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Mr. Paul Marsden (Shrewsbury and Atcham) rose--
Mr. Maude: This has turned into a short debate, which is a pity because it is on such an important subject. I must continue.
Will the Government publish an assessment of the impact of the removal of the 10 measures on jobs and investment? The film industry is important and we want to know about it, but what about shipping? What about the tax relief on reinvestment in ships, which the Labour party supported enthusiastically when it was introduced? That is apparently on the list and has to go.
The Financial Secretary must have been able to organise an assessment because she has been chairing the committee that has identified the problem. While she was doing that wearing one hat, presumably her officials in the Treasury could have been making an assessment of the impact on jobs and investment. The House wants to know.
Mr. Oliver Letwin (West Dorset):
Does my right hon. Friend agree that it would also be useful if the Financial Secretary told the House why she told European Standing Committee B only a few months ago that the very committee that she was chairing would have no effect on domestic tax legislation? [Interruption.]
Mr. Maude:
We hear from the Financial Secretary that it is apparently true that there will be no effect on Britain. I take that as a refutation of the suggestion that any of the 10 measures in question affect Britain. Will she confirm that?
The Financial Secretary to the Treasury (Dawn Primarolo):
I shall speak later.
Mr. Maude:
We shall be looking for a definitive answer then. From a sedentary position, she confirmed that what she said last year was absolutely true, so none of this affects Britain at all. Let us hear a definitive answer.
While we are on the subject of harmful tax competition, as it is called by the Labour Government and their European partners--
Mrs. Anne Campbell (Cambridge)
rose--
Mr. Maude:
I must continue. I cheerfully gave way to my hon. Friend the Member for West Dorset (Mr. Letwin) because I know that he is capable of thinking up intelligent remarks for himself. We now know that Labour Members intervene only when comments have been handed out in written form beforehand.
Let us put paid to the idea that the Prime Minister again tried to put about at Question Time today, suggesting that the code of conduct on so-called harmful tax competition was produced under the previous Government. That is absolute rubbish--it was blocked when the previous Government were in office. It was signed up to by this Government. This Government thought that it was a great idea, and they signed up to it in December last year. Indeed, in announcing the decision, their press release said that Britain had signed up to the code of conduct "for the first time". They are condemned by their own mouth. Once again, the Prime Minister has given the House a misleading impression.
Mr. Ian Stewart:
Will the right hon. Gentleman give way?
Mr. Maude:
No, I shall continue. Giving way to the hon. Gentleman is very tempting, but I shall resist the temptation on this occasion.
The Chief Secretary to the Treasury (Mr. Stephen Byers)
rose--
Mr. Maude:
I shall give way to the right hon. Gentleman.
Mr. Byers:
It must be recorded that the group on the code of conduct was first discussed during the United Kingdom presidency of the European Union. Will the right hon. Gentleman confirm that that was in November 1992, when the Conservatives were in office, and that they did nothing to block the proposal?
Mr. Maude:
The proposal may have been discussed, but it was blocked while the Conservatives were in power. It was not signed until this Government were in office. They are condemned by the boast in their press release. It is very generous of them to want to share the credit, even though they tried to take it all for themselves when they announced the decision.
Mr. Byers:
Once again, for the record, I refer to the ECOFIN meeting of 23 November 1992 and the agreement signed by the then Conservative Government. It was agreed that "the above criteria", which lists
Mr. Maude:
The more that the right hon. Gentleman reads out, the more it confirms the point. The Conservatives were committed to nothing in the nature of what this Government have signed up to. Britain signed up to such a damaging measure only when this Government came into office. They were then unwise enough to put the Financial Secretary in charge, with the result that the issue has come straight back like a boomerang, in condemnation of some of their very favourite measures.
Will the Chief Secretary spare us the weasel words that we have heard from him and his colleagues--[Interruption.] We have heard so much equivocation and qualification.
Mr. Christopher Leslie (Shipley):
Will the right hon. Gentleman give way?
Mr. Maude:
I will not give way to the hon. Gentleman.
