---

Finance (No. 2) Bill

The hon. Member for Rayleigh (Mr. Francois) made a nice try, Mr. O’Hara, but he was not fast enough. I think that it would help the Committee if we reflected on the introduction of the regime, its performance and the current position, to clear up some of the misunderstandings. I assure the hon. Member for Ludlow (Mr. Dunne) that no amendments have been selected. If he looks at the annunciator screen, he will see that it says, ““Clause 61 stand part””. There has been no attempt to amend the clause, which would be almost impossible due to the definitional problems. Furthermore, the clause has nothing to do with home working, so I shall park all those points. At the time of the 1999 Budget, my right hon. Friend the Chancellor said:"““We hope this new measure will encourage business to loan computers to their employees and that it will be as successful as a similar scheme developed in Sweden . . . There are real benefits to business, employees and the wider community from increasing access to computers.””" The digital strategy launched in April 2004 was assessed by the Prime Minister’s strategy unit, with a foreword by the Prime Minister and the Secretary of State for Trade and Industry. The assessment stated:"““The conclusions in this report will be implemented by government and will play a crucial role in improving the cohesion of our society, the wealth of our economy and the quality of the life of our people.””" The report was reflecting on the fact that the home computing initiative was not sufficiently targeted to help the low paid, the unemployed and the excluded. The HCI was underpinned by a tax exemption, which can be found at section 320 of the Income Tax (Earnings and Pensions) Act 2003. It allowed an employer to lend a computer to an employee for private use, tax free. If an agreement between the employer and the employee was in effect a hire purchase agreement, the tax exemption did not apply and any direction issued by the Office of Fair Trading would not cover it. That means that the tax exemption does not apply where the computer equipment has been bought, whether for a mother or otherwise. That is quite clear. As Members have pointed out, the HCI was modelled on a Swedish scheme introduced to increase home computer ownership. The evidence from Sweden shows that between 1996 and 2001 home computer penetration rose by 29 per cent. to 56 per cent., a compound annual growth rate of about 14 per cent. However, over the same period, UK household penetration increased from 27 per cent. to 44 per cent., a compound annual growth rate equivalent to 12 per cent. So the UK achieved a comparable rate of growth in home computer take-up when the HCI was barely used, demonstrating that the HCI itself has not had a strong impact. I am not saying that it has not helped, but other issues have been involved, such as competition and liberalisation. With regard to other international comparisons, a similar HCI scheme was introduced in the Netherlands but it was scrapped several months ago, citing the same sort of reasons as those in the UK. In Sweden, the Agency for Public Management, which is responsible for efficient public administration and promoting e-government, recommended abolishing the scheme in August 2005, as its positive effects had declined while its costs remained high. The Swedish Finance Minister is considering action at present.