WELFARE REFORM AND PENSIONS BILL (IR35)
3rd November 1999
Mr. Fabricant:The Minister was disingenuous, saying that the Government are closing a loophole that the previous Conservative Government had overlooked. As I said earlier, the Inland Revenue proposed the package of measures twice before, and twice before the Conservative Government rejected it because we knew that it would be bad for British industry. Now, the Labour Government have reintroduced a measure that has previously been rejected because they do not understand industry.
Hon. Members from both main Opposition parties have spoken of constituents whom we have met today. Over the past two and a half weeks, I have received via the internet 2,600 letters from people all over the country expressing opposition to the measure. My right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke) is absolutely right to say that the Government will have to change the legislation later, because it is not only the software industry and training consultants that will suffer, but freelance journalists too. Mark my words, once freelance journalists realise that they are being hit hard in the pocket, they will write about it and the Government will start to change direction, as they always do when they think that they are becoming unpopular.
The change to schedule E will mean that small, entrepreneurial companies will suffer, because small companies have to go out to seek business. Large companies that do that can charge expenses against tax, but small companies will now be unable to do so. A small company cannot afford to spend £240 travelling to Aberdeen to win a contract, but, having failed to win it, be unable to charge that expense against tax because it is precluded by schedule E. That is not only wrong and unfair, but crippling to smaller businesses.
Mr. Darling indicated dissent.
Mr. Fabricant: The Secretary of State shakes his head, but what did he do before becoming a Member of Parliament? He was not in business, so he does not speak from experience. He has simply become a Labour apparatchik imposing a measure similar to the selective employment tax, which was imposed by previous Labour Administrations and which destroyed businesses.
Mr. Nicholas Winterton (Macclesfield): I agree with every word my hon. Friend has so far uttered and with the views expressed in this debate by other right hon. and hon. Friends and Liberal Democrat Members. Does not such a debate make the people of this country consider the relevance of the House of Commons, when the argument is so clearly overwhelming, but the Government, for party-political reasons, ill-advisedly refuse to change their view?
Mr. Fabricant: My hon. Friend is absolutely right -- the Government are merely dupes of the Inland Revenue. Twice the Inland Revenue came up with the scheme and twice it was rejected by a Conservative Government; but, because they are desperate to make hundreds of millions of pounds from small business men -- small business men who should be able to become large business men -- the Labour Government have accepted the scheme.
I started as a small business man: my business ended up operating in 48 countries worldwide and employing hundreds of people in the United Kingdom, each of whom paid tax.
If this legislation had been in place when I started my business, it would never have got off the ground. Entrepreneurs are the future of Britain. The Government have shown their true colours. They will stifle entrepreneurs at birth, and they should be ashamed of themselves.
