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7.9 pm
Mr. Michael Jack (Fylde): I have listened carefully to the hon. Member for Wimbledon (Mr. Casale) and hope that he will volunteer to serve on the Finance Bill Committee. Once he has had the opportunity to wade through 588 pages and examine some of the more Byzantine and complex ways in which the Chancellor seeks to translate his proposals into law, he will be less enthusiastic about condemning simplicity and more on the side of Conservative Members, who speak with the voice of experience and reality.
I strongly support the Conservative amendment, which asks the House to decline to give the Bill a Second Reading, because of its 558 pages and its content--the extra taxes that it imposes on the citizens of Wimbledon and the rest of the United Kingdom, on the businesses of Wimbledon and the rest of the United Kingdom, and, importantly, on home owners in Wimbledon. I intend to say something about business taxation later. I remind the House that I have properly declared my declarable interests--principally, my interest as a non-executive director of a quoted public company.
Before we talk about the size of the Bill, we must reflect on how a Finance Bill is put together. It is always interesting to observe the creative tension, and the battle that takes place between Inland Revenue officials, Treasury officials and Ministers as they decide just how big a Bill they think they can cope with--and, more importantly, what measures need to go into it. I think that this Bill is so long--its length has already been mentioned--and so complex for two reasons.
This is likely to be the last full-length Finance Bill before the next general election. All the evidence suggests that certain people are sweeping every possible bit of legislation into a large pile, on the basis that next year they will not be so lucky. As for the Bill's complexity, I think it reflects the fact that this Chancellor likes to fiddle with the tax system. The Red Book contains a series of measures--small measures--dealing with small and medium-sized enterprises. It continues a trend that the Chancellor has followed ever since taking office: the introduction of a series of small measures that are not terribly well thought out, and are certainly not crafted with care in the sense of evaluating the real effect on the economy--measures whose whole purpose is to give the impression of an active Chancellor who is doing all kinds of things, probably to very little effect. That is the sort of trend that leads to a long Finance Bill.
Another reason for the fact that our Finance Bills have become longer is that the financial community has become more adept at finding ways around the drafting of legislation. I warmed to the theme of the hon. Member for Kingston and Surbiton (Mr. Davey), the Liberal spokesman, who spoke of the need to separate the parts of the Bill that deal with the Taxes Management Act 1970 and the parts that deal with the more contentious elements of the Budget. I made that point last year, and I make it again this year. If we are to have any meaningful reform of our tax laws, it is important to make that separation in the legislation and the concurrent consultation.
If I am selected as a member of the Standing Committee, I hope to table an amendment asking the Treasury to go one step further than the tax law rewrite exercise. I have been on the steering committee dealing with that exercise. It is interesting not only to observe the results of the rewrite of our tax law in plain English, but to note the frustration of those who have been involved. They are frustrated by the dearth of resources to support the exercise; but more interestingly, they are frustrated by the fact that, although measures to smooth the operation of our existing law are already emerging, they cannot be enacted because of the inevitable strictures of the rewrite exercise. I do not apologise for that, because I was partly responsible, but I think it fair to say that the exercise is doing a good job in showing better ways in which the existing tax law could be developed.
If we are talking about reform, we must be certain about whether we want better, clearer legislation of the current type, or less tax legislation in total. If we want to reform the tax system fundamentally, how would we do that? I do not think that question has been properly answered, but practitioners cry out for an answer. I hope that the Treasury will look kindly on the idea of a report showing how the tax law rewrite could be taken into territory allowing a real reform of the system. That might take a decade, but we need to think about it. We should ensure that size does not necessarily determine whether a Finance Bill is good or bad, and that quality and clarity become the benchmarks.
Some of the proposals feature niggling complexities. We have already heard today about changes in the Government's energy policy. I was interested to note that the Secretary of State for Trade and Industry chose today to announce some easing of the moratorium on gas-fired power stations. Having tabled parliamentary questions, I learned from the Government that there was no need for the climate change levy as currently proposed. While I entirely support the idea of saving 2 million tonnes of carbon dioxide as a contribution to our Kyoto target and to a reduction in global warming, the proposed method is unnecessarily complex.
Horticulture, in which I earned my living before coming to the House, has survived because it has saved energy over the years, but the best that that industry--which has a superb record on energy saving, and which is carbon-neutral in terms of the job that it performs--can get out of the Government is a 50 per cent. rebate. If the Paymaster General considers the implications of an end to the moratorium on gas-fired power stations, and also reads the parliamentary answers that I have secured from my colleagues so far, she will find that a 13 per cent. reduction in coal-fired electricity generation, coupled with a 14 per cent. increase in generation from gas, will save 2 million tonnes of carbon dioxide a year. The climate change levy, as such, is thus not needed.
