Finance Bill

The hon. Gentleman is right. The measure will affect many other sectors. The key point is that the buildings involved will have a relatively short life span, yet require long-term investment, which is being undermined by the changes proposed in the Bill. The Chancellor’s pet projects are flagged up even when there is limited evidence of their success. There has been increased investment in research and development tax credits, especially those for larger companies, even though companies often need to make the decision to invest before they examine whether they are eligible for tax credits. The same is true for smaller businesses. Indeed, many very small businesses will not be aware of some of the credits that are available. A report last year by the Institute of Chartered Accountants in England and Wales made the point that R and D tax credits had not had a clear impact on the decision about whether to invest. It also pointed out that the largest companies benefited from them disproportionately. Recommendation 18 of the Treasury Committee report that has been published today states:"““It is not clear whether measures such as the increase in the R&D tax credit and the introduction of the Annual Investment Allowance will have the desired beneficial impact on investment levels by small companies. We recommend that, prior to the 2009 Budget, the Treasury review the impact of these measures on business investment in order to ensure that the measures are having a positive impact on investment and business growth, including … small businesses?." Surely there should have been an investigation of the validity and usefulness of the credits before they were extended further. Does the Department intend to undertake a full review of the efficacy of the system, as recommended by the Treasury Committee? While R and D tax credit is one of the pet projects, or touchstones, that the Chancellor likes to highlight, it is frustrating that we have again seen tokenism on the environment this year. Limited progress has been made, but that seems to have been only in response to a considerable increase in public pressure. Amendments on vehicle excise duty that the Liberal Democrats tabled to last year’s Finance Bill look remarkably similar to measures before us today. This year’s proposed increases represent a welcome improvement on last year’s measures. The increase for some of the most polluting cars in the higher band of VED for new cars that was introduced last year was equivalent to the cost of less than half a tank of petrol. This year, the difference between the bands has increased to about £95. However, last year’s Energy Saving Trust report indicated that the price differential required to have an impact on behaviour would need to be nearer £2,000. If the Government are serious about using such measures to bring about real changes in behaviour, there is still a long way to go.