Finance Bill

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Mr. Edward Davey (Kingston and Surbiton): Continuing the theme of the hon. Member for West Dorset, I also believe that a spirit of self-sacrifice has brought you to this arduous task, Dr. Clark. You may well be pleased if our proceedings are cut short. Will you pass on our greetings to the other two Chairmen—Mr. O'Hara and Mr. Hood?

As the hon. Member for West Dorset said, there is little that is controversial in the Bill, and he fairly described it as boring. Some of the flaws in our procedures are worth noting. The Bill may be boring and relatively uncontroversial, but it is also complex, and we have little time to find the problems lurking within the complexities.

Problems that the parliamentary draftsmen have not foreseen may escape our attention because we are debating a long Finance Bill—particularly in comparison with the Finance Bills of the 1960s, 1970s and 1980s. In the short time available, we may fail to pick up the problems. I regret any failings and apologise to those who may be affected by them. It is less a failing of our abilities than of the whole process. I have long felt that it is a key and urgent task for this House to reform that process and I hope that the Government will give it serious thought. Let us hope that whoever is returned to power after the forthcoming election, will also give serious thought to reforming it.

Mr. Letwin: I just want to put on record how much we agree with that. I also hope that after the election a political consensus will emerge across the House. There is no doubt about the need for deep reform of the procedure. Much more strenuous and detailed examination is required in a different format.

Mr. Davey: I am grateful for that outbreak of consensus and I suspect that the hon. Gentleman and I might find other reasons to agree as we progress through the Bill. I am also grateful for the Chief Secretary's warm and amusing remarks. Sometimes when reading Hansard, irony does not immediately strike one from the page, so let us make it clear that there was a degree of irony in the right hon. Gentleman's comments. When I first served on a Finance Bill Committee I was surprised at how long debates could last. That being the case, I shall now sit down.

Mr. Jack: I also welcome you to the Chair, Dr. Clark, and the other Chairmen who will be presiding over our proceedings.

I rise to express a note of sadness because the programme motion breaks a long tradition in the way in which Finance Bills have been handled in this House. In days gone by, Standing Committees would sit through the night. There was a robustness about the debates that will sadly be lacking under the more forensic approach outlined in the programming motion. Sometimes we alight upon a point on which it is right to spend a little more time examining what a Minister may say to justify a position. With the constraints of a timetable, that facility will not be afforded to us, except at the expense of some other part of the Bill. I record my sadness that we must have a programming motion on a Bill that has always proceeded with a degree of consensus and tradition.

9.45 am

The Chief Secretary to the Treasury (Mr. Andrew Smith): Does the right hon. Gentleman acknowledge that both the out-date of the programming motion and its structure have been determined by his hon. Friends? Moreover, are his comments made in the conservative spirit of wanting to leave things as they were or in the radical spirit of reform that the hon. Member for West Dorset advocated just a few moments ago? It is very early on to have such a serious Opposition split.

Mr. Jack: If the Chief Secretary wants to debate the reform of the tax system, I will gladly detain him, but it would be unfair to do so in the light of the programming motion. Having been involved in the tax law rewrite exercise since its inception, I know that there is a great deal to commend the approach mentioned by my hon. Friend. I just wish that the Government had shown enthusiasm similar to that of the Chief Secretary for doing something about the subject. One item not included in the motion, and therefore not in the Bill, is a commitment to do anything to report to the House on possible simplification of the tax system and our procedures. I welcome the Chief Secretary's conversion to the subject. Perhaps before the end of the Bill we might even see some tangible sign that we are going to deal with the issue.

My purpose in commenting was not to criticise the allocation of time in the motion, but to acknowledge the passing of a tradition under which we agreed on the conduct of the Bill by consensus, giving us time to alight where necessary to debate in detail some fact that emerges in debate. That facility could be lost as a result of the programming motion.

Mr. Alun Michael (Cardiff, South and Penarth): For the sake of the record, should the right hon. Gentleman's regret at the passing of those late night debates in which he and I took part on occasion and which were of dubious quality and forensic outcome, especially on the Conservative side, be read as irony or humour?

The Chairman: Order. The right hon. Member for the Fylde should respond briefly. I have so far been listening to items that are not in the motion or the Bill. Now we are reverting to a historical review of the proceedings of the House. Unless the right hon. Gentleman is brief, I shall have to call him to order.

Mr. Jack: Thank you, Dr. Clark. In recent times, the amount of time that we have spent on undue late sittings has reduced. One could argue that the quality has improved.

