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Schedule 8
Amendment made: No. 15, in page 95, line 4, column 3, at beginning insert--
'In section 76(8), the definition of "relevant franked investment income".'.
--[Mr. Darling.]
Bill reported, with amendments.
Order for Third Reading read.
The Chief Secretary to the Treasury (Mr. Alistair Darling):
I beg to move, That the Bill be now read the Third time.
This debate concludes proceedings on the first Finance Bill of the new Government. The Bill goes a long way towards implementation of the manifesto commitments that we made prior to the election and resulted in our winning. It introduces a number of measures that are good for the long-term health of the economy. The measures that we have taken in the Budget and in our reform of the way the Bank of England fixes short-term interest rates will ensure that we have a stable platform on which to build for the future.
Before I deal with the merits of the Bill, I want to say a word or two about a recurring theme of the debate. Conservative Members referred to the guillotine and to proceedings on the Bill generally. We had the usual two days in Committee of the whole House, nine sittings in Standing Committee A and the best part of two days on Report. If there was insufficient time to discuss everything that the Opposition wanted to discuss, they haveonly themselves to blame. From our proceedings in Committee--both here and upstairs--it is obvious that the Opposition did not make the best use of their time.
For example, on Wednesday 23 July, the hon. Member for Grantham and Stamford (Mr. Davies), who has won the respect of all hon. Members on previous Finance Bills, and whose ability to speak without notes on any subject for any length of time the Whips care to allot him is unparalleled, was warned under Standing Order No. 42, which deals with "irrelevance, or tedious repetition", because he spoke for more than an hour on clause 43, which the Opposition did not even oppose.
The hon. Member for Witney (Mr. Woodward) spoke for about an hour on a measure relating to the film industry that the Opposition did not oppose. We had a long discussion about the mother of the hon. Member for Daventry (Mr. Boswell) and whether she was Welsh. At one point, the shadow Chief Secretary told us about a tour that he had taken in various parts of the world. We had all sorts of discussions.
We know, because we had 18 years--rather too long--to practise, that it can be easy and tempting for the Opposition to filibuster and waste time when there is no matter of substance to discuss. Conservative Members and those who follow our proceedings outside the House have every right to expect that legislation should be studied line by line, but the Opposition did not put their limited time to good use in this instance. Some Labour Members believe that the Opposition's strategy all along was not to
discuss the matters in hand, so that they would have some reason to complain afterwards. That is a matter for the Opposition.
We gave ample time--more than has been given in the past--to debate the Bill. It is surprising, especially in view of everything that the Conservatives said during the general election campaign and right up to the Budget, that they gave the windfall tax on the privatised utilities such scant attention. That, we were told, was to be the main battleground for the Tory party, yet it was not even mentioned on Second Reading and there was scarcely any criticism--certainly none of substance--in Committee. The Opposition talked a lot beforehand, but when they had the opportunity to table amendments, they could find nothing that they wanted to criticise, and did not even bother.
Mr. Ken Livingstone (Brent, East):
I agree with my right hon. Friend about the weakness of the attack. Many of us regret the fact that the Budget's weaker points were not scrutinised more diligently by the Opposition. Perhaps I can now help to rectify that. Does he think that the Opposition did not really attack the windfall tax because they did not think that it was too bad? As they had seen all those City forecasts that the utilities could stand £10 billion of tax, our settling for half that amount seemed like a pretty soft option.
Mr. Darling:
I am sure that my hon. Friend needs no encouragement to follow the Opposition and offer his own criticisms. Before the general election, we always said that the windfall tax was reasonable in every respect, and so it proved when it was announced by my right hon. Friend the Chancellor. It was a reasonable amount because we are a reasonable Government.
What is more, the tax will be applied to a reasonable cause: helping to equip the country for the future and to give many young people and the long-term unemployed some hope. Perhaps that is why the Conservatives gave up on their opposition to it; perhaps they realised that people in general, and even the utilities themselves, understood that our proposal was reasonable, as was the purpose to which the money was to be applied.
