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Mr. Bercow : My hon. Friend the Member for Huntingdon (Mr. Djanogly) movingly describes the plight of over-taxed granny under the Labour Government, and he is entirely correct. I do not myself have a granny, but I feel sure that if I did, she would strongly oppose new clause 7 and would have good reasons to justify her position.
I was rather taken aback both by the fact of the introduction of the new clause and the manner in which the Paymaster General sought to commend it to the House. It seemed obvious that there was considerable irritation in the Inland Revenue and in Her Majesty's Treasury about the alleged sauce—I use that word advisedly—of taxpayers who had sought to avoid or minimise a burden by a contrivance that was perfectly legitimate under the law. In other words, Ministers are upset because they have not been able to plan, with Kantian perfect information, for every scenario. There are eventualities in which citizens are able either entirely to avoid a burden or to keep it to a much lower level than the Government would favour.
I say three cheers to that, and I confess that one reason—probably the principal reason—why I oppose new clause 7 is that I oppose the whole monstrous apparatus of inheritance tax. I do not seek to argue my case according to the intricacies of the tax or the arguments about revenue raised or forgone. My view is that it is fundamentally immoral and unethical.
My only criticism of my right hon. Friend the Member for Wokingham (Mr. Redwood)—I scarcely volunteer criticism of him on any occasion—is that he was guilty of a certain understatement of his case. If he had said what he said a little more forcefully—perhaps with a degree of crudity that was lacking from his presentation—his stance on this important matter would be all the clearer.
I am glad that the hon. Member for Yeovil (Mr. Laws) urged something of a wider review and debate. He was justified in doing so. He challenged my party—without giving any particular idea of the stance of the Liberal Democrats—to say where we stood overall on inheritance tax. I am against it, and I want to scrap it.
Mr. Deputy Speaker: Order. I understand the temptation felt by the hon. Member for Buckingham (Mr. Bercow), but the hon. Member for Yeovil (Mr. Laws) began to lead us astray on this matter, and I must remind the House that we are dealing not with inheritance tax as a whole but with new clause 7.
Mr. Bercow: You know, Mr. Deputy Speaker, that I never knowingly behave badly. My poor conduct is always entirely inadvertent, and there is nothing better than to be brought to book by your kindly but authoritative ministrations. That is what has happened to me, and I make no protest about it.
On behalf of my constituents, many of whom have already raised their anxieties about new clause 7—others can be confidently expected to do so on Saturday in Market Hill—I inveigh in the strongest possible terms against new clause 7. If people are using the device of gifts without reservation to circumvent the frankly sinister and oppressive designs of this tax-raising, pocket-plundering, petty-minded, socialistic-oriented Government, I say three cheers to them. Unite, and fight new clause 7.
2.15 pm
Mr. John Baron (Billericay): I wish to raise a couple of points with the Paymaster General. The ramifications of any new clause—indeed any legislation—need to be properly thought through. What thought has been given to the effect that new clause 7 will have on the equity release market? There is little doubt in my mind—my hon. Friend the Member for Arundel and South Downs (Mr. Flight) briefly touched on the point—that it will lead to a dramatic increase in equity release mortgages, schemes and loans.
We all know that the industry got off to a bad start not so long ago, with many sharks operating in the market. Has any consideration been given to whether the market should be regulated to ensure, at the least, that fair play is done and seen to be done? The schemes will be considered by many vulnerable people in the autumn of their years who are thinking about how best to release equity from what, given that the equity markets have not done so well recently, is probably their main investment. What are the Government going to do to ensure that their nudging forward of the equity release market—the interest in the market will be quite significantly increased in some instances—will not mean that vulnerable people will be taken advantage of, particularly given that many of them may live on their own and need good advice? The industry needs to be properly run and regulated, and I ask the Paymaster General to tell us her thoughts about that. What action do the Government intend to take to ensure that there is fair play in the market?
Secondly, I want to discuss the idea that it is somehow perfectly immoral to avoid this tax. None of us wants to see legitimate tax avoided, but I think that the Paymaster General has completely underestimated the extent to which house prices have increased. My hon. Friend the Member for Arundel and South Downs mentioned that between 1.5 million and 2 million houses fall into the inheritance tax bracket. Statistics and studies exist that suggest that the figure is greater than that. No one really knows. It is completely wrong, however, to suggest that when people who have paid tax throughout their lives and simply want to hand on their assets to their children, it would be somehow immoral not to tax them. The Government need to re-examine their thinking. The new clause would tighten matters even further. It is, in effect, a new tax, whatever the Paymaster General may say.
Mr. Bercow: My hon. Friend is aiding our deliberations. In referring, as the Paymaster General did, to people who are rich enough to pay inheritance
tax, was she including in her categorisation every member of the Cabinet and most members of the Government?
Mr. Baron: I completely agree with that. The Paymaster General would also include in that threshold a large swathe of teachers, nurses and all those who work in public service, particularly in the south of England. I should appreciate her deliberations on whether that is right.
My hon. Friend the Member for Huntingdon (Mr. Djanogly) made the excellent point that not enough thought has been given to the effect that the new clause may have on the break-up of families and homes. The Government are in complete crisis with regard to the care home sector, in which something like 45,000 to 50,000 beds have been lost because of the bureaucracy and regulation that they have introduced. This measure will not help that situation. No one knows the exact figures or the extent, but it could lead to a premature break-up of a home simply because the arrangement will no longer be available whereby a parent—an elderly person, perhaps—could live within the home that had been gifted. That may make the premature selling of the house to realise assets a reality. I hope that the Government have given that some thought, and I look forward to hearing from the Paymaster General.
Dawn Primarolo: The new clause applies to an avoidance scheme used by married couples. It has nothing to do with grannies, grandsons or children; it specifically deals with the exploitation of the inheritance tax rules, especially by married couples.
Mr. Djanogly: Will the right hon. Lady give way?
Dawn Primarolo: If the hon. Gentleman will wait, I shall be happy to give way in a moment, but we need to set out a few facts clearly.
We are not discussing whether the Conservative Opposition are in favour of inheritance tax, although I should be delighted to have such a debate. Despite the fact that inheritance tax was introduced by their Government—
Mr. Djanogly: Will the right hon. Lady give way?
Dawn Primarolo: No. I will give way to the hon. Gentleman in a moment, but I want to make a few points so that we can be clear about what we are discussing, rather than what Opposition Members think—
Mr. Djanogly: On a point of order, Mr. Deputy Speaker. It is right to point out that the provision may relate to grannies and that husbands and wives—
Mr. Deputy Speaker: Order. I must tell the hon. Gentleman reprovingly that he has been a Member of this place long enough to know the difference between a point of debate and a point of order. That was not a point of order.
May I remind the Minister that I had already suggested that discussion of inheritance tax in principle is outwith the scope of the new clause?
Dawn Primarolo: I agree, Mr. Deputy Speaker: whether individual hon. Members like or dislike inheritance tax is not the subject of the debate. The subject of the debate is whether tax rules that were introduced in 1986 and have been variously amended should fairly apply to all taxpayers. Some taxpayers comply with their tax obligations, so the Government have responsibilities when others find ways around their compliance obligations.
The point is whether the Government of the day should be required to ensure fairness between taxpayers. I understand the issue in terms of fairness. Tax rules should apply fairly to taxpayers who are subject to them and it is the Government's duty to ensure that that happens.
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