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Finance (No. 2) Bill

We have heard again about the Bill’s length, which, at 475 pages, is no doubt to give the impression of action on tax and the economy. Many of its clauses, however, do nothing of the sort. Many clauses tinker round the edges of issues rather than addressing them fundamentally, others are simply damaging and unnecessary, and at least one is at odds with what the Chancellor said only a few short months ago and shows confusion in the heart of the Treasury. I will deal first with clauses 6 and 7 on hydrocarbon oil duty. For the consumer, in the real world, fuel prices are rising inexorably. In parts of Scotland, a litre of diesel or unleaded has now crashed through the £1 barrier. Surely that was the time to introduce a sensible fuel price regulatory system, which would be sufficiently sensitive to moderate fuel prices at the pump at times of high world oil prices, rather than simply to increase oil duties as normal, notwithstanding that the rises will not come into effect until September. Along with the expected and unfettered rise in fuel duty, car owners will be affected by the changes in clause 13 to vehicle excise duty. The Scottish National party broadly welcomes changes that make vehicles with heavy CO2 emissions more expensive to run, particularly if they offer a real disincentive to unnecessary use of such vehicles. At the top end of the scale, however, there is almost no disincentive whatever. The other side of the argument is that the Treasury must surely recognise and understand the massive difference between a working four-wheel-drive vehicle taking animal feed up a snowy field in late spring to early lambs and a ““Chelsea tractor”” sitting outside a posh flat in Kensington. I hope that the Government will at some point accept an amendment that will force them at least to report on the Bill’s impact on working vehicles, whether four-wheel drives on hill farms or Land Rovers or other four-wheel-drive vehicles used, for example, in mountain rescue. Clause 26 removes the small companies relief. Corporation tax was charged at 0 per cent. up to £10,000. At £10,000, there is marginal relief at 19 400ths up to £50,000 at which the business rate of 19 per cent. applies. The small business rate applies up to £300,000, with marginal relief up to £1.5 million, calculated at 11 400ths. Clause 26 abolishes the starting rate. The policy is described on page 190 of the Red Book as ““tackling tax motivated incorporation””, and will cost £50 million this year but produce revenue for the Government of £390 million in 2007–08 and £530 million the year after. It might be a positive disincentive to incorporation—the reason why the 0 per cent. rate was introduced in the first place—but I suspect that it will also feel like a disincentive to start and incorporate any business taken alongside the additional burdens of the higher business rate in Scotland and, for many small businesses, rocketing fuel costs. Clause 30, however, on first-year allowances for small enterprises, appears to assist and provide an incentive for small companies. It was first announced in the pre-Budget report in 2005, and increases the rate from 40 per cent. to 50 per cent. for one year from April 2006. In December, the Chancellor estimated that 4.2 million businesses would benefit. However, the Red Book shows the estimated cost to be nothing for this year and £60 million for 2007–08, with a yield of £15 million in 2008–9. For 2007–08, if there is a cost of £60 million, and assistance to the value of £60 million, the average benefit to the 4.2 million businesses would be £14.28. I wonder what might be the cost of a small business’s accountant achieving additional relief of some £14. Clause 61 has been mentioned by many Members, and is described in the lobby briefing as repealing"““the exemption for computer equipment made available to employees for private use””." That brief sentence masks the report on the BBC on 26 March suggesting that some 2,000 people could lose their jobs after the Government pulled the plug on the scheme. Perhaps Labour thinks that 2,000 lost jobs are a price worth paying for the £300 million that the Chancellor will claw back over the next three years. Talking of clawing back money, North sea oil has been a honeypot for the Government. Clause 149, entitled ““Attribution of blended crude oil,”” will take another £200 million out of the North sea over the next three years. That is an extraordinary move, following the £2 billion tax take announced in the pre-Budget report—extraordinary because on 30 March, a week after the Budget, the Paymaster General told me in a written answer that in the pre-Budget report of 2005 the Chancellor had announced a package of measures for the North sea and that"““As part of this announcement the Chancellor committed to no further increases in North sea taxation for the lifetime of this parliament.””"