Skip to main content

Registered Social Landlords: Treatment Of Certain Leases Granted Between 1St January 1990 And 27Th March 2000

Volume 408: debated on Tuesday 1 July 2003

The text on this page has been created from Hansard archive content, it may contain typographical errors.

'(1) This section applies to a lease in relation to which the following conditions are met—

  • (a) it is a lease of a dwelling to one or more individuals;
  • (b) it is for an indefinite term or is terminable by notice of a month or less;
  • (c) it was executed on or after 1st January 1990 and before 28th March 2000;
  • (d) at the time it was executed the rate or average rate of the rent (whether reserved as a yearly rent or not) was £5,000 a year or less; and
  • (e) the landlord's interest has at any time before 26th June 2003 been held by a registered social landlord.
  • (2) A lease to which this section applies (whether or not presented for stamping) shall be treated—

  • (a) for the purposes of section 14 of the Stamp Act 1891 (c. 39) (production of instrument in evidence) as it applies in relation to proceedings begun after the day on which this Act is passed, and
  • (b) for the purposes of section 17 of that Act (enrolment etc of instrument) as it applies to any act done after that day,
  • as if it had been duly stamped in accordance with the law in force at the time when it was executed.

    (3) If in the case of a lease to which this section applies the Commissioners are satisfied—

  • (a) that the instrument was stamped on or before the day on which this Act is passed, and
  • (b) that stamp duty was charged in respect of it,
  • they shall pay to such person as they consider appropriate an amount equal to the duty (and any interest or penalty) so charged.

    (4) Any such payment must be claimed before 1st January 2004.

    (5) Entitlement to a payment under subsection (3) is subject to compliance with such conditions as the Commissioners may determine with respect to the production of the instrument, to its being stamped so as to indicate that it has been produced under this section or to other matters.

    (6) For the purposes of section 10 of the Exchequer and Audit Departments Act 1866 (c. 39) (Commissioners to deduct repayments from gross revenues) any amount paid under subsection (3) above is a repayment.

    (7) This section shall be construed as one with the Stamp Act 1891 (c. 39).

    (8) The reference in subsection (1) above to the landlord's interest being held by a "registered social landlord" is to its being held by a body that—

  • (a) is registered in a register maintained under—
  • (i) Article 124 of the Housing (Northern Ireland) Order 1981 (S.I.1981/156(N.I.3)),
  • (ii) section 3(1) of the Housing Associations Act 1985 (c. 69),
  • (iii) Article 14 of the Housing (Northern Ireland) Order 1992 (S.I.1992/1725 (N.I.15)),
  • (iv) section 1(1) of the Housing Act 1996 (c. 52), or
  • (v) section 57 of the Housing (Scotland) Act 2001 (asp10), or
  • (b) is a body corporate whose objects correspond to those of a housing association and which, pursuant to a contract with Scottish Homes, is registered in a register kept for the purposes by Scottish Homes.
  • (9) Section 129 of this Act (relief for certain leases granted on or after 1st January 2000) does not apply to a lease to which this section applies.'.— [Mr. Boateng.]

    Brought up, and read the First time.

    I beg to move, That the clause be read a Second time.

    With this it will be convenient to discuss the following: amendment No. 8, in page 29, line 30, clause 42, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendments Nos. 53 to 57.

    Amendment No. 98, in page 35, line 40, clause 53, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 9, in page 37, line 30, leave out Clause 56.

    Government amendments Nos. 58 to 63.

    Amendment No. 21, in page 42, line 28, clause 62, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendments Nos. 64 to 68.

    Amendment No. 22, in page 47, line 23, Clause 68, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendments Nos. 69 to 76.

    Amendment No. 23, in page 59, line 24, clause 93, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 99, in page 65, line 11, clause 104, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 24, in page 69, line 1, clause 114, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 25, in page 69, line 10, clause 114, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendments Nos. 77 to 79, 143 and 144.

    Amendment No. 26, in page 75, line 2, clause 123, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendment No. 80.

    Amendment No. 100, in page 75, line 22, clause 125, leave out 'SDLT' and insert `PTT'.

    Amendment No. 101, in page 75, line 23, clause 125, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 102, in page 75, line 26, clause 125, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 103, in page 75, line 28, clause 125, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendment No. 81.

    Amendment No. 10, in page 161, line 35, leave out Schedule 5.

    Government amendments Nos. 82 to 86.

    Amendment No. 104, in page 219, line 33, schedule 13, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendments Nos. 87 to 90.

    Amendment No. 27, in page 232, line 37, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 28, in page 234, line 4, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 29, in page 234, line 10, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 105, in page 234, line 26, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 30, in page 234, line 29, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 31, in page 235, line 1, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 32, in page 235, line 4, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 33, in page 235, line 11, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 106, in page 235, line 14, schedule 15, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendments Nos. 91 to 95.

    Amendment No. 34, in page 240, line 17, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 35, in page 240, line 21, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 36, in page 240, line 25, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 37, in page 240, line 27, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 38, in page 240, line 29, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 39, in page 240, line 32, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 40, in page 240, line 37, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 41, in page 241, line 11, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 42, in page 241, line 15, schedule 18, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 43, in page 241, line 21, schedule 19, leave out 'SDLT' and insert 'PTT'.

    Amendment No. 44, in page 241, line 28, schedule 19, leave out `SDLT' and insert 'PTT'.

    Amendment No. 45, in page 241, line 31, schedule 19, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 11, in page 241, line 32, schedule 19, at end insert
    `but no order under this paragraph shall appoint a date earlier than 1st December 2004.'.
    Amendment No. 46, in page 241, line 35, schedule 19, leave out `SDLT' and insert 'PTT'.

    Government amendment No. 96.

    Amendment No. 47, in page 242, line 22, schedule 19, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 48, in page 242, line 26, schedule 19, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 49, in page 242, line 37, schedule 19, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 107, in page 243, line 10, schedule 19, leave out 'stamp duty land' and insert 'property transaction'.

    Amendment No. 50, in page 243, line 13, schedule 19, leave out `SDLT' and insert 'PTT'.

    Amendment No. 51, in page 243, line 14, schedule 19, leave out `SDLT' and insert 'PTT'.

    Amendment No. 108, in page 243, line 15, schedule 19, leave out 'stamp duty land' and insert 'property transaction'.

    Government amendment No. 97.

    Amendment No. 15, in page 246, line 8, schedule 20, after 'other', insert 'transitional'.

    Amendment No. 16, in page 246, line 9, schedule 20, leave out
    `appear to them appropriate in consequence of abolition'
    and insert—
    `are necessary or reasonably incidental to effect the replacement'.
    Amendment No. 17, in page 246, line 13, schedule 20, leave out
    `appear to the Treasury to be appropriate'
    and insert—
    `are necessary or reasonably incidental to the replacement of stamp duty except on instruments relating to stock and marketable securities; but any such provision or any such regulation which is not necessary or reasonably incidental to such purpose shall not take effect.'.
    Amendment No. 18, in page 246, line 15, schedule 20, leave out
    `annulment in pursuance of a'
    and insert 'an affirmative'.

    No one listening to you read out that little lot, Madam Deputy Speaker, could say that we have not listened. I am afraid that the hon. Members for Arundel and South Downs (Mr. Flight) and for Torridge and West Devon (Mr. Burnett) will say that we have not listened, but we have. We have now reached a group of amendments on stamp duty and stamp duty land tax. I shall deal first with new clause 10, which is one of the many examples of our having listened to the concerns of stakeholders. I shall then deal with the Opposition amendments. Finally, I shall deal with the Government amendments. Some of them are technical, but most again reflect our willingness to listen to concerns that have been expressed in Standing Committee and by stakeholders.

    6.30 pm

    New clause 10 further extends the targeted relief from stamp duty for registered social landlords. Many RSLs have been using a particular form of lease under the impression that it was exempt from stamp duty. However, it now appears that those leases should have been stamped. Recognising the valuable role played by RSLs, we do not believe that it is appropriate now to seek stamp duty on the many lease agreements currently in place, not least because under current stamp duty provisions, it is unclear whether the liability should be met by those RSLs or their tenants.

    The new clause therefore exempts from stamp duty indefinite tenancy agreements granted between 1 January 1990 and 27 January 2000 where the landlord at any time before 26 June 2003 has been an RSL. That means that it will apply to indefinite tenancy agreements both granted by and assigned to RSLs. The new clause also removes the administrative burden of stamping tenancy agreements that have not previously been stamped, which means that RSLs will now have certainty that their tenancy leases comply with stamp duty legislation. I commend this worthwhile new clause to the House.

    I now turn to the Opposition amendments. Amendments Nos. 8, 21 to 51 and 98 to 108 simply attempt to change the name of the tax and would have no effect on its scope or operation. Their aim is clearly to cause unnecessary alarm and confusion among house purchasers and their advisers by suggesting that the Government are introducing a new tax— [Interruption.] Quite so; Opposition Members attempted to make that suggestion throughout the proceedings in Committee. I should have thought that it had been rebuffed sufficiently for them not to want to repeat their folly on the Floor of the House, but I fear that that is not the case.

    I fear that we are now about to hear folly in triplicate from the hon. Gentleman.

    I am not sure I am grateful to the Chief Secretary for giving way on that sour note, but perhaps he will answer this question: in what sense is this tax a stamp duty, since it involves neither a stamp nor a duty?

    It is a reflection of a continuing process of modernisation that was begun by the Conservative party, which should welcome it. I am surprised that, having heard the arguments, the hon. Gentleman, who has an open mind, should persist in that one.

    Let me emphasise that those who already pay their way—the vast majority of purchasers and their advisers—will notice little difference as a result of the implementation of SDLT. The rates for residential purchases will remain the same. The main difference will be that payment of SDLT will be accompanied by a return rather than an original document, but the information on the return will be virtually the same as that already provided to the Revenue, so there is no change there.

    The legal and accountancy professions are familiar with the name "stamp duty land tax" as a result of the customer education programme that we have already launched. It would cause a great deal of needless confusion if, in the unlikely event of the amendment appealing to the House, that name were to be changed. Those who will notice a difference are those who have used the archaic features of stamp duty for avoidance purposes. The modernised structure and procedures will ensure that they pay their proper share. I hope that the Opposition will support us in that aim and the changes that are necessary to achieve it.

