---

Finance (No. 2) Bill

I would like to reinforce what has already been said from the Opposition Benches. I am sure that the Minister is right in saying that the average investment to date has been £3.8 million, based on the 40 per cent. tax allowance. I suspect that it is more likely to have been the 40 per cent. rate than the eligible assets test that encouraged the greater investment. There is general agreement that the investments eligible under the new rules are likely to be—although they will not always be—more risky in profile than they were, so there may be more justification for maintaining the 40 per cent. rate. At least if it were temporary, it could be extended for one more year and we could see how much more effective the eligible assets test will be. I am concerned that we may face a stop-go problem, irrespective of how much money is invested in the market. Obviously, 30 per cent. is better than 20 per cent., but it seems rather arbitrary. I believe that we could have retained the 40 per cent. rate for one further year while we assessed the effect of the eligible assets test, which would have provided a stronger basis of information on which to judge the success of the scheme. I therefore broadly support retention of the 40 per cent. rate, but I accept that the Government have made a judgment—that is what it is, a judgment—about whether changes to the rules will focus down on the particular companies that are investing. I accept what the Minister said about going back to the original aims of helping younger and growing companies, but because of the reduction in the incentive, it remains to be seen whether there will be enough money to do so. That remains to be proved.