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5.8 pm

Mr. Edward Davey (Kingston and Surbiton): The hon. Member for Broxtowe (Dr. Palmer) has in large part made a very measured and constructive contribution to the debate, but his earlier remarks on the Select Committee on the Treasury were wide of the mark. I speak as a former member of that Select Committee who was involved in the drafting of several reports, including those on the Budget. I remember from my time serving on that Committee that there was constructive debate when we considered draft reports.

When I look through the minutes at the back of the report and at the amendments tabled by Conservative Members and Liberal Democrat Members, especially my hon. Friend the Member for Yeovil (Mr. Laws), I see constructive amendments that relate to evidence provided to them by their expert external advisers. The advice and

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evidence were provided not by politicians or party pundits, but by experts in economics and finance. In that vein, I found the hon. Gentleman's remarks unwelcome and out of place in the House.

Although the hon. Gentleman may have had a valid, understandable reason not to be present, other Labour Members were not present either. If his objections to the report are to be considered, we need to understand why those Members were not there to argue their case. One can only presume from their absence that they were not interested or that they were not prepared to argue their case because they were embarrassed by aspects of the Budget.

Mr. Tom Harris: Whatever the hon. Gentleman's explanation of how the report came to be in its present form, does he believe that the views of the Treasury Committee, as now constituted, are accurately represented in that report?

Mr. Davey: That is a surprising intervention. We have the report before us and it was passed in a proper manner through the due procedures. If it is not representative, that is the fault of the members of the Committee and those who were absent, not the Committee as a whole. That is the process of the House.

Mr. Andrew Tyrie (Chichester): As a member of the Committee, I should say that the overwhelming proportion of the report—almost all of it—was the Chairman's first draft. The huge row that has broken out concerns a relatively small part of a number of proposals in the summary of recommendations.

Mr. Davey: I am grateful for that elucidation.

Mr. John McFall (Dumbarton) rose

Mr. Davey: In order to be fair to the House, I shall allow the Chairman to respond.

Mr. McFall: As the hon. Gentleman knows, the Chairman's drafts come before the Committee. If the hon. Gentleman looks at the back of the report he will see that 25 amendments were put forward. If 25 amendments are put forward, the Chairman's report is changed quite considerably. That is a matter of fact.

Mr. Davey: It is a matter of fact that the report was changed significantly, but the amendments that were passed were based on the evidence provided by the external advisers. That is a key point.

Mr. Laws: Will my hon. Friend give way?

Mr. Davey: I want to come to the substance of my speech but before I do so I shall take an intervention from my hon. Friend who also serves on the Committee.

Mr. Laws: Is my hon. Friend aware that some of the amendments that were passed to the Chairman's draft report—for example, recommendation (s), which welcomes measures in the Budget, and recommendation (k), which welcomes the Government's approach to the

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growth and stability pact—were tabled by Opposition Members to the Chairman's report and side with the Government? Is it not clear therefore that the suggestion of the hon. Member for Broxtowe (Dr. Palmer) of an entirely partisan, political approach is not an accurate summary of the way the Committee conducted itself?

Mr. Davey: My hon. Friend has the concluding remark to this part of the debate. He shows that he and Conservative Members played a constructive role in the debate and I recommend the report to other hon. Members.

Several hon. Members rose

Mr. Davey: I shall not take further interventions on the report because many criticisms can be levied at the Finance Bill and I want to come to those. Tonight and during the next few months, my hon. Friends and I will be making those criticisms because we believe that many parts of the Bill are ill judged and damaging to the British economy. There are the ill-advised choices of taxes that the Government have sought to raise and there is the complexity that is piled on complexity.

Liberal Democrats will be tabling a series of amendments to show their constructive and genuine alternative to the Government's tax policy. While the Chancellor seems intent on tying up British business in tax bureaucracy, Liberal Democrats will be radical in their proposal to cut his Gordian knot.

Despite the Bill's failings, however, on Second Reading the House must be mindful of the core direction of the Budget's strategy—to provide the cash for our public services, and in particular, the health service. It took the hon. Member for Buckingham (Mr. Bercow) 20 minutes before he came to the health service, and that shows a complete misunderstanding of the Budget.

Liberal Democrats are unequivocal in welcoming the Government's U-turn from their general election position on that matter. Just under a year ago, Liberal Democrats argued at the general election that taxes had to rise to fund the services that we provide for each other. Our election campaign was focused on health, education, pensioners and police. It was distinguished and differentiated partly by the fact that we were arguing for higher taxes to make that revenue possible, and that extra revenue had to be found from somewhere.

Our opponents were vicious in attacking us. They said that we were wrong in saying that we could not have something for nothing, so we are delighted that Labour has now changed its course and agrees with us.

Mr. Tom Harris: Will the hon. Gentleman give way?

Mr. Davey: Before I do so, let me say that the Liberal Democrats wish that the Government had made that position clear before the election. The process would have been fairer and more honest, frank, open and transparent and the Budget would have had even wider acclaim if they had put the proposals to the British electorate just 11 months ago. I hope that the hon. Gentleman can explain why they were not put before the electorate.

Mr. Harris: I am grateful to the hon. Gentleman for giving way, but I shall stick to my original intention in

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making this intervention. Was not his party criticised at the time of the election because it said that it would fund every promise under the sun through a 1 per cent. increase in the basic rate of income tax?

Mr. Davey: That was a disappointing intervention. If he had read our manifesto, which was accompanied by detailed costings, he would have seen that it set out a series of spending proposals that were fully costed on the basis of three major tax changes, including not only the penny on income tax, but the 50p charge on incomes of more than £100,000 a year—a proposal that was repeated in our alternative Budget. Indeed, we will be pushing and arguing for our alternative and against the Government's tax measures, which we think are far more damaging.

Mr. Bob Blizzard (Waveney): Will the hon. Gentleman give way?

Mr. Davey: No.

Interestingly, Labour's key policy changes after the last election and the 1997 election were based on Liberal Democrat manifesto commitments made in the campaigns. In 1997, in order to move away from the Conservative policies of boom and bust and failed economic management, the Labour Government rightly adopted our policy of establishing an independent central bank. [Laughter.] Labour Members laugh, but the proposal was not set out in their manifesto, so they should wipe the smiles off their faces. Perhaps they will be more amused by my next observation. It was interesting to hear Conservative Front Benchers try to take credit in the Budget debate for the independent central bank policy, when they had opposed it in government. It beggars belief that the Conservative Opposition are trying to take credit for that policy.

However, after the 2001 election, Labour has now adopted our policy of raising tax to invest in the public services. If only it had done so before.

Mr. Blizzard: Will the hon. Gentleman give way?

Mr. Davey: No.

If only Labour had adopted our specific tax policies, we would have had a much happier outcome, but at least it has shifted. It is the Conservative Front Benchers who are now left high and dry, voting against investment for the NHS. The Conservatives join the Liberal Democrats in criticising specific tax policies, and we welcome their support in opposing the Government on those measures, but they present the country with no alternative, so it can only surmise that in voting against the tax rises, the Conservatives want to vote against the health service. Instead of a coherent alternative health policy, we read in today's edition of the Financial Times that their health policy update—that is what they call it—will take at least another year to come into being. The Liberal Democrats wonder why. Perhaps on their Cook's tour of continental capitals, the Conservatives have rediscovered their previous love for Europe. They may have developed a taste for continental travel and for the euros jingling in their pockets, or perhaps their delay in proposing a constructive alternative has occurred simply because they do not know what to do.

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Whatever the cause of the Tories' black hole on health, the Liberal Democrats at least know that they object to the NHS investment, and we will point that out, as I am sure Labour Members will.

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