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Sir Michael Spicer (West Worcestershire): Successful or not, the increases in excise duties are an integral part of the Government's policy to raise the overall level of taxation as a percentage of gross domestic product. The fact that the Government are increasing taxation as a whole as a proportion of GDP is now an established fact in the Red Book, and even if, under the convention uniquely invented by the Government, one includes the working families tax credit as a tax deduction, taxes as a whole are going up.
To return to a point made by the hon. Member for Broxtowe (Dr. Palmer), the irony is that the burden of the overall level of taxation falls on indirect rather than direct taxes. As a Conservative, I have no particular objection to that--it fits in very much with my overall philosophy--but it must be a cause for shame among Labour Members. The process of increasing excise duties is part of that overall strategy.
The strategy is necessary because of the explosion in the rate of increase in public spending and planned public spending that the Red Book also recognises. It is soaring--there is no question about that. The Select Committee on the Treasury recently established the facts. In 2000-01, public spending will rise by 6.7 per cent.; in 2001-02, it will rise by 6 per cent.; and in 2002-03 by 13 per cent. It is therefore not surprising that bodies such as the International Monetary Fund recently pronounced that Britain's economy was at risk of overheating and that the aim of Government policy ought to be to take the pressure off interest rates. The IMF stated that in these circumstances it would be ideal for fiscal policy to take the burden off monetary policy, and the fact that that has not happened is a matter to be regretted.
All that is part of a context recognised by everyone outside the present Government. Expenditure is soaring and taxation policy is inevitably following it. It so happens that taxes are being raised through indirect taxation, particularly excise taxes.
Mr. Edward Davey: Can the hon. Gentleman tell the House what expenditure he would cut in order to tighten fiscal policy?
Sir Michael Spicer: I would take a totally different approach to public expenditure. There is the question whether private resources should be used for public services to a far greater extent than is the case. It is extraordinary that a Government who ostensibly support those most in need, but not so much those less in need, do not accept--they may do so secretly, but not publicly--the need for private resources in public programmes. That is inevitable and will have to be recognised one day.
Mr. Davey: I am grateful for the hon. Gentleman's reply. Can he tell me whether it is in respect of pensions, police, schools or hospitals that he believes the private sector has most to do?
The Second Deputy Chairman of Ways and Means (Mr. Michael Lord): Order. We are straying rather wide of the amendment.
Sir Michael Spicer: I bow to your constraints, Mr. Lord, although I would be happy to debate the topic at length.
The rise in excise duties is a matter of great interest. The rise in tobacco duty is self-evident. The change is 8.41 per cent. However, in the case of alcohol, as my right hon. Friend the Member for Wells (Mr. Heathcoat- Amory) mentioned, the so-called indexation to inflation is a strange phenomenon and will have to be explained by the Government.
Throughout the Red Book and throughout the discussions that we on the Treasury Committee have with the Monetary Policy Committee, the argument is that the rate of inflation--RPIX--is currently below the target level of 2.5 per cent. and is likely to remain so. Nevertheless, the Government say that indexed alcohol duty will go up by 3.4 per cent.
There may be all sorts of calculations involved, but the basic inflationary index used to govern inflationary policy and thus to determine most of the UK's monetary economic activity--the RPIX index--continues to be well below the target level of 2.5 per cent., so it is extraordinary that an indexation device is suddenly introduced, whereby excise duties on alcohol are put up by 3.4 per cent. The Government will have to tell us more about that in the course of the debate. [Interruption.] I am glad that the Minister is sending his assistant scurrying away, presumably to get some answers.
6.15 pm
Amendments Nos. 1 and 2 highlight the importance of the independent analysis of the effect of excise on smuggling. The Treasury Committee, and especially the Sub-Committee which I chair, spent a great deal of time on the matter. It took evidence and on 8 February published its report on HM Customs and Excise. Paragraph 64 is directly relevant to the debate on the amendments. It states that in March 1999, in the pre-Budget report,
- the Chancellor of the Exchequer announced that there would be an "independent evaluation of the strategy and measures deployed to tackle excise duty and fraud and evasion . . ."--
In the 1998 pre-Budget report, almost exactly the same promise was made. That is partly the answer to the hon. Member for Kingston and Surbiton (Mr. Davey), who spoke about physical constraints on smuggling. The 1999 announcement was an almost exact repetition of the offer of an analysis of physical constraints on smuggling in the previous year's pre-Budget report. In 1999 Mr. Taylor was put in charge of the report. The results of his evaluation apparently influenced the measures taken in the 1999 report and in the current Budget.
Because of the importance of the report in determining Government strategy on excise duty, particularly in relation to smuggling, we--the Treasury Committee--
- requested sight of Mr Taylor's report to the Chancellor so that we could assess whether the measures announced by the Chancellor to deal with tobacco smuggling fully met the evaluation's recommendations. We were also concerned to investigate how Mr Taylor had undertaken his review, given that witnesses from several key alcohol and tobacco trade and retail associations told us that they had not been consulted by him. We were told--
- that the advice tendered by Mr Taylor was "personal and confidential" to the Chancellor and could not be made available to Parliament as a result.
- We consider it unacceptable that the Treasury should commission a review of an important area of Government policy, and announce policy measures apparently based on the outcome of that review,
- without allowing Parliament access to the review's conclusions. We recommend that the Chancellor make available for Parliamentary scrutiny the results of Mr Martin Taylor's recent evaluation of Government policy to tackle tobacco smuggling.
Mr. Campbell-Savours: If the Taylor report included material that was based on intelligence, would the hon. Gentleman still be in favour of publishing it?
Sir Michael Spicer: There are always issues associated with intelligence, but the Government were not prepared to consider publishing any part of the report, or to produce a summary of the analysis that led to the conclusions. They were not prepared to give Parliament any insight into an apparently substantive and significant contribution to Government policy which had been announced in public. Confidential matters relating to security and intelligence could have been deleted. Parliament accepts that when such reports are published, certain references to intelligence sources and techniques will not be disclosed.
It is scandalous that the report was not published. I should have thought that that was common ground on both sides of the House. I should have thought that the hon. Gentleman, who feels strongly about parliamentary matters and speaks against the Executive on occasion, would consider it wrong that a major report which was publicly announced should not be a public document. Probably because it reached conclusions that the Government did not wish it to reach, the curtains came down. I do not believe that that had anything to do with information or intelligence. The fact that the report came to the wrong conclusions from the Government's point of view made it unacceptable in the public domain.
Mr. Campbell-Savours: I do not know what was in the report. I do not know whether it dealt with intelligence matters, but I presume that it did. If, on a balance of judgment, Ministers decided that a document would be worthless unless it included that intelligence material, which it cannot include if it is to be published, how can one challenge that judgment? A similar decision would have been made by Ministers in the previous Government. I heard them say that when I used to sit on the Opposition Benches.
Sir Michael Spicer: If the matter had such implications for national security and the intelligence services because of smuggling, the Government could have made that clear, but they did not. They claimed that the report was a personal matter for Mr. Taylor and the Chancellor. If the hon. Member for Workington (Mr. Campbell-Savours) is right--I suspect that he is not--the Government should say that the report had not been published for security reasons. We could have considered the matter and Parliament could have decided whether it had implications for national security. However, the Government never said that the report was sensitive because of national security or the way in which the intelligence services work; they said that the report was personal to the Chancellor. I believed that the hon. Gentleman would find that unacceptable.
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