    This is where I shall labour the point at a little length—

    That is very unfair. It is important to point out the history to Opposition Members. In 1986, the then Conservative Government introduced stamp duty reserve tax. Precisely the same strictures that the hon. Member for Tatton (Mr. Osborne) threw at me might have been thrown at my predecessor or the Financial or Economic Secretaries of the time. Of course, what was introduced was a tax on transactions involving chargeable securities, which does not involve the physical stamping of a document, but I cannot remember anyone, whether from the Government or the Opposition, suggesting at that time that the name was misleading. [Interruption.] I was not in the House at that time. Indeed, I suspect that the hon. Member for Tatton was still in primary education or, as that is not possible even for one so youthful, in the sixth form.

    The hon. Gentleman was in the fifth remove: no doubt he was the terror of the fifth remove.

    There is absolutely no basis for the amendments that the Opposition have tabled in an attempt to persuade the House of the virtues of a change of name, and I urge the House to reject them.

    Amendments Nos. 9 and 10 are perhaps the more serious Opposition amendments. They would remove the provisions relating to the SDLT charge on the rental element of leases. Of course, Opposition Members are well aware that there is an existing stamp duty charge on the rental element of leases. However, since stamp duty on land transactions will in general be abolished from the implementation of SDLT, the amendments would mean that there was no charge at all—not even the current one—on the rental element of the leases. That in itself is enough to make me urge my hon. Friends to resist the amendments. Indeed, I hope that on reflection Opposition Members will recognise the error into which they have fallen in tabling them.

    Of course I shall give way to the hon. Gentleman, who may have been reflecting even as I have been speaking and may want to assure us that that is not the intention.

    I am grateful to the Chief Secretary for giving way. He is being a little disingenuous in suggesting that the stamp duty on leases will disappear altogether. He knows as well as I do that many predictions suggest not only that there will be an increase of four to eight times in the stamp duty payable on an average 10-year lease, but that, in many circumstances and in exceptional cases, the amount payable in relation to longer leases could be very much higher.

    I am afraid I do not accept that analysis, and I shall explain why. As is so often the case when the effect of amendments would by any definition be disastrous, we will no doubt hear from the Opposition spokesman that these are merely probing amendments designed to allow a debate—in this case on the lease duty proposals. As the Opposition denied themselves in the Committee of the whole House by concentrating at length—I do not criticise them for this—on the other, perhaps less significant, aspects of the Bill, it is right for me, as they clearly desire it, to set out in a little more detail the Government's approach to the charge on the rental element of leases.

    Stamp duty payable on the rental element of leases, which is often called lease duty, has long been out of step with the duty payable on purchases, and the existing structure of lease duty distorts commercial decision making. The current charge is on just one year's rent, at rates that vary according to the length of the lease. A lease of 35 years is charged at 2 per cent., whereas one of 36 years is charged at 12 per cent. The Government believe that the decision to own a property leasehold or freehold, or on what type of lease to take, should be business led, not tax led.

    After extensive consultation, we now propose a new lease duty structure to reduce such distortions while securing a fair amount of tax from those transactions. The Government are still open to comment on the proposals. My officials have recently had positive and constructive meetings with interested parties. We are perfectly prepared to consider an alternative structure that meets the Government's objectives equally well. Under the proposals, lease duty will, as now, be a one-off, up-front charge on rents, but based instead on the value of the lease over its term, using total rent discounted to net present value. That approach surely better captures the value of a lease to the lessee and reflects modern commercial practice in the treatment of future payments.

    The £150,000 zero rate threshold for purchases will apply equally to the value of rents on commercial leases, so that leases where the net present value of rent over the term is less than £150,000 will be exempt. That will take 60 per cent. of all commercial leases out of the charge completely; and businesses that do pay more under the proposals will pay at a flat rate of 1 per cent., which is still considerably less than the 4 per cent. on an equivalent purchase. That decision was welcomed by the industry.

    The structure narrows the gap between charges on leasehold and freehold transactions without imposing an unfair burden on large businesses, and removes the burden completely for smaller leases such as those typically used by small businesses and start-ups, where help is most needed and where this Government have done much to assist. Most residential rental leases are currently liable to lease duty, but under the proposals the vast majority will fall below the £60,000 threshold. A small number of residential leases, about 5,000 per year, will be liable—broadly those with the very highest rents. The proposals thus reflect the Government's commitment to fairness, to encouraging enterprise and to reducing regulatory burdens. I ask my hon. Friends to show their support for those commitments by rejecting the amendments decisively.

    Amendment No. 11 aims to defer the introduction of stamp duty land tax until at least 1 December 2004. Hon. Members will be aware that the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) has already written to my right hon. Friend the Chancellor on that subject; the hon. Member for Hertford and Stortford (Mr. Prisk) kindly informed me that my reply to that letter was received yesterday. The terms of that reply were similar to those in which I shall suggest to the House that the amendment should be roundly rejected.

    Deferring the modernisation process for another year simply does not make sense. We have already told the House about the widespread avoidance of stamp duty, which will undoubtedly continue if reform is not pursued. We received general recognition in the course of our deliberations in Committee that the issue was a cause for concern: that ought not to divide the House. We have explained that half of all commercial property transactions worth £10 million or more pay stamp duty at 4 per cent., whereas the other half pay nothing. That cannot be right. The continuation of such unfairness for another year cannot be justified, and would lead to a loss of yield of around £250 million.

    I note that Conservative Members did not seek to defend to my hon. Friends or me in Standing Committee unfair tax avoidance of the sort that we described. Indeed, the hon. Member for Hertford and Stortford said that he supported the Revenue in challenging
    "unreasonable actions that seek to enable someone to avoid their fair tax liabilities."—[Official Report. Standing Committee B, 3 June 2003; c. 312.]
    Why, then, would Conservative Members table an amendment that would leave the door wide open to avoidance for another year—especially given that they tabled the same amendment in Committee of the whole House, then chose not to explore it but instead to have an extended debate on other issues?

    6.45 pm

    A target date of 1 September 2003 aims to strike a balance between the urgent need to tackle avoidance and allowing sufficient time for taxpayers and their agents, including solicitors and other conveyancers, to make the necessary preparations. Deferral would merely ensure that the existing unfairness endures for another year—good for avoiders, but bad for everybody else. I therefore urge the House to reject amendment No. 11.

    Amendments Nos. 15 to 18 seek to restrict the power of the Treasury to make regulations to amend or to repeal enactments relating to stamp duty and stamp duty reserve tax following from the abolition of stamp duty, other than on instruments relating to stock or marketable securities and certain partnership transactions. They would also make the regulations subject to an affirmative resolution of the House. That is undesirable, because limiting the scope of the regulations in that way would prevent the making of regulations that ensure that stamp duty and stamp duty reserve tax on shares work properly together.

    Moreover, amendment No. 18 would lead to uncertainty over whether regulations that are in place have full effect. I fear that that would create the danger—to which the hon. Member for Torridge and West Devon (Mr. Burnett) will be acutely alert—of lacunae arising. That of course would never do, so I hope to see the hon. Gentleman in the Lobby with us on this group of amendments, if nothing else.

    Will the Chief Secretary acknowledge that one of the many lacunae in the stamp duty provisions is the fact that there is a continuing raft of legislation? He has even offered to reconsider lease duty. When will it stop? When will we know exactly what are the Bill's provisions on stamp duty?

    I am very fond of the hon. Gentleman, but he really must avoid falling like so many of his Liberal Democrat colleagues into the trap of wanting it each and every way: they want the best of all possible worlds—to have their cake and eat it. Realistically, he cannot take us to task for not consulting enough, then, when we do consult and say that we are open to making new proposals—if they meet our objectives—in the light of those consultations, complain about a lack of certainty. That is unfair. The hon. Gentleman is a fair-minded man, so for him to take us to task for being open and consultative is uncharacteristically unreasonable.

    I am extremely grateful to the Chief Secretary—or should I call him the chief? Hail to the chief. My point is that we do not want continuing stamp duty land tax legislation for perhaps another six months without proper scrutiny or a proper opportunity for this House to debate it in detail. That is what disturbs us.

    I hear the hon. Gentleman, who makes his point in his usual way. However, that argument would not lead us to abandon our commitment to consultation and the careful consideration of alternatives—nor does it make the amendments any more acceptable. The purpose of regulations under schedule 20 is to enable stamp duty legislation to be repealed when it is no longer needed and to ensure that the current effect of the legislation is preserved for stock and marketable securities. Regulations will not be made under schedule 20 to increase the scope of stamp duty or the rate at which it is payable. I hope that that will be of some comfort to the hon. Member for Torridge and West Devon. There is no need to make regulations subject to affirmative resolution. I hope that, on the basis of that assurance, hon. Members will not try to divide the House.

    Hon. Members are anxious to hear from the hon. Member for Hertford and Stortford, so I shall deal with the Government amendments expeditiously. They fulfil the commitments that I made in Committee and clarify other aspects about which we have received representations. Some—for example, those on appeal procedures—are essentially technical. However, most make substantive changes, for example, on the rules for sub-sales, to meet genuine concern; that were shared by all members of the Committee. I should like to take the opportunity to thank all those inside and outside the House who have engaged in constructive dialogue and continue to do so. We had some good sittings in Committee, and they have led to improvements to the measure.

    Amendments No. 96 and 97 cover issues that relate to the transition from stamp duty to stamp duty land tax. Amendment No. 96 ensures that there is no charge on anyone who substantially fulfils a contract before Royal Assent. That deals with anxieties that such a charge could be perceived as retrospective. Amendment No. 97 preserves the current practice whereby an agreement for a lease can be presented for stamping at the same time as the exit duty lease without incurring interest or penalties. Amendments Nos. 53 to 56 deal with the treatment of sub-sales and other circumstances in which the purchaser's rights under a contract are transferred to a third party.

    Clause 45 as drafted would impose a charge on a contracting purchaser, whether or not he completed, at the latest when the ultimate purchaser completed. Hon. Members know that we debated the issue at length in Committee. There was particular concern that there might be a charge on contracting purchasers who do not complete or, indeed, substantially fulfil the contract. I gave an assurance that it was not our intention that such purchasers should be subject to a charge. The amendments would give effect to that assurance.

