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Mr. Owen Paterson (North Shropshire): Can the right hon. Gentleman name three groups that have welcomed the measure?
Mr. Vernon Coaker (Gedling): Labour Back Benchers, for one.
Mr. Smith: Labour Back Benchers certainly welcome the measure. I was at a post-Budget breakfast where an array of luminaries commented on the Budget. The measures which, for example, avoid the need to transfer assets before pooling chargeable gains and losses were welcomed. I shall be happy to send the hon. Gentleman details.
Mr. Jack: If the measure is supposed to increase the competitiveness of UK companies in terms of their overseas investments, can he explain why I have received
no representation from any UK overseas investor pointing out that his tax bill will be lower by virtue of the Government's proposals?
Mr. Smith: The package of measures does make the UK more competitive. If people write to the right hon. Gentleman, they are far more likely to do so when they have something to complain about than when they have something to praise in the Budget.
Mr. Nick St. Aubyn (Guildford) rose--
Mr. Smith: I have given way sufficiently.
The Bill will also help us meet our international commitments to the environment. Following last year's Budget, the Bill is an important part of the largest-ever package of environmental tax measures to be introduced in the United Kingdom. Clause 30 introduces the climate change levy. Clauses 20 to 23 reform vehicle excise duty for cars. Clause 58 fundamentally reforms company car taxation, providing an incentive for low CO 2 emissions and removing the perverse incentive for drivers to clock up business mileage simply to reach more generous thresholds.
Clauses 136 and 137 increase the landfill tax rate and clarify liability. Moreover, the changes to the affordable warmth programme in clause 78 and the reduced rate of VAT on the installation of energy saving materials and on the grant-funded installation of heating systems for which clause 131 provides will help ensure that pensioners feel the benefit of warmer homes and cheaper fuel bills as well as that of the £150 winter allowance. The programme takes forward the Government's commitment to combating fuel poverty by supporting the installation of energy efficient central heating systems and insulation. It will benefit up to 1 million low-income homes.
The affordable warmth programme will be funded through a public-private partnership with commercial lessors. Capital allowances will reduce the cost of leasing and allow the scheme to reach many more households than would otherwise be possible. Those provisions, taken with the Budget announcements of an incentive for ultra low sulphur petrol, the aggregates levy and the consultation on stamp duty relief for brownfield developments, make this a Finance Bill for the environment as well as for working families and enterprise.
The Bill also backs charitable giving. Clauses 38 to 46 implement our radical package of measures to boost donations to charities and improve the operation of the tax system for charities. The Bill abolishes the minimum limit on tax relief for donations, boosts payroll giving through the three-year, 10 per cent. Government supplement and abolishes the maximum limit on donations.
Clause 40 cuts red tape on corporate donations. The Bill also introduces new income tax reliefs on gifts of shares and securities, frees charities from the need to set up subsidiaries for small trading and fundraising ventures, and broadens the VAT zero rate for the sale or hire of donated goods. It is a good package, which is widely welcomed by charities. Simon Hebditch of the Charities Aid Foundation described the provisions as radical. He estimated that they would mean £350 million extra a year in tax relief.
Together with our on-going consultation on the establishment of a network of children's funds, our measures on charities show how Britain can make the most of one of our greatest strengths: the readiness of our people to give so much of their time and money through voluntary and community activity for the benefit of all.
The Bill promotes enterprise and fairness. It looks to the future while the Conservative party remains locked in the past. It shows the Government keeping their promises, whereas the Conservative Government broke theirs. Labour stands for the many as we provide sound public finances, low inflation, higher living standards, help for working families and pensioners and employment opportunities for all. By contrast, today's increasingly extreme Conservative party makes reckless tax pledges for the few. Those policies would deny health and education investment for the many, and return Britain to the bad old days of boom and bust.
The Bill means more enterprise, opportunity and fairness in a Britain that is better off with Labour. I commend it to the House.
4.59 pm
Mr. David Heathcoat-Amory (Wells): I beg to move, To leave out from 'That' to the end of the Question, and to add instead thereof:
- 'this House declines to give a Second Reading to the Finance Bill because its 558 pages impose more complex regulations, introduce further taxes and fail to reverse the increasing burdens of taxation on families, on homeowners, on motorists, on consumers, on savers and on businesses.'
Mr. Barry Gardiner (Brent, North): Will the right hon. Gentleman give way?
Mr. Heathcoat-Amory: Not yet. The Bill begins encouragingly by stating that it conforms to the European convention on human rights.
Mr. Andrew Smith: For the record, the right hon. Gentleman should accept that the Bill is 54 clauses shorter than that which the Conservatives introduced in 1996.
Mr. Heathcoat-Amory: That is a wholly bogus way in which to measure the length of the Bill because volume II and half of volume I are made up of schedules. It is not difficult to cut the number of clauses if the number of schedules is increased. This is easily the longest Bill so it is not surprising that the Institute of Chartered Accountants spokesman said:
- This is out of all proportion to anything we have seen before . . . I do not know how ordinary people have a hope of understanding their tax affairs. Even accountants are struggling.
Instead of boasting about the temporary Budget surplus, which has largely been achieved through three tax-raising Budgets, the Chief Secretary should attend much more closely to the economy's long-term productive capacity, on which we shall have to rely to pay for our public services long after the Budget surplus has disappeared. That productive potential is being eroded and undermined by the Bill, which is particularly damaging when combined with the ever higher tax burden being levied on taxpayers and businesses of all sorts.
The Chief Secretary was coy when my right hon. Friend the Member for North-West Cambridgeshire (Sir B. Mawhinney) asked a straight question about the additional burden on business. The Confederation of British Industry Budget briefing refers to
- the increase in the business tax burden which we have estimated at over £20 billion over the five years of this parliament.
The argument about whether the Government have broken their pre-election promises not to increase the tax burden has, in essence, been settled. Before the Budget, the Prime Minister's personal press officer, Mr. Campbell, let the cat out of the bag, or reaffirmed what the rest of the country knew: the tax burden has increased sharply since the election and, at the end of this Parliament, will be substantially higher than at the start.
Mr. Geraint Davies: Following my intervention on my right hon. Friend the Chief Secretary about the combination of borrowing and tax, does the right hon. Gentleman accept that the global level of borrowing and tax has decreased? Will he support the right hon. Member for Haltemprice and Howden (Mr. Davis), the Chairman of the Public Accounts Committee, who has called for the Tories to introduce a borrowing guarantee, which would reveal the high borrowing and tax levels that the right hon. Gentleman oversaw?
Mr. Heathcoat-Amory: The hon. Gentleman has it all wrong again. I refer him to the Government's own Budget document, which clearly states on page 200 that the tax burden has risen, continues to rise and will be higher at the end of this Parliament. If he does not believe the Government's literature, no wonder he is in denial on the tax burden. The arithmetic is absolutely clear, but the Government have invented a new trick: a hypothetical average family that pays no indirect tax at all, spends no money and does not drive, smoke, drink, insure anything or move house. That family, supposedly, now has a lower tax burden. Perhaps he was referring to that.
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