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12.16 pm
The Financial Secretary to the Treasury (Dawn Primarolo): This was supposed to be a debate on tax avoidance and offshore trusts. The right hon. Member for Penrith and The Border (Mr. Maclean) spent five minutes on tax avoidance and loopholes and 35 minutes restating the innuendo and the points that the Conservatives have already made against my hon. Friend the Paymaster General. The Opposition cannot stomach the fact that they made a complaint to Sir Gordon Downey--the complaint that they have outlined again this morning--and the report says:
- "We agree that there is no case for saying that Mr. Robinson breached the rules of the House."
Then they make snide comments and direct us away from the debate by making points against other Ministers. I am surprised that the Conservatives want to bring up the poll tax again. I am happy for them to remind the country that they introduced that unfair tax, they wasted £14 billion and they had to change the legislation. They do not want scrutiny of that.
As the Minister responsible, I am replying to a debate on tax avoidance. [Interruption.] Conservative Members can laugh and ridicule as much as they like. The facts stand for themselves--let us move away from the
innuendo. As my hon. Friend the Member for Dudley, North (Mr. Cranston) has said, the general anti-avoidance regulations, on which the Tax Law Review Committee has published an excellent report, could have stood some debate from Conservative Members--but they did not want to know. As the hon. Member for Twickenham (Dr. Cable) said, there are important discussions to be held about the difference between loopholes and evasions--something which the Conservatives do not apparently appreciate as they slip into continual allegations. As my hon. Friends the Members for Erewash (Liz Blackman) and for Wolverhampton, South-West (Ms Jones) have made clear, the Government are pursuing a coherent policy in this regard. It is quite simple: the official Opposition do not have a policy. They want to keep making personal attacks instead of dealing with the issues.
Dr. Julian Lewis (New Forest, East):
Will the Financial Secretary give way?
Dawn Primarolo:
I shall finish this point, and then give way to the hon. Gentleman. It is encouraging that some Conservative Members have a new-found interest in tax loopholes, but it is regrettable that they did not take action to deal with them when they were in government. Perhaps the hon. Gentleman will explain why.
Dr. Lewis:
The hon. Lady's line of defence seems to be that the Government are against tax avoidance in general, but in favour of it in this case.
Dawn Primarolo:
I have not started the line of defence yet; I have not started explaining all the action that the Government has taken to counter tax loopholes.
This debate, secured by the right hon. Member for Penrith and The Border, a former Conservative Minister, has initiated discussion of the Government's policies, how they have been implemented to tackle tax avoidance, and how we shall meet our manifesto commitments to close tax loopholes, as the hon. Member for Twickenham said. The debate allows me to set out what the Government have already done to root out tax loopholes, to explain why we have had to act as a result of the Conservatives' failure over 18 years, and to signal the direction in which the Government intend to go.
Mr. Maclean:
It is very courteous of the hon. Lady to give way. I understand that she will wish to do so rather than try to answer the questions that I have put to the Paymaster General. May I ask her for her personal opinion? She has furiously defended her role concerning the poll tax, and I admire her for saying so. Does she personally agree with the Deputy Prime Minister, when he said on "Breakfast with Frost":
Dawn Primarolo:
Does the right hon. Gentleman agree with the chairman of the Conservative party, when he said on television:
Dawn Primarolo:
The hon. Gentleman confirms it. He must substantiate it outside the Chamber and not seek protection in order to make an allegation without supplying the truth.
Mr. Bruce:
The hon. Lady knows that I said that that charge had been made against the Paymaster General. Does she agree that, since we understand that he is being investigated by the Inland Revenue, he should resign from his job because, effectively, he is being investigated by his own Department?
Dawn Primarolo:
I caution the hon. Gentleman on two points. First, he should look up the difference between avoidance and evasion to ensure that he understands the seriousness of his allegation. Secondly, the allegation that the Inland Revenue is investigating the matter was made in the same newspaper article in which it was said that the Paymaster General had offshore trusts in Bermuda. Opposition Members should not believe everything that they read in the press. They should base their allegations on fact.
Dawn Primarolo:
I shall give way in a moment.
This debate is about Government policy. Conservative Members do not want to hear about Government policy because they know that they do not have a leg to stand on. I shall get it on the record.
Dawn Primarolo:
I shall not give way at this stage. I shall give way to the right hon. Gentleman before I conclude my remarks.
In July, we took action in a series of significant areas where we found exploitation of tax loopholes. In the Budget, we ended abuses of corporation tax, value added tax and the pay-as-you-earn scheme. That action will raise £1.5 billion over five years and relates to points that hon. Members have made about the importance of the security and integrity of the tax system.
Dividends on shares which are trading assets are now treated as part of the holder's trading profits. That will yield £500 million up to April 2001. Conservatives did not do anything about that when they were in government. They are telling us today that they are committed to such action, but they did not do anything about it. They were too busy trying to explain why their colleagues were taking cash for questions to look properly at the tax system.
On acceleration of capital allowances, finance lessors can no longer use subsidiaries to gain advantage. New rules counter arrangements under which unused past allowances were transferred to the lessor through a sale
and leaseback, as was so under the previous Government. They did nothing about it, yet they now tell us that they have a new-found commitment to root out tax loopholes. I am glad that they are late converts. Perhaps we shall see much more committed support of the Government's policy.
Provisions on company purchase schemes counter certain company tax avoidance schemes where a company's owners sell the company to avoid paying accrued or anticipated corporation tax liabilities. That will yield £300 million before 2001. Conservatives did not do anything about that. They did not think that it was important. They were not committed then to rooting out tax loopholes, but, apparently, they are now.
The Government have moved on PAYE avoidance.
Dawn Primarolo:
I shall finish this point and then give way.
The Government have already acted on second-hand goods margin schemes, cash accounting schemes, capital goods schemes and scope of insurance premium tax, in their first Budget, and are now developing their policy.
Mr. Heathcoat-Amory:
Will the Financial Secretary answer just one of the questions that we put to her, rather than trying to answer the questions that she would have liked to be asked? She has referred to our statement that the Paymaster General is under investigation by the Inland Revenue because of his link with his family trust in Guernsey. She obviously knows--because she has made reference to it--whether that is so. Will she tell the House whether the Paymaster General is being investigated? If he is, he must resign immediately. If he is not, will she assert that beyond doubt?
Dawn Primarolo:
The right hon. Gentleman knows that he is merely repeating press speculation. That is typical of Conservative Members' innuendo and allegations. They are interested only in smears.
I have described what the Government have done so far, but I want to talk about the work that we are developing. The Inland Revenue has been carrying out a wide-ranging review of tax loopholes, to which the hon. Member for Twickenham referred.
Mr. Burnett:
Will the hon. Lady give way?
"You may argue that the politician has said one thing and perhaps done another"?
Does she share that view?
"I'm sure that Geoffrey hasn't done anything illegal"?
21 Jan 1998 : Column 969
Perhaps Conservatives should make up their minds about the allegations. One Conservative Member has accused the Paymaster General of evasion. Evasion is illegal.
Mr. Ian Bruce
indicated assent.
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