(urgent question): Mr. Speaker, I am very grateful to you for agreeing to enable this urgent question to be put, and the purpose of putting the request in this form—

Order. If the hon. Gentleman would just ask the question.

Will the Chancellor of the Exchequer make a statement on the position in relation to capital gains tax policy?

Let me answer the hon. Gentleman’s question. The Government’s position on the reform of capital gains tax was set out in the pre-Budget report on 9 October. However, I have subsequently received representations from a number of organisations and individuals with whom I have been consulting, and as a result of which a wide range of proposals have been made to me. Because those proposals cover a wide range of approaches, and in some cases are quite complex, I think it desirable to have further discussions with those groups before I finalise my proposals. It is not now going to be possible to conclude that process until the new year. I can tell the House that when I am ready to make proposals, I will come to the House and make a statement in the usual way.

For the sake of completeness, I understand that the hon. Gentleman, who is the acting leader of the Liberal Democrat party, was moved to ask this question because he saw on today’s Order Paper notice of a written ministerial statement on Finance Bill measures. Perhaps I can tell the House that those measures relate to two types of corporation tax avoidance involving the leasing of plant machinery, such as combine harvesters, tractors and so on, which had a potential tax loss of hundreds of millions of pounds. The written ministerial statement had nothing whatever to do with capital gains tax.

May I explain to the Chancellor why the matter is urgent? It appears that the Prime Minister, no less, and the Chancellor have been separately briefing national newspapers about imminent changes to the legislation. Surely this House should be told about that. I was further prompted by the fact that I understood that the Federation of Small Businesses and the Confederation of British Industry have booked rooms this afternoon in order to announce changes communicated to them by the Government. It may be, as is often the case, that there is a terrible breakdown in communication between the Government and the business organisations. It may be that the Chancellor simply did not wish to communicate his findings to the House first. That is the source of the urgency. Does not he agree that the Government made a serious error in not consulting business organisations before announcing the pre-Budget report statement, that that failure to consult lies behind an enormous amount of ill will in the business community and that his standing with business is roughly comparable with that of the Home Secretary with the Police Federation?

Will the Chancellor clarify whether the Government still intend to proceed with their proposal to abolish taper relief, which was a central feature of their policy? Was not the reasoning behind the proposal that it would tackle a specific anomaly in relation to private equity funds? It was realised, once the 10p rate was abolished, that private equity partners would pay less—in some cases, a lower rate of tax than their low-paid employees. The Government introduced the far-reaching change to deal with that. However, is not it also the case that the anomaly remains? The private equity partners still pay a lower rate of tax than their low-paid employees. In the process of introducing those changes, did not the Government create a set of anomalies whereby, for example, entrepreneurs now pay a much higher rate of tax—18 per cent. rather than 10 per cent.—and second home owners can pay a lower rate of tax? Those anomalies have created a great deal of anxiety and concern in the business community.

Will the Chancellor confirm that the Government intend to proceed with the abolition of taper relief? In doing that, have the Government now accepted that their policy in 1998, which was strongly opposed at the time by me and my colleagues and the Conservatives, who appear to have done a U-turn on the matter, was misguided and introduced excessive complexity into the system?

Order. The hon. Gentleman is beginning to debate the matter as if it were a statement when it is an urgent question. I think that we must now let the Chancellor respond.

Despite what the hon. Gentleman says, his question was not prompted by the booking of rooms. In the normal way, when a request for an urgent question is made, Mr. Speaker has to consider it. The hon. Gentleman saw a reference to a written ministerial statement on the Order Paper. I simply point out that it was made to plug a loophole in relation to corporation tax; it had nothing to do with capital gains tax.

The hon. Gentleman asked many questions about capital gains tax. The Government’s position is as I set it out. We have received a wide range of proposals, and helpful discussions have taken place. I want to ensure that we get those things right and I intend to do that.

rose—

Order. With an urgent question, I have to hear what the appropriate Minister has to say. The Chancellor’s answer leads me to conclude that I will not open up the subject to prolonged questions. [Interruption.] If the hon. Member for Tatton (Mr. Osborne) keeps calm, I will, of course, call Front Benchers.

The Chancellor of the Exchequer pretends that it is all a mistake. However, he told the CBI conference on 27 November:

“We are working with the CBI and other business organisations to listen to what you have to say. I expect to publish final proposals in the next three weeks.”

The Chancellor has told us for the first time today that he will not publish those details until the new year, although, as the leader of the Liberal Democrats said, business organisations expected them in the next couple of days.

Is not it the Chancellor’s final humiliation that he has to defend at the Dispatch Box his first and only original tax proposals when everyone knows that, in the next couple of weeks, he will have to announce major concessions and U-turns, not least because the Prime Minister went behind his back and briefed the newspapers? In the meantime, thousands of small businesses and employee share owners do not know what to do or what the position will be next April. He knows what the concessions will be. Why does not he admit what they are and that he has lost, hoist the white flag and say, “I surrender”?

Nice try. I had hoped to be in a position to announce final proposals, but for the reasons that I have stated that is not now possible. However, I will come to the House, as I always do on these occasions, when I am ready to make my proposals.