    Contracting purchasers will not be charged stamp duty land tax solely as a result of completion or substantial performance by the ultimate purchaser. On the other hand, a contracting purchaser who substantially performs, for example, by going into possession, will be charged stamp duty land tax. That charge is fair and creates a level playing field for different classes of taxpayer, but we are anxious to know about specific transactions that might operate unfairly. Hon. Members, as well as the professional associations and others, will doubtless have views to express if such instances arise.

    Amendments Nos. 57 to 59 and 81 amend clause 58 and make consequential amendments to other clauses. The clause allows relief for the acquisition of an existing dwelling by a house builder when a new dwelling is being given in exchange for the existing one. The amendments fulfil the commitment that I made in Committee to extend the relief to cases in which the house that the builder acquires is worth more than the new dwelling and the householder is downsizing. Members of the Committee will remember our specific concerns about senior citizens who try to downsize in preparation for their old age.

    I certainly thank Opposition Members for their contribution to a constructive debate in Committee.

    Amendments Nos. 70, 78, 79, 143 and 144 make the necessary adjustments to ensure that stamp duty land tax works in the context of Scots law and conveyancing practice. I am grateful to my hon. Friend the Member for Glasgow, Maryhill (Ann McKechin) for her contribution to that debate.

    Amendments Nos. 60 to 67 and 84 to 86 cover our commitment to ensuring that the Bill covers the relevant Welsh institutions and planning institutions. The hon. Member for East Carmarthen and Dinefwr (Adam Price) made an important contribution to our deliberations on those matters in Committee.

    Amendment No. 68 replaces a reference to an obsolete Act, in relation to which we had some fun in Committee. Amendments Nos. 69 and 71 widen the definition of financial institutions to allow for the wider development of alternative property financing arrangements such as Islamic mortgage products. Many inside and outside the House welcomed that.

    Amendment No. 72 clarifies the circumstances in which purchasers need to self-certify when they register land with land registries. Amendments Nos. 73 to 76 deal with applications for deferred payments, clarify the way in which tax is calculated and ensure that there are sufficient powers to provide for appeals, returns and postponements. Amendments Nos. 77,87 and 95 ensure that the appeals regime for stamp duty land tax is in line with that for other taxes.

    Amendment No. 80 covers instruments that will remain within the remit of stamp duty rather than being subject to stamp duty land tax after the tax has been implemented. Those instruments give effect to contracts that are entered into on or before the date of Royal Assent, provided that the contract is not varied or assigned after Royal Assent. Anxiety has been expressed that instruments that complete such contracts would not be within the remit of existing stamp duty and thus might escape charge altogether. That was never the Government's intention. The amendment puts it beyond doubt that instruments that complete such contracts remain within the remit of the stamp duty charge.

    Amendments Nos. 82 and 83 make technical changes to schedule 7, which deals with group relief, in line with the commitments that I made in Committee. I commend all the amendments to the House.

    I draw hon. Members' attention to my entry in the Register of Members' Interests. I thank the Chief Secretary for his remarks. I am not sure that they did not neatly erase some parts of the debate in Committee, but the process was positive and I thank him for his opening comments.

    Before considering the amendments that we tabled, I should like to consider new clause 10 and the 45 other Government amendments. The fact that the Government have to make 46 changes to a single aspect of the measure at this late stage shows the shoddy handling of their proposals for a new land tax.

    I welcome the Government's action in new clause 10 and their belated recognition of an omission. It is a shame that the action had to be rushed at the last minute, but the change is nevertheless welcome. However, I have two concerns and I hope that the Chief Secretary will be able to deal with them in his reply.

    As the right hon. Gentleman said, new clause 10 relates to registered social landlords and subsection (1)(e) sets out one of the five conditions in which the new clause operates. It states that as a condition,
    "the landlord's interest has at any time before 26th June 2003 been held by a registered social landlord."
    The danger is that that is open to uncertainty and therefore abuse. Perhaps the right hon. Gentleman will answer the following questions. What happens if the registered social landlord holds the property or the interest for only one month? What if that month is before 26 June 2003 but outside the qualifying period of 1990 to 2000? That could lead to uncertainty and possibly abuse. I hope that the Chief Secretary will put on record the Government's interest and intent.

    I also wish to draw hon. Members' attention to subsection (3). It states that the commissioners shall pay to each person
    "as they consider appropriate an amount equal to the duty … so charged."
    There is a potential contradiction with subsection (5), which states:
    "Entitlement to a payment under subsection (3) is subject to compliance with such conditions as the Commissioners may determine".

    7 pm

    My concern is that this language is somewhat open-ended. I recognise that there is a need for subjective judgment by the Revenue, but can the Chief Secretary explain to the House and put on the record exactly the conditions that he and the Government have in mind? Subject to the answers to such questions, we are willing and happy to support this important correction to the original Bill.

    Government amendments Nos. 54 to 56 refer, as the Chief Secretary said, to what we know as off-plan sales. During the convivial debates—as he seems to remember them—that took place in Committee, there were occasions when, among that conviviality, it appeared that there were very large holes in the Bill. These amendments, among the many others, are intended to till one such hole: the question of how the Government intend to treat off-plan sales. May I be the first to welcome the Government's U-turn on this issue? [Interruption.] I can see that the Chief Secretary does indeed accept what I have just said. I understand from his comments that these amendments will seek to fulfil the terms of our own proposal as presented in Committee, which was that off-plan sales should be exempt. Indeed, we withdrew that proposal in Committee only in order to allow the Government to introduce their own solution.

    As I and other Members have had only 48 hours in which to consider these amendments, along with the other 42 Government amendments, I do have a couple of brief questions, as the Chief Secretary might expect, and I should be grateful if he would respond to them. Which representative bodies did the Government consult in drawing up the amendments, and can he name the organisations that have expressed support for them? Can he confirm whether the Government intend to include all off-plan sales, or are there any that they are seeking to exclude through these amendments?

    The Government have tabled a series of amendments that are intended either to correct previous omissions or to provide clarity. Naturally, we welcome any attempt to clarify this legislation, but it has to be said that had the Government consulted properly in the first place and allowed sufficient time in Committee, many of the amendments would not have been required.

    In fairness, I do welcome amendment No. 74, which seeks to include provision for appeals under clause 90. I accept that that seems a sensible move. Do amendments Nos. 93, 94 and 95—they apply to schedule 17, which deals with appeals procedures—represent an enhancement or a diminution of an appellant's rights? I appreciate that many people will have assumed that the former is the case, but I should appreciate his confirming that that is indeed so.

    I turn to Government amendments Nos. 58, 57, 59 and 81, which seek to amend clause 58. Members of the Committee will recall that we, Her Majesty's official Opposition, sought to amend this clause. The underlying problem is that the Bill as drafted would permit people to part-exchange their home for a new one, but only if they are trading up to a more expensive property. The result would be the bizarre situation in which a multi-millionaire could benefit from such relief by trading up to a new mansion, but an elderly couple hoping to trade down would in fact face a tax bill. Despite the earlier protestations from Ministers—I remember them, but perhaps the Chief Secretary is happier to gloss over them—they have now at last relented. I should therefore like to welcome the amendments: on this occasion—but perhaps only on this occasion—it is true that the Government have actually listened.

    Indeed, but I hope that he will be listening later.

    I turn to our amendments and to the substance of the issues behind them. Amendment No. 8 relates to clause 42, which introduces an entirely new tax. I did enjoy the exchanges involving my hon. Friend the Member for Tatton (Mr. Osborne), but the truth is that when something is called a tax, it is a tax; the Chief Secretary will, we hope, learn that soon. Supported by 82 other clauses and 17 schedules, this provision represents the single most important tax element in this year's Budget and in the Bill before us. Amendment No. 8, together with its consequential amendments, would correct the name of this tax to reflect what it is seeking to charge. It also highlights the fact that, despite the Chancellor's promises of last year, this initiative is about not tax reform but raising tax revenues.

    Clause 42 describes this new tax as a "stamp duty land tax", yet any first-year lawyer knows that stamp duty and land tax are two entirely different things, both in law and in practice. Stamp duty is a charge on authorising documents; land tax is applied to real estate—in this case, to land and to property transactions. So the bizarre idea of bolting the two together in the hope that no one will notice is most peculiar: it is to create something that, in tax terms, is both fish and fowl; It is a contradiction in both term and tax. As someone said to me recently, it is an attempt to create a push-me-pull-you tax, but I suppose that it is no surprise that this Government should wish to face both ways at once.

    The real reason why the Government have chosen this oxymoronic name is to hide the fact that they have broken their promise to modernise stamp duty. Their consultation document promised that the reforms would create a system that
    "better reflects modern commercial practice".
    Most important of all, we were promised that this new reform would deliver fairness for all, and yet, almost immediately after the consultations began last year, things went horribly wrong for the Revenue and the Government. Their choice of discount rate was shown to bear no relation to the open market, and the leading experts on their consultation committees described their preferred charging for leases as
    "the worst of all possible options … which would lead to extreme charges."
    It was then pointed out that the Government had forgotten to account for the thousands of hotels, restaurants and shops that pay variable rents. So by January of this year it was clear that the position was irretrievable. That is why, on 21 January, Ministers instructed the Revenue to stop consultations immediately and without explanation. The result is that this property transaction tax—for that is what it is—is neither fair nor modern. It is an ill-conceived tax, and, after a heavily guillotined parliamentary programme, it remains ill considered.

    I shall give the House two simple examples of why this tax is wrong. When the Government promised us last year that they were going to modernise stamp duty and achieve fairness, everyone assumed that would include removing what is known as the slab effect. This term refers to the tax's rate structure, whereby a single rate applies to the whole purchase price. Thus, a young couple buying their first home at £250,000 would be liable for £2,500 in tax; but were they to pay a pound more, they would have to spend £7,500 in tax—three times the lower figure. This iniquity is repeated at each threshold: at £60,000, at £250,000 and at £500,000. So this was a great opportunity for the Government to sweep away this ancient and unfair tax legislation, yet what do we find? Through this Bill, they have written that iniquity back into legislation. What a wasted opportunity. What a failure to reform.

