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9.14 pm

Mr. John Grogan (Selby): One of the mantras of the long-serving 19th-century Tory Prime Minister, Lord Liverpool, was a warning to his colleagues not to interfere with what he described as the "people's pleasures". During the past hour, we have heard powerful speeches about cigarettes and beer from the hon. Members for Guildford (Mr. St. Aubyn) and for North Dorset (Mr. Walter) and from my hon. Friend the Member for Barnsley, Central (Mr. Illsley), so it would be wrong to let the few minutes of the debate available for my speech pass without some reference to clause 6, which, to all intents and purposes, abolishes the existing duty on betting--another of the people's pleasures.

It is proposed that, from next January, duty will no longer be levied on bets, but that there will be a tax of 15 per cent. on bookmakers' gross profits. That is a great step forward.

At this point, I should declare an interest: I am still buying drinks with my modest profits from a bet on Red Marauder on Saturday. It followed a win on Papillon last year. Like many punters, I look forward to tax-free bets next year. Indeed, the only possible argument for the Prime Minister delaying the general election until next May is that we could all place tax-free bets on that possibility. That may, of course, not be the overwhelming argument.

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The views of the industry are revealing. John Brown, chairman of William Hill, who is to be credited with coming up with many of the ideas that influenced the Chancellor, said:

I shall briefly consider those three propositions. It is worth remembering that 50,000 people work in the betting industry, which is valued at between £6 billion and £7 billion. The forecasts for the development of e-betting show that it is not a future aspect of e-commerce; it is very much with us at present. A recent report from Merrill Lynch stated:

The global online market is set to soar to £123 billion by 2015.

The changes that the Chancellor is making to betting duty, combined with the strengths of the industry in this country--of integrity, which is recognised worldwide; of an IT infrastructure; and of a skilled work force--mean that the UK can look forward to being a dominant force in the industry. It is encouraging that William Hill, Coral and Ladbroke have all said that they will abandon their offshore operations and come back to the UK. The Tote is abandoning plans to set up in Malta. The industry has great prospects.

There are great prospects also for an increase in the Chancellor's tax take. He is taking a bit of a punt--a bit of a gamble; Treasury predictions are that if there is no increase in betting, the tax take could fall by about £150 million over the next two years--about a third of the current rate. However, all the predictions are that, as in Ireland, with a reduction in duty there will be a considerable increase in betting turnover and that, within a few years, the Treasury will take more in revenues than under the current system. Indeed, if it persisted with that system, given the threat of offshore betting, there is every likelihood that its take would decrease over the coming years, thus reducing the amount of money to be spent on schools and hospitals.

Finally, the measure will be good news for punters. Obviously, there must be an infrastructure to deal with problem gamblers. One should never forget that gambling causes a great deal of misery for some people and the industry must always be aware of that.

Ultimately, of course, we must all remember--even those of us who won on the grand national--that the bookmakers win. The effect of the Chancellor's measures would be that, if one started off with £100 to bet on horses or on football, the current tax take would allow one to make £460 of bets before all the money was lost. Under the Chancellor's new measures, that amount will increase to £700, but the bookmakers will get the whole £100, either way. However, I commend this neglected measure to the House.

9.20 pm

Mr. Howard Flight (Arundel and South Downs): The House has had an interesting debate on what is a tired and dull Finance Bill; it is hardly the radical, vote-winning

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stuff that we expected in an election year. The main measure is the new stealth tax--the aggregates tax. As my hon. Friend the Member for West Dorset (Mr. Letwin) said, that tax was not even mentioned in the Chancellor's speech. As with IR35, the defining measure of a stealth tax is whether the Chancellor mentions it in the Budget speech. Of course, there was no mention there of the 33 clauses that comprise the Budget's main new tax.

There are 292 pages of further tax complication. As various hon. Members have said, the volatility--nay the inaccuracy--of economic forecasts should cause the House to worry about the Government's economic judgment as we enter an economic period more difficult than the past eight years have been. When the Chief Secretary opened the debate, I could not help but think that his speech was motherhood and apple pie. Like the Budget and the Finance Bill, it had been drafted before the American economy started to go off a cliff and before stock markets fell seriously. We are likely to experience the knock-on effects in Britain. I do not know whether the Chief Secretary has seen the national institute figures for the first quarter, which came out at the end of last week. They estimate that growth will be only 0.3 per cent., and that growth for the year will be about 1 per cent. That still trails behind euroland and is hardly 2.6 per cent., but he confidently glossed over the fact in his speech.

