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CGT battle to add to Government woes

Black November continues for the Government with Conservative incompetence jibes beginning to stick and pressure growing on the Chancellor over Northern Rock, HMRC and capital gains tax.

On the back of criticism today by the Treasury select committee over the effect the CGT changes will have on small business, the Conservatives will offer an alternative package of reforms this week.

The Treasury select committee has warned the Government of its concern over the effect its CGT changes could have on small business, employee shareholders and longer-term investment.

In its report into the pre-Budget report the MPs call on the Government to set out how it proposes to mitigate the effects of the withdrawal of taper relief, especially in respect of small business.

The report also attacks the Government for not consulting explicitly on the withdrawal of taper relief prior to the publication of the PBR.

The MPs acknowledge the Chancellor has made it clear he is unwilling to reverse the CGT decision but they have called on the Government to clarify which parts of the changes it is prepared to discuss with the industry.

No mention is made in the report of the damage the changes could do to the life industry in terms of insurance bond sales.

The Conservatives sense yet another chance to attack the Treasury as incompetent and further damage the Government¹s standing within the business community on this issue.

Reports suggest the Tories will use the CBI conference to reveal plans to reverse parts of the CGT decision and bring the rate back to 10 per cent for people selling their small firm or share portfolios.

The Prime Minister went no further than telling the CBI conference today that the Government would continue to listen and discuss representations it has received on the proposed CGT changes.

LibDem leadership contenders Chris Huhne and Nick Clegg both spoke at the CBI conference attempting to show off their business credentials and economic liberal outlooks.

But in many eyes acting leader Vince Cable has been the LibDem star shining brightest over the last couple of weeks with stinging attacks on the Government over both the events at Northern Rock and HMRC and would be a popular candidate with many if he decided to change his mind and stand.

Elsewhere, FSA chief executive Hector Sants gave his first major speech on the retail distribution review at last week¹s Aifa dinner, although it was slightly upstaged by the FSA press office¹s decision to release the whole
speech the morning of the dinner.

Sants pledged to work with advisers on the RDR, said he was well aware of their concerns and acknowledged that at times the regulator has not made itself as clear as it could have done.

He also got a loud cheer from members for highlighting the changes to the Financial Services Compensation Scheme which Aifa fought hard for and which will significantly reduce the scheme¹s burden on advisers.

The conciliatory language, in line with similar recent speeches from FSA head of the RDR Amanda Bowe, is in marked contrast to certain statements coming out of Canary Wharf around the time the discussion paper was published.

The new mood music has gone down well with many advisers. Simply Biz chairman Ken Davy, who has been a vocal critic of certain aspects of the review, says he is willing to take Sants at his word and hopes constructive dialogue between the FSA and the adviser community can continue.

Fidelity head of IFA channel Peter Hicks also welcomed Sants¹ speech but warned advisers should still take the discussion paper as it stands and ensure they voice their concerns about the damage that could be caused by the likes of CAR and primary advice.


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