    Just as bad is the Government's determination to persist with applying this tax on VAT on any consideration. Despite our apparently convivial discussions in Committee, and all the pleas from the professional bodies, the tax as it stands tonight will still be charged on any VAT paid. It is therefore a tax on tax.

    Will the Chief Secretary explain the logic behind the proposal? In what possible way is it modern commercial practice? In what sense is it fair? In respect of the slab effect—the tax on tax—the Government had the opportunity to deliver on their promise of fairness and modernity, but they have failed in both.

    As the Chief Secretary anticipated, our concerns about the tax go further. Most important of all is the way in which the new tax hits leasehold occupiers—hence our amendments Nos. 9 and 10. At present, stamp duty on leases is calculated by reference to the lease length and the average annual rent. Under clause 56 and schedule 5, the new tax will be charged at 1 per cent. of the value of the rent payable over the whole lease term. In practice, as all the outside experts have shown, that would lead to exceptional tax rises. I should add that the Chief Secretary admitted in Committee that those rises were over and above any revenue that would come from clamping down on tax avoidance. This is extra money that businesses will have to pay.

    For example, retailers face an additional tax bill of £130 million on new store openings. Dixons told me that it faces a tax bill of £2 million if the tax is implemented, and B&Q advises me that, for an average store, the tax bill will rise from £35,000 to £285,000—an eightfold increase.

    My hon. Friend is making a powerful and articulate case. Is he aware that the latest figures from the British Retail Consortium show that the annual additional cost to retailers would be £238 million?

    I am grateful to my hon. Friend. As always, there appears to be a gap between the reality perceived by the Government and the reality that Opposition Members deal with. He is right: this is a bill that businesses will have to pay, and that is the problem.

    With a starting threshold of £150.000, the new tax—despite the Government's warm protestations—will catch most occupiers with an annual rent of between about £12,000 and £15,000. That includes the vast majority of companies in the Chief Secretary's London constituency, and most companies in our major cities. Thus the Royal Institution of Chartered Surveyors has shown that, for example, a factory of 1,000 sq ft in London on average rents for 11 years will pay £5,251 more in tax. An office of 1,000 sq m in Leeds, however, on average rents for a 10-year period, will pay £17,000 more in tax. In Glasgow—and this may be of particular concern to you, Mr. Speaker—a 500 sq m shop on average rents for 15 years will have to pay another £50,537 in tax. That is a fivefold increase.

    Opposition to the Government's plans does not come only from the retail sector. It is much wider than that—pubs, clubs, bars and restaurants are all up in arms. The Association of Licensed Multiple Retailers has highlighted the fact that pubs, for example, tend to operate on longer leases of between 10 and 30 years. Assuming an average pub rent of £30,000 over an average lease term of 20 years, the value of the transaction would be about £600,000. At present, the existing stamp duty would amount to £600, but the new tax would cause the cost to rise tenfold, to £6,000. How does the Minister justify that rise? The ALMR has said that it would result in
    "major market distortions, drastically increasing the entry hurdles for small businesses."
    What is the Chief Secretary's response to that?

    In his Budget speech, the Chancellor specifically cited tax avoidance as the key reason for tackling lease duty, and the Chief Secretary repeated that today. I can perhaps understand that argument when it is applied to the abuse of special purpose companies, but it makes no sense when applied to organisations taking out leases. Is the Chief Secretary seriously telling the House that businesses choose to lease a shop or office just to avoid tax? It is nonsense.

    Moreover, in his Budget speech the Chancellor also excused the changes by telling the House that
    "there will be no duty on 60 per cent. of commercial rental contracts."—[Official Report, 9 April 2003; Vol. 403, c. 279.]
    Loyal to his boss as ever, the Chief Secretary has repeated that statement today. Yet, when challenged—as it has been in recent weeks—the Revenue has been unable to provide any information about the statement, or even the data on which it was based. Many people suspect that it was wrong.

    7.15 pm

    Indeed, as my hon. Friend the Member for Boston and Skegness (Mr. Simmonds) mentioned, the British Retail Consortium has conducted a comprehensive survey. It was released today, and I have a copy here. The survey found evidence that contradicts what the Chief Secretary has said. It covered 125 retailers, 10,000 outlets and 7,584 leases. Its figures paint a picture that is wholly different from the one presented in the Budget. Instead of the much vaunted claim by the Government that 60 per cent. of leases will be exempt, the truth is that 71 per cent. of those surveyed will have to pay. That is the complete opposite of what the Chancellor and the Chief Secretary claimed.

    Will the Chief Secretary tell the House what the basis for his claim was? How many properties and leases were used in the sample? Was it really just a few hundred—including, I am told, lock-up garages? Will the Revenue now publish its data and end the speculation that the Chancellor's Budget statement on this matter has been—to use the common parlance—sexed up?

    The Government's proposals in clause 56 and schedule 5 for taxing leases fail to create a system that is either modern, effective or efficient. Instead, new distortions in the leasehold market will be created. Businesses could have to pay £200 million or more in tax, over and above tax-avoidance measures, and vital market sectors—such as retail, the licensed trade and tourism—will be badly affected. That is why Opposition Members reject clause 56 and schedule 5, and why, with your permission, Mr. Speaker, we intend to press amendments Nos. 9 and 10 to a vote.

    Throughout the outside consultation and the Committee stage of the Bill independent experts have all advised against implementing legislation about which so many unanswered questions remain. What is the true cost of compliance? What will be the impact on private companies participating in private finance initiative and public-private partnership schemes? How will complicated transactions such as sale and leasebacks be treated? Who will be able to apply for the new subsale relief, and who will not? Why has the Treasury chosen a discount rate that bears no relation to the property market? To date, not one of those questions—and there are many others—has been answered satisfactorily. Some of them have not been answered at all.

    I understand that the other place has endorsed the view that the legislation is incomplete. In its 10 June report, the House of Lords Select Committee on Economic Affairs stated that
    "we have heard the strength of the essentially unanimous views of our private sector witnesses urging that the tax would not be in a fit state to introduce on 1 December 2003 … We recommend that the Government should review early in the Autumn of 2003 whether the tax can be got right in time."
    That is why we tabled amendment No. 11.

    In his Budget speech, the Chancellor recognised the need to get the legislation right and offered to delay implementation until 1 December 2003. Yet it is clear that the proposals are incomplete, and that some sections of them are incoherent. Amendment No. 11 has the support of the leading organisations in business and property. They include the Confederation of British Industry, the Royal Institution of Chartered Surveyors, the Law Society of Scotland, the British Retail Consortium, the Association of Licensed Multiple Retailers, and the British Property Federation. The intent of the amendment is to ensure, whatever our reservations about the underlying principles, that the legislation that is enacted is workable, fair and acceptable to the majority of those whom it affects. After all, bad law leads only to greater tax avoidance.

    Because we consider amendment No. 11 to be a constructive proposal, we gave the Chancellor early notice. My right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), the shadow Chancellor, wrote to him last week. Yesterday, the Chief Secretary replied. In his letter, he rejected our amendment on the ground of fairness—that old word again—and because it would lead to a loss of yield of around £250 million. There we have it—the rush to push the Bill through is all about the growing hole in the Chancellor's Budget. The Government are beginning to realise that they will need every penny because they are wasting money, and that they will need to spend more and more if they are ever to have a hope of fulfilling their manifesto commitments.

    The proposed tax increase seems to sit rather oddly with what the Chancellor said in his Budget speech:

    I will freeze stamp duty on homes and business property purchases." —[Official Report, 9 April 2003; Vol. 403, c. 279.]
    How could he possibly say that in the context of the reaction of businesses to the proposals?

    What an appropriate quote. Most Members increasingly realise that what the Chancellor says and what he does are often entirely contradictory. The worry for many now is that with this Government one must always read the small print.

    The Chief Secretary made an admission in his letter: that despite what he said earlier, the Bill was not perfect. He admitted that it was so bad that it will need refining, not just over the next few weeks or months but, inevitably, over the next couple of years. What an appalling admission. Does the Chief Secretary not realise what a message that sends out: that he and his colleagues are perfectly happy to rush through a new tax that is so ill considered it will take years to correct? If the Government's wish truly is to tackle tax avoidance, what possible logic can there be for pushing through a Bill that will take years to correct? What possible confidence can we, or taxpayers, have in the Government, or in what I can only describe as their dodgy duty?

    Given that, and given the lamentable and short reply that the Chief Secretary gave to our amendments, I have grave concerns about the way in which he is approaching the matter. I hope that he will be more positive at the end of the debate. We have many reservations about the Bill, but amendment No. 11 is offered as a genuine way to help to improve the law. I hope that he will reconsider and accept our offer, but if he does not we will—with your permission, Mr. Speaker—be determined to press this matter to a vote.

    It pains me to start off this collection of clauses and amendments by welcoming one of the elements with which the Chief Secretary has already dealt—new clause 10, the successor to new clause 6. We are pleased that the Government have listened to our representations, and to those of others such as the National Housing Federation, on the issue. The Chief Secretary will be aware that we originally tabled amendments Nos. 195 to 197 and 201, which emerged initially in new clause 6 and then in new clause 10.

    The proposal is important because it affects many social housing tenants who would have been adversely impacted by the situation as it was in the original Bill, under which many of them would have faced the uncertainty of a system in which they would have to get their tenancies stamped before they were effective in law. That archaic, unfair and impractical requirement would have caused uncertainty and a great deal of cost.

    The Chief Secretary will know that, by custom and practice—and in Inland Revenue guidance—it has been the responsibility of individual social housing tenants whose rent exceeded particular annual thresholds to ensure that their tenancy agreements had been properly stamped. For a period, this seemed to be a rule or regulation that was not heeded, but it became clear over the last couple of years—as a consequence of a number of cases that came to court—that it was vital that this stamping occurred. Without it, there could be legal uncertainties that would affect the social housing tenants and the landlords.

    The payment of stamp duty under the previous circumstances gave the document a legal standing in a court; without it, a judge could refuse to accept the contract as evidence of the tenancy. The Finance Bill initially formalised the previous situation, which had been uncertain under the law—and certainly under the practice—by essentially making the individual tenants legally liable.

