§ 8. Mr. Nick St. Aubyn (Guildford)What representations he has received from the business community on business taxation in advance of his pre-Budget report.[135956]
§ The Financial Secretary to the Treasury (Mr. Stephen Timms)We have received a number of representations on a variety of business tax topics, including representations from the Confederation of British Industry, the British Chambers of Commerce and the Institute of Directors.
§ Mr. St. AubynThe Chief Secretary has just told us that on Tuesday the Government gave no assurances to the oil industry on petroleum revenue tax. In the past three to four months, has the Financial Secretary or any other member of the Treasury team given any assurances to the oil industry about the level of petroleum revenue tax? If so, could he share with the House what those assurances were?
§ Mr. Lawrie Quinn (Scarborough and Whitby)Would my hon. Friend give particular consideration to businesses in rural areas such as Scarborough and Whitby, which have had many difficulties in recent years? Looking forward to the forthcoming rural White Paper, would he explain to the House what help may be available to areas that are in need of special assistance at this time?
§ Mr. TimmsMy hon. Friend will be aware of the favourable business reaction to the announcements that my right hon. Friend the Chancellor made yesterday about a more than £2 billion reduction in transport taxes and the package to make VAT easier to administer for small businesses. Both those measures will be welcome to businesses, particularly to small firms in my hon. Friend's constituency. He is right that the rural White Paper will also make important announcements. We are concerned to ensure that businesses in rural areas have the benefits of a competitive economy, building on the stability that we have achieved in the past three years.
§ Mr. Edward Davey (Kingston and Surbiton)Is the Minister concerned that yesterday's Treasury estimates show that business investment is slowing dramatically, from a 7.5 per cent. growth rate last year to 1.75 per cent. this year and 1.5 per cent. next year? How does the Minister explain this lamentable business investment performance? Is it to do with the increase in business taxation or the Government's failed exchange rate policy?
§ Mr. TimmsWe have a good record on investment in the economy. In the past, instability was a major cause of problems with investment, but the new stability that has been secured in the past three years is leading to a substantial improvement. Business investment reached record levels, at 14.5 per cent. of gross domestic product, last year. Investment as a proportion of GDP is now higher in the United Kingdom than in the United States. The UK receives 40 per cent. of all US and Japanese investment in the European Union. The picture on investment is actually very good.
§ Mr. Nigel Beard (Bexleyheath and Crayford)Does my hon. Friend agree that present planned investment in transport infrastructure can make a major contribution to increasing productivity in the economy? That was suggested this week by the Director-General of the CBI, 432 who dismissed the transport infrastructure spending plans of the right hon. Member for Kensington and Chelsea (Mr. Portillo).
§ Mr. TimmsMy hon. Friend is absolutely right. Sustained public investment not only in transport but in education and science is vital if we are to build on the success achieved over the last three years. We now have a stable platform, but we need investment in infrastructure—and, as my hon. Friend says, our spending plans will deliver that.
§ Mr. James Clappison (Hertsmere)Should we not set what the Minister says, and what is in the pre-Budget report, against the fact that the Government have imposed an additional £10 billion worth of tax and regulation on business? Should we not also set what the Minister and the pre-Budget report say about tax changes against what the director general of the Institute of Directors—one of the bodies cited by the Minister—has said about what happened yesterday? He said:
One day we may see a simplification of tax, but it wasn't today.Now that the Chancellor has been forced to eat humble pie as a result of his treatment of motorists and pensioners, is it not time the Government began to address some of the problems that they have created for business? Those problems are reflected in the fact that our growth rates are slipping behind, in productivity difficulties, and in the fall in our share of world exports.
§ Mr. TimmsIt is hard to know where to begin in responding to all those erroneous points. As far as I recall, the hon. Gentleman supported the 22 tax increases introduced by the previous Government. He asked about simplification of taxes. My right hon. Friend the Chancellor made an important announcement yesterday about easing the burden on small businesses with regard to the administration of VAT, which has been widely welcomed. The Federation of Small Businesses said yesterday that the measures would
reduce tax headaches for millions of small enterprises and encourage them to grow.I would have expected the hon. Gentleman to welcome that.We have cut the main rate of corporation tax from 33 per cent. to 30 per cent., and the corporation tax bill for small businesses benefiting from the lower rate has fallen by about 25 per cent. I would have expected the hon. Gentleman to welcome that as well.