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Finance Bill

The hon. Gentleman and I will have to agree to disagree on that point. I clearly do not accept his description. The hon. Member for Taunton (Mr. Browne) suggested that capital gains tax should be taxed at income tax rates, but there is a clear view that 18 per cent. strikes the right balance. The Government's strong view is that that 18 per cent. rate rewards investment and enterprise, which is important for the economy. It ensures that people with gains above the tax-free allowance of around £9,600 contribute to the public purse and it remains internationally competitive. The proposals for capital gains tax reform have been controversial. We do not generally consult on changes to tax rates, but wide-ranging discussions with interested parties took place after the pre-Budget report, and the entrepreneurs' relief announced in January was our direct response to the concerns that were raised. Her Majesty's Revenue and Customs have engaged in discussions with tax experts on the technical detail and issued draft legislation for comment ahead of Finance Bill publication. The entrepreneurs' relief directly responds to the concerns raised by business groups and it should receive a warm welcome in the House. The hon. Member for Runnymede and Weybridge said that this was the wrong time to be increasing business tax, and that case was advanced in the previous debate. However, the new entrepreneurs' relief continues to deliver targeted support for business. The change will deliver a massively simpler system that will benefit everyone. The hon. Member for Taunton said that the entrepreneurs' relief makes matters more complex, but again, I do not agree. The reform will replace a significant amount of structural complexity, which is a change well worth having. It will provide a simple system, based on a single headline rate and a focused relief for entrepreneurs. The relief has been carefully targeted to deliver a special 10 per cent. rate for business and enterprise, which, as I said, is essentially what business has been asking for. Overall, the changes introduced by the Bill represent a major and welcome simplification of the capital gains tax regime. The hon. Members for Dundee, East and for Runnymede and Weybridge pressed the matter of entrepreneurs' relief, saying that it was not good enough and it was a small concession, and they referred to the loss of confidence in the UK as a business environment, but entrepreneurs' relief will deliver a 10 per cent. CGT rate for the vast majority of small business owners and material investors. That is a tax saving of up to £80,000 each. Overall, the UK continues to be an excellent place in which to do business, as was said earlier. For example, the relative cost of starting a new business is now equal to that in the US and lower than in France and Germany, and that is why, as my hon. Friend the Exchequer Secretary reminded me earlier, 700,000 new businesses have started up in recent times. The overall changes that we are making are not only good, but welcome to businesses.