    After considerable negotiation between the National Housing Federation and the Inland Revenue, the federation secured a form of words to ensure that new social housing tenancies were effectively exempt from stamp duty. That is extremely welcome. However, many thousands of tenancy agreements held by social housing tenants and landlords remain unstamped. The concern was that without some exemption or backdating, those individuals would be unprotected in law and their court cases might be thrown out in a court case brought by either of the two parties.

    The National Housing Federation was lobbying the Treasury directly, and we are pleased that Treasury officials listened. The federation also made representations to us, leading to our amendments. We welcome very much the fact that the Government engaged in a dialogue that led not only to the clarification of the new social tenancies, but to the putting in place of an exemption that went back not to the 1995 cut-off—as was initially suggested in our amendments—but to 1990, which is extremely helpful.

    The Chief Secretary will be aware that the concern arising from new clause 6 was that it might not cover those tenancies managed by RSLs where the tenancy had been transferred to the RSL from a local authority. Unfortunately, we were unable to deal with new clause 6 in substance during the Committee, but we are grateful that—in private conversation and correspondence—the Paymaster General was willing to confirm that it was the intention of the Government to make sure that the tenancies in question were also exempt.

    There was a question mark among those on the borders of the Committee—we did not have time to debate the issue in Committee—as to whether new clause 6 offered protection to such tenancies, as envisaged by the Government. The National Housing Federation is again to be commended for detecting the possibility that new clause 6 would not implement in full the Government's intention to exempt such tenancies. We are extremely grateful that the Government have listened to representations, initially by proposing the measures in the original Finance Bill but also by tabling new clause 6 and then new clause 10. The Chief Secretary will want to put it on record today that new clause 10 will provide certainty for RSLs by clearly providing for the fact that the relief will be available both to tenancies granted by RSLs, and to tenancies transferred to RSLs from local authority providers.

    We welcome that element of the new clauses and amendments, but we share the concerns outlined by the Conservative spokesman, the hon. Member for Hertford and Stortford (Mr. Prisk). We welcome the fact that, in Committee, the Government listened to some of the other representations and produced their own proposals to meet matters such as the concerns in respect of trading down.

    However, in spite of the fact that the Government have consulted on this specific matter for perhaps a year, it is clear that the consultation has not been substantial enough and we are left wondering whether the Government's new process—of having a pre-Budget in which serious consultative measures are supposedly brought forward and then implemented in the Budget itself—has really worked in respect of stamp duty land tax. It still seems that we are in for a period of great uncertainty until later this year, when the Government may introduce further proposals on this part of the Finance Bill. As the hon. Member for Hertford and Stortford (Mr. Prisk) touched on, we have the prospect, as the Chief Secretary has himself confirmed, of a further period of uncertainty while the Government contemplate further changes.

    7.30 pm

    A balance has to be struck between the Government's responsiveness to proposed changes and good suggestions that emerge in the course of our proceedings, and introducing proposals that are not properly thought through, leading to a long period of uncertainty, of amendment and the inability of this place to scrutinise all the proposals seriously. Although I welcome some of the Chief Secretary's proposals that address the issues raised in Committee, I hope that he will be willing to accept amendments Nos. 9, 10 and 11, which would delay some parts of the stamp duty land tax. We could then get it right rather than opt for a period of one or two years in which many further amendments would have to be made. That would be destabilising for businesses.

    The hon. Gentleman makes a pertinent point. The Chief Secretary's earlier dismissal of new clause 11 showed that he did not understand what it is about. It would be possible to close the tax loopholes while at the same time undergoing a full and proper consultation to ensure that the full detail, particularly of the lease duty element, is thoroughly thought through, so that proper and sensible structures go on to the statute book.

    I am grateful for that contribution. The hon. Gentleman is right that there is no reason why the Government should not bring forward anti-avoidance and other provisions. However, with changes to tax law as significant as this, it should be thought out, so that we can make sensible amendments in Committee without requiring a further period of consultation and uncertainty for six months and then potentially yet another year of amendment and uncertainty beyond it. When the Government introduced the pre-Budget consultative process, we welcomed the possibility that tax legislation would be better thought through before it came before the House as the Finance Bill, but it has not worked successfully in this case.

    I shall deal first with the issue of the name of the new tax. I know that considerable time has been spent discussing that. It would be difficult to improve on the simplicity of the explanation of my hon. Friend the Member for Tatton (Mr. Osborne) as to why it is not relevant, and I am not sure that the Chief Secretary can overcome that objection. However, the explanatory notes provide a straightforward explanation of why the tax is new and why the proposed name for it is wrong:

    "Stamp duty is over three hundred years old and the legislation was last consolidated in 1891. It is a charge on documents that transfer property, and when duty is paid, stamps are still impressed physically on the document concerned. Unlike more modern taxes there is no provision for the tax to be collected directly from taxpayers by assessment."
    We have assessment, not a stamp, so I do not understand how we can possibly call it stamp duty. To that extent, I fully support the amendment to change the name to a property transfer tax.

    Based on last year's Budget, the Inland Revenue initiated a series of consultative committees to examine technical issues related to the stamp duty reform programme. The Government have provided no particular reason why that consultation came to an abrupt halt, but for some reason it did so in January. Can the Chief Secretary advise us on why that happened? As my hon. Friends have made clear, professional organisations and company after company told us that more consultation was needed. In that regard, it would be interesting to know exactly how many consultations the Chief Secretary has had. He made light of the implications for business, implying at one point in his speech that business welcomed the changes. I find that hard to believe, but it would certainly be helpful if the Chief Secretary could describe the feedback that he has received from business. I doubt very much that it would have been positive.

    To understand the importance of having more consultation before introducing legislation, we need look no further than at the 35-odd Government amendments under review today—with promises of even further reviews. It is obvious that the legislation has not been clearly thought out or properly consulted on.

    I move on to the complex issue of stamp duty and leases. Disgracefully, in my opinion, that issue has not been dealt with during the whole course of the Bill until today, largely on account of the lack of time allowed by the Government for scrutiny. I shall refer to clause 56 and schedule 5, and to amendment No. 9, which would delete them.

    In summary, the main result of the provisions will be significantly to increase the stamp duty payable on leases and unnecessarily to increase the complexity of the legislation and to penalise retailers and people in industry who want to enter into long-term leases by depriving them of the security and certainty of their premises. On the contention that the provisions are necessary to combat tax avoidance, the most objectionable tax-avoidance methods using leases have been counteracted by the introduction of stamp duty land tax, so that the transaction rather than the document is made taxable and charges to payments are extended in return for variations of lease. The residual stamp duty avoidance technique, which the provisions could be said to have counteracted, should he capable of being dealt with in a far simpler way, without penalising commercial transactions. In any event, it arose mainly because of the distortion made in commercial transactions by having rates of duty as high as 12 or even 24 per cent. being chargeable in respect of rents on long leases.

    In addition, it should be borne in mind that the inventiveness in the utilisation of stamp duty schemes has primarily been the result of significant increases in stamp duty since 1997, when the Government came to power. Many of the schemes put in place are utilised by taxpayers only on the basis that the current rates of stamp duty payable are seen as an unfair additional cost, which makes a difference between a transaction making economic sense and making no economic sense whatever. As other hon. Members have mentioned, we are talking about an awful lot of taxpayers.

    Stamp duty at 1 per cent. on the value of commercial property transactions was a price that could be regarded as inconvenient, but acceptable. 'The current rates of stamp duty mean that the need to pay it may make a deal uneconomic or may significantly depress the value of the properties owned by the investors.

    In the press notice published on Budget day, the Government gave the example of a 10-year lease with £10,000 rent per annum. Stamp duty of £200 is currently payable on such a lease, but under the new regime, duty of £835 will be payable, which is a fourfold increase. That is because rental payments total £100,000 over the life of the lease, but once discounted, the net present value is £83,166. However, if the lease were for 20 years, the duty would increase sevenfold or eightfold. For a 35-year lease, the duty might be 15 times as much.

    The Estates Gazette of 3 May stated that an operator such as J D Wetherspoons, which requires 35-year leases and has average rentals of around £150,000 per annum, may be looking at additional costs of £50,000 for each lease after the tax is introduced. I cannot reconcile that with the Minister's statement that businesses were somehow accepting of the new tax. To add insult to injury, if the landlord charges VAT, that is added to the rent in calculating the net present value of the lease.

    The net present value of the rent payable over the term of a lease is calculated by applying one of the most complicated formulas that I have ever seen. In case the Minister has not been told, I must say that most professionals see it as totally ridiculous and way beyond the comprehension of most, if not all, business people. The impact of these changes for companies such as those in the retail and leisure industries, which rely on long leases, will be massive.

    The consultation that the Government carried out on the proposals was, in the end, meaningless, and was shown to be nothing more than the Government having a trawl through the property sector to look for stamp duty loopholes. If the Minister thinks that the industry has not picked up on that, he is mistaken. That is what the industry believes, and I assure him that it will not be forgotten next time he wants consultation on some tax measure.

    Let me look at why I think the changes unnecessary. The most objectionable use of leases for stamp duty mitigation has been counteracted by the introduction of stamp duty land tax. Techniques involved the grant of leases, often to nominees, and their assignment in circumstances in which there was no practical need for stamp duty to be paid on the assignment, resting on the contract schemes. Those schemes would have been counteracted by the fact that stamp duty land tax is a tax on transactions, not documents. After 1 December, it will no longer be an effective means of avoiding the tax. A variant of that was to arrange for a lease to be granted that had a low value because of provisions placed on it that either required the rental rate to be paid or significantly reduced the commercial marketability of the lease. A payment was then made in exchange for the variation of the lease and, under current stamp duty legislation, such payment did not give rise to a charge to stamp duty. Under the new SDLT, such payments will give rise to a charge to tax.

    In addition, taxpayers can no longer rely on the fact that a lease is for a period of less than 21 years to give them the opportunity not to pay stamp duty on the document on the basis that it cannot be registered with the Land Registry and that it might never be necessary for them to rely on it in legal proceedings, which would require it to be stamped. Under the new tax, if SDLT is payable, the tenant is obliged to pay it.

    7.45 pm

    The main scope for stamp duty mitigation, which is not clearly caught by the mere introduction of SDLT, is therefore the use of rent averaging—for example, providing under a lease for between 99 and 999 years that the rent after, say, the first 20 or 35 years should be the greater of market value or £1,000, thus reducing the average rent over the term of the lease by reference to which the stamp duty was calculated. However, that was often used in situations in which the current stamp duty regime would, without such a device, have resulted in an inequitable charge arising.

