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Finance (No. 2) Bill

Amendments Nos. 10 and 11 would renew and make permanent the temporary rate of 40 per cent. income tax relief for investments in venture capital trusts. When the Government announced in the 2004 Budget a two-year temporary rate set at 40 per cent. to boost investments in venture capital trusts, it could not have been made clearer that it would expire on 5 April 2006. I made those points very clear in our Committee debates on the Finance Bill that year. It was intended as a stimulus to VCT investments and I am glad that the hon. Member for Fareham (Mr. Hoban) recognised how successful it has been over the past couple of years. We have seen record investment in these two years with fundraising of £520 million in 2004–05 and more than £700 million in 2005–06. That record fundraising investment led to substantial growth in the VCT industry, in the number of venture capital trusts and in the number of fund managers. I am sure that the hon. Member for Fareham would accept that it is unreasonable to expect the industry to continue this exponential growth and record fundraising increases every year. What it requires now is stability and our proposals are intended to provide just that.