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Finance (No. 2) Bill

I am not going to speculate on the tax policies drawn up by my Front-Bench colleagues. I do not have any knowledge whatever of them. We all believe that tax policies should change and evolve over time; that is not in dispute. If the Government had made a good case for the abolition of the HCI, I would have accepted its abolition. However, they did not, and they have abolished the scheme in the worst possible way. That is the problem. If only they had taken a bit more time and care over its abolition, we might not be having this debate tonight. I remind the Paymaster General that, on 19 January 2004, the then Secretary of State for Trade and Industry—now the Health Secretary—said at the relaunch of the scheme:"““For individuals—as well as cost savings—HCI schemes can help realise personal and professional potential. Through improved ICT access and use, they provide the tools and resources which further individual learning, enhance workplace skills and increase employment opportunities.””" In January this year, on the second anniversary of the scheme, the Minister for Industry and the Regions said that the"““HCI provides a great example of what can be done when the government and industry are working together to fulfil policy objectives””." On 13 March, he repeated that praise in The Times, in a supplement on the HCI, when he stated:"““Since 2003, our home computing scheme has promoted the Government’s aim of widening the ownership and use of computers at home, while helping our aim of bridging the digital divide.””" As the Paymaster General knows, the DTI offered the scheme to its own staff for the first time on 15 March this year. It was still encouraging its staff to take up the scheme even on the very day of the Budget. It came as a total surprise to the Secretary of State for Trade and Industry that it was to be abolished. That is a matter of public record. The most extraordinary quote of all comes from the Chancellor of the Exchequer in his 1999 Budget:"““Inequality in computer learning today will mean inequality in earning power tomorrow, so to bring more computers into more British homes, we will legislate so that employees will be able to secure computers on loan from their companies as a tax-free benefit . . . In the new economy, the more individual talent we nurture, the more economic growth we will achieve.””—[Official Report, 9 March 1999; Vol. 327, c. 180.]" Yet at the precise moment at which that ambition was beginning to be fulfilled, the scheme was abolished. The reasons that the Paymaster General gave earlier for abolishing the scheme do not bear even the most cursory critical examination. The job has not been done. She made derisory comments about a 4 per cent. increase in the number of people taking up that initiative, but that is 1 million households by my reckoning. If we are to be internationally competitive, we have a long way to go to increase the penetration of computers in households. I was particularly disturbed by the Paymaster General’s comments on the abuse of the scheme. Of course, everything that we do is abused. The VAT system is abused, and I expect that many hon. Members would love to see it abolished, but I doubt that that would be the response to its abuse. Instead, the response would be to close the loopholes and to police the system more effectively. That should have been the Government’s response to abuse of the HCI scheme. If there was significant abuse—which I genuinely doubt—the response should have been to close the loopholes. Indeed, the industry is bursting with ideas on how to close every possible loophole. As I said earlier, I take particular exception to the Paymaster General’s suggestion that Evesham Technology was abusing the scheme by marketing other products. Some of those products were specifically allowed under the scheme. Her Majesty’s Revenue and Customs kept the terms vague because it said that it wanted to allow room for emerging technology. Actually, the industry would have liked the terms to be tighter, to avoid any possible abuse. Also, as good entrepreneurs, representatives of the industry offered other products outside the scheme at full market cost in their brochures. They were trying to sell more kit. That is a natural reaction for enterprise. HMRC made the fatal error—a tragic misunderstanding that further undermines my confidence in it—of thinking that those products were being offered as part of the scheme. They were not; they were add-ons that were not included in the scheme’s terms. I accept that there is bound to be a modest amount of abuse, but I fear that the abuse that the Paymaster General has referred to will turn out either to have been very modest indeed or to have involved a complete misunderstanding of what was actually going on. I completely reject the idea that the scheme was not properly focused, because 375,000 lower-paid workers have already benefited from it. All the signs were that, as the scheme extended down into the small and medium-sized businesses, more and more lower-paid workers would benefit. It is no good the Paymaster General shaking her head in disbelief: that is what the evidence showed. It is quite clear that that was beginning to happen. The TUC expressed its strong support for the scheme. Brendan Barber stated:"““The Home Computing Initiative has helped thousands of low paid workers without confident IT skills buy their first ever computer. Unions up and down the country have been promoting the scheme, often linked to training schemes. The sudden closure of the scheme would mean that many hours of voluntary union effort would go to waste.””" I am not sure whether that was the quote that my hon. Friend the Member for Rayleigh cited earlier. I do not think that it was. As for suggestions that higher rate taxpayers particularly benefited, I note that the foreword to the information and guidelines booklet referred to developing,"““a broader skills base for all employees””," not just lower-paid ones. The Government were not focusing on those workers then, and they boasted about the greater benefit that higher rate taxpayers would get from the scheme— the combined taxation benefits meant that the price of a computer fell by 41 per cent. for those higher rate taxpayers compared with a 33 per cent. discount for basic rate taxpayers. An advantage that the Government were trumpeting then is now suddenly a reason for abolishing the scheme. We all know that the sole reason for the removal of the scheme is that the Chancellor wanted to save some money at the eleventh hour. That is the only explanation for the fact that the proposal was put in the Budget at the last minute, without any of his colleagues in Whitehall even knowing that it was being considered. That is what makes it so sad. Although I was interested to hear what the Paymaster General had to say in her opening speech, she sounded more like the Secretary of State for Trade and Industry than the Paymaster General. We need to know where responsibility for delivering the Government’s digital strategy resides. I wrote to the Prime Minister, following an unsatisfactory exchange in Prime Minister’s questions last week, to ask him whether that responsibility now lies with:"““The Chancellor, who did not understand the very serious consequences of his precipitate actions, or the Trade and Industry Secretary, who had only just offered this excellent scheme to his own departmental staff?””" Such crucial policy cannot be made on the hoof in response to bad Budget decisions, but that is what we have seen tonight, and that is why I am so concerned. I could go on at great length, but other Members wish to speak and we wish to hear the Paymaster General’s response. I know that I have sounded excitable and angry at times; that is because I am angry about the way in which the scheme has been abolished. It was delivering the Government’s objectives and I resent the way in which they are rewriting history to say that it was not. The method of its abolition was handled appallingly, causing maximum possible despair and despondency in the industry and destroying the vital bond of trust that should exist between Government and the private sector in this important area of policy. I had hoped, with more time, to list ways in which the scheme could have been improved, all of which have been suggested by the industry, which was discussing them with HMRC officials a few days before the Budget—only a few days before the scheme was abolished. That is what I find utterly extraordinary. Not even HMRC had the slightest idea that the Chancellor was planning to abolish the scheme. It was a last-minute decision, and I plead with the Paymaster General for it to be reconsidered. At least the scheme should be given an extra year for an orderly phase-down while satisfactory alternatives are put in place.