‘(1) The Chancellor shall, within six months of Royal Assent, publish and lay before the House of Commons a report detailing the distributional impact of any changes to or abolition of Schedule 19 to the Finance Act 1999.

(2) No amendment may be made to Schedule 19 to the Finance Act 1999 within two years of Royal Assent, unless the report set out in subsection (1) has been published and laid before the House of Commons.’.—(Chris Leslie.)

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

I will be brief. The new clause seeks to ensure that, within six months of Royal Assent, the Chancellor will publish a report that sets out the distributional impact of the abolition of what is known as schedule 19 to the Finance Act 1999. What exactly is that? It refers to the abolition of the stamp duty reserve tax that is charged on unit trusts and open-ended investment companies. The proposal was announced in March. The Chancellor did not dwell on it, but he plans to introduce it in the next Finance Bill in 2014—hon. Members can barely wait for that Finance Bill Committee to convene.

The stamp duty reserve tax requires asset managers to pay 50 basis points—half a percentage point—when investors sell units in their funds. The rationale for its abolition is apparently that it will boost the competitiveness of British funds. It is levied on managers of UK-domiciled unit trusts. The new clause has been tabled to highlight—and  so that I can ask the Minister about—this tax cut for the City. It is essentially a tax cut for those investment managers.

We should pause to ask a few questions about that at a time when ordinary people and families are suffering, and when life is getting harder for most people. The Government are of course failing to tackle the deficit, which is not going anywhere. Deficit reduction has stalled; it has stopped.

Will the Minister confirm that the Chancellor’s decision will give away £145 million of taxpayers’ money to those investment managers in the year in which the change comes into effect? My hon. Friends will be interested to know that, over the four years projected in the Red Book, the tax cut to the City is apparently of about £600 million.

The problem is that when those things are described in such archaic and obscure terms—stamp duty reserve tax, schedule 19—unsurprisingly, people glaze over. Therein lies our problem, so I want the Minister to be absolutely straight with the Committee. He is giving a very significant tax cut to the City and fund managers now, so I want him to justify on the record what is going on. Who will benefit? Will hedge funds benefit? What sort of individuals will benefit? That is the purpose of tabling the new clause. He knows that the public are generally very sceptical about the Government’s largesse to the wealthiest in society, especially after the millionaires’ tax cut. Will he come clean, give us the figures and tell us why this change is a priority when life is getting harder for so many people?

I thank the hon. Gentleman for his comments. I hope to persuade him that, with respect, his assessment of the potential effects of removing the schedule 19 tax is somewhat flawed.

Let me explain that the schedule 19 special stamp duty reserve tax is charged on the funds industry. It acts as a proxy for the principal stamp duty tax charge on the purchase of shares. The reason why the tax exists is that there is a 0.5% stamp duty charge when an individual purchases shares, but there is not necessarily an exchange of shares in the usual sense when they purchase UK-domiciled funds, because many funds try to match sellers with buyers. That is why it is referred to as a proxy tax and charged in lieu of the tax that would have taken place had there been an exchange of shares rather than matching.

As we heard, the Government announced in Budget 2013 that they would abolish this tax as part of their investment management strategy to improve competitiveness. There are two broad reasons why the hon. Gentleman should consider withdrawing his amendment. First, the Government have committed to publishing a tax information and impact note for the measure just as they do for a majority of measures which are included in any Finance Bill. This note will be published alongside the draft clauses of the Finance Bill 2014 that will abolish schedule 19. In common with all such notes, it will set out what the new legislation seeks to achieve and why the Government are undertaking the change, together with a summary of the expected changes and their impact. It will include the Exchequer impact, the impact on households, equalities impacts, business and third sector impacts, and impacts on the public sector as well as other impacts that may be  relevant. It will, as always, be a detailed note and when the information is published there will be an opportunity for hon. Members to discuss this in more detail.

The other reason why the hon. Gentleman may be flawed in his assessment is that this is not a tax break in any way for the City. This is a tax break that ultimately feeds through to the investors who invest in these funds. Schedule 19 only applies to UK-based funds. So investors can even today choose not to pay this tax if they invest in a non-UK fund instead. That might be managed by a UK fund manager, but if they choose a fund that is domiciled offshore, such as a Luxembourg SICAV entity or an Irish CCF entity, they can get exposure to exactly the same asset class but avoid this tax. The end result means that the fund is domiciled offshore, which has an impact on the UK-based fund industry.

