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Dr. Vincent Cable (Twickenham) (LD): Much in the Finance Bill is uncontroversial. When the revenue clauses were put to the House a few weeks ago, I do not recall that there was more than one Division, and that was on a Scottish nationalist motion for which only four Members voted, so on the revenue provisions there has not been a great deal of controversy. As I understand it, the implication of the Bill is to tighten the economy by the grand total of 0.02 per cent. in terms of fiscal policy, so we are not talking about great changes in economic policy.
What remains for debate is the way in which the Government have treated some complex provisions. In the Budget debate we had a useful exchange about the stamp duty provisions, which brought out the fact that what sounded like an attractive idea—the idea of giving stamp duty relief on commercial property in disadvantaged areas—turned out not to have been thought through. I am disappointed that the Government have not produced a reasoned research paper of any kind to explain how we got to that point, what the consequences were, who benefited, and what will happen as a result of the local enterprise initiative,
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which I suspect will encounter the same problems as the previous tax relief. There has been a lack of reasoning and a lack of understanding about a rather complex policy.
We had argued for lifting the threshold for stamp duty and had calculated that it would be possible to lift it to £150,000, giving the scrapping of the disadvantaged area relief. In view of the revenue that the Government have saved through that measure, it is disappointing that they were not able to lift the threshold further. For most of us in the south of England, the provision is useless, but none the less welcome to the limited extent to which it is proceeding.
Mr. Tyrie: The spokesman for the Liberals has just created a black hole in a prospective Liberal Budget, not that there ever would be such a thing. He suggested that the money that the Government are raising on stamp duty should go back into stamp duty relief. Could he explain how he would fill that hole?
Dr. Cable: The commitment to increase the threshold for stamp duty to £150,000 will be in our manifesto. I have already said that publicly. There will be no black hole because it is fully costed. The manifesto with full costings will be published in 10 days, and will explain precisely how the cost is covered. We will not be proceeding with the Government's alternative local enterprise proposals. Our plans have all been fully costed, in contrast with the James initiative, on which I have commented frequently and about which doubts are shared by many of the hon. Gentleman's colleagues, although we will not go into the sad history of the past couple of weeks.
Mr. Fallon : Before we leave the subject of stamp duty, can we be clear what Liberal Democrat policy is? It is to further transfer stamp duty relief from the inner urban areas to the more affluent areas, especially in the south. Will the hon. Gentleman be promulgating that loudly in places such as Sheffield and Newcastle?
Dr. Cable: I was completely up front in the weeks running up to the Budget, arguing that the disadvantaged area tax relief provision for commercial property should be dispensed with, because the main beneficiaries were not small shops in Sheffield, but large commercial property developers in Canary Wharf and such areas. That is why we argued for getting rid of it and we believe that is the correct thing to do. We remain committed to lifting the stamp duty threshold for domestic properties further to £150,000 a year. That is fully costed and will be fully explained in the manifesto when we present it shortly.
On the specific Budget provisions, I agree with the hon. Member for Tatton (Mr. Osborne) that what has been taken out is appropriate and what remains is sensible and something that we can all support. On the major change, the anti-avoidance measures, we need a great deal more time for reflection. We are all committed to such measures where they are effective, but they are at the core of the Government's budgetary arithmetic, as the Chief Secretary knows. They propose to raise £3 billion over three years, so the ability to make the measures stick is central to the Budget's credibility. For the reasons that have partly been given, it is right that we be given further time for reflection.
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On the international provisions, the so-called double no tax agreements, the point has been made, not just by people who currently benefit from these measures in multinational companies but by accountants who deal with them, that by dealing with such matters in too clumsy a way there might be some short-term gain in revenue, but some long-term loss. Equally, I understand that there is an enormous degree of complex argument around the 15 or 20 anti-avoidance measures concerned with financial derivatives, with which the Government propose to deal, and the danger of tackling those in the wrong way or in a clumsy way would simply be to raise the cost of capital for companies, not necessarily to save revenue for the Government. So a great deal of thought is required on the various measures, and I welcome the opportunity to pursue them further in that proper way.
Our main criticism of the Finance Bill was not so much for what was in it as for what was not in it, and we hope that whoever forms the Government in a few weeks' time will address these issues. The first is the transparency of the budget process. It is already very clear, because of the uncertainties surrounding the £3 billion revenue from anti-avoidance measures, that we would have to take on trust much of what the Inland Revenue says about projected revenue. There is also much room for controversy about projected growth rates, and that is one reason why we have argued strongly that there has to be a proper system of independent audits of the Budget's assumptions to give to fiscal policy the same kind of integrity that exists in monetary policy. That is not a doorstep campaigning issue, but I hope that the Government are listening to the arguments and that if they are returned they will address the problem—that we have a proper degree of independence in the appraisal of fiscal policy that a body such as the National Audit Office, properly supported by economic advice, would be able to give.
The Chief Secretary acknowledged the second omission when he said that the Government are responsive to the need for reform of local taxation. I do not know what that is coded language for and how radical the reform will be when we get it, but as he knows we are committed to scrapping the council tax altogether, and the sticking plaster solution of £200 in one year is clearly not satisfactory, although I am not sure that the Conservative's £500 is satisfactory either. I happen to live in a constituency that for the last three years has had a Conservative-controlled council that has raised council tax by £500 per household over that period, so my constituents will derive no benefit from that. In addition, there are many households where one occupant is a pensioner and one is not that would not qualify for the discount, and there are many low-income families without pensioners who would not qualify for that discount either. Therefore, that provision is itself inadequate. It may be sustained, but it is not adequate and it does not deal with many of the injustices that lie at the heart of the council tax. It does not create a system based on ability to pay. If the Chief Secretary is as good as his word and we have fundamental reform if the Government are re-elected, I hope that they will consider income-based systems of taxation, as the Liberal Democrats have suggested.
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The third omission relates to pensions. The right hon. Member for Fylde (Mr. Jack) made the point earlier that over the next few weeks many people will be struggling with all the complexities of pension credit and other forms of means-tested benefit without the help that we are sometimes able to give them. That illustrates the much wider point that trying to deal with pensioner poverty in this way excludes many pensioners, it creates high rates of marginal withdrawal or marginal rates of tax for pensioners and is a fundamentally unsatisfactory system. We know that the Government are considering, through the Turner commission, a much wider-ranging reform. We hope that they eventually come out, as we have, with the concept of a citizen's pension payable to at least older pensioners without extensive means-testing and without the complexity and the high marginal rates that currently apply.
Again in a spirit of consensus, it is clear that the three parties among us that are competing at the election, whatever the sound and fury, are agreed on a series of propositions. The first concerns taxation. The simple brutal fact of the matter is, as the Institute for Fiscal Studies, which the hon. Member for Tatton called in aid several times, has pointed out, that all three parties would increase taxation after the next election, and that there would be a minimum £24 billion a year increase under the Conservatives as a result of fiscal drag throughout the next public spending review period. That is common ground.
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