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Session 1999-2000
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Standing Committee Debates
Finance Bill

Finance Bill

Standing Committee H

Thursday 4 May 2000

[Mr. Frank Cook in the Chair]

Finance Bill

(Except clauses 1, 12, 30, 31, 59, 102 and 113)

9 am

The Chief Secretary to the Treasury (Mr. Andrew Smith): I beg to move,

    That, during proceedings on the Finance Bill (except Clauses 1, 12, 30, 31, 59, 102 and 113) the Committee do meet on Tuesdays at half-past Ten o'clock and at half-past Four o'clock and on Thursdays at Nine o'clock and at half-past Four o'clock.

[Hon. Members: ``Hear, hear.''] It is nice to see everyone so happy at the start of our proceedings. I am delighted to see you in the Chair, Mr. Cook. I am pleased that the good order that you kept in last year's Committee proceedings as co-Chairman of the Finance Bill has been rewarded. I am also delighted that your co-Chairman is Dr. Clark. You present a formidable team, and I am sure that you will keep the Committee in good order.

I welcome to the Committee the right hon. Member for Wells (Mr. Heathcoat-Amory), who will lead for the Opposition. He brings great diligence and experience, and I am sure that if there is a way of bringing the euro into the debate, he will find it. Having been shadow Chief Secretary at this stage of the parliamentary cycle, I know that it can be rather a mixed blessing. Any cuts in revenue that the right hon. Gentleman advocates will constitute a denial of essential resources to the national health service, and any extra spending that he promises will add to the Opposition's list of reckless spending pledges, of which we keep a running count. I look forward to his and his hon. Friends' contributions.

I also look forward to the contributions of the hon. Member for Kingston and Surbiton (Mr. Davey) and his Liberal Democrat colleagues. I am sure that they will be of great interest to the Committee, if only to see which side of their tax and spend agenda is ahead on any particular day. Sometimes they vote with the Government; sometimes they vote against us. We shall have to wait and see.

I welcome my hon. Friends to the Committee. Our proceedings will bring great stimulation to their lives over the coming weeks and, indeed, months. I can already see how excited they are. My role will be one of strategic oversight, as is customary for Chief Secretaries. [ Interruption.] Hon. Members seem to have translated that remark as meaning that I shall not be present in Committee all the time. It may be of great consolation to them to know that, as the Committee is having amicable, interesting and enjoyable discussions about how to raise money, I shall be having no less amicable and enjoyable conversations with my colleagues about how to spend at least some of it-where it is prudent so to do.

I shall be especially indebted to my hon. Friends the Paymaster General, the Financial Secretary and the Economic Secretary. I am conscious of the fact that, exceptionally, this is the third Treasury Bill of the Session, and I know that they are enjoying every minute. The force and vigour of their arguments will be sufficient to persuade the Opposition, should they need any persuasion, to support this excellent Bill. Should my hon. Friends in the remotest of possibilities need any persuasion, we have an excellent Whip, my hon. Friend the Member for Nottingham, North (Mr. Allen), who will add an extra delicacy of argument to convince them.

You are set fair, Mr. Cook, for interesting and civilised discussions that will, I trust, illuminate and improve the Bill. I hope that all members of the Committee will enjoy what should be a good discussion that will be tempered only by the sad knowledge that, however long hon. Members might wish to continue, the summer recess will eventually draw our proceedings to a close.

Mr. David Heathcoat-Amory (Wells): I, too, welcome you to the Chair, Mr. Cook. Both you and Dr. Clark have acknowledged skills as Chairmen and we look forward to deliberating under your guidance. I am grateful to the Chief Secretary for his kind personal remarks. He is the fourth consecutive Chief Secretary whom I have shadowed, so I hope that he survives long enough to see the end of the Bill. The others have all mysteriously disappeared; some have gone up and some have gone sideways-I hope that he will go up. He leads an experienced team and we look forward to vigorous and possibly prolonged debates.

This is the longest Finance Bill of all time-558 pages-so it demands a great deal of scrutiny. The Chief Secretary described his role as supervisory. I would describe myself more as a player-manager; I will participate, but leave a great deal to my right hon. and hon. Friends, who have great experience in the field. The Bill is immensely complicated-regrettably, far too complicated for the ordinary taxpayer. It makes no attempt to write fiscal legislation in language that is understandable to our constituents, so it represents another gap between politicians and electors. Even tax practitioners find much of its content hard to understand, particularly the schedules, which take up almost three-quarters of the Bill. We debated some of the earlier clauses on the Floor of the House and will not repeat them in Committee, but the schedules are immensely long and complex-the one on the energy tax runs to more than 80 pages, for example, and we look at that in great detail.

I hope that all hon. Members will participate in the debate. I recognise some veterans, from both sides of the House, and see some new faces, which is welcome. I genuinely hope that we can tempt some Government Back Benchers out of their shells. They occasionally take up a defensive posture of unquestioning obedience to the wisdom of their Whip and the comments of their Front Bench-which have not always been borne out. Indeed, we have already had a dramatic climbdown. We debated double taxation relief on the Floor of the House and then, lo and behold, last night a retreat was published. The damaging provisions are not now to be implemented for nine months, pending further discussions.