    For example, where two investors decide jointly to buy a property, one way to structure the transaction is for one joint venturer to acquire a freehold property and the other to acquire a leasehold property in respect of that property. In the case of property that costs £20 million, and assuming a rental return of 8 per cent. per annum, which is £1.6 million, the first purchaser could acquire the freehold interest for £10 million plus VAT and, at the same time, the vendor would grant a leasehold interest to the other purchaser for another £10 million plus VAT, under which amount, equal to half the overall rent, each freehold and leasehold interest would, in general, be equally valuable. One would therefore expect the same amount of stamp duty to be payable in both cases. However, that is not the case. Under the current stamp duty regime, it should be assumed that the acquirer of the freehold would pay stamp duty of 4 per cent. on £11.75 million, which is half the value plus VAT. The amount payable would be £470,000. The acquirer of the leasehold interest would pay the same amount on the premium paid on the grant of the lease, but would also pay stamp duty of 12 per cent. on the rent payable in the case of a lease of less than 99 years, and of 24 per cent. in the case of a lease of more than 99 years. For example, 12 per cent. on £940,000 would be £112,200 and 24 per cent. would be £224,000. That amount could be reduced by drafting the lease so that after the first 35 years, the lease would be reviewed to the greater of market value or £1,000. That, in itself, would significantly reduce the average rent on which duty would be calculated, and there would appear to be no good policy reason why such high stamp duty should be payable in those circumstances.

    I do not deny that these are complicated provisions or, to be frank, that the calculations can be made beyond looking at them on paper. However, from all that I can make out from my own work and from what businesses and professionals tell us, the tax is unfair, the Government have not consulted adequately and the consultation that was carried out has only put up the industry's back. I shall certainly support the amendment.

    I draw attention to my entry in the Register of Members' Interests, particularly my chairmanship of two surveying practices that provide advice to tenants and landlords in the property market, mainly in the United Kingdom.

    I rise primarily to speak in support of the amendments tabled by my hon. Friends on the Front Bench. The provisions would remove clause 56 and schedule 5 and suggest that implementation should be delayed until December 2004, although I do not have the same confidence as my Front-Bench colleagues that the Government will be ready to put the measure into operation by that time, if the consultation process that ended in January is anything to go by, as well as the lack of discussion and responsible answers to the pertinent and appropriate questions and probing amendments put by my hon. Friends in the Standing Committee, I have no confidence that the Government will be ready by December 2004. Indeed, the fact that the Government have tabled 46 new clauses and amendments demonstrates to Members and to people outside the House what a shambles and a mess this part of the Bill is.

    On Second Reading, I spoke about the stamp duty proposals in some detail. At the time, knowing that I had not been fortunate enough to be selected to serve on the Standing Committee, I hoped that I could illuminate some of the problems emanating from the Bill. I hoped that the Government would take that opportunity to explain the methodology, and that they would close some of the obvious apertures and deal with the discrepancies in the Standing Committee. Needless to say, owing to the Government's apparent disingenuousness and to the inevitable programme motion, few of the issues that I raised were clarified. In fact, the inverse is true: the more time elapses, the greater the confusion, uncertainty and bewilderment.

    I do not want to repeat the Second Reading debate, but the House should note that, in my view, commercial property should be decoupled from residential property. Indeed, the Red Book states that
    "the Government will be able to differentiate between the commercial and residential markets, in order to take into account significant differences in the economic circumstances of the two sectors".
    That makes excellent sense, but it is not what is proposed in the Bill.

    Commercial property is an investment vehicle; it is an investment sector, alongside stocks, shares, gilts and bonds and its stamp duty treatment should be the same as for other investment vehicles. It is generally accepted—at least by everybody except Ministers—that not decoupling residential and commercial property has nothing to do with economic benefit or slowing down the commercial property market; it is purely a revenue-raising and revenue-generating exercise.

    There is another more suspicious, bigger picture. As the Government are taking us—some would say slowly, others would say too quickly—towards possible entry to the European currency, where we would lose control over our economy and our monetary and fiscal policy, one of the few levers remaining in the Chancellor's control is the power to control the taxation of property in its various guises. I suspect that that is one of the main arguments that will be forthcoming as the euro entry discussions heat up and we get closer to that possible— but unacceptable—event. The danger is that a precedent will he created for a retrospective view of property transactions and property taxation, hailing a return to the disastrous 1970s, with such things as purchase tax and development land tax, which ruined the development market.

    I have some specific points about the leasehold stamp duty taxation proposals. It is debatable whether rental can he capitalised as if the lease were an asset. Admittedly, some leases carry values: long leases of up to 99 years, some of the ground leases that underlie many residential tenancy arrangements, and some prime retail leases in our main shopping thoroughfares. Although I support the Chief Secretary in his efforts to close the abuse of tax loopholes, most companies lease premises from occupational necessity. Office tenants require space for workers. Industrial tenants require space for plant and machinery. Retailers require an outlet, or outlets, to sell their products. They do not sign leases to avoid paying stamp duty on the alternative freehold purchase. In my experience, that has never happened. The reverse is true for those occupants; they do not want to tie up capital in property but to release it for investment in their business and in job-generating expansion.

    The Chief Secretary said in his introduction that decisions should be business-led, not tax-led. That is right and it is exactly what happens at present, but it will not happen if the proposals reach the statute book.

    Tenants, whether they are industrial, office or retail, want flexibility to react to the market at a particular time. The retail sector, in particular, is constantly changing and evolving. The proposals would stifle innovation and entrepreneurial dynamism. Indeed, I understand that Marks and Spencer might not have initiated the roll-out of its latest small food stores to compete with Sainsbury Local and Tesco Metro if the stamp duty proposals had been in force at the time of that decision.

    My hon. Friend eloquently highlights the dangers in the commercial market. Does he share my concern that the Government seem to be ignorant that, in the real world, the reason retailers are leasing and not buying is that 40 per cent. of them lack an alternative, as is shown in a British Retail Consortium survey published today? Is not that the case?

    I am grateful to my hon. Friend for that information. He makes an extremely good point; it is indeed the case. From my experience of involvement in that marketplace before I entered the House—something to which I shall refer later—trends over the past 15 years show that retailers who for historical reasons had many freeholds in their portfolios have engaged in sale and leaseback, released capital to invest in new plant and machinery, new shopfitting and new employment, and have opened new branches. Unless the Chief Secretary can clarify exactly what will happen, such activities will be much less economically advantageous.

    The problems that my hon. Friend describes are dramatic and he gives useful examples. An article in the Estates Gazette states:

    "Possibly what will evolve is a more liberal association between landlord and tenant, such as a form of partnership or franchise rather than a lease."
    Does my hon. Friend believe that the effect of the proposals will be so dramatic that leasehold could, in effect, go into demise and that people will look for other ways of holding property?

    My hon. Friend makes a good point. I suspect that, to some extent, that might occur, but depending on the interaction of supply and demand in a particular marketplace, at some point, a retailer or occupier may be prepared to take the decision to pay the stamp duty to get a particular store or industrial unit. However, that does not make the provision right and the direct impact will be to reduce the rent that the occupier is prepared to pay, which will have a knock-effect because if an occupier is prepared only to pay a lesser rent, or is only capable of paying less, the building will be worth less to an investor. In the big league, shopping centres and office blocks are owned by pension funds, so all hon. Members and everyone outside the House who has a pension fund will be affected because the value of the properties in those funds will reduce.

    The stock exchange is not particularly safe bet at the moment, so many investors are reluctant to put their money into stocks. Many private individuals are putting their money into commercial property because they believe that it is a safer bet, especially as the leasehold system only allows rents to increase at the moment, but that it is separate argument and I would not wish to go down that route, Mr. Deputy Speaker, because I am sure that you would rule me out of order if I were to do so. However, as was implied by my hon. Friend the Member for Huntingdon (Mr. Djanogly), imposing severe additional costs on many tenant occupiers would have very serious implications.

    8 pm

    Again, my hon. Friend makes an extremely valuable point, tying in the implications of leasehold stamp duty proposals to the wider implications for the economy. Clearly, the economy has been held up in the past few years by retail sales and the property sector. Does he believe that those proposals could turn the property sector, thus destroying one of the last good bits of the economy?

    I alluded to the severe implications for the property sector, but there are much greater implications that could well have an impact especially on the retail sector, which I shall come to later in my remarks.

    I want to raise two specific issues at this juncture, and I hope that the Chief Secretary to the Treasury will reply to them in responding to the debate. First, why did the Treasury initially say that this element of the Budget would be revenue neutral? It clearly will not be revenue neutral. As I said earlier to my hon. Friend the Member for Hertford and Stortford (Mr. Prisk), the British Retail Consortium has said that retailers alone, not the totality of tenant occupiers in the UK, will have an additional tax contribution of £228 million per annum.

    I shall repeat the figure that struck me as most stark on Second Reading: B&Q has said that the proposals will cost it—one company alone—an additional £5 million per annum. The only way that it could avoid paying a bill of that size is to reduce the length of lease that it is prepared to accept, which would have a knock-on impact on property values.

    We are discussing the details, but these proposals are already having an impact on the marketplace. B&Q and other retailers are already saying that, for deals completed after 1 December 2003, they will be no longer prepared to take leases of 25 years and above. That will cause them internal problems because they traditionally write off their enormous shop-fitting costs over the length of the lease. If the length of lease is shorter, they will need a bigger financial hit per annum. That will have an all-round impact, so the store will be less profitable. If stores are less profitable, retailers can only afford to pay their staff less, or they will have to employ fewer staff.

    Is there any evidence to date to show that these proposals might act as a disincentive to multi-stores, such as B&Q, expanding into areas where their employment is much needed, such as market towns and more rural areas?

    My hon. Friend makes a very good point. He is absolutely right, and I shall come to that point a little later in my remarks. What happens in the marketplace will have an impact on those marginal decisions where a retailer may, or may not, expand in a certain area. I shall give some specific statistics for areas, such as the parliamentary constituency of East Ham, where 23 per cent. of the working population are employed in retailing. That is just the sort of place where marginal decisions could have a direct impact on employment in retailing. Many people gain jobs in retailing that are not terribly well paid, but those jobs are necessary to support their lifestyles. I am not sure that there would be much alternative employment in those areas without retailing.

