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Mr. Eric Forth (Bromley and Chislehurst): On a point of order, Mr. Benton. Presiding, as you are, in the Chair so superbly, you may well not yet have heard the rumour that has been circulating over the past couple of hours, and which has also reached the media, that it is possible that the Secretary of State for Transport, Local Government and the Regions may seek to make a statement later this evening. That would be a welcome development, were it to be true. You will appreciate the slight difficulty that that would appear to cause: as we are in Committee under your excellent guidance, could you advise the Committee what procedure might be available, were the Secretary of State to make his expected statement and therefore come to the House at last and be accountable for his actions over the past few months? Such guidance would be very helpful not only to the Committee, but perhaps even to the Secretary of State.
The Temporary Chairman: As the right hon. Gentleman knows, the House is in Committee. It is therefore inappropriate for me, as Chairman of the Committee, to comment on any of the issues that he raises in his point of order. It is not for me to express an opinion as to what might happen after the Committee has finished. I say simply that I know nothing of the matter to which the right hon. Gentleman refers. I am here as Chairman of the Committee of the whole House considering the Finance Bill, and I cannot rule on the matter.
Mr. William Hague (Richmond, Yorks): Further to that point of order, Mr. Benton. Respecting your position as Chairman of the Committee considering the Finance Bill, but noting that you represent the authority of the Speaker in the House of Commons at this moment, may I ask you to relay two questions from me, and from other Members, to the Speaker?
First, would it not accord with all precedent in the House for a Minister wishing to alter, withdraw or correct a previous substantive statement in the House to seek to do so in some way in the House? Is it not extraordinary, therefore, that the Secretary of State for Transport, Local Government and the Regions should do so in a statement made solely to the press, and then slink from the Chamber this afternoon while Members were pressing him to come here?
The Temporary Chairman: Order. I think I have already ruled on this. I am happy to convey the right hon. Gentleman's wishes to Mr. Speaker, but I cannot do more than that, and I am sure that Mr. Speaker will have heard about this himself by now. I now propose to return to the Finance Bill. The Question is—
Mr. Andrew MacKay (Bracknell): Further to that point of order, Mr. Benton. It was quite correct, I am sure, for you to point out that you are chairing a Committee of the whole House. You mentioned the possibility of the Secretary of State's coming here at 10 pm. There are suggestions in the Lobby and elsewhere that there will be a statement at 10 pm, but, as you know, in Committee the debate on the Finance Bill can continue until any hour. Is there a facility that allows the Secretary of State to come here at 10 pm in those circumstances?
The Temporary Chairman: I made no reference to time, or to a statement. If and when a statement is appropriate, the right hon. Gentleman will know in due course.
I do not propose to take any more points of order on this matter. I ask Members to leave the Chamber quickly and quietly.
Question proposed, That the clause stand part of the Bill.
Mr. Flight: Clause 27 postpones the normal date for the implementation through PAYE of revised indexation of personal reliefs—17 May—to 17 June.
First, I want to know the reason for the delay. We realise that the Finance Bill was presented rather later this year, but the basic indexation data must surely have been available to the Inland Revenue in the expectation of its normal implementation. Secondly, I want to be absolutely sure that the month's delay will sort itself out over the year, and that citizens can expect the normal 12 months in relation to the new indexation. I assume that that is the case, but clause 27 does not make it entirely clear.
Dawn Primarolo: The period for notification following the announcements in the Budget, and hence the necessary delay, are to allow all the tables and other material to be printed and collated, and properly checked, and to enable instructions to be issued to the 1.3 million employers involved. That is obviously necessary.
There is also provision for a CD-ROM version of the guidance and the tax tables, in accordance with the Carter recommendations. Employers will be given a pack, which we hope will encourage them to let computers do more of the work for them, that work being the administration of PAYE.
The delay, then, is simply a consequence of the later Budget. It is also intended to ensure that information given to employers is accurate, is in a form usable by
them, and gives them enough time to forward the instructions. That will be the only consequence of the change.Clause 27 ordered to stand part of the Bill.
Question proposed, That the clause stand part of the Bill.
7.15 pm
Mr. Flight: Clause 28 effectively abandons the 1977 Rooker-Wise amendment in relation to the indexation of personal allowances for 2003-04.
The freeze in both the national insurance primary threshold and personal allowances will raise £700 million in 2003–04 and £850 million in 2004–05. May I ask the Paymaster General whether there is any proposal to freeze the amounts for 2004–05 as well? That would raise an extra £1.6 billion in that year.
Our objections are based partly on principle, and partly on the fact that approximately 1 million more people—960,000, I think—will be paying top-rate tax. That is an increase of some 50 per cent., which will hit policemen, nurses and teachers particularly hard and, inevitably, is likely to drive up pay demands in the public sector. Moreover, although the official figures show an increase in the tax take between 1996–97 and 2006–07 of 35.3 to 38.3 per cent., there will be an increase of 5 per cent. if we take into consideration the accounting changes made since 1995.
I think we have made it abundantly clear that, while we accept the need for additional spending on health care, we oppose the raising of tax without a package of reforms that will deliver improved health care and ensure that the extra money is used effectively rather than simply resulting in extra costs. Only about 60 per cent. of the money raised through tax increases will be spent on health; 40 per cent. will go on tax credits, if we allow for the accounting fiddles in that regard.
Mr. Tom Harris (Glasgow, Cathcart): The hon. Gentleman says he opposes tax increases specifically to fund the health service unless reforms are made, yet his party and its Front Benchers have refused to specify the reforms that they want. Is it not the case that they are simply opposed to extra investment in the NHS, full stop?
Mr. Flight: No, that is not the case. In all sincerity, hon. Members other than me have made the point many times. It involves an issue of principle. While we have a Soviet-style system of delivering health care, while hospitals do not have adequate independence to run their affairs properly and while only some 17 per cent. of expenditure is getting to the front line and there are more administrators than hospital beds—the statistics show clearly that that is the case in Scotland and Wales—merely increasing expenditure will not result in improved delivery.
Mr. Mark Hendrick (Preston): Will the hon. Gentleman give way?
Our proposition is extremely simple: until we have in place a programme of adequate reforms that will do its best to ensure that extra expenditure delivers better health care, expenditure will risk being wasted. We have made the position clear many times—in essence, it is the reason why we are opposed to this little stealth tax of freezing personal allowances. Furthermore, the particular group that the measure hits is one that the Government are ill-advised to hit and, as I implied, the additional revenue that will be raised is likely fairly substantially to be swallowed up by additional pay demands.
Lynne Jones (Birmingham, Selly Oak): Although I am certainly in favour of the Government increasing taxation so that they can invest more in the health service, I am very unhappy with the clause, which freezes the personal allowance.
I believe that far too many poor people are paying tax. Rather than freezing the personal allowance, the Government should be increasing it in order to take people out of tax. Some 69 per cent. of people on a third of median male earnings are paying tax. That is nonsensical; many people are paying tax and then having to rely not on tax credits, but on existing means-tested benefits.
That arrangement is unnecessarily complex. We need reform of the tax system substantially to raise the personal allowance and to reform tax rates so that they are simple. We need to raise the threshold at which middle income earners pay the higher rate of tax. We also probably need a rate of about 30 per cent. in the middle to compensate for the reduced tax that would result from a substantially higher tax allowance. I also believe that there should be a higher rate of tax than the current 40 per cent. and that such taxation should strike high earners, not moderate ones.
Such reforms are not on offer, but in the meantime, I will not support the clause or the abolition of the changes that took effect following the introduction of the Rooker-Wise amendment.
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