High-technology Industries

HC Deb 15 January 1998 vol 304 cc469-70

2. Mr. Garnier

What is his policy on providing financial support to high-technology industries. [21052]

The Chancellor of the Exchequer (Mr. Gordon Brown)

The essential policies for high-technology firms are those that promote stability and prevent stop-go. In addition, in order to encourage investment, we have reduced the corporation tax rate for businesses from 33p to 31p. We propose to reduce corporation tax to 30p in 1999. We have produced a small and medium business tax relief by doubling capital allowances and we are reviewing capital gains tax. Dr. Keith McCullagh and senior figures from high-tech companies are also producing a report about how to stimulate high-tech investment, especially in research and development-based firms.

Mr. Garnier

Do the Chancellor and his Treasury team plan to assist high-tech industries by exempting them from capital gains tax on share issues? Is that not precisely what the Paymaster General managed to do by transferring £10 million-worth of shares to do with his high-tech company into his offshore trust? Why should the Treasury team, which contains a Minister who seems intent on avoiding tax, be so keen to impress upon other lesser mortals that they should pay every penny of tax?

Mr. Brown

I might have known that the hon. and learned Gentleman was not at all interested in high-technology firms. The Conservative party should start talking to businesses that have welcomed the cut in corporation tax from 33p to 31p—the lowest rate of corporation tax in our history. They have also welcomed the fact that we plan to cut corporation tax to 30p and that we are reviewing capital gains tax. It is a measure of the Government's success that we have persuaded senior figures from the high-technology industries to come together in a working party that will report soon, with a view to the Budget, on how we can help specifically some of the most modern, high-technology firms in our country.

Mr. Sheerman

Does my right hon. Friend agree that many high-tech companies spin out of universities and university research? Is there a way in which he could introduce a tax break for companies and individuals who give back to universities specifically for high-tech innovation? We in Britain—individuals as well as big corporations in the private sector—are small givers to universities, and that could be a new form of resource.

Mr. Brown

We have already made available for small and medium companies, including those that have spun off from universities, an enhanced capital investment tax relief that they can use in this financial year to expand their investment. In addition to that, by cutting corporation tax we are creating the environment in which long-term investment can take place. For university-based and other firms, the McCullagh committee is looking at how we can increase the venture capital industry's input into investment in these areas.

We are struck by the fact that there is 40 per cent. more investment of the national income in high-technology firms in the United States than in Britain—£4.5 billion is invested in high-technology companies there, and only one tenth of that in this country. That situation was not rectified under the previous Government, but we hope to rectify it.