    I wish to return to the total tax take in the retail sector of £350 million, which my hon. Friend referred to slightly earlier. We have concentrated very much on the retail sector, but, of course, there are other sectors. I understand that, under these proposals, the total tax take could be as much as £8 billion, which is more than capital gains tax, inheritance tax and petrol tax added together, so we are discussing enormously significant issues.

    I agree, and my hon. Friend makes a very good point. I had not heard that statistic before, but the £8 billion figure happens to chime with the black hole that the Chancellor currently faces in his Budget. That may be very pertinent, and my hon. Friend may have hit on something very interesting.

    I am grateful to my hon. Friend for giving way again. Is there any evidence to show that inward investors in the property sector are being affected or that foreign investors are having second thoughts about investing in commercial property in this country as a result of these changes?

    My hon. Friend makes a very good point. I was going to talk partly about that issue, but I decided to leave it out because there is no evidence, as yet, that the Chief Secretary's proposals will have a direct impact on inward investment. However, there is no doubt that, because of the United Kingdom's general economic stability during the past 10 years under Governments of both colours—in my view, the Government are trying to spoil that economic stability—we have received enormous sums of inward investment, as the global economy weakens and especially as money has been invested in commercial property in the UK because of the problems in the middle east. However, there is also no doubt that many foreign investors are looking very carefully at exactly what the Government will do in relation to these proposals because they will have a detrimental impact on commercial property values.

    My hon. Friend is teasing out many of the unintended consequences that the Government clearly have not thought of, but is he aware that the British Retail Consortium has highlighted only today the fact that, if the Government's proposals are implemented, 75 per cent. of retailers will limit or stop their expansion?

    I am aware of that statistic, and it returns us to the intervention made by my hon. Friend the Member for East Devon. The greatest impact of the four-to-eightfold increase in stamp duty on leases will be felt at the marginal sites, assuming that 10-year leases are used. Such leases are short in the prime retail sector, where 15-year leases, if not longer, are normally used, so the multiple will be even higher. These proposals will have a significant impact, but whether the 75 per cent. figure is right will only be provable over time.

    The second question that I should like to ask the Chief Secretary at this juncture is how did he, or his Department, arrive at the net asset value figure of £150,000? That figure seems extraordinarily arbitrary. The basis for that calculation may have been a desire to exempt small businesses—the Chancellor of the Exchequer told us that a figure of 60 per cent. was used in the Budget, as the Chief Secretary confirmed in his opening remarks today—but I support what my hon. Friend the Member for Hertford and Stortford said in his polished remarks: that figure is absolute nonsense. It is very interesting that neither the Treasury nor the Inland Revenue will allow members of the public or hon. Members to study the consultation process that the Treasury underwent to arrive at that figure. That suggests that the consultation was not particularly wide and that, if it was wide, it was not particularly deep.

    The British Retail Consortium has undertaken its own survey, covering businesses that occupy 10,000 units in the United Kingdom, which amounts to 40 per cent. of the retail market. I suspect that that consultation process was much bigger than that undertaken by the Treasury, under the auspices of the Paymaster General and the Chief Secretary to the Treasury. Only 30 per cent. of units will be exempt, which, from my experience, sounds high in itself. Huge numbers of small businesses will be caught not by a marginal increase but by an enormous increase. The minimum increase will be four to eight times the amount paid at the moment, and that is if one assumes that businesses have a 10-year lease rather than the more traditional 15, 20 or 25-year lease.

    What will happen when Debenhams or John Lewis acquires a new department store? Owing to the millions of pounds that must be invested to fit escalators and all things that are required in new outlets, such firms can take 99-year leases. Will they have to pay millions of pounds in stamp duty? I assure the Chief Secretary to the Treasury that they will not, because they will find legal documentation to help them to find a way to avoid paying that unnecessary and unjustified taxation.

    The British Property Federation says that no business in London is likely to be exempt, but surely that was not the intended outcome of the Government's attempt—let us be kind—to exempt small businesses. The measure could have a severe impact on the take-up of leases, especially office occupational leases, which is a struggling market, especially in central London. In the second quarter of this year, office supply in central London has continued to increase while take-up has continued to fall. Provisional figures for the second quarter from a major, well established and highly regarded surveying practice show that available office stock throughout central London grew by 10 per cent., to about 27 million sq ft. The take-up during that quarter is expected to be 1.4 million sq ft in the City of London and 1.1 million sq ft in the west end—both figures are well below the long-term average. City office take-up is expected to be down by 56 per cent.

    What does the Chief Secretary to the Treasury think that the Bill will do to the office market in central London, which is at the heart of our financial market? Many firms are trying to sub-let office space and many have reduced their staff because of the state of the stock exchange.

    The Bill could cause not only the office market but the retail market to suffer. My hon. Friend the Member for East Devon made a good point about marginal sites, but not only acquisitions—new stores—in marginal sites might be shelved. The opening of new stores in prime pitches might be cancelled because of the extent of the additional taxation under the Bill. Leases on existing sites might not be renewed, so properties that were occupied might be vacated. That could cause an area to go downhill and it could become impossible to re-let a space if the pitch changed or if there were an economic change in one area compared with others.

    There was a seminar this morning on how to renew seaside and coastal towns, some of which have suffered over past years. One of the problems in several of our seaside towns is the proliferation of charity shops, which happens because retail units are empty. Surely we should make it easier for people to take offices and encourage them to do so rather than implementing the Bill's measures, which would represent a move in the opposite direction.

    My hon. Friend makes a good point. Skegness is part of my constituency, so I was hoping to attend the seminar. Unfortunately, it clashed with the time when I had to go to the Public Bill Office to hand in the title of my ten-minute Bill. I have asked the Chief Secretary's office for any information that emanated from the seminar.

    The main driving force behind the proliferation of charity shops is the fact that they do not pay rates, which means that they have fewer overheads than normal retailers. Although I am not suggesting that we change that situation, charity shops have a competitive advantage that allows them to go into weaker retail pitches than normal retailers that do not enjoy that tax break.

    8.15 pm

    I shall emphasise the importance of retail employment throughout the United Kingdom. Fortunately, a document with which the House of Commons Library provided me provides information on the constituencies of the Chief Secretary, the Paymaster General and myself on the same page. In my constituency, 15 per cent. of the work force are employed in retail—that figure excludes the motor trade. In the Chief Secretary's constituency, 10 per cent.—5,000 people—are employed in the retail sector. Twelve per cent. of the work force in the Paymaster General's constituency of Bristol, South are employed in retail. Those statistics are on the high side but they are fairly average. I shall cite a few extremes. In East Ham, 23 per cent. of the work force are employed in retail. The figure is 21 per cent. in Hendon and 24 per cent. in Thurrock—one in four people are employed in the retail trade.

    Retail makes a massive direct and indirect contribution to local communities and economies. Enormous numbers of people rely on a successful, thriving, flexible and expansive retail sector for their economic well-being. The Government's muddled and ill-thought proposals put that at risk. I hope that Labour Members will be prepared to return to their constituencies and explain that the policy to place an additional tax burden on retailers led directly and indirectly to the loss of people's jobs in the retail sector.

    It is important to make the point that the costs will be passed on. Customers and consumers will also be hit because the prices in the shops that they visit will be higher.

    My hon. Friend makes an extremely good point, as always. The measures will impact on jobs and job creation, but the implication is that they could also be inflationary. Perhaps only this Government could achieve such a unique combination of negative impacts.

    It is clear that the Government's methodology is confused and no matter what the Chief Secretary says, they are introducing a virtually new tax, not a modernisation. The measures on stamp duty will have a negative impact: first, they will reduce tenant movement in the market; secondly, they will make it more difficult to refurbish buildings; thirdly, they will reduce investment by tenants; fourthly, they will depress the value of land; fifthly, they will increase building obsolescence; and, sixthly, they will lead to buildings being unoccupied. If the Government do not want to be responsible for those negative impacts, they must listen carefully to the professional organisations that they are supposed to be consulting.

    My hon. Friend mentioned the serious implications for pension funds earlier, although he did not include that in his list. I suspect that the Treasury has not taken that fully into account as it eyes up money for a smash-and-grab raid.

    My hon. Friend makes a good point. The closure of the tax loophole, which I am not necessarily defending, will have an immediate impact on pension funds because £200 million will be taken out almost immediately. That will have a detrimental impact on the performance of pension funds, which will affect everyone in the United Kingdom with a pension fund.

    I have spoken for long enough, but I want to raise two final points. I mentioned sale and leasebacks, sub-sales and securitisation on Second Reading but I cannot find any clarification on those matters from the Bill or discussions in Committee. No one seems to have addressed those technical, complex and serious matters. It is completely unacceptable to deal with those matters using delegated legislation because there will be no proper discussion or scrutiny and, probably, no vote. They should be included in the Bill.

    My second point is allied to that concern and relates to clause 57, which enables properties in deprived areas to avoid stamp duty. In principle, I do not have a problem with that. It sounds sensible ' and commendable, but surely it cannot have been the Government's intention to increase the value of some commercial assets in deprived areas by up to £50 million. Meadowhall shopping centre, which is outside Sheffield, is in a deprived residential area. As a result of removing the 4 per cent. charge, £50 million is added to its value—10p of the share value of the company that owns it and 1 per cent. of the net asset value of the whole company. That is ludicrous. Almost the whole of central Birmingham, central Manchester and Canary Wharf are exempt. Is that a proper and justifiable use of taxpayers' money? I think that it should be spent elsewhere and not used in such a way.

    The evidence to back that is clear when one considers that the analysis of the deprived areas is based purely on the affluence—or lack of it—of residents, not on the economic and business activity that occurs in a particular ward. I shall not go into the detail of what happens when ward boundaries change, because that is an argument for another day, but none of those things seems to have been discussed, never mind set out in black and white. That is a further argument for decoupling residential and commercial property.