Not only will the tax help the young and the long-term unemployed, but there will be £1.3 billion, of which my hon. Friend the Paymaster General and my right hon. Friend the Secretary of State for Education and Employment are now considering the allocation, for rebuilding and repairing schools and thus improving education for children.
The Government have also introduced measures to begin a programme to reduce the deficit--the massive debt--that we inherited because of the outgoing Conservative Government's mismanagement of the economy. It is necessary to reduce debt if we are to secure the stable platform that the country needs to build for the future.
A central part of the Bill is the measure to reform the corporation tax system. Lowering corporation tax rates by 2 per cent. for both large and small companies is one of the major reforms of the system and will help businesses to plan and to invest for the future. The Bill also contains measures to increase investment relief. Conservative Members either did not find that exceptionable or did not get round to tabling any amendments to it.
A central part of the Government's approach to taxation is the concept of fairness--a concept that the Conservative party does not always understand. That is one of the reasons for our reduction of VAT on domestic fuel to the lowest rate that European rules allow. The Bill also contains a number of measures designed to close tax loopholes and deal with abuses in the tax system. That clearly excited Conservative Members. Let me say this to them: did not their Government, under prompting, try to close some of the loopholes in the Finance Bill that was debated earlier this year? It must be the duty of any Government to ensure that there are no unintended abuses in the tax system and, if there are loopholes, to close them.
I appreciate that it can be galling for those who engage in tax planning and who legitimately advise people on how to take best advantage of the tax system to find that the Government of the day have shut off a particularly lucrative avenue. They must accept, however, that as taxpayers themselves they have an interest in ensuring that the Government are rigorous in their approach to the system and do not allow abuses to develop.
The Bill also builds on our commitment to the environment and the promotion of health. It largely implements our manifesto promises, on the basis of which we won the election.
I note that the International Monetary Fund, which is not noted for its support for our party in government, said that the new Government have made an excellent start and that we have set a high standard for our economic policies, aiming to maintain stability and foster long-term growth while seeking fairness and developing human potential. That does not strike me as too bad an assessment of what we have done, and it strikes me as an infinitely better assessment than anything that could have been said about many of the Budgets that have been introduced over the past 18 years.
Mr. Heathcoat-Amory:
The Bill was conceived in great haste and forced through on a timetable motion. Its long-term effects will be extremely damaging.
The Chancellor promised only one tax increase in the Bill: the windfall tax. The Chief Secretary to the Treasury made the extraordinary observation that the Committee had not debated the tax. I realise that he made only fleeting appearances during the Committee stage, but one of his hon. Friends really should have told him that we spent the whole of the first day debating the windfall tax, having spent a good deal of the Committee stage on the Floor of the House debating clause 1--the clause that introduces the tax. The right hon. Gentleman cannot even get the facts straight in regard to proceedings in Committee.
The central feature of the Budget, however, is the fact that, although the Chancellor did indeed promise us one tax increase, he delivered 17. Despite all the assurances and promises that were made before the election, which were repeated so often and emphasised so strongly,
the Chancellor will raise between £5 billion and £6 billion every year, starting this year. We have the immediate imposition of extra duty on fuel--petrol, diesel and heating oil--which nets the Chancellor £750 million this year and is far more than he is giving away in the 3 per cent. cut in VAT on domestic fuel. We have the restriction on mortgage interest relief, the stamp duty increase, the abolition of relief on health insurance and many other increases.
Then, an hour or so ago, we again witnessed the extraordinary spectacle of the foreign income dividends saga. The whole world knows, even if the Government will not admit it, that the Government made fools of themselves over that. They blundered ahead, trying to abolish foreign income dividends in the teeth of advice to the contrary.
For the benefit of any hon. Member who has just joined us, I remind the House that foreign income dividends are a form of tax relief for British companies with large overseas earnings that was brought in by the previous Government. The Labour Government simply wanted to abolish them, but were soon told by those responsible that the damage would be immense. Instead of withdrawing the proposals, however, they continued to blunder on and, an hour ago, we were forced to adopt the proposals in the Finance Bill. The Bill that is about to pass out of the House of Commons contains a clause and a major schedule that do not contain the Government's intention--we have legislated to put into law something with which the Government disagree.
9.7 pm
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