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Finance (No. 2) Bill

I thank the hon. Lady for her question, and take this opportunity to welcome her to her position on the Front Bench. With respect, I think that crude assertions, drawing arbitrary lines in percentages and then making comparisons, does not assist us in deciding what is fair. [Interruption.] The shadow Chancellor says from a sedentary position, ““They’re your figures.”” It is irrelevant whose figures they are; I am referring to the comparison. It is not a test of fairness to produce two sets of figures and compare them. The operation of the tax system and the various means of support that the Government provide for many hard-working families contribute to the overall fairness of the system. Measures in the Bill will also ensure continued fairness, innovation and a level playing field for the alternative finance arrangements used in particular by the Muslim community. With clauses 103 to 146, we are introducing real estate investment trusts to improve the efficiency of our residential and commercial property markets and to allow smaller investors to access property returns. We have also acted to change part of the inheritance tax regime for trusts, specifically bringing accumulation and maintenance trusts and interest in possession trusts into the mainstream rules for other kinds of trusts. The Bill limits the scope for people to use trusts to avoid paying inheritance tax and reduces from 25 to 18 the age at which children gain access to trust assets. In effect, that continues our work to close loopholes in the inheritance tax and trust regimes and to ensure that people pay their fair share of tax, while protecting vulnerable people. What the Bill does not do, however, is also clear. This measure is not retrospective, and we have provided a two-year transition period to give time to reorder financial affairs if needed. Only trusts with assets above the inheritance tax threshold will have to pay any charge under the revised rules, and no one who wrote a life insurance policy in trust before Budget day will have to pay a new inheritance tax charge as a result of these changes. On the point about reducing the relevant age for those trusts, let me just say this: on reaching their 18th birthday people can vote, fight for their country and even get their child trust fund, but as things stand they may not get their trust assets for another seven years. That is an anomaly, and the Bill fixes it. Fairness is a matter for all parts of our economy and for all industries, so let me turn briefly to oil. Sustained increases in oil prices since spring 2004 have led to an upward shift in the medium-term outlook for oil prices. The same is true of a significant unforeseen economic rent from North sea oil and gas production. That is why we are introducing a package of measures to reform the North sea fiscal regime, including an increase in the rate of supplementary charge on profits from exploitation of our oil and gas reserves. That will ensure that the regime continues to strike the right balance between oil producers and consumers. Let me be clear on this: North sea oil is a critical sector for the UK, and it is only right and fair that we should all share in the profits of increased prices—producers and consumers alike. I turn now to productivity, competitiveness and fairness. Building on the Budget and the pre-Budget report before it, the Bill targets support in a flexible way that is more responsive to our global economy. It also increases our support for the environment. Today, 98 per cent. of emissions occur outside Britain. Climate change is an enormous threat to Britain and to the world. It is complex but it is real, and all Governments must act. With the climate change levy we did just that. As my right hon. Friend the Chancellor of the Exchequer said, the resulting climate change agreement and the carbon trust funded by it have reduced carbon emissions by a total 28 million tonnes. That is why we are already able to meet our Kyoto targets. What is more, in each of the next five years climate change measures will reduce emissions by more than 6 million tonnes. By 2010, that will amount to some 40 per cent. of our total carbon reductions. Given the climate change levy, more than 10,000 businesses have signed climate change agreements. Under the carbon trust, some 3,000 businesses have reduced their emissions. Enhanced capital allowances have underwritten investment in 13,000 energy-saving products. Building on that, clause 172 will increase the rates in line with current inflation, introduced from 1 April next year. The Bill also amends the structure of company car tax and vehicle excise duty to strengthen existing incentives to use environmentally friendly vehicles.