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9.17 pm

Mr. David Laws (Yeovil): I am pleased to be able to contribute to the debate. I shall follow on from the comments made by the Chairman of the Treasury Committee on the Committee's Budget 2000 report, which was released today. I commend the hon. Member for Dumbarton (Mr. McFall) for his measured and sensible comments about the contents of the report, which contrasted with the unusually intemperate comments of the hon. Member for Broxtowe (Dr. Palmer), who I am pleased to see back in his place.

The hon. Member for Broxtowe gave a rather unfair description of the activities of the Treasury Committee yesterday when it drew up the report. He gave the impression that the Opposition members had been on the rampage yesterday in Committee Room 6, forcing into the report all sorts of bizarre and overtly political conclusions that were not warranted by the Committee's deliberations.

I hope that the hon. Gentleman has had a chance to reflect on those comments, especially as he is usually an extremely temperate and moderate member of the Committee, and I hope that when he reflects on the report, he will study carefully the conclusions set out at the back of the report. In particular, I hope that he will study conclusion (s) on the redistributive nature of the Budget, conclusion (j) on the trend rate of growth, and conclusion (h) on the stability and growth pact.

I hope that the hon. Gentleman will reflect on the fact that, in all those areas, amendments were tabled during the Committee hearings that altered the draft report in a way that was more sympathetic to the Government. I expected some praise from the hon. Gentleman for having proposed two of those amendments myself, including one which, surprisingly, won the support of Conservative members and is now being echoed from the Government Back Benches—that is, the amendment that appears in conclusion (s), which states:

Not only did we get surprising support from Conservative Members, but we have now even managed to encourage Labour Members to use the word "redistributive".

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How can it possibly be the case that the Opposition Members who serve on the Treasury Committee were making irresponsible additions to the report, given that they forced in such amendments—more Labour than the hon. Member for Broxtowe himself—and that they voted to include amendments such as that which now appears as conclusion (k)? That conclusion states:

the precise issues that appear in the Budget documents are then listed. I hope that the hon. Gentleman will reflect carefully on those issues and perhaps now withdraw his earlier comments, and I give him the opportunity to do so.

Dr. Palmer: I am grateful to the hon. Gentleman for giving way. I am not totally impressed by the brace of fig leaves that he offers. Does he not feel on reflection that it is an undesirable precedent for a Select Committee to determine a report on something as central as the Budget not by consensus, but effectively by 25 whipped votes?

Mr. Laws: I am grateful to the hon. Gentleman for that comment. It is a great precedent that hon. Members who draft Select Committee reports should consider any case on its merits, not on the basis of whether the arguments embarrass the Government. Some hon. Members would like the Select Committees to be the Government's poodles, but many more hon. Members believe that Select Committees should be willing to be the terriers that pursue the Government and which occasionally nip at their heels when they make mistakes.

I have mentioned the parts of the Select Committee report that support the Government's policies. I hope that all Labour Members welcome that support, as it gives the lie to the idea that Opposition Members who serve on the Treasury Committee irresponsibly amended the report. The Select Committee supports some of the Government's policies, but it warns the Government about some issues, such as the change in the growth forecasts. Many outside commentators regard that change as not being particularly prudent, and certainly as having removed the prudence element that was previously in the Government's growth forecast, leaving only as a prudent cushion the surpluses that the Government are projecting on the current balance—something that the Select Committee welcomed in the Government's policy.

I shall deal further with the criticisms in the Treasury Committee report that were backed by Opposition Members, in spite of the reticence of some of the Labour Members who serve on the Committee. If the argument, used by the hon. Member for Broxtowe, that Opposition Members were being irresponsible was well founded, one would expect there to be a huge divergence between the evidence on those issues given to the Select Committee and the wording of the report, but there is no such divergence. That is shown exactly in respect of the Government's decision to increase employers' and employees' national insurance contributions—the first major item of criticism made by the Treasury Committee.