The programming motion refers numerically to the clauses that we must debate. Although, as my hon. Friend the Member for West Dorset pointed out, this is supposed to be a non-controversial Finance Bill, it still contains 180 clauses and 28 schedules. It shows no indication of the reforming zeal that the Chief Secretary enunciated a moment ago towards the way these procedures are taken. Finally, when Ministers come to present their case for these clauses, I hope that they will be prepared to give us detailed evidence to justify the policy positions being advanced.

Question put and agreed to.

The Chairman: Before we proceed I have several announcements to make. First, copies of the ways and means and money resolutions agreed to by the House on which the Bill is founded are available in the Committee Room. Secondly, in view of the resolutions of the House relating to the declaration of interests, right hon. and hon. Members are required to declare relevant interests when they table amendments, as well as when they speak to them. Copies of the rules are available from the Committee Clerk. Thirdly, I referred earlier to the boxes behind me to my right. If hon. Members wish to make use of them, they can be locked in a filing cabinet when the Committee is not sitting. Finally, adequate notice must be given of amendments. Neither I, nor my co-Chairmen Mr. O'Hara or Mr. Hood, will as a rule call any starred amendments, including any starred amendments that may be reached during an afternoon sitting.

Clause 4

Rates of tobacco products duty

Question proposed, That the clause stand part of the Bill.

The Financial Secretary to the Treasury (Mr. Stephen Timms): I join my right hon. Friend and other hon. Members in welcoming you back to the Chair, Dr. Clark. Your immense experience of our proceedings as well as your well known fairness will help us greatly.

Smoking is the single largest cause of preventable illness and premature death in the UK, killing 120,000 people every year. The increase in duty on cigarettes has encouraged existing smokers to smoke less or to quit and has discouraged children and young people from taking up the habit. Maintaining the real price of cigarettes and tobacco is an important contributor towards our health objectives. The clause therefore increases rates of excise duty on all tobacco products by approximately 1.8 per cent., in line with inflation, with effect from 6 pm on 7 March 2001.

We had many discussions last year about the discrepancy between the indexation rate for excise duties and allowances. We argued that it was swings and roundabouts. This year's figures demonstrate that that is the case. Allowances are being uprated by 3.3 per cent. and excise duties by only 1.8 per cent. I suspect that we will hear a good deal less about that in this Committee. I commend this clause to the Committee.

Mr. Letwin: I do not intend to spend an undue amount of time on the clause. There is nothing terribly new to say about it, but I want to rehearse the reasons why the Opposition believe that it is a mistake to go on raising the rates for tobacco. I accept the point that the Financial Secretary makes about relative indexation, and if I can be allowed so unusual a departure, I confess to having made the mistake last year of believing that the Government intended to continue with the asymmetry in a direct line rather than following the swings and roundabouts principle. This year they have followed the swings and roundabouts principle, and we should be grateful for that. I withdraw some of the remarks that I made last year on that subject.

Our underlying difficulties with the idea of progressive nominal rises in tobacco duties remain. There is a particular force to this argument, because this year appears to be the year in which the fiscal crossover, which I believe that the Liberal Democrat Members, alongside the Government, thought would not happen, has happened. The Financial Secretary might give an explanation for the decline in revenues that differs—it would be worth listening to—but, as far as we can determine, the duty differentials that have opened up because of the UK's poor competitive position on duty have led to yet another significant increase in smuggling, as we expected.

Let me begin by stating a few points on which we agree with the Government, before moving on to those on which we clearly do not agree. We agree that smuggling is a bad thing. I know that we agree because we both support taking considerable steps to try to stop it. The Government would not be spending large sums of money to try to stop smuggling if they did not think that it was a bad thing. I suspect that we agree that the reason why people smuggle is not that they enjoy it as a pleasant pastime on a Saturday afternoon but because they are trying to make money from it, which they are able to do because of the duty differential. So far, I am being uncontroversial—at least I hope so.

I suspect that we agree with the Government—we certainly agree with the hon. Member for Truro and St. Austell (Mr. Taylor); his report remains in obscurity, but the contents of it become clearer and clearer over time—that the cause of the intensity of the smuggling is the size of the duty differential. In other words, normal market economics, albeit in a subterranean and illicit form, have prevailed. The supply of smuggling has arisen because the price advantage of smuggling has grown. So far, I suspect that we are on common ground.

I believe that we also agree—I have never been sure about the Government's position, but whether or not they agree, it is true—that the effect of that kind of smuggling not only deprives the Revenue of money but criminalises large numbers of people in the UK who probably lead perfectly blameless lives otherwise, at least in relation to the law.

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Prepared 26 April 2001