Finance Bill

I always appreciate the hon. Gentleman’s interventions, but small businesses operate on the margins so £1,000—even £500—can make a huge difference. Unfortunately, the provision demonstrates yet again the Labour Government’s lack of understanding of how small businesses actually work and survive from day to day. I am only hazarding a guess, but if too many businesses make use of the annual investment allowance they could sow the seeds of the Government’s next anti-avoidance strategy. Businesses that invest will come to be seen as cheating. In the words of the Federation of Small Businesses:"““It is amazing how quickly a concession to encourage enterprise can become a loophole.””" In our report on the Budget, the Treasury Committee admitted:"““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.””" That is the very point made by my hon. Friend the Member for Sevenoaks (Mr. Fallon) earlier. We suggested that the Treasury should take stock of the impact of those changes before the 2009 Budget. I would go a little further. If the Government are looking for a positive signal to send to small businesses, and for a policy that will have no new unintended consequences, there is one simple answer: leave the small companies rate well alone for a year or so and let small businesses and their accountants catch their breath.