What planet is the Minister living on? He may have oodles of constituents coming to him saying, “If only I could invest my open-ended investment company domestically rather than in Europe”. Opposition surgeries are filled with constituents struggling with the bedroom tax and other crippling changes that affect many people in the real economy, yet his priority seems to be this £145 million cut. Can he confirm that figure? Will he at least put it on record that this is a tax cut of £145 million, as it says in the Red Book? That should be a simple thing for him to do.

One thing I can confirm is that the assessment of the OBR at this point is that it is approximately £145 million. But as I have said, when a further impact note is published there will be more detail on that. One thing that the hon. Gentleman may not be taking into account, possibly unintentionally, is that a fund management directive is currently going through the European Union. Once that goes through—it will be implemented very shortly by the UK, as by other EU members—it will be far easier for UK investors, including his constituents and mine, to access foreign-domiciled funds. If we do not make this change it will make UK-domiciled funds far less competitive and it will damage jobs and investor returns in Britain. The hon. Gentleman may want to take it into account that around 40% of investments in UK-domiciled funds is by British pension funds. Another 25% is by insurance companies. This tax cut will feed through ultimately to investors and make UK fund management far more competitive versus international competitors.

Does the Minister agree that the distinction being implied by the Opposition between what they call a real economy and an unreal economy and between constituents at surgeries and other people is misleading as a description of the British economy? Highly specialised elements of the economy can contribute enormously to the wealth of the whole country. Such divisive language and distinctions between real and unreal simply do not contribute to growth in national wealth.

Order. I must now bring proceedings on the Bill to a close.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 9, Noes 15.

Question accordingly negatived.

On a point of order, Mr Amess. I simply wish to mark the occasion.

I thank hon. Members who served on the Committee and the officials who have been in and out of here; I do not know quite how many officials came in and out over the course of the many, many sittings that we have had. Running through a Finance Bill is hard business at the best of times, and this has been a particularly hefty Bill.

I wish to put on record our thanks to the Clerks and to Hansard for keeping track of some complex issues. I also thank the Whips, who managed to ensure that our business was kept to good order. I particularly pay tribute to my hon. Friends on the Committee for bearing with us and for making their own contributions, particularly my hon. Friends on the Front Bench, the Members for Newcastle upon Tyne North and for Kilmarnock and Loudoun. It is a difficult task for the Opposition to fulfil.

I also thank Ministers for their courtesy and diligence in replying to our points, even though we disagreed with them, often vehemently. Finally, I thank you, Mr Amess, and Mr Crausby, who chaired the Committee. We are grateful.

Further to that point of order, Mr Amess. Does the Economic Secretary remember that he promised to buy us all a pint of beer? Will he keep that promise today?

Further to that point of order, Mr Amess, I, too, thank you and Mr Crausby for your chairmanship. I thank everyone for their collegiality and friendly interventions, especially from the hon. Member for Islwyn.

Veterans of Finance Bill Committees will know that it is one of my pleasant duties to host the annual reception of the Chartered Institute of Taxation. It is an exciting occasion that comes with drinks and canapés. This year it will be on Tuesday 2 July at 7 pm in the Terrace Pavilion. I would imagine that by that stage, as usual, people will be having withdrawal symptoms from listening to the Exchequer Secretary, whom I am sure will be speaking to us. I want to hear him again. There will be free food and drinks from the institute. Everyone on the Committee would be welcome.

Further to the point of order, the hon. Member for Nottingham East made more rapid progress with the points of order than I was expecting—that was a first for the Committee—but I wish to make a few closing remarks.

As the hon. Member for Nottingham East and I noted in our opening comments to the Committee, we both enthusiastically anticipated first-rate scrutiny by all members of the Bill Committee, which is what we have had. Over the past few months, the Committee has examined the Bill in great depth. We had an extensive debate on income tax, considering it for more than five hours. We had an imaginative discussion on creative industries and the tax relief that the Government are introducing. We even had a debate on the comparable attractiveness of being Dr Who or a member of the Select Committee on Scottish Affairs, one of which deals with power-crazed alien monsters—the other is a Select Committee. We also had a number of debates on anti-avoidance and the practical action taken by the Government against such behaviour. We have not quite considered every sub-paragraph, although it has sometimes felt like that.

