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Mr. Peter Lilley (Hitchin and Harpenden): The right hon. Gentleman said that in 18 years a total of 61 Bills were guillotined, which is an average of just over three a year. The current Government have guillotined three Bills in two months. That is a big difference.
Mr. Darling: I am not sure what point the right hon. Gentleman is seeking to make. During the 18 years in which the Conservatives were in power they used the guillotine on 82 occasions. Without wishing to digress too far from the Finance Bill, it was essential to get the measure to allow a referendum on Scottish devolution through to enable people in Scotland to have the opportunity to vote this autumn. Had Conservative Members wanted to discuss that matter seriously, they could have done so. Instead, we had a series of ludicrous amendments, which were obviously designed to waste time. The same was true of the debate on the assisted places scheme.
I repeat the offer that I make on behalf of the Government. There are important measures in the Finance Bill and if any hon. Member wants to table amendments, we want to facilitate that discussion. I hope that, as a result of the measure we are taking next week, when we will arrange for the Bill to be debated in an orderly manner, there will be plenty of opportunity to discuss that detail in a manner which, most importantly, is appreciated by those who will be affected by it.
Mr. James Clappison (Hertsmere)
rose--
Mr. Darling:
I do not wish to speak for too long, but as the hon. Gentleman is becoming so distressed I do not wish to prolong his agony.
Mr. Clappison:
I am not distressed. The right hon. Gentleman referred to the Bill to scrap the assisted places scheme. I should like him to take into account the fact that the Government tried to take it through its Committee stage in one evening, but, as a result of the valuable
Mr. Darling:
This Government do not break their promises. I popped into the Chamber during that debate because I wondered what on earth was going on. It was perfectly obvious to me that Conservative Members were engaged in a good old-fashioned filibuster--a tactic which many Oppositions have used in the past. We are anxious to ensure that the Finance Bill is properly scrutinised. In terms of the time allocated and the length of the Bill, our arrangements are generous compared with what happened in the past.
One of the Government's central objectives is to achieve a degree of economic stability that we have not seen in this country for many years. As I and others have said, it is surely the central objective of any Government policy to obtain long-term economic stability to allow individuals and businesses to plan for the future, to invest and save. We have taken a number of measures to achieve that stability in the domestic market.
Clauses 15 and 49 of the Bill, for example, will implement measures that we believe will calm the housing market. No one wants to see a return to the so-called Lawson boom of the late 1980s, for which many Conservative Members must bear some responsibility. It led to an unsustainable boom, which was followed by one of the deepest recessions in our country since the first world war. As a result, many people, having bought their houses, have been unable to sell and recoup the losses that they had made. My right hon. Friend has therefore taken the necessary steps to ensure that the housing market does not get out of control as the Conservatives allowed it to do in the late 1980s.
As I have said, we want to encourage long-term investment, and a number of measures in the Bill will enable us to encourage that process. They must be taken together with the steps that we took early on entering office when we handed operational responsibility for setting interest rates to the Bank of England. The confidence that inflation and long-term interest rates will remain stable and low, so that firms can make long-term investments, is extremely important. In order that firms can retain and invest many of the profits that they earn, clause 18 of the Bill cuts the main rate of corporation tax to 31 per cent. That measure is accompanied by provisions to reduce the small companies' rate of corporation tax to 21 per cent. It is a major step in the right direction and has been widely welcomed.
As has been discussed at great length in the House--I dare say that hon. Members will want to scrutinise the subject in Committee--we are also introducing measures to remove the distortion in the tax system, whereby a company that retains its profits for reinvestment is taxed at 33 per cent. but if the money is paid out to a pension fund it is effectively taxed at 16 per cent. We believe that investment decisions should be taken by businesses, not the tax man. Part III of the Bill aims to put that right.
There are other measures to encourage investment. Clauses 42 and 43 introduce a temporary doubling of the allowances for investment in the next 12 months--they are targeted particularly on small and medium-sized businesses. As a result, £230 million less tax will be paid
by business than would otherwise have been the case. I should have thought that all hon. Members would welcome that proposal at this stage in the cycle when investment levels are far lower than one might reasonably expect.