The Chief Secretary concentrated on the progress of economic events that had broadly been forecast in 1996 by the then Conservative Chancellor, except that taxation has been some £28 billion per annum higher--about 3 per cent. of gross national product. I cannot resist referring to the Chief Secretary's comment, with which all Conservative Members agree, that a healthy economy and good investment require sound money. I assume that that was his code for saying that he cannot, therefore, support the euro, given that it is such a weak currency.

My hon. Friend the Member for West Dorset gave a splendidly cogent tour de force of the Bill and its background. We all know that there have been four years of taxation by stealth to build up the necessary surpluses, allegedly, to sweeten the electorate in an election year. The disappointment has been the fact that there has been little sign of the delivery of additional Government expenditure to date.

Dr. George Turner: The hon. Gentleman says that there has been no delivery. In Norfolk, the capital input from Government was £4 million in the final years of the previous Conservative Administration; it is nearly £30 million this year. Delivery is under way.

Mr. Flight: I thank the hon. Gentleman for that intervention; he makes my point. It is no good talking about the money--whether that point is true or false--because the question is about delivery. The hon. Member for Kingston and Surbiton (Mr. Davey) also said that actual expenditure on health and education was higher as a proportion of national income under the previous Administration than under this Government.

The main task of my hon. Friend the Member for West Dorset was to expose the 33 clauses that deal with the aggregates tax. It is not, in fact, a tax on aggregates, but a land tax. As the Chief Secretary's comments suggested, it echoes the development land tax. The aggregates tax and the climate change levy--which is also purely a

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tax-raising measure--are the two main politically correct stealth taxes. The Government have not set in stone the promise that tax revenues will be offset by alleged reductions in national insurance.

Both taxes are designed to raise revenue and clothed in language that pleases the politically correct, but neither will benefit the economic life of our country. The climate change levy will severely damage manufacturing industry and the aggregates tax will put up the price of roads, housing and everything else that is built.

My hon. Friend hoped that the Government would at least accept amendments to measures outstanding from the previous Finance Bill, such as the new onshore pooling arrangements, the new arrangements for controlled foreign companies and fair taxation arrangements for restructuring. He also pointed out that, surprisingly, there was nothing in the Bill to deal with foot and mouth problems, but he has given clear notice of the issues on which we shall look to table amendments. Problems need to be anticipated. We should not just wait for things to happen, because the farming industry and related sectors are suffering from this terrible crisis.

The right hon. Member for Llanelli--[Interruption.] I apologise for my pronunciation--and I am a quarter Welsh, too. The right hon. Member for Llanelli (Mr. Davies) made an interesting speech. It is true that a lower rate of saving is partly a function of economic confidence, but it is usually a function of declining disposable incomes. The one statistic that has been glossed over is the fact that there has been a near halving of disposable income growth after tax in recent years. People have borrowed to finance consumption even though they have tried to keep up their gross savings.

The right hon. Gentleman echoed the worry that, in the current climate, there is the risk that people will seek to rebuild their savings too quickly and will cut their consumption substantially. That will cause economic volatility, so he argued in favour of fiscal management and he has a perfectly fair point. Monetary management is still necessary. We should never forget that the Federal Reserve's failure in the 1930s to keep up the money supply led to the great depression. The cause was monetary not fiscal.

The hon. Member for Kingston and Surbiton clearly asserted himself as a man of the 1980s, or perhaps the 1990s. He saw monetary policy as all important and attached less importance to the scope of fiscal policy. He said that the Chancellor had misinformed the Treasury Committee about the figures for taxation. The hon. Gentleman pointed out that the changes to European Union definitions meant that the 38 per cent. figure was roughly equivalent to 36 per cent., so it was not correct of the Chancellor to claim that there had been no change in the proportion of gross national product taken in taxes. Even if people are not aware of the specific figures, they are well aware of the fact that there has been a massive rise in the tax take as a result largely of the stealth taxes that have been inflicted upon us.

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