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Taxation
7. Mr. David Amess (Southend, West): If he will make a statement on changes in the burden of taxation since 1997. [44503]
The Chief Secretary to the Treasury (Mr. Andrew Smith): The figures for net taxes and social security contributions as a percentage of gross domestic product are set out in table B22 of the pre-Budget report.
Mr. Amess: After that hogwash, will the Minister confirm that the amount of tax raised each year is now £100 billion greater than it was when this rotten Government first came to power? Will he explain why the Government have broken their promise not to increase tax without reforming services, particularly the national
health service? Finally, will he now admit the truth—that taxes are going up while, because of Government incompetence, public services are being driven down?
Mr. Smith: It is nice to see the hon. Gentleman approaching the issue with his characteristic objectivity and good humour.
I, of course, stand by the figures in the table to which I referred. The hon. Gentleman should recognise that we made the tough decisions. We sorted out the public finances; we invested more in public services; and we kept every promise that we had made on tax. The hon. Gentleman's party wrecked the public finances, cut public investment and broke all its promises.
Derek Twigg (Halton): The burden of taxation is a key issue. Constituencies such as mine, which is one of the most deprived in the country, want that burden to be shifted from the poorest people. I hope the Minister and the Chancellor will do more next week to ensure that it is. My constituents also want the money raised in tax to be spent specifically on education, health and transport in deprived areas such as mine. I urge the Minister to ensure that that happens as quickly as possible.
Mr. Smith: I share my hon. Friend's concern—indeed, determination—to ensure that while everyone in the country benefits from our policies, those who need help most of all benefit the most. That is what is happening as a consequence of the record investment that we are already making in the NHS, and the increased investment in fighting crime and in transport. As a result of the Government's decisions on personal taxation and benefits, the poorest fifth of the population—the poorest fifth of families with children—are £1,700 a year better off. Of course we hope to build on that in the future.
Mrs. Angela Browning (Tiverton and Honiton): One of the most damaging burdens of taxation that the Government have introduced applies to pension funds. That, compounded by the problems of the market and of annuity rates in particular, means that many people approaching retirement face it with grave misgivings.
Tomorrow the Government will have an opportunity to put matters right, when the Pensions Annuities (Amendment) Bill is before us. Will the Minister guarantee that neither his Front Benchers nor his Back Benchers will talk the Bill out, or dissemble in any way? That would deprive people who are very concerned about their income in retirement, for which they have saved. Will the Minister ensure that Labour Members support a Bill that is backed by the Opposition and by other Members on both sides of the House, so that pensioners can heave a sigh of relief in the knowledge that the Government will not penalise them any further?
Mr. Smith: Of course we are all concerned about the future of pensioner incomes, and it would be good if there could be a cross-party consensus. I look forward to hearing the hon. Lady and her hon. Friends support the Government's proposals for the pension credit, which will do an enormous amount to reward those with savings who were penalised under the Conservative party.
My hon. Friend the Economic Secretary has published a full consultation document on annuities. I shall read with interest what the hon. Lady says on the subject.
Mr. Tony McWalter (Hemel Hempstead): My right hon. Friend will have read in this morning's newspapers that a multi-billionaire receives more from the Treasury than ever he pays. Will he ensure that after the Budget such people pay the appropriate amount of tax?
Mr. Smith: As a matter of long-established practice, we do not comment on the individual circumstances of taxpayers. I shall take the general thrust of my hon. Friend's question as a Budget representation and refer it to my right hon. Friend the Chancellor.
Mr. Michael Howard (Folkestone and Hythe): Has the Chief Secretary also seen the figures reported today, calculated by the United Kingdom's largest financial adviser, which show that British families now face a higher tax bill than those in France, Italy or Spain? Is the Chief Secretary proud of that?
Mr. Smith: The overall tax burden, which is what the question was about, is lower in this country than in France and Germany. Moreover, as a consequence of all the changes made by the Government, a typical family with children is £1,000 a year better off. Furthermore, the tax burden, which fell last year, is falling this year as well.
Climate Change Levy
8. Mr. Eric Illsley (Barnsley, Central): If he will make a statement on the operation of the climate change levy. [44505]
The Financial Secretary to the Treasury (Mr. Paul Boateng): The climate change levy is designed to promote greater energy efficiency, and to be revenue neutral. Part of the levy revenue is being recycled to provide enhanced energy efficiency advice to business and to provide support for energy efficiency investments. We are on target to meet our Kyoto obligations to reduce carbon emissions.
Mr. Illsley: I am grateful for my right hon. Friend's response, but will he look again at those companies that do not qualify for integrated pollution prevention and control status and thus cannot take advantage of the rebates introduced by the Government? I refer particularly to a company about which my right hon. Friend may have heard during his recent visit to Barnsley—Potters Ballotini—which uses 100 per cent. recycled materials. It seems anomalous that a company using recycled materials should suffer from having to pay the full climate change levy. Will he look again at the operation of the system?
Mr. Boateng: I learned very intimately from meeting business people in Barnsley of the interest and concern that my hon. Friend takes in these matters. Such a company would be well placed to benefit from the considerable advice and financial support that the Government are making available to those who want to make energy efficiency savings. However, my hon. Friend will appreciate that the tax is on energy; it was designed by Lord Marshall to help us to meet our Kyoto
obligations, and it is doing that. It is benefiting businesses through the reduction in national insurance contributions and through the advice and assistance of the Carbon Trust. I hope that the company to which my hon. Friend referred will feel able to approach the trust and ourselves for any advice that it might require.
Mr. David Lidington (Aylesbury): I should have more respect for the Financial Secretary if he were prepared to take responsibility for the Government's decisions rather than to hive it off to Lord Marshall or anybody else they have hired to give advice. Surely his hon. Friend the Member for Barnsley, Central (Mr. Illsley) made an extremely important point, which is relevant to the interests of a large number of manufacturing businesses throughout the country that do not qualify, under IPPC regulations, for taking part in a climate change agreement. What answer does the Financial Secretary have for a company such as Plastic Technologies of Smethwick? It tells me that it faces an annual climate change levy bill of about £61,000 but that it will receive national insurance rebates of just over £4,000. Is not the truth that the Government have picked a complex and bureaucratic method of taxing companies which will deliver small environmental benefits but which has already distorted markets and is placing burdens on British manufacturing companies that their foreign competitors do not have to bear?
Mr. Boateng: The benefits are real and tangible. They are appreciated by a range of companies and, indeed, the citizens of this country because they are designed to enable us to respond to climate change—to enable us effectively to deliver a response that cuts carbon emissions. The hon. Gentleman is wrong to sneer at the care and detailed attention that was paid to consulting industry. Lord Marshall, a distinguished leader in industry, was extremely helpful in enabling us to get the right solution to a very real problem.
It ill behoves Opposition Members to make wild promises in their election manifesto to abolish that tax without making even one minute suggestion—one iota—on how emissions might otherwise be reduced. They wish the ends but are completely bereft when it comes to the means.
Mr. Peter Pike (Burnley): Does my right hon. Friend recognise that every energy user, such as the glass and paper industries, still feels disadvantaged, despite Government moves to meet their requirements on the climate change levy? They feel that they are at a disadvantage with their competitors. Does he also recognise that they feel more concern about the massive increase in gas charges, which mean that they are paying far more than those on the continent?
Mr. Boateng: We do indeed recognise that, and the Government will respond in due course to the performance and innovation unit report on the issue. It is important that we continue our dialogue with industry. We have met the CBI and continue to work with its officials on the IPPC definition, about which we have heard. We have a tax that is sound in its essentials and is delivering the objectives that the whole House surely seeks.
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