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Finance (No. 2) Bill

My hon. Friend cuts to the very heart of the policy challenges that any Government face, and which we have been trying to tackle since we took office in 1997. As he said, it is a question of getting the right balance between creating incentives for small businesses to start up and grow, and preventing the abuse and avoidance that we tend to see promoted and taken advantage of. In dealing with the situation that we faced, we had to decide whether to box around with further legislation—and thereby prevent—the marketed schemes and practices that we wanted to discourage, or whether to take instead the step urged on us by businesses, their representative organisations and tax specialist organisations: to create a simpler regime. Clause 26 does that by getting rid of the non-corporate distribution rate and the starting rate. The hon. Member for Fareham described the clause as simply a tax-raising measure, but it is about fairness, not raising taxes. I refer him to the pre-Budget report, in which we announced the measure.