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Finance (No. 2) Bill

I am sure, Sir John, that we will have a fuller airing in this debate of some of the issues that were raised in the debate on the previous group of amendments. Under the amendments now before us, we seek to make permanent the temporary increase in income tax relief that applies to VCTs and enterprise investment schemes. The Financial Secretary and I have different views of what a move to 30 per cent. means. He seems to think that it is an increase; I might suggest that it is a decrease—but I am sure that we will return to that topic in a minute. It is worth remembering why the 40 per cent. rate was introduced in 2002. It was intended to stimulate the VCT market, and in the words of the British Venture Capital Association’s pre-Budget submission,"““meet the Government’s objective of creating funds for investment in entrepreneurial companies that stimulate growth and create employment and tax revenue.””" Indeed, it has had the benefit of stimulating the VCT market and raising more funds for investment in unlisted companies. In 2004–05, VCTs raised more than £500 million in funds; press comment around the end of the financial year suggests that they had raised about £730 million. Of course it is worth bearing in mind the fact that in the year before the relief was increased from 20 to 40 per cent., the sales of VCTs were worth less than £100 million.