On this and related subjects, we need some straight answers. Last week, the Chief Secretary said:
Will the Chief Secretary explain why, so very recently, but before all this subject became so controversial and uncomfortable for the Government, he and his colleagues were prepared to sign up to what amounted to a clear commitment in "The New European Way", which was launched with so much bragging, boasting and razzmatazz? We are told that that great document was drafted by the Chancellor's team in the Treasury. It is not for us to say whether its authorship, like another famous document, is "all Balls". The document states:
Mr. William Cash (Stone):
Will my right hon. Friend give way?
Mr. Maude:
If my hon. Friend will forgive me, I shall continue.
Will the Chief Secretary explain--he has utterly failed to do so--why the Prime Minister, in his address to the French National Assembly earlier this year, was explicit in committing the Government to protecting the veto only in respect of personal taxation? Does the Chief Secretary accept that that shows that everything else is negotiable?
A few months later, the report of the Labour party's national policy forum on Europe, which was presented to the Labour party conference and formally adopted as party policy, narrowed down the area of tax policy even more. It talked of member states retaining control over only "personal tax rates". Today, the joint letter signed by the Prime Minister and Chancellor Schroder narrowed it down even more. That great document was supposed to get the Prime Minister out of the hole in which he has found himself on this issue--yet, it makes matters worse. It says:
Mr. Cash:
Will my right hon. Friend give way?
Mr. Maude:
No; I have given way several times and this is a short debate.
Why cannot the Chief Secretary say, as he has apparently been ready to say about the budget rebate, that such matters are simply not negotiable? Does he not understand that the rebate on which he stands so proudly was negotiated only because the Prime Minister of the day was ready to fight for it?
Today, I hope that the Chief Secretary will give some straight answers to the questions that he failed to answer last week. Will he use the veto to protect Britain's rates of stamp duty on house purchases? Will he use the veto to protect Britain's VAT rates? Will he use the veto to protect jobs in the City of London from the imposition of the withholding tax? Will he say no to the equally damaging fudge on exchange of information, which further analysis makes increasingly clear would pile up extra transaction costs and drive business out of the UK?
What assurance can the Chief Secretary give that our veto on tax will remain? Does he agree with the German Finance Minister, who clearly thinks that it should go? He said:
"If necessary, we will be prepared to use our veto to protect the national interest."
That was a fudge. He cannot say when he will use the veto, what he is in favour of, or what he is against. He also said:
"if the draft directive on the withholding tax remains in its present form, we will veto that directive."--[Official Report, 1 December 1998; Vol. 321, c. 697-99.]
The directive will clearly not remain precisely in its present form. Will he veto the withholding tax? It is a very simple question. He cannot seek refuge, as he always does, in the qualification and equivocation that we have so much come to expect from the Government.
"We must make further progress in tax and benefit reform . . . by co-ordinating savings and corporate taxation".
We now know from what Mr. Lafontaine set out yesterday that, in Labour's lexicon, co-ordination of taxation and harmonisation of taxation are the same thing. The Government find co-ordination much less embarrassing to talk about--but the commitment is there.
"At no time have we considered measures to harmonise personal income tax".
The weaselling continues. First, the Prime Minister is protecting personal taxes, then personal tax rates. Now personal income tax is all that is being protected. Does not the Chief Secretary understand that the more that the Government narrow down the areas of tax policy to which they attach importance, the greater the suspicion that everything else is negotiable?
"It is my personal view that we eventually must go to qualified majority voting on the sensitive issue of taxes".
That was not just a personal view after all, because the German Chancellor agrees. He said:
"I must stress that the finance minister has the backing of the Government when he demands steps in this direction."
The Finnish Government, who will take over the EU presidency in July, have put moving to QMV on tax matters high on the agenda. They say:
"Majority voting on taxation is not a question of if but of when".
9 Dec 1998 : Column 388
Until the whistle was blown on them, the Government were merrily proceeding down the path of ever greater tax harmonisation. Why should they have committed themselves to protecting only such a narrow range of taxes from majority voting if they were not really saying, with a nudge and a wink, that everything else was negotiable? Why did the Prime Minister refer just to personal taxes when he spoke in the French National Assembly--as if that was not sending the clearest signal possible that the rest was open to negotiation?
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