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Finance (No. 2) Bill

The Liberal Democrats and the House as a whole have to recognise that the private equity market in the City has been one of the great successes in recent years. It now provides more than 50 per cent. of all private equity in Europe; perhaps it is second only to the US in the provision of that capital. The Government have played a part in that by providing the legislative and taxation framework and a business-friendly environment in which that could happen. It therefore seems rather strange that we should be restraining that very success with the proposals in the schedule. I suspect that tax breaks have been the driving force. The hon. Member for Braintree (Mr. Newmark) successfully pointed out that, only a few years ago when things were going into a decline, the change was made and more money was put in. Perhaps it is the very success—now building up to more than £700 million or £800 million—that is causing the Treasury to become rather frightened at the prospect of the amount of tax relief that it is going to allow.