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Mr. Darling: I shall give way to the hon. Gentleman if he tells us why he stood on a manifesto at the last election that promised to reduce tax year on year and not to increase VAT, and when returned to the House voted to increase taxes. Will he tell us why he did that?
Mr. Richards: The hon. Gentleman would have a windfall tax. The right hon. Member for Sedgefield (Mr. Blair) said at the weekend that he had taken legal advice on the propriety of introducing such a tax. That suggests that the Leader of the Opposition must have given counsel specific details of the proposed tax. Will the hon. Gentleman tell the House when he and his right hon. Friend will make those details known in public?
Mr. Darling: As the hon. Gentleman will not answer questions about his broken promises on tax, he might be better advised asking Aims of Industry and the right hon. Member for Peterborough (Dr. Mawhinney), the Chairman of the Conservative party, to publish the legal advice that they were spreading about in newspapers over the weekend.
It is interesting that one of the lawyers who apparently wrote that legal opinion telephoned the Daily Mail to express his concern that his and his fellow lawyers' opinions were being distorted by Aims of Industry and the Conservative party. If the Conservative party is to rely on such a bogus opinion, it is no wonder that people do not trust it. What we saw at the weekend was not a legal challenge but a political challenge. I understand why the Conservatives are taking that course. Their paymasters--some of the fat cats whom they have been protecting for many years--are increasingly fed up and frustrated at the inability of the Tory party to make any impact on the proposed windfall tax. It is no wonder that they summoned the chairman of the Tory party, gave him a dressing down and asked him why he was not doing more to try to advance his cause. The Conservative party will not be able to advance its cause if--
Mr. Darling:
I shall not give way. The point has been adequately and completely answered.
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Conservative Members might do well to sit in a period of quiet humility and to listen, given the record of the hon. Member for Clwyd, North-West (Mr. Richards). Let them reflect on what the Finance Bill will do. It contains seven further tax rises. Council tax is due to increase by £4 billion. Insurance premium tax will be increased from 2.5 to 4 per cent. Air transport tax will be doubled. Tax relief on profit-related pay will be abolished. All that is equivalent to 8p on the basic rate of income tax for someone on average earnings. Prescription charges will be increased, as will fuel duties and tobacco duties.
Since the last election, despite what the Conservative party promised, taxes have increased. The typical family is paying £2000 more in tax than it was at the last election.
Mr. Waldegrave:
Will the hon. Gentleman give way?
Mr. Darling:
I shall give way to the Chief Secretary, but I want him to answer this central question: why should anyone believe what the Conservative party has to say about tax this time round when it made the same promises to reduce taxes in 1992 and then broke them? Why should anyone believe the Conservative party? Let the Chief Secretary answer that question.
Mr. Waldegrave:
The hon. Gentleman is doing what Labour Members always do. He is parading a list of proposals that it is popular with certain groups to oppose. He said that it is a disgrace that we are abolishing profit-related pay, and that that is a new tax. If he were sitting on this side of the House and were introducing a Finance Bill, would he reintroduce the old system of PRP? Or is he saying to people who are lobbying for the maintenance of the allowance that he is on their side, but is not giving them a pledge to do anything about it? I suspect that the latter is his position.
Mr. Darling:
The right hon. Gentleman must realise that anything said in the House is recorded in Hansard and is widely available throughout the world. The idea that anyone would say something in this House and hope that it would not be picked up somewhere else is nonsense.
My right hon. Friends and I have no hesitation in making it clear that we are not promising that if we are returned to power after the next election we will restore everything that the Conservatives have abolished in the past 18 years.
Mr. Waldegrave:
Will the hon. Gentleman give way?
Mr. Darling:
I shall give way in a moment.
We have different priorities: we believe that there is much that the Government should be doing--for example, in education and in encouraging people at work--that they are not doing. It has never been our position that we will undo everything that the Conservative Government have done and rectify every broken promise.