Andrew Dilnot of the Institute for Fiscal Studies gave evidence to the Select Committee on the Treasury. The Chairman asked Andrew Dilnot:

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Andrew Dilnot, who is well respected, replied:

He described


That justifies the Treasury Committee's criticism on that point.

Chris Grayling (Epsom and Ewell): Will the hon. Gentleman give way?

Mr. Laws: I am sorry, but I will not give way because of the time. I regret not giving way because I am sure that the hon. Gentleman would make a pertinent point.

Whom can we turn to on the Government's proposal to increase employers' national insurance contributions, on which no assessment has been made of the employment consequences? Whom can we turn to in support of the Treasury Committee's concerns about the employment effect of that measure, which will increase the tax on jobs? The answer is none other than the Chancellor of the Exchequer himself, who seemed to have forgotten when he came before the Treasury Committee a few days ago that just two years ago when he introduced the climate change levy he cut employers' national insurance contributions and argued in a Treasury press release that the cut in that tax on employment would boost employment.

Apparently, the economic rules have now been overturned, and two years later the Chancellor can increase employers' national insurance contributions without that having any effect on employment. That is a miraculous change, just as miraculous as the fact that the Chancellor can effectively, without in his view abolishing the upper earnings limit on employees' national insurance contributions, extract money through employees' national insurance contributions from every person who now earns more than what used to be the upper earnings limit.

Two other fundamental criticisms of the Budget were made in the Treasury Committee's report. The first has been mentioned by a number of individuals, including the hon. Member for Fareham (Mr. Hoban) in his helpful speech. He warned about measures such as the films tax relief, which was introduced with great fanfare in 1997 and altered in 2001. That was to be a limited cost measure—£15 million in the first year—directed towards great British films, which would be stimulated. Now we discover from the Chancellor that programmes such as "Coronation Street", "Ground Force" and "Emmerdale" are being made with that tax relief—that the money going into the Exchequer from hard-working families is being wasted on such reliefs.

The concern about the Government's tax policy that was expressed clearly in the Treasury Committee's report is not only that we are getting an increasingly complicated tax system but that those complications open up precisely those types of loopholes. No doubt we shall find that other measures, such as the reduced rate of beer duty for small breweries, will open up exactly such problems in the future. No doubt we shall find that the Chancellor of the

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Exchequer will return in a couple of Budgets' time to announce to much less fanfare that he is closing loopholes and recovering large amounts of money.

It is easy to welcome such measures when they are announced individually, but one would have hoped that the Treasury, of all Departments, would be conscious of the fact that there are no free lunches and that money that is given to the film industry and to "Coronation Street" potentially comes from other areas that could be higher priorities for the Government, such as the Government's agenda on social exclusion, lifting people out of poverty and raising tax thresholds. Surely those priorities should be higher up the agenda than the introduction of silly tax reliefs and gimmicks that merely end up being loopholes that are abused by accountants and others in the private sectors.

In respect of the last major criticism of the Budget that was made in the Treasury Committee's report, surely the measures that my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) criticised earlier—the oil tax and the foreign companies tax measures—should have been consulted on in the pre-Budget report. Many people inside and outside the House welcomed the idea of a pre-Budget report and the opportunity to consult on tax changes before they were brought in so that they could be more sensibly constructed; yet two major tax measures in the Budget, on oil and foreign companies, have been brought in without proper consideration and deliberation and will no doubt be all the worse for that and will have to be unwound in future Budgets.

I hope that the Chief Secretary and others on the Treasury Bench will take that to heart and use their innovation of a few years ago for the purpose for which it was intended, rather than as the sort of mini-Budget for the Chancellor's gimmicks that it has become.

The hon. Member for Broxtowe said earlier that the type of activity in which the Treasury Committee had engaged yesterday brought Parliament into disrepute. I could not disagree with him more on that point. What depresses people about Parliament, particularly at present, is the Executive's huge power—the Government's disproportionate majority—which means that proper debate about measures in the House can be suppressed, which in turn has helped to make the House increasingly irrelevant. If we have more debates and more reports such as the one produced yesterday by the Treasury Committee, the House will be all the better for it.

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