    I was pleased and impressed when the Paymaster General responded in a constructive and helpful manner o points that I raised on Second Reading. She said:
    "the Government have sought to protect small businesses in a variety of ways through thresholds, which the hon. Member for Boston and Skegness will have ample time to discuss. I should be happy to give him the detail."—[Official Report, 6 May 2003; Vol. 404, c. 630–31.]
    Well, I am still waiting. I have received no such detail. I understand that the Standing Committee did not discuss it and that the House has not received any such information. I would be grateful if the Paymaster General could provide me with the detail of, and the justification for, the extremely detrimental, damaging and problematic proposals, because they could cause severe job losses and create severe problems as the consultation process progresses.

    I want specifically to address amendments Nos. 15, 16, 17 and 18, which relate to a section of the Bill that comes after the measures on stamp duty. Before doing so, I pay tribute to the most professional and important contributions by my hon. Friends the Members for Hertford and Stortford (Mr. Prisk), who made a forensic analysis of much of the Bill's shoddiness, and for Boston and Skegness (Mr. Simmonds). I hope that the Chief Secretary and, more particularly, his advisers listened carefully to what was said.

    It was only some 13 years ago, when we were in power, that we were forced to reduce and suspend stamp duty to keep the residential property market afloat. In addition to the unresolved problems, the Government's proposals are inviting, at a particular time in the cycle, major damage to the sector. Again, I think with horror of the virtual halving of the equity assets of pension funds. Their property assets could also be severely damaged. Pensioners would never forgive the Administration responsible for that.

    The four amendments relate to the objection in principle, as I mentioned in Committee, to the final paragraph in schedule 20, which gives further powers to the Treasury to amend and repeal primary legislation on stamp duty and stamp duty land tax by negative resolution regulation. In the light of what the Chancellor said subsequently, we are especially concerned that the Government may use the powers to implement their policies further to raise taxation, and stamp duty and stamp duty land tax on home owners, as part of their professed objective to ensure greater convergence of the UK housing market with the market in continental Europe. On that subject, we agree with the Governor of the Bank of England that the greater availability of longer-term mortgages is unlikely to have much impact. However, bearing in mind the bubble in prices of the past three or four years, it is possible that higher taxes and stamp duties on homes could have a major impact on house prices.

    There are similar references in clause 123(2), which states:
    "The Treasury may by regulations make such other amendments and repeals as appear to them appropriate in consequence of the"
    primary legislation. There are other references in clause 109, which gives a general power to vary the implementation of the transitional stamp duty arrangements, and clause 112, which gives the Treasury a power to vary the rate of stamp duty up to the implementation date. When I raised those issues in Committee, the Chief Secretary replied to the effect that the powers were only to be used for the transitional arrangements relating to the abolition of stamp duty and the implementation of stamp duty land tax. In particular, it seemed that the legislation on stock and securities under existing stamp duty arrangements was preserved.

    Regrettably, it has become only too apparent that the electors view the Government as not to be trusted. Our amendments would write into schedule 20 specific limits on the powers to change stamp duty and stamp duty land tax in accordance with the description given by the Chief Secretary of why the powers are being provided. The amendments tighten the powers in line with the Chief Secretary's response. They also change the negative resolution to a positive resolution.

    It is unlikely that we will muster the majority to win if the amendments are put to a vote, but we want the Chief Secretary to give a clear and simple confirmation that the various measures that give the Treasury power to change the rate of stamp duty and stamp duty land tax by negative resolution and secondary legislation are specifically concerned with transitional arrangements and will be used only in relation to those arrangements. We also want him to confirm that they are not a devious sleight of hand to enable the Chancellor to have a crackpot scheme to change dramatically the taxation of people's homes, motivated by questionable schemes to achieve convergence with EU property markets.

    8.30 pm

    We have had a full debate in which we have subjected the Bill's provisions and the amendments to them to considerable scrutiny. I say at the outset that it is important in reflecting on the issue of regulations, as the hon. Member for Arundel and South Downs (Mr. Flight) has done, to recall not only the assurances that I gave in Committee, which I affirm, but also to understand that regulations will not be made under schedule 20 to increase the scope of stamp duty, or to increase the rate at which stamp duty is payable. The purpose of the regulations is to ensure that stamp duty continues to apply to stock and marketable securities in the way that it does now. Subjecting the regulations to affirmative resolution, as the amendments propose, is therefore unnecessary. I do not think that I could be clearer than that, and I hope that that satisfies the hon. Gentleman.

    The hon. Gentleman needs to understand that the legislation as drafted enables the Treasury to manage the reduction in the scope of stamp duty in a smooth and effective manner and to make changes when they are needed. It is not our intention in any way to seek to increase the scope of stamp duty through these regulations, but it is intended that we should also use regulations to put in place repeals and amendments when they are needed to ensure that the reduction in the scope of stamp duty is achieved smoothly. I believe that that gives the hon. Gentleman the assurances that he seeks. I welcome the fact that he has been gracious enough to thank me for that assurance.

    In a thorough debate, we have examined the clauses and the amendments in some detail. The hon. Member for Yeovil (Mr. Laws) made a serious contribution. There were serious and lengthy contributions from the hon. Members for Boston and Skegness (Mr. Simmonds) and for Huntingdon (Mr. Djanogly). I regard the contribution of the hon. Member for Boston and Skegness, by virtue of its length alone, to be a job application for the Committee that considers the Finance Bill in 2004. I am sure that Opposition Members who determine such matters will bear him very much in mind. I am only sorry that we missed him during the Committee stage of this year's Finance Bill. No doubt there were good reasons for that.

    We need to reflect on the contributions of the hon. Members for Huntingdon and for Boston and Skegness. I am glad that both hon. Gentlemen took care to make it plain that they recognised the problem of widespread avoidance and that they approved of measures to deal with it. That is why I was disappointed that they were not able to find it in their hearts to approve the measures that we are bringing forward.

    We believe that a lease duty structure that is more in line with commercial practice would significantly reduce distortions of business decisions and would be an important part of encouraging compliance and preventing artificial avoidance schemes that are currently used to avoid stamp duty, to the extent of more than £10 million. I am surprised that the hon. Member for Huntingdon complains that the net present value formula is too complex and that he believes that it will lead individuals and practitioners to incur substantial costs in calculating values.

    We addressed the matter at some length in Committee. I made it clear then—I am happy to affirm what I said now—that all necessary help will be available to the public, practitioners and industry in using the net present value formula and applying the relevant legislation. In particular, an electronic help tool is being developed, which will be available from the date that stamp duty land tax is implemented. I hope that these assurances will be of assistance.

    I shall take up the points made by the hon. Gentleman. He can then return to them, if he wishes, in an intervention.

    Complaint was made of uncertainty being introduced as a result of the measures that we are putting forward. We have taken a bold step in modernising the stamp duty regime. The task was long overdue, and it was an essential one. It was one that Conservative Members fluffed when they had the opportunity to carry it out. They have been only too keen to point out the long pedigree of stamp duty, so it is inevitable that modernisation of 300 years of law and practice will be a complex task. It may be that it is that very complexity that deterred Conservative Members from embarking upon the task when they had the opportunity to do so, despite frequent calls from the industry for them to do so.

    We have addressed the task in a way that is open and consultative, and recognises its seriousness and complexity.

    On the calculation of NVP, I think that the Minister said that some type of electronic device or tool would be available. Will he say more about that? Will it be a calculator with NVP capability? Will it be made available from local offices? Will there be a charge? Will he give us more information?

    It is not a calculator with NVP. I undertake to assure the hon. Gentleman that he will be one of the first to receive a demonstration of the tool. I shall draw to the attention of those responsible his interest in it. I look forward to his assessment of the electronic tool when he has the opportunity to reflect on it.

    In Committee, the hon. Member for Huntingdon said that the provisions that we are introducing are not to be regarded as a cleaning-up exercise. I agree—there is a change from a tax on documents to a tax on transactions, which is a fundamental reform. Hon. Members have tried to analyse certain aspects of the Bill as if there were still a document tax, but that is quite wrong. The Bill requires a wholly new way of thinking, and the challenge is to make it work for every transaction. Inevitably, there will be some residual uncertainty, as long-held principles are being dismantled and rebuilt so that they are fit for the 21st century. However, the Inland Revenue is working tirelessly to ensure that guidance is issued, and there will be further consultation. We make no apology for that, as I do not regard the fact that we are continuing to consult on the Bill as a sign of weakness. Such consultation is to be welcomed, and the programme of customer education that we have embarked on is designed to ensure that taxpayers' questions are answered and their concerns addressed.

    I turn to the issue that the hon. Member for Huntingdon raised about the consultation itself. I am sorry that he is no longer in the Chamber, as I would like to tell him that consultation has been fairly continuous since the Budget of 2002. We have ensured that it has been detailed and open to everyone who wishes to share their opinions and experience. To be fair, I do not think that the people who have been participating in the consultation have complained or have had any grounds to complain that their concerns have not been taken seriously.

    I shall give way in a moment, as I want first to address a survey that has been touted during our discussions this evening. I believe that it is an internal document, as I certainly have not seen it.

    I look forward to having an opportunity to read it—[Interruption.] I shall not do so during my deliberations, although I am tempted.

    The British Retail Consortium has been closely involved in work with Treasury officials on a number of areas, including changes that could be made to the lease duty proposals. Any data that it has to offer will, of course, be considered carefully. It has had discussions with officials, and recent meetings have been constructive. I do not doubt that in due course that that will be reflected in refinements to the proposals in the weeks and months ahead.

    If the Chief Secretary is now sufficiently confident about the sample on which the Revenue has allowed him and the Chancellor to proceed to claim that 60 per cent. of leases will in fact be exempt, will he now confirm to the House that he intends to publish that evidence so that we can see it and make sure that the consultation is as proper as he claims?

    I have already addressed that matter in detail in Committee. It is not our intention to depart from established practice and publish the figures as the hon. Gentleman suggests. However, we have shared data on leases with consultees in recent meetings. They are based on information provided by lessees to stamp offices and land registries, and they are the best data available to us. I hope that the hon. Gentleman will give us credit for our actions, because the consultation, I repeat, has been open and informed.

    It being eight hours after the commencement of proceedings on the first Way and Means motion relating to the Bill, MR. DEPUTY SPEAKER, pursuant to Order[this day] proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.

    Question put and agreed to.

    Clause read a Second time, and added to the Bill.