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Tax System
6. Dr. Lynne Jones (Birmingham, Selly Oak): What proposals he has for simplifying the tax system. [130133]
The Paymaster General (Dawn Primarolo): We continue to support the tax law rewrite project, which aims to modernise direct tax law and make it clearer and easier to use. The first rewrite Bill will be ready for enactment by the end of this year.
Dr. Jones: I thank my hon. Friend for that answer, but rewrite is not the same as simplification. The House has just completed consideration of the Finance Bill. I must confess that I have not studied its 742 pages to the extent that I am sure other Members have, but I get the impression that successive Governments have introduced Finance Bills that have made the tax system more complex. Most have paid lip service to the need for a less complex system, but none have set up a mechanism with clout for addressing the issue. I invite the Government to set up such a mechanism, preferably involving Members, who should be given adequate resources for this important job.
Dawn Primarolo: If my hon. Friend had studied the Finance Bill, she would have seen that at least one measure removed more than 40 pages of highly complex tax law. I am sure that she will also appreciate that when a Government approach tax law, they have to balance fairness with simplicity and understanding for the taxpayer. In today's complex world, another issue that Governments have to address is the activities of the tax planning industry, which spends all its time trying to circumvent tax law and avoid paying the levels of tax that Parliament had intended should be paid, so anti-avoidance legislation becomes increasingly complex.
The tax law rewrite project considers how to simplify the drafting of legislation, and the Government are reviewing how we can ensure that our legislation is simpler and easier to understand, while addressing the issue of fairness in the tax system.
Mr. Michael Fallon (Sevenoaks): Is the hon. Lady aware that only new Labour could describe 15 separate rates of capital gains tax and 21 separate rates of company car tax as simplification? Why does she think that every business organisation now complains about the tax complexity and red tape imposed by the Government?
Mr. Dennis Skinner (Bolsover): We have just got rid of 5 million files.
Dawn Primarolo: I know that we are nearing the end of the Session.
The hon. Member for Sevenoaks (Mr. Fallon) is saying that he is opposed to the 10p rate of capital gains tax and to the way in which the Government have reformed the tax system to encourage long-term investment. Is he seriously suggesting that the previous system of capital gains tax, with all its indexation, was somehow simpler?
Gross Domestic Product
7. Mr. James Clappison (Hertsmere): What proportion of gross domestic product was represented by net taxes and social security contributions at the latest date for which information is available. [130134]
The Chief Secretary to the Treasury (Mr. Andrew Smith): The Treasury updates its fiscal and economic forecasts and the ratio of tax receipts to gross domestic product twice a year, in the Budget and the pre-Budget report, and most recently in the Budget Red Book, which showed the share falling from 37 per cent. of GDP last year to 36.9 per cent. this year and to 36.7 per cent. in 2003-04. As the Chancellor said on Tuesday, the combination of a stronger economy leading to higher revenues and £4.5 billion lower spending meant that the net debt repayment last year was not £11.9 billion, as we said at the time of the Budget, but £18.1 billion.
Mr. Clappison: Can the Chief Secretary tell us whether the tax burden now is greater or less than it was when the Government came to office?
Mr. Smith: The figures are set out in the Red Book for the hon. Gentleman and the world to see. It is clear that the tax burden is falling. Moreover, the day after the Budget, the shadow Chancellor said on the "Today" programme that
- the Red Book which is the document that accompanies the Budget shows that the Government expects the tax burden to fall during the next parliament, which is exactly what we expect.
Mr. Smith: My hon. Friend is right. The previous Administration wrecked the public finances, doubling
borrowing, so that for every extra pound that they spent, 42p went in debt interest and social security, whereas we are now able to get that down to just 17p, so that we can put more than 80 per cent. into the front-line priorities--health, education, fighting crime, and transport. When the Conservatives left office, the debt to GDP ratio was 44 per cent. On the plans that we set out this week, we will get it down to a third of GDP--33 per cent. That shows a Government running the economy properly, with sound and strong public finances.
Mr. Peter Lilley (Hitchin and Harpenden): Can the Minister confirm that in 1979 the share of national income taken by spending and tax in this country was slightly higher than in the rest of the European Union, and that by 1997 it was substantially lower than the rest of the EU, giving the UK an enormous relative advantage? Can the right hon. Gentleman confirm that, on his own projections, that gap between us and our competitors on the continent is set to narrow, eliminating at least part of the great advantage that we built up over 18 years?
Mr. Smith: That was rather a long way of explaining that the figure rose under the Tories.
Employment (Scotland)
8. Mr. Tom Clarke (Coatbridge and Chryston): If he will make a statement on the impact of his Department's policies on the levels of employment and unemployment in Scotland. [130135]
The Chancellor of the Exchequer (Mr. Gordon Brown): Since the election, employment has risen by 62,000 in Scotland and unemployment has fallen by 22,000. Unemployment is now the lowest for 20 years. By 2003-04, public spending will be £3.4 billion higher than in 2000-01, showing that the Scottish economy and Scottish public services will do well.
Mr. Clarke: Is my right hon. Friend aware that under this Government the number of unemployment claimants in Scotland has fallen by a quarter, and in my constituency by almost 30 per cent? Does he agree that, in the interests of even more progress, he is absolutely right to stand unflinchingly in support of the new deal and the Government's other employment initiatives, particularly in the light of some of the Mad Hatter ideas being spread around the House, including the implementation of public services cuts guarantees?
Mr. Brown: I am grateful to my right hon. Friend, who is absolutely right. The new deal is a vital part of employment creation in this country. It is a tragedy that the Opposition will not support it, and that they would abolish it if they were elected. It would be one of their public spending cuts, which would total £16 billion. The Conservative party helpfully provided a regional breakdown for us. As my right hon. Friend knows, the cuts would be £1.4 billion in Scotland. Such cuts under a Conservative Administration would be a disaster. That is why there are no Conservative Members of Parliament from Scotland.
Miss Anne McIntosh (Vale of York): Does the Chancellor agree that the new deal has been an expensive
failure in Scotland? The Conservative way forward of "Britain works" will be a much more successful system. Will the Chancellor tell us whether he has assessed the impact of the Barnett formula on employment in Scotland? It should be subject to review, and, post-devolution, greatly reduced.
Mr. Brown: The policy word the hon. Lady was seeking was "abolition" of the new deal. That is Conservative party policy. A former Conservative Chancellor of the Exchequer said that, for him, unemployment was a price worth paying. I fear that the Conservative party is now following that route. It is a bit much for the shadow Chancellor to say that he supports full employment while proposing to abolish the new deal. However, he has got to do that because he would have to make public spending cuts of £16 billion.
On Scotland, I am sure that the hon. Lady would agree that it is unfair that all the regions of this country and all the nations of Britain would have to suffer major public spending cuts as a result of a Tory programme. That is why the people will not vote for it.
Mr. Alasdair Morgan (Galloway and Upper Nithsdale): The past three sets of unemployment figures for Scotland, according to the International Labour Organisation--the Government's preferred measure when they were in opposition--have shown successive increases. The figure is now the same as it was two years ago. How does the Chancellor explain that?
Mr. Brown: Since the 1997 election, the ILO figures show that unemployment has fallen by 22,000.
Mr. Morgan: For the past three years?
Mr. Brown: For the past three years, the figures have been minus 22,000. Youth unemployment has fallen by 71 per cent.--I believed that the hon. Gentleman would welcome that--and long-term unemployment has fallen by 54 per cent. If we had followed the policies of the Scottish National party, we would not be able to afford a new deal. The SNP has no cause for complaint; it should applaud our measures to create new jobs in Scotland.
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