I thank the hon. Member for Newcastle upon Tyne North for her many probing contributions, in particular related to the debate on the annual tax on enveloped dwellings—ATED. In a lengthy speech, she managed to refrain from any bad puns about taxes being ’ated and, in fact, no one has made that mistake until now. I also believe that she asked 39 questions, which is an average for her speech of one question per minute and a half—a level of productivity only to be praised. I was delighted, with a certain amount of help, to be able to answer a fair proportion of those questions.

The Bill has received good-natured and thorough scrutiny—it is all the better for it—not only from those in Committee but from the representative bodies and other interested parties providing support. That is right, because consultation is fundamental to the tax policy-making process, which we are committed to, as the Bill demonstrates. I therefore thank all the representative bodies that made contributions.

I thank all hon. Members on the Committee for their contributions. Some were made with great passion, such as the one by my hon. Friend the Member for Braintree on seed enterprise investment schemes, or the one by my hon. Friend the Member for Bristol West on tobacco. I am sure that many hon. Members who were present over recent months are already looking forward to next year’s Finance Bill.

Again, I thank the shadow Minister and the Opposition Members for their many insightful contributions. They have worked extremely hard in scrutinising the Bill, and that should be recognised. We must not forget the work of the hon. Member for Leicester South and my hon. Friend the Member for Chelsea and Fulham in ensuring that we have nearly got to the end of the road.

I thank the Economic Secretary to the Treasury, my hon. Friend the Member for Bromsgrove, who made but one mistake in the entire time, which was to offer every member of the Committee a pint of Sajid’s Choice, which is currently available in Strangers Bar. If anyone would like to join us, we will be there later.

I must also mention my hon. Friend the Member for Warrington South, who has been a tremendous conduit for inspiration. I feel terrible that while delivering a speech  and being passed a note, one cannot break off to say thank you on every occasion, so I have felt terribly rude over the past few months, not saying thank you as he has handed me various notes of inspiration—although, frankly, I have not always been grateful, but there we go.

I thank you, Mr Amess, and Mr Crausby for your guidance and wisdom throughout our deliberations, in particular for smoothly guiding us through the potential constitutional crisis that might have occurred as a consequence of confusion over votes regarding the amendments tabled by my hon. Friend the Member for Amber Valley. I hope that there will not be a repetition, but I will leave it ambiguous as to whether I mean of the confusion or of his amendments. It has, nevertheless, been a great pleasure to serve under your chairmanship, Mr Amess.

I thank, as always, Mr Patrick, and I understand that after four years this might be his final Finance Bill before he moves on to other things. I thank him for his service, not only this year but in previous years. I also thank the Hansard Reporters and the Doorkeepers who have ensured the smooth running of the Committee. Finally, I thank the HMRC and Treasury officials, and parliamentary counsel. I make special mention of Elizabeth Gardiner from the Office of Parliamentary Counsel, who this week was honoured for her services to the preparation of legislation and was made a Companion of the Order of the Bath—a well-deserved honour.

As the Committee stage concludes, I very much look forward to Report and to the other final stages of the Bill. I thank all those who have made the experience what it has been.

In the interests of avoiding repetition, I thank all hon. Members for their kind and generous remarks. Mr Crausby and I have found chairing the Committee a great pleasure, not least because of the good-natured spirit in which it has been conducted. I also thank hon. Members for being understanding of my Freudian slips, whether it be “the warm being roomed”, miscalling amendments, getting hon. Members’ names wrong or, indeed, having some confusion over a vote. At all times, however, my voice has been heard and I am grateful for that.

I thank the Doorkeepers, the Attendants and the officials for the way in which they have supported the Committee, and most of all I thank our inscrutable Clerk, who has ensured that wise counsel has prevailed during our proceedings. We wish him a happy retirement after his four years’ service on the Committee, and wish him well in his new post.

Order and, in a real sense of the word, order.

Bill, as amended, to be reported.

Committee rose.