Some amendments have already been tabled, so we know even before we start that the Bill contains errors. A Treasury special adviser had imposed on the Inland Revenue, against its wishes, a clumsy attempt to rewrite double taxation and foreign earnings law. In this case-and I am sure that there are others-the immediate complaints of the accountancy profession have been justified. The complaints of outside bodies and people who have to live with the legislation were found to be correct. I am sure that there are many other unexploded mines in the legislation.

Mr. Stephen Dorrell (Charnwood): My right hon. Friend touches on an important issue, which was debated on the Floor of the House last night. He says that the Government's concession is welcome, but I am sure that he acknowledges that the effect of their announcement is to delay the introduction of the measures until next spring. If the Government are to follow that through, does he agree that they should use the delay to reconsider the substance of the Bill?

Mr. Heathcoat-Amory: I strongly agree with my right hon. Friend. We believe that the entire exercise is misconceived and should be withdrawn, as the industries and companies affected now live with uncertainty. Outside the House, anger has been generated because the extensive consultation process about the taxation of foreign earnings and double taxation relief was completely ignored when the Government unexpectedly drafted new provisions. They then underestimated the revenue implications, and the whole thing has now blown up in their face. It would be better if they withdrew the provisions and, if necessary, made modifications in a year's time.

I hope that the Government have learned lessons. Although it may fracture the general atmosphere of good will to say it, I think that the Chief Secretary will admit that he made a slight fool of himself on Second Reading. He insulted a distinguished partner of PricewaterhouseCoopers, someone who will be president of the Institute of Chartered Accountants, and said that he was entirely wrong in criticising the proposals. It is now apparent-the Treasury has implicitly admitted it-that the partner was right, so some humility from the Government would be in order on that and other issues. Many proposals have been made hastily by a Government who do not always understand business and may be badly advised on the matter.

I have two declared directorships with associated shareholdings in the Register of Members' Interests, one in a property company and the other in an agricultural supply company. Neither company is greatly affected by the Bill, but I shall mention my interests again if they are appropriate. I thought that it might help the Committee to bear them in mind at this stage.

Mr. Edward Davey (Kingston and Surbiton): From the Liberal Democrat Benches, I welcome you to the Chair, Mr. Cook, and look forward to many long sittings with you overseeing our proceedings. I also look forward to the chairmanship of your colleague, Dr. Clark, who will share your burden. I hope that you will enjoy the way in which we conduct our business over the next few months.

I was disappointed by the Chief Secretary's suggestion that he would not be with us as much as we would like. I hope that that means that he will spend time finding new ways to invest in our schools, hospitals and police forces. If he does so to the degree that we have asked, it will be welcome and his lack of appearance in Committee will be worth while. He will be aware that members of the Committee-not only Liberal Democrats, but Conservatives and occasionally Government Back Benchers-sometimes have a propensity for spending. I am sure that he will want to pop his head round the door of the Committee Room to make sure that we are not obstructing his plans.

It is nice to see the right hon. Member for Wells leading for the Conservatives again; we have shared the responsibility of leading for our respective parties on the Finance Bill on previous occasions during this Parliament, and have had some interesting discussions. Three other Liberal Democrat Members are serving on the Committee. They were desperate to be here today, and I did not have to remind them how important the Committee is but, unfortunately, they had pressing engagements elsewhere. They send their apologies, and look forward to engaging in debate later.

9.15 am

The Chief Secretary was interested in how the Liberal Democrats would vote on particular amendments and clauses. Obviously, I will not give him a full breakdown because I want to keep him and his colleagues in anticipation. On previous Finance Bill Committees we have tended to vote with the Conservatives on most amendments. The Chief Secretary may be surprised by that, but if he consults the record he will see that on many areas of tax legislation, when the Government make the tax system far more complicated and no fairer, we have sided with the Conservatives. We will continue to do so when we think it appropriate to criticise the Government.

It is nice to see the hon. Member for Croydon, South (Mr. Ottaway) here. He and I served on the Committee for the Greater London Authority Bill in this Parliament. That Bill was actually longer when we had finished with it than the Finance Bill that is before us. It was a mammoth piece of legislation and, as many of its provisions come into force today, we will see the mess that will result from that.

During the Second Reading debate, I criticised the length of the Bill, as did the right hon. Member for Wells. It is a serious issue. During our proceedings we will find many mistakes in the Bill because the parliamentary draftsmen have had to work overtime to prepare all the clauses and schedules. The right hon. Gentleman referred to errors that the Government had already had to correct in the Bill, although they have not gone about those corrections in the way that we would both wish. I would take a heavy wager with the Ministers serving on the Committee that they will have to amend the Bill many times during our proceedings, because it is so long and complex. That will do nobody any good. Businesses and individuals who examine the Bill to plan their tax and business affairs on the basis of its provisions will not know how the Bill will look in its final stages.

 
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