Mr. Darling:
I shall give way in a moment, if the right hon. Gentleman can contain himself. If he sits and contents himself for a few moments, I shall make it clear that the state of the public finances and the Government's
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Mr. Darling:
I promise the right hon. Gentleman that I shall give way in a moment. I enjoy a good debate, and we have several hours to discuss these issues. He still has not dealt with the central point. At the last election he and his colleagues promised that they would reduce taxes year on year. They said that they had no plans to extend the rate or scope of VAT and no plans to increase national insurance. They broke those promises, so why should people believe them again?
Mr. Waldegrave:
We are making some headway. The hon. Gentleman said clearly that he will go on attacking us for abolishing PRP, but he will not restore it. That is an exact summary of Labour's methods in general.
Mr. Darling:
I shall carry on exposing the fact that the Conservative party broke the promises that it made at the last election. It broke its pledge on profit-related pay, and as a result 3 million people will be worse off. We are entitled to attack the Conservative party on that, just as the right hon. Gentleman and his right hon. and hon. Friends are entitled to criticise our policies.
The Financial Secretary to the Treasury (Mr. Michael Jack):
What is the hon. Gentleman's view on profit-related pay?
Mr. Darling:
I am happy to refer the hon. Gentleman to the numerous remarks that I have made on PRP. We have always supported the principle of ensuring that people working in any organisation or any factory have a stake in the enterprise that employs them. That is why we support the extension of employee share ownership and the principle behind the profit-related pay scheme.
Two years ago, when I first spoke about this matter, I expressed concern about the fact that the scheme was being abused and that the cost was rising uncontrollably. At that time, Conservative Members ridiculed our concern and suggested that we were irresponsible to express it. Conservative Members cannot get away from the fact that they tolerated abuses of the system for far too long, which is why they were eventually forced to scrap the scheme. It was not scrapped because it was a temporary scheme, as the right hon. Gentleman said, but because the Conservative party had so operated it that it could no longer afford to continue it in its present form. The Government have not told us whether they still believe in the principle or will come up with an alternative proposal. We shall wait and see.
There is one piece of good news--we should all be thankful that the Bill is shorter than last year's: it contains only 111 clauses. Much detail will have to be attended to in Committee. It is worth noting, however, that since 1979 there have been 4,596 pages of new legislation in Finance Bills, more than half of which have been produced during
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Let me place it on record that I welcome the news that the work of the tax law review committee--of which I was a member, although I have now resigned--will be continued by a committee chaired by Lord Howe, but containing a widespread membership. I hope that that committee will be able to further the process of simplifying tax legislation; I think that hon. Members on both sides of the House would welcome that.
Every Second Reading of a Finance Bill must take place against a background of the performance of the economy. Today, the Chief Secretary gave us a familiar litany of claims that the Tories make. Let us examine them, for they do not bear close examination.
The right hon. Gentleman said that his was the party that was delivering lower taxes. Well, his sense of humour has certainly not deserted him. Although one particular rate of one particular tax fell by one penny, what the Government gave with one hand they took away with the other. As we see in paragraph 16 of the Treasury Committee report, published last night, Mr. Andrew Dilnot of the Institute for Fiscal Studies said:
So there we have it. The Chief Secretary tells us that this is a tax-cutting Budget, but the people and the House know that that is not the case. According to the Government's own Red Book, in 1979 the proportion of gross domestic product that went on tax was 35.5 per cent.; in the coming financial year, it will be 36.25 per cent. The Government's claims about tax, just like their claims about everything else, simply do not stand up.
"There is very little difference between the direct impact in this year's Budget and last year's Budget . . . the gains rise with income".
It is interesting to note in the same paragraph that Professor Tim Congdon, who is no great friend of the Labour party, raised a "wider issue", saying that
"the main problem with the tax system was to be found at the low end of the income scale where people could face 100 per cent. marginal tax rates because of the interaction of the social security system and the tax system."
That problem, he said, could not be tackled by simply "tinkering at the margins".
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