| Previous Section | Index | Home Page |
Mr. Redwood: Does that mean that the Liberal Democrats would take away those tax reliefs?
Mr. Laws: The right hon. Gentleman will know that we would remove certain tax reliefs, not least the film tax relief, which was originally introduced by the Government in the expectation that it would cost £20 million to £40 million. However, within a couple of years, behind the backs of Ministers, "Coronation Street" and other programmes were categorised as films, and the cost of the relief had increased from £30 million or £40 million to £200 million, then £300 million and £350 million. We ought to subject such measures to much greater scrutiny in the House, and I am very surprised indeed that the Chancellor and Treasury officials should allow Treasury Ministers to get away with all those ill-thought-out reliefs— there seems to be no ongoing assessment of their economic value.
There is an extremely worrying lack of coherence in the Treasury—one would expect to find it there of all places—about the way in which the tax system treats similar types of activity. Earlier, we had a debate in which I appeared to irritate the Economic Secretary by asking him whether the intention was to create a level playing field for different forms of tax on gambling. He is laughing now. He thinks that that is amusing. Apparently, it is not the Government's policy that there should be a level playing field. It is the policy of the Government to send out through the tax system a signal that certain types of gambling are better than others. I do not understand that at all. I do not understand how the economists and officials in the Treasury and the chief economic adviser, for whom I have the highest regard, can allow Ministers to get away with such ill-thought-out measures.
On the overall thrust of tax policy, we must wonder whether the Government are committed to fairness in tax, as they have long boasted. Shortly after the Government came to power in 1997, we tabled questions asking about the tax burden by income deciles—figures for which the Labour party in opposition had been asking and on which it had been getting parliamentary written answers since 1979, and using them to taunt other parties about the effect of their tax policies. It was interesting that within about a year of the Government coming to power, that series was abolished. Apparently, it was far too complicated to assess the effect of tax policies on each income decile.
It seems that a lot of work would have to be carried out to produce a new series, and we have not seen it yet. With the increase in council tax being forced through by
the measures being taken by the Chancellor—one of the most regressive taxes that the Government have yet thought up—we are not surprised that they do not intend to produce that series, as it would show how regressive certain elements of their tax policy are.When we link all that to the Government's economic performance, we see a Government who came in initially in 1997 with a clear and, in certain respects, ambitious agenda. They gave the central Bank of the United Kingdom operational independence, even though that was not in their manifesto, and we welcomed that. They had a clear agenda, whether or not one agreed with it, on public expenditure, and they wanted to restore the public finances to a strong state. They wanted to end the dithering on the euro, and they wanted to prepare and decide, rather than wait and see.
What do we see in all those areas now? A failure of the Government—failure on the economy, where productivity growth is as low as it has been for 10 or 20 years, and lower than in the period before they took over. If we do not have productivity growth, how will we get extra money into public services without an ever-rising tax burden? We see the budget balance returning to significant deficit, and perhaps even to structural deficit, after a short period of surplus. We see the tax burden going back up and the Government having to use taxes such as national insurance. Because of the political pledges that were given not to change income tax, they have found a mirror-image tax. It is not surprising, therefore, that people feel such distrust of the Government.
On public services, we see an increasingly centralised system of delivery that cannot possibly work and which is letting down the British people. On the euro, it is difficult to see what the difference is between the wait-and-see policy that was derided, and the prepare-and-decide policy that we were to get.
Mr. Stephen O'Brien: Hope and pray.
Mr. Laws: The hon. Gentleman is probably right.
The Finance Bill is a complacent Bill from a Government who have run out of steam and from a Chancellor who has little to be complacent about.
10.8 pm
Mr. Redwood : The Chief Secretary tonight made a bad fist of a very bad case. He dared to tell the House that the Budget is about stability, enterprise and fairness. It is about none of those things.
