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Mr. Boateng: My hon. Friend is right. That should be celebrated by hon. Members of all parties.
Mr. Bercow: Will the Chief Secretary give way?
Mr. Boateng: No. I have given way many times and the hon. Gentleman will have his chance. I shall come back to him.
A healthy, skilled work force in strong communities are essential to maintaining economic stability and building the foundations of future innovation and prosperity on which we depend. The Budget confirmed that that would continue to be our policy. The 1 per cent. increase in national insurance that was announced last year and will be paid from April will go entirely and directly to the NHS. Consequently, by 2008, there will be 80,000 more nurses and 25,000 more doctors than in 1997.
The shadow Chancellor described the increase in national insurance contributions as a tax on jobs. [Hon. Members: "Hear, hear."] They say, "Hear, hear", but he used the same argument against another policy that was abhorrent to the Conservative party: the national minimum wage. The right hon. and learned Gentleman described that as an axe on jobs. He is well known for his play on words, but however one plays on the words the policy was no such thing. We created 1.5 million more jobs. That was the measure of our success, which the Opposition could not hope to replicate.
Everyone benefits from a national health service that is free at the point of need, so everyone who can contribute to its long-term financial future should do
that. The Opposition claim that the rise in national insurance is a burden on business, but it means that employers will pay approximately £10.50 a week for an employee on average earnings compared with £30 in Germany and £60 in France. The hon. Member for Arundel and South Downs said in his infamous memo that the Conservative party should consider France and Germany. Yet employers pay £30 a week in Germany and £60 in France. Does anyone seriously suggest that that is a better way to fund the NHS than the measures that we have introduced? The answer to that can only be no.
Mr. Bercow: Will the Chief Secretary now answer the question that he ducked 22 days ago at the conclusion of the Budget debate? Given that the increased expenditure on the national health service has not been matched by a commensurate increase in clinical activity, and that the Government say that they favour reforms, will he name three that will make a difference?
Mr. Boateng: It simply is not true to say that there has not been an increase in clinical activity.
Mr. Bercow: I said "commensurate".
Mr. Boateng: Well, it depends what the hon. Gentleman means by "commensurate". I suspect that he and I will have different definitions of the word. There are now more operations, and more treatments being given outside in the community, closer to people's homes. There are better treatments for cancer, and better dispensation of drugs. All those things are happening, as well as there being additional nurses, doctors and people working in radiography and on the front line to improve people's health. By any count, on any indices, the NHS has improved, and to say otherwise is, quite frankly, an absolute travesty of the truth.
It is unfair when the burden of tax falls on businesses or individuals who play by the rules and who pay their fair share, while tax cheats distort competition and push up the tax rates that the rest of us have to pay to make up the difference. That is not fair, and taxpayers rightly expect the Government to close tax loopholes and to tackle tax fraud so that the burden is not unfairly placed on normal taxpayers because a minority abuse the system. I suspect that we shall spend much time in our deliberations on these clauses Upstairs. Of course we need to get it right, but I hope that it will be possible for Members on both sides of the House to welcome the measures to close tax loopholes that my right hon. Friend the Paymaster General will be taking us through in detail.
This year's Budget announced a compliance and enforcement package to enable the Inland Revenue to counter direct tax avoidance and to contribute an additional £1.6 billion of revenue over three years. The Finance Bill includes a wider package of measures to ensure a level playing field for taxpayers who fulfil their obligations.
Mr. David Laws (Yeovil): In respect of tax avoidance, and of the loopholes that the Chief Secretary says that he is now closing, what action have he and the Chancellor taken since the Treasury Committee looked
into the issue of tax avoidance by the Inland Revenue and Customs and Excise in respect of the Mapeley STEPS—strategic transfer of the estate to the private sector—transaction?
Mr. Boateng: We replied to the Treasury Committee on Friday, and it will want to consider carefully what is outlined in that memorandum. The hon. Gentleman might wish to return to that issue when the Committee has had an opportunity to reflect on it.
We are introducing measures to tackle VAT fraud and avoidance—in particular missing trader fraud, which costs us billions and makes billions in profit for organised crime—and measures to close down other schemes that a minority of businesses and individuals had been using to avoid paying their fair share of tax. All those important measures are contained in the Bill and I think that they will all be welcomed. We are also taking action to prevent tax avoidance through manipulating share schemes, coupled with giving support to companies that want to implement employee share schemes in line with the legislation. We have also included clarifications because we have listened to business; it has said that it wants greater clarity in this area so that it can implement such schemes to give people a sense of ownership and a stake in the success of their company.
There is action to counter capital gains tax avoidance through offshore trusts and second-hand life insurance policies, and action to close a loophole in the controlled foreign company rules allowing some companies to escape UK tax on profits from extended warranties and credit protection insurance. Those measures follow the Budget announcement of a compliance and enforcement package to enable the Inland Revenue to counter direct tax avoidance and thus contribute an additional £1.6 billion over three years. There is also a comprehensive modernisation of stamp duty to counter widespread tax avoidance, which distorts the commercial property market and business decision making, and has given rise to contracts and artificial vehicles for the transfer of property.
I do not think that any of the activities I have described could be justified by any reasonable person.
Mr. Mark Prisk (Hertford and Stortford): The Chief Secretary said that consultation with business is extremely important, which indeed it is. He has now mentioned the new land tax—or, at any rate, what he describes as a modernisation. Can he explain why Ministers instructed the Revenue on 21 January to end all consultations? Elements of the Bill have not been mentioned, were not consulted on, and do not have the support of business.
Mr. Boateng: No such instruction was made known to me, or to my right hon. Friend the Paymaster General.
In modernising stamp duty we want to ensure that it is better targeted. We are taking comprehensive powers to address widespread tax avoidance. We are reducing the burden on smaller businesses, and reforming and modernising the framework of tax, bringing it into line with other modern taxes. The modernised charge will be
mandatory, and there will be new enforcement and compliance powers. We are levelling the playing field across different types of transaction, which can only increase fairness. We are clamping down on the avoidance of stamp duty, while removing duty on property other than land, interests in partnerships and shares, and securities.All those measures emanate from consultation and listening, and I believe that they will be widely welcomed by business.
Mr. Jonathan Djanogly (Huntingdon): Do not the proposals relating to VAT fraud and Customs and Excise come too late? As is shown by recent cases, the Government have failed to crack down adequately on fraud, which has led to the loss of hundreds of millions of pounds in VAT, and have failed to control Customs and Excise as well.
Mr. Boateng: That is not true. Over the years, Customs and Excise has learned from what some of those cases have brought to light. I believe that Customs and Excise in this country is widely recognised as a world leader in the field. When I went abroad as Financial Secretary I encountered nothing but admiration for it, not least in the Customs community, and I know that the current Economic Secretary is finding the same. We should be very careful before doing down the hard-working men and women involved in law enforcement in Customs and Excise, who take great risks on behalf of the Revenue. They should be congratulated on their vigilance and determination.
Mr. Prisk: Will the Chief Secretary give way?
Mr. Boateng: Not at this point.
We want to create that level playing field, and to end the highly complex artificial arrangements into which some people enter to avoid paying. In the long term, the modernisation of stamp duty will facilitate electronic commerce and electronic conveyancing. It will allow fairer treatment of house purchases funded by certain types of alternative mortgage product. The double charge on so-called Islamic mortgages, for instance, will be removed.
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