On top of that general investment incentive, for the first time, clause 48 introduces a special regime for British films. The British film industry has undergone something of a renaissance in the past few years. British sites are being used for filming, not least in my constituency and in my street. Over the past couple of years, many films have been made and have brought great benefit to this country. I hope that hon. Members will support our measures.
The Budget also sets about modernising the welfare state. That was a fundamental part of our election approach and was set out in our manifesto. The new deal for the unemployed will be financed by a windfall tax on the privatised utilities, which is implemented in part I of the Bill. I am not sure whether the Tories still oppose that part of the Bill as they have not mentioned it recently. In case they do, I remind them that it is an important part of any Government's strategy. We must change the culture of this country whereby many young people feel that they have no obligation to society and no chance to contribute and believe that they live in a country from which they are effectively excluded. It is essential that young people be given the opportunity to train and to work to improve their qualifications.
As we have said often before, in a world where capital is increasingly mobile, the skills and training of the work force will mark us out as a place to invest. The private utilities were sold far too cheaply and the windfall tax has been pitched at exactly the right level, as subsequent events have borne out. Above all, we must remember that the proceeds of the windfall tax will be an investment for the future.
Mr. Malcolm Bruce (Gordon):
The Chief Secretary is setting out a long-term objective with which many of us would agree and we hope that he and his Government succeed in fulfilling it. Will he acknowledge, however, that there is a short-term tension at the heart of his proposals? The Government are taking not only £5 billion in the windfall tax but, if they succeed in getting the Bill through the House, an additional £5 billion from advance corporation tax relief while, by their own admission, they are tightening still further the public spending squeeze. The Scottish Office figures show that there will be a real cut of £126 million this year and £25 million next year. The Chief Secretary and the Chancellor of the Exchequer are both Scottish Members. Can the Minister explain how the short-term needs of the public services in Scotland can by met? Would it not be sensible to use some of the revenue that he is bringing in at least to maintain the real value?
Mr. Darling:
Even before the Budget, my right hon. Friend the Secretary of State for Scotland announced a significant reordering of spending priorities within the Scottish Office to enable it to help--for example, through the rough sleepers initiative and housing measures. As I keep telling the hon. Gentleman, although he does not appear to listen, the real-terms increase in health and education spending, as well as the windfall tax proceeds
The hon. Gentleman says that it is all very well for the Government to consider the long term, but what about the short term? If he were standing here in my position, what would people make of his strategy? He seems far more concerned about today and tomorrow and will not lift his eyes to see that unless we solve the long-term problems, we shall never resolve the short and medium-term problems. Part of the problem that we face as an incoming Government is that it is obvious that the outgoing Conservative Government never looked to the long term.
Every day, I go into my office in the Treasury and I wonder whether or not Conservative Ministers knew that they were never coming back. We are having to pick up the consequences of decisions that could never have been taken by people who expected to be returned to office. When they left, there was something about their mental state--they knew that they would not be coming back and we have had to pick up the pieces. Across the board, we are introducing measures to stand this country in good stead in the long term.
The subject of fairness may be something of a puzzle to Conservative Members, but others may wish to listen. Fairness is an essential component of any tax policy. It is for that reason that we are reducing VAT on domestic fuel to 5 per cent. The Conservatives wanted to put it up to 17½ per cent., which would have hit many of the most vulnerable and poorest people in this country. Is it not ironic that one of the measures that the Conservative party wants to discuss next week is our measure to remove tax relief on private medical insurance? Although that tax subsidy existed for six or seven years, the number of people who took advantage of it never changed: it was a subsidy for people who already had private medical insurance. It is obvious from the Conservative party's stance that it was far more concerned with the few people who would benefit from that relief than the many who will benefit from our measures to reduce VAT. That is why we make no apology for removing the relief. Governments should give reliefs only where they are justified and where they will benefit the majority: they should not give a relief to people who will behave in the same way whether or not they receive it--as happened with the private medical insurance subsidy.
We are introducing other measures to close tax loopholes--something to which we have always attached great importance. All those who exploit loopholes should be on notice that we intend to take a firm line; clause 26 and clauses 44 to 47 begin that process. As my right hon. Friend the Chancellor said, the Inland Revenue is carrying out a wide-ranging review on tax avoidance with a view to introducing legislation in future Bills. It is also considering the case for a general anti-avoidance rule.
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