Let us take the case of enterprise. Can the Budget be said to be a Budget for enterprise, when all the moves on corporation tax are to increase the tax and make it more difficult for business to shield its hard-earned and dwindling profits? Can it be said to be a Budget for enterprise when the cornerstone of the Government's policy this year is a big hike in employer and employees national insurance? Labour introduced a tax on jobs, and dares to tell the House that the Budget is a Budget for enterprise and jobs. Can it be said to be a Budget for enterprise when we see a fundamental restructuring of stamp duty and land taxes, in a way that is likely to be damaging to retail and property, two of the sectors that
have so far survived rather better than others from the depredations of the Chancellor, who is always taking more and more money away? Can this year's Budget be said to be a Budget for stability? Of course not.The Finance Bill contains the seeds of the Government's own undoing. They have foolishly decided to use their huge majority to grant themselves the powers to start to tax the property sector, particularly people's homes, more highly as a means of regulating the economy. I give them this warning tonight: if they do that—if they increase stamp duties on homes under the powers that they are taking, or if they decide at some future date to introduce capital gains on the principal residence, as they have threatened to do in recent documentation—they could well overshoot and destroy the one remaining thing that is keeping the economy going.
It is higher house prices that are keeping up confidence to some extent. It is higher house prices that are enabling people to borrow to supplement their squeezed incomes and keep up their spending patterns. It is higher house prices that are sustaining a modest level of confidence in a corporate sector that has otherwise been sandbagged and knocked badly by the Chancellor's tax depredations in recent Budgets. If the Government use their enhanced powers and new taxation base to take more money out of the housing sector, they will rue the day. They will do themselves considerable political damage as well as undermine the one remaining part of the British economy that still survives and works in their favour.
I do not think that the Government have yet learned the brutal lesson that they should have learned from their previous higher taxes. This year's Budget and Finance Bill are about higher tax. They are based on the proposition to which the Government have worked for the past four years, which is if they see a stream of income or money going into the private sector, they can take as much of it they like and do no damage—the private sector deserves such treatment. In the moral universe of the Chancellor and the Chief Secretary, it is necessary to take a big chunk of that money away from the private sector and use it for their own spending purposes.
Mr. Redwood: The Chief Secretary says that, but he should look at the evidence. At the end of the 1990s, the Government saw a successful telecommunications industry, so they imposed a £22.5 billion windfall tax on that industry and more or less destroyed it. They destroyed jobs, investment and prosperity—they destroyed the very engine of growth at the peak of that market's growth. Then, the Government saw pension funds and thought, "What an easy target. Let's take £5 billion a year off pensioners—they won't notice, they're too old to complain." That, of course, did grave damage to pension funds and helped to produce a bigger collapse in the stock market in Britain than was seen overseas.
This year's Budget and Finance Bill threaten to do the same thing to employment and to housing, so I renew my warning to the Government that they should back off from the housing market. They should understand
that it is the last remaining thing that makes part of their growth forecasts credible. No private sector forecaster thinks that the Chancellor has a hope in hell of achieving the growth in the economy that he forecasts for the next two years. We all know that his revenues will fall short and his expenditures will exceed his Budget. We all know that this Finance Bill, the biggest tax bill ever presented to the British people, will not be enough. I promise the Government that if they go ahead and use the extra powers that they are taking over the housing market, not only will the taxes not be enough, but they will fall short by a massive amount and trigger a substantial disaster.The Chief Secretary says that this year's Budget is a Budget to produce fairness. What is fair about a Government who tax the poor to pay the fat cats in the quangos and the government sector? What is fair about a Government who expand the bureaucracy and the government sector—
It being nine and a half hours after the commencement of proceedings on the first Ways and Means motion relating to the Bill, Mr. Deputy Speaker, pursuant to Order [this day], proceeded to put forthwith the Question already proposed from the Chair.
Question put, That the Bill be read the Third time:—
The House divided: Ayes 285, Noes 175.
| Next Section
| Index | Home Page |