If the hon. Lady would like an even more environmentally friendly example, I can refer her to a letter placed in the Library by the Minister of State, Ministry of Agriculture, Fisheries and Food. In the England rural development plan, the Ministry was able to point out the benefits of carbon absorption by the planting of miscanthus grass or short rotational coppice--energy crops. I asked the Ministry what would happen if the horticulture industry increased its plantings: could it
absorb its own carbon dioxide output? I was told that if 41,000 hectares were planted, that could be done; but much more tellingly, that the planting in the United Kingdom of 108,000 hectares of short rotational coppice would take away all the 2 million tonnes of carbon dioxide. That complies with Government policy.I estimate that the cost would be £150 million. If burning that short rotational coppice required, as it would, the construction of more appropriate power stations, the cost could be recovered through the cost of the energy itself. If necessary, the Government could recoup any upfront moneys that they had to invest to encourage that form of activity.
We have 18.6 million hectares under cultivation; the 108,000 hectares that I mentioned represent about 0.5 per cent. of our cultivatable land area. In a simple, straightforward, environmentally friendly, job-creating way, we could do away with the levy, and provide a solution to the complexities in the Bill. It is time that the Government looked for some energy-saving carrots, instead of always looking for sticks with which to beat people, and imposing additional costs on UK industry that will not be imposed on our continental and world-based competitors.
Just as the Government refuse to consider such simple ways of dealing with climate change, they reveal themselves as the authors of complexity on page 147 of Red Book, in the Financial Statement and Budget Report, which deals with the parts of the Bill that introduce variable rates of vehicle excise duty on new cars. There is nothing in the Bill or the Budget praising motor manufacturers for their technical ingenuity in reducing noxious emissions, nor anything that recognises the fact that Europe's car makers have already voluntarily agreed to exceed Government emission standards by means of their own technology and agreements throughout Europe.
I do not know what the table in page 147 is supposed to say about future emissions because there has been no environmental impact study. There are four VED bands and three levels of taxation: for cars using cleaner fuels, for petrol cars and for diesel cars. We are supposed to find that all sorts of magic things will occur because of a spread in VED--it will be between £90 and £160. In terms of influencing people's car purchase, it is for the birds. To be introduced, such a system requires complex legislation, but it is against a background of no measurable environmental benefit because no study has been done. It is about time the Government looked more carefully at the way they introduce legislation, because it is complex indeed.
In the Budget, attempts are made to bring the same environmental schemes to the field of company car taxation. The Government have seen fit to amend the previous arrangement, which may have induced people to drive unnecessarily long distances to try to get over the 18,000-mile barrier to pay a discounted rate of company car tax, rather than the full rate. However, the Government seem to have introduced a full, head-on charge for the man who takes home the company van, the genuine company car user, the person for whom the company car is a proper tool of the trade.
That person has in no way been assisted by the proposal. Again, there is no effort to try to work out whether company car purchase schemes will be influenced by that mechanism, yet in its own way, it adds complexity to the Bill.
One thing confuses me above all else. If, through those two measures on motor vehicles, the Government are trying to encourage a reduction in carbon dioxide emissions, why are they penalising the most carbon dioxide-efficient type of engine: the diesel? They seem to have imposed a penalty on such cars. They say that they will consult and do something about it later, but why wait until later? Why not do something about it now and back companies such as BP Amoco, which are introducing their own very clean fuels? One of the benefits of the fuel will be to take away sulphur dioxide emissions. It will be burned by the most energy-efficient engine.
I do not see the logic in what the Government are doing, introducing unnecessary complexity in that whole area. There is very little to encourage the take-up of liquified petroleum gas, which in terms of non-carbon dioxide emissions is one of the cleanest fuels in the country. The Government's policies in that area are confused.
I comment next on the Government's arrangements for non-controlled foreign companies, so-called company mixer schemes, and the tax arrangements for companies trading abroad. I well understand why companies have become concerned about that form of taxation. It is true that there was consultation with business on double taxation over the two years before the Budget, but nowhere in that consultation exercise was there any indication of the proposal to change the nature of those companies and their tax position--that was not part of the consultation exercise. All of a sudden, the competitive position of United Kingdom companies trading on a world basis has been put at risk by the proposal.
I held a conversation with one such company last Thursday to establish beyond peradventure whether it would be trading at a disadvantage. The answer is very clearly that it would. In a tax sense, it will be treated worse, for example, than its German counterparts.
The company has a subsidiary. The mixing of revenues under different tax regimes takes place in Luxembourg. It can maintain its competitive position, for example, compared with German companies, by mixing streams of incomes, which have borne a different rate of taxation. As a result, it can maintain a competitive tax regime compared with its continental counterparts and sustain a regular flow of investment to new enterprise in Europe.
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