms Sandra	Stuart, Ms Gisela
Palmer, Dr Nick	Stunell, Andrew
Pearson, lan	Swinney, John
Perham, Ms Linda	Taylor, Rt Hon Mrs Ann
Pickthall, Colin	(Dewsbury)
Pike, Peter L	Taylor, Ms Dari (Stockton S)
Plaskitt, James	Taylor, Matthew (Truro)
Pond, Chris	Temple—Morris, Peter
Pope, Greg	Thomas, Gareth (Clwyd W)
Pound, Stephen	Thomas, Gareth R (Harrow W)
Powell, Sir Raymond	Timms, Stephen
Prentice, Ms Bridget (Lewisham E)	Tipping, Paddy
Prentice, Gordon (Pendle)	Trickett, Jon
Primarolo, Dawn	Truswell, Paul
Prosser, Gwyn	Turner, Dennis (Wolverh'ton SE)
Purchase, Ken	Turner, Dr George (NW Norfolk)
Quinn, Lawrie	Twigg, Derek (Halton)
Radice, Giles	Tyler, Paul
Rammell, Bill	Walley, Ms Joan
Rapson, Syd	Welsh, Andrew
Raynsford, Nick	White, Brian
Reed, Andrew (Loughborough)	Wigley, Rt Hon Dafydd
Rendel, David	Williams, Rt Hon Alan (Swansea W)
Robertson, Rt Hon George (Hamilton S)
	Williams, Alan W (E Carmarthen)
Robinson, Geoffrey (Cov'try NW)	Williams, Mrs Betty (Conwy)
Roche, Mrs Barbara	Willis, Phil
Rooker, Jeff	Wise, Audrey
Ross, Ernie (Dundee W)	Wood, Mike
Roy, Frank	Wright, Anthony D (Gt Yarmouth)
Ruane, Chris	Tellers for the Ayes:
Russell, Bob (Colchester)	Mr. John McFall and
Sanders, Adrian	Mr. Jim Dowd.
NOES
Ainsworth, Peter (E Surrey)	Cash, William
Arbuthnot, James	Chapman, Sir Sydney (Chipping Barnet)
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)	Chope, Christopher
Baldry, Tony	Clappison, James
Bercow, John	Clark, Rt Hon Alan (Kensington)
Beresford, Sir Paul	Clarke, Rt Hon Kenneth (Rushcliffe)
Boswell, Tim
Bottomley, Peter (Worthing W)	Clifton—Brown, Geoffrey
Bottomley, Rt Hon Mrs Virginia	Collins, Tim
Brazier, Julian	Colvin, Michael
Browning, Mrs Angela	Cormack, Sir Patrick
Bruce, lan (S Dorset)	Cran, James
Burns, Simon	Rt Hon David

Davies, Quentin (Grantham)	Major, Rt Hon John
Davis, Rt Hon David (Haltemprice)	Malins, Humfrey
Day, Stephen	Maples, John
Dorrell, Rt Hon Stephen	Maude, Rt Hon Francis
Duncan, Alan	Mawhinney, Rt Hon Sir Brian
Emery, Rt Hon Sir Peter	May, Mrs Theresa
Evans, Nigel	Moss, Malcolm
Faber, David	Nicholls, Patrick
Fabricant, Michael	Ottaway, Richard
Fallon, Michael	Page, Richard
Forth, Rt Hon Eric	Paice, James
Fowler, Rt Hon Sir Norman	Paterson, Owen
Fraser, Christopher	Pickles, Eric
Gale, Roger	Prior, David
Garnier, Edward	Randall, John
Gibb, Nick	Redwood, Rt Hon John
Gorman, Mrs Teresa	Robathan, Andrew
Gray, James	Robertson, Laurence (Tewkb'ry)
Green, Damian	St Aubyn, Nick
Greenway, John	Sayeed, Jonathan
Grieve, Dominic	Shephard, Rt Hon Mrs Gillian
Hague, Rt Hon William	Shepherd, Richard
Hammond, Philip	Simpson, Keith (Mid—Norfolk)
Heald, Oliver	Soames, Nicholas
Heathcoat-Amory, Rt Hon David	Spelman, Mrs Caroline
Horam, John	Spicer, Sir Michael
Howard, Rt Hon Michael	Spring, Richard
Jack, Rt Hon Michael	Steen, Anthony
Jackson, Robert (Wantage)	Streeter, Gary
Johnson Smith,	Swayne, Desmond
Rt Hon Sir Geoffrey	Syms, Robert
Key, Robert	Tapsell, Sir peter
King, Rt Hon Tom (Bridgwater)	Taylor,lan (Esher &Walton)
Kirkbride, Miss Julie	Taylor, John M (Solihull)
Laing, Mrs Eleanor	Taylor, Sir Teddy
Lait, Mrs Jacqui	Towned, John
Lansley, Andrew	Tredinnick, David
Leigh, Edward	Viggers, Peter
Letwin, Oliver	Wardle, Charles
Lidington, David	Widdecombe, Rt Hon Miss Ann
Lilley, Rt Hon Peter	Wilshire, David
Lloyd, Rt Hon Sir Peter (Fareham)	Winterton, Mrs Ann (Congleton)
Loughton, Tim	Winterton, Nicholas (Macclesfield)
Lyell, Rt Hon Sir Nicholas	WoodWard, Shaun
MacGregor, Rt Hon John	Yeo, Tim
McIntosh, Miss Anne	Young, RT Hon Sir George
MacKay, Andrew
Maclean, Rt Hon David	Tellers for the Noes:
McLoughlin, Patrick	Mr. John Whittingdale and
Madel, Sir David	Mr. Nigel Waterson.

Question accordingly agreed to.

Clause 30 ordered to stand part of the Bill.

Mr. Gibb

On a point of order, Mr. Lord. During the debate on amendment No. 2, the hon. Member for Dudley, North (Mr. Cranston) referred to some statutory instruments relating to clause 30 that he said the Government had already published and placed in the Library, and I believe that that was confirmed by the Paymaster General. I asked Library staff for the reference number of the draft regulations; they can trace no sign of any such regulations being published on Friday, and there is no mention of them in the list of draft regulations or on today's Order Paper. Is not it a gross discourtesy to the Committee that the regulations were not published before the debate, and is not something odd going on, when Labour Back Benchers can see them before other hon. Members?

The Second Deputy Chairman

I was not in the Chair when those exchanges took place, but I have no doubt that Ministers will have heard the point of order. If the documents ought to be in the Library and are not, I assume that Ministers will take the appropriate action.

Mr. Geoffrey Robinson

Further to that point of order, Mr. Lord. I hope that the hon. Gentleman asked for the right things when he went to the Library.

Mr. Gibb

Yes.

Mr. Robinson

If that is the case, we are at a loss at the moment, but we will seek to rectify any error as quickly as possible.