Individual Savings Accounts

Lord Forsyth of Drumlean Excerpts

Wednesday 9th June 2010 Lords Chamber

[Lord Sassoon]

I thank the noble Lord for his question and I was wondering when we would get some more of the candour shown in yesterday’s remarks. I know that the question of capital gains tax is of interest to many noble Lords. The coalition Government believe that the tax system needs to be reformed to make it fairer and simpler, and that is why we will increase the personal allowance for income tax to help lower and middle income earners. To fund this, we are carefully considering the various options for taxing non-business capital gains at rates closer to those applied to income while ensuring that there are generous exemptions for entrepreneurial business activities. Reforming CGT will ensure that those seeking to avoid paying income tax by converting their income into a capital gain will pay their fair share of tax. Further details on the coalition Government’s proposals will be provided at the Budget.

[Lord Forsyth of Drumlean]

My Lords, in welcoming my noble friend to his new position, could I ask him to look at this again? The noble Lord, Lord Myners, indicated in the last Parliament that this issue was the subject of a review and that we might get a response in due course. How long is “in due course”? Does not my noble friend agree that small and medium-sized businesses are the key to expanding prosperity and jobs in our country? Making this small change—which as the noble Lord said is an anomaly—will open up the possibility of investors being able to invest, and being “all in this together”, to create a recovery in our country. Surely we need a response.

[Lord Sassoon]

First, I regret that I cannot say why the previous Government made no progress on their promised consultation. As I have said before, the new Government, who have not been in office for very long, are considering this question and we will set out their approach in due course. In the mean time, I stress that we welcome the views of interested parties. I should also stress that we are looking at a whole range of issues related to SME financing, which I agree is an extraordinarily important matter. The range of issues relates as much to bank lending and keeping the flow of credit going as it does to raising equity.