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The Paymaster General (Dawn Primarolo): The right hon. Gentleman raises an important point on the
competitiveness of the corporation tax regime—not just its rate, but its structure. Consultation has taken place and he will have heard the Chancellor announce that another publication will be produced in the summer, followed by more consultation with business to do precisely what he says—to maintain that competitive advantage across the board.
Mr. Jack: I am grateful for that clarification. The Paymaster General makes an important statement on the positioning of the second round of consultation on corporation tax reform. I was aware of the arrangements and am glad that I raised the problem, especially if we manage to sustain the competitive advantage.
I should have liked the Bill to create a special credit to encourage UK companies that want to invest in the most difficult parts of the world, such as Iraq and the poorest 50 nations. We have a tax credit for research and development because we want to encourage that. Can we not consider the same mechanism to encourage British overseas investment in difficult parts of the world?
Finally, I refer to a theme that I have mentioned a number of times in the context of the Finance Bill: the need to commit ourselves to go beyond the tax law rewrite exercise and to look comprehensively at the way in which our tax system operates. A draft new clause was sent to me on behalf of practitioners in the tax industry. The first part of it reads:
- "The Inland Revenue and Customs & Excise shall jointly prepare a report to be submitted to Parliament on the need for a Tax Law Commission, to act in parallel to and to complement the work of the Law Commission."
7.43 pm
Roger Casale (Wimbledon): I am grateful for the opportunity to put on record something about which the Conservative party has said little this evening: the innovative child trust fund, which I support, and the £350 million that the Finance Bill makes available to invest in that. I also support the extra money for pensioners and many of the measures that are aimed at boosting competitiveness and productivity, which enable us to continue our work on the micro-economy. In particular, I welcome the incentives that the Bill and the Budget put in place to help improve skills, to reward investment in new technology and to promote innovation at a regional level. I have in mind the extension of the employer training pilots through the learning and skills councils—another important innovation by the Government—the extension of the research and development tax credits and measures to promote innovation throughout the supply chain, not least by working more closely at a regional level to build up regional networks by working with local industry, local government and local businesses. That will create the pool of skills and economic opportunity that is needed to encourage the innovation that will spread the strong economic growth experienced in some areas throughout the country.
The measures that are aimed at boosting productivity and competitiveness are important. Having put in place a highly successful and robust framework for macro-economic stability, the biggest long-term economic challenges that face the country are micro-economic and involve how we can improve British competitiveness and productivity. The Budget measures implemented by the Bill reflect our commitment to economic stability and to enterprise and innovation. Those are coupled with measures to advance social justice, which has become the trademark of the Government whose work the Chancellor and his Front-Bench team carry out well. There is nothing different in that sense between this Finance Bill and others. I was pleased to see that we have more of the same so that we can build on the solid foundations for the future.
It is surprising that we have not heard more from the Conservatives about those micro-economic challenges, which involve the need to improve investment and innovation to boost competitiveness and productivity. Instead, we heard a long list of things that they do not like about the Budget, such as investment in public services. We want to raise revenue for those public services, but they wish to cut that investment, and in the parts of the debate that I heard, they focused on such fiscal measures and the macro-economic framework.
I first came to this place a few years ago, in 1997. Wimbledon was a Conservative seat for a long time and I was full of ideas, hopes and aspirations about what we could change. Many of my constituents accepted that I wanted to invest in public services—in hospitals and schools—but the first question they asked was, "Where is the money going to come from?" It is clear from the Bill where the money will come from because it sets out all the measures that are being developed by the Government to raise the resources that we need to meet our commitments to invest in public services.
It is all very well for Conservative Members to say, "No, no. It's not 20 per cent. cuts that we want." The right hon. Member for Wokingham (Mr. Redwood) said that we were wrong to think that and that it was not kind of us to suggest that they want to cut public expenditure by 20 per cent. In fact, from what he said, it seems that they really want to cut public expenditure by 40 per cent. or 60 per cent. We could have long and interesting discussions about that, but they would be academic because there is not much prospect of the Conservatives returning to office at the moment. We can, however, imagine what would happen if they formed a Government.
We can debate the level of cuts, but what we should really talk about is where the money will come from to pay for services. It is not possible for the Conservatives to say that they do not want to cut public expenditure and then to oppose a list of measures that are directed at raising revenue to pay for public services. Every year we have a Budget and a Finance Bill to implement its measures. Every year there is an opportunity, as there is this evening, to remind my constituents why they voted Labour for the first time in 1997 and then did so again in 2001. They will continue to vote for us because we can answer their question: "Where will the money come from?" It is because families, individuals and, in larger and larger numbers, small and medium-sized businesses do not trust the Conservatives with their economic security and future prosperity that they keep coming
back to us. I am confident that at the next election many people will have further reason to avoid putting their trust in the Opposition, because it will be clear to them, as it is clear to me now, that not only can the Opposition not be trusted with their economic security and future prosperity but, in addition, they cannot be trusted with the public finances that the Government's able stewardship of the economy and the hard work of millions of taxpayers, both individuals and businesses, have helped to create.It is an historical fact that the last Tory Government spent recklessly. They spent not only on the failure of their fiscal policies, as rising unemployment resulted in soaring social services budgets, up from £50 million in 1992 to £90 billion in 1997, but on the failure of their monetary policies—15 per cent. interest rates meant that the homeowner faced the threat and, in many cases, the reality of eviction, and the taxpayer was meeting the burden of the rising cost of Government debt. The Tories spent on consultancies. We have heard attacks on public servants and administrators in the health service and other areas of the public sector tonight, but what about all those private service consultants who received all that public money raised by previous Finance Bills to dismantle the public services, sell them off quickly and, in many cases, cheaply to plug the vast, gaping hole in public finances that they had created?
Roger Casale: I am keen to make progress, so I shall not give way at this stage. However, I shall see how I get on and if I have a bit of time later I will give way to the hon. Gentleman—[Interruption.] I am tempted to give way to the hon. Gentleman, who will know from my efforts in the House that I am usually generous in doing so, but I am anxious that Government Members should have the opportunity to speak. I am keen, as I am sure Members on both sides of the House are, that I should get to the end of my speech.
Let us see how the Tory party has got on in opposition. Having spent recklessly when in government, it has now pledged to cut public finances if it ever returns to office. The Opposition have a bit of an image problem that they need to straighten out, but it will not be cured by a skin-deep makeover. I notice that they have now become very attentive.
Mr. Jack: On a point of order, Mr. Deputy Speaker. In the interests of understanding the hon. Gentleman's remarks, would you be so kind as to direct me to the part of the Bill that deals with Conservative policy?
Mr. Deputy Speaker: I think that the right hon. Gentleman can safely leave these matters to the Chair.
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