I beg to move amendment 31, in page 15, line 40, leave out from 'unless' to end of line 9 on page 16 and insert

'they have been made in accordance with section 257 of the Banking Act 2009'.

After the excitement of bingo we move to clause 25, which is less exciting but more important for revenue raising. [Interruption.]

Order. Will hon. Members not staying for this debate leave the Chamber quickly and quietly?

Clause 25 creates a legal framework to enable any institution that has taken part in the arrangements set out in subsection (2) voluntarily to waive its tax losses. The clause was required to deal with the particular situation of the Royal Bank of Scotland, which agreed to forgo a certain element of its tax losses as part of its agreement to enter the asset protection scheme. Interestingly, the Government chose to encourage it to forgo its tax losses rather than some of the tax planning activities that the bank carries out on behalf of its customers. I am sure that the Government will be able to justify that later.

This framework has been put in place to deal with the price that RBS will pay to go into the asset protection scheme. It is worth noting that when I tabled a parliamentary question asking about the amount of losses that RBS would forgo, the Economic Secretary gave a vaguely worded answer that rather suggested that no one quite knew. Of course the reason for that is that the agreement on the APS is yet to be signed. It may be some months before that happens, and I suspect that the losses to be forgone will not be finalised until that point.

However, my concern is not so much that RBS has agreed to enter into the APS at a price—that is a deal struck between it and the Government—but about the breadth of clause 25. Subsection (2) creates a situation whereby if a company enters into an arrangement with any Government Department—not just the Treasury—it can forgo its tax losses if there are any guarantees, indemnities or payments. That potentially covers a wide range of schemes. It may cover the guarantees offered to the automotive sector for loans it is seeking from the European Investment Bank. Under subsection (2)(b)(iv), even the scrappage scheme may be covered, as it contains the phrase

"gives other financial support or assistance to P or another person (whether in money or otherwise)."

So even an arrangement in kind could create a situation whereby a company could agree with the Government that in return for such assistance it would forgo its tax losses.

Perhaps my hon. Friend will permit me to go back to RBS. Is he aware that although it would be good news in future if the company had to pay more corporation tax, at the point of sale of the shares back into the private sector taxpayers would get a lot less money because they would get the tax losses forgone knocked off a rather big multiple? This gives rise to a rather difficult situation relating to whether taxpayer value is being protected.

My right hon. Friend, who has a great deal of experience in the City, makes an important point that we did not touch on in Committee: what is the value of the losses forgone, and how will they be valued in the market? That is a point to bear in mind for the future.

As I said, my concern is not so much about RBS as about the breadth of the scheme. My amendment would narrow its breadth by tying it back to the Banking Act 2009, which the Economic Secretary and I spent many happy hours debating in Committee. I sought to link my amendment back to the part of the Act that relates to the provision of financial assistance. That would narrow the range of events in which a company could forgo tax losses to those that relate to any banking bail-outs. That would cover RBS in the context of the APS, but it would not cover, for example, guarantees from the Government for loans made to the automotive sector from the EIB.

That is the rationale behind my amendment. When we debated this in Committee with the first of the three Exchequer Secretaries that we had to deal with during the course of our proceedings, Angela Eagle said:

"This is a narrow provision and must be agreed between the company that is asking for support and HMT. Although it is potentially wide, paradoxically it is also narrow at the same time." ——[ Official Report, Finance Public Bill Committee, 2 June 2009; c. 210.]

My amendment would make it narrow from the outset and limit the range of transactions that could be entered into that could lead to a firm giving up its tax losses. That would make it much clearer what the clause is meant to do, and potentially protect companies from undue pressure being placed on them by the Treasury and other Departments to forgo their tax losses in return for a particular scheme or set of arrangements that the Treasury or other Department might wish to encourage them to enter into.

Clause 25 ensures that an agreement reached between a company and the Treasury will be effective for tax purposes if the company relinquishes its right to use tax losses as part of an agreement to access Government financial assistance. The clause will apply to arrangements forming part of an agreement under the asset protection scheme but, as Mr. Hoban noted, it could be used in other situations, particularly if Government assistance is required to maintain financial stability and restore confidence. It is essential that when such an agreement is reached, we have provision in tax law for the agreement to have the intended effect.

As the hon. Gentleman pointed out, the amendment is intended to limit the scope of the clause to arrangements made in accordance with section 257 of the Banking Act 2009, thus making implementation of the clause subject to the laying of a statutory instrument. It is similar in purpose to amendments that he tabled in Committee.

On the technical aspects of the amendment, it has been pointed out previously that a statutory instrument would delay the resolution of the terms of any agreement, which could reduce rather than boost market confidence. If a company's agreement to give up its losses were contingent on subsequent parliamentary approval, there would need to be provision in the agreement itself to revisit its terms if that approval were not given. Such terms would mean that the agreement would not have the necessary certainty to achieve its aim of restoring confidence and stability to the markets.

The hon. Gentleman made the point that he wanted to narrow the scope of the clause. It is important to bear in mind that it can apply only if a company has agreed to relinquish its losses and if that agreement is pursuant to the company's accessing financial assistance from the Government. He referred to comments that have been made previously about a potential paradox, in that the clause may be seen to be necessarily wide-ranging but will be applied only in narrow circumstances. We believe that limiting the scope of the clause is unnecessary, and that the resulting extra layer of scrutiny would be potentially destabilising. It may mean that deals would need to be struck with absolute certainty and in a very short time scale.

My experience of Governments is that they tend to prefer cash to an agreement on tax losses. It would be up to a company that wanted financial assistance to agree voluntarily to relinquish its taxes, and it would be up to the Government to agree that that was in the best interests of taxpayers. In the normal scheme of events, Governments would much prefer to have cash than tax losses, so I do not believe that the clause will be used substantially. When it is necessary to use it in future, it will be right to do so. The amendment would unnecessarily restrict it and be potentially destabilising in the circumstances in which it is likely to be used. For those reasons, I ask the hon. Gentleman to withdraw it.

I am not entirely convinced by the argument about the delays that would be caused by agreeing a statutory instrument. If the Economic Secretary looks back over the history of the past few months, he will see that the Government have taken action to deal with Bradford & Bingley and the Dunfermline building society, for example, and taken measures that require statutory instruments to be approved. They have gone ahead with that quite happily, but now they claim that they cannot act without a statutory instrument that the House of Commons has approved. It is not the Government's strongest argument.

I am not sure about the Economic Secretary's assurance that the power will not be used often. Many clauses, which we are assured will not be used often, are included in Bills, yet the Icelandic banks were tackled under clauses in the Anti-terrorism, Crime and Security Act 2001. We must, therefore, be wary of Ministers' reassurances. However, in this case I will take them at face value. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.