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Mr. Tyrie: My hon. Friend sounds as though he has experienced that.

Mr. Davies: My hon. Friend makes an intervention from a sedentary position that was worth making standing up. I should be happy to give way to him.

Mr. Tyrie indicated dissent.

Mr. Davies: Not unnaturally, there is great concern that, if we are unlucky enough to have another Labour Government, the Treasury might be planning to tax the so far tax-free lump sum. Another worry is that there is a plan to reduce the level of tax relief for pension contributions up to the new global limit, moving away from an individual's marginal rate of tax to the standard rate of 22 per cent.

Either of those moves would be devastating to the incentive to save and to contribute to a pension scheme and would automatically and immediately result in a further reduction in our already extremely low savings ratio. That would be in conflict with what the Government say about their apparent attachment to improving the savings ratio and increasing the provision people make for their retirement. I fear that the Government will find themselves in a contradictory situation with fiscal policy collapsing. They have been overspending and the only ways to avoid increasing taxes if they return to power would be to revise the spending plans that they are selling to the electorate substantially downwards or to abandon the golden rule, and they would then not be committed to the principle that enshrines considerable fiscal stability and prudence. The Chancellor talks as though the growth of the
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economy will bail him out, but his projection is that economic growth will be permanently above the trend rate or that the average rate of economic growth over time will be greater than the maximum rate of growth. That does not make sense.

The Government will have to do something desperate unless they agree to adopt our suggestions for some sensible policy changes in the new deal and in asylum and immigration. The next Conservative Government will make some policy changes and save money on administration. The Labour Government's record is appalling. They cannot go a day without setting up a new quango or more bureaucracy. Every time they introduce a new initiative, we hear about a new quango—the latest one will cost £26 million or so to set up. That must stop.

There are greater prospects for administrative savings than were identified in the Gershon review and many were identified in the James report. We have a well-thought-through and reasonable programme for policy changes and administrative savings that will lead to our being able to have £12 billion more available in the second financial year of the next Government than this Government would have on their projections. That will enable us to cut spending by £8 billion and reduce taxes by £4 billion, which will be a modest but significant step in the right direction. It will be the turnaround that this country badly needs.

3.24 pm

Mr. Mark Prisk (Hertford and Stortford) (Con): I thought that Finance Bills might be behind me but the calibre of the speeches today has moved me to make a short contribution. I suspect that this will be the valedictory contribution from the Chief Secretary to the Treasury and I would be upset if I were unable to make at least a short contribution. Before I discuss the details of the Bill before us and of the Bill that should have been before us I want to add my personal congratulations to him, although his appointment is dependent on other matters. He has made unique, sometimes theatrical and often charming contributions to our debates in Committee and in the Chamber. I wish him well.

My right hon. and hon. Friends rightly highlighted one of the most important points of our deliberations—the quality of the scrutiny that the House can undertake. I am still a relatively new Member, having been elected four years ago, and I still believe that it is important to allow for debate and preparation of our thoughts. We have been given just four hours to consider 106 clauses, 11 schedules and, as my hon. Friend the Member for Sevenoaks (Mr. Fallon) rightly highlighted, 203 pages of primary legislation. That is unacceptable. Time for debate is crucial to allow us not, as Ministers may suggest, needlessly to drag the matter out but to probe the what-if questions. That is the point of parliamentary debate. The essence of parliamentary discussion is to identify what Ministers and their advisers may not have anticipated and to use that process to ensure that at the end of our deliberations the legislation is better than when it came before us. That is important.

A second aspect of the quality of scrutiny is preparation time. I hoped to have the opportunity last night to consider the Bill in detail and to compare it with the main Bill, but that was not open to me. I inquired at
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the Vote Office but the Bill was not available. The Prime Minister's decision to go to the country a year before he needs to has made it necessary to have this debate today. Hon. Members will be restricted in their ability to contribute to the debate in a thoughtful and considered way so one of our functions—to listen to outside experts and to draw on that expertise to better inform the legislation—has been removed.

In the few hours available to them some of my right hon. and hon. Friends have been able to inquire into the concerns of experts in the tax, accountancy and legal professions, but the chances of amending the Bill or debating the benefits of amendments have been negated because we do not have that opportunity. I have contributed to the consideration of two Finance Bills during the past two years and that outside expertise enabled sensible and often non-partisan discussions to improve the legislation. I am disappointed with the Government and that will reflect on them as the legislation is passed later today.

Having put those concerns on the record, I want to turn to more specific matters. I suspect that right hon. and hon. Members will be not entirely surprised that I want to talk about stamp duty land tax. There is undoubtedly something to welcome in the change in the threshold from £60,000 to £120,000 and it would be remiss of me not to recognise that as a positive step forward. It was interesting that the Chief Secretary was unable to identify or confirm the number of households in his constituency that would benefit, although he said that the Financial Secretary would do that for him. In my constituency, which is not a million miles away from the leafy suburbs of Brent, the reality is that less than 3 per cent. of first-time buyers could benefit from the change. That means that the hopes of 97 per cent. for some positive change from the Government have been dashed.

When one considers the total revenue that the Government plan to receive in the coming year, one discovers the reality of the situation. It is not, as one might have gathered from listening to the Chancellor, a benevolent reduction in the tax burden: quite the contrary. If one looks at the Red Book—the Government's own figures—it shows that they anticipate a 9 per cent. increase in the total stamp duty land tax revenue. It would rise from £8.9 billion to £9.7 billion. That 9 per cent. rise is a significant increase in the tax burden.

Experts in the house-buying market do not anticipate that house prices will rise by more than 4 or 5 per cent. in the coming year, so where does that 9 per cent. additional total revenue come from? It may be argued that it will come from the changes in disadvantaged area relief, although those are relatively small figures. What worries me, and it relates to an excellent point made by my hon. Friend the Member for Sevenoaks, is that we have no genuinely independent audit on which we can base our assessment as to whether the total burden of individual taxes is correctly estimated. We see a figure in the Red Book and we have to assume that it is correct. It may be correct, but the problem is that we have no means by which to judge that. I hope that the Financial Secretary will address that concern.

Although the Chancellor has taken a minuscule step forward in increasing the threshold to £120,000, he has missed a great opportunity and I shall explain why that
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is so. The tax is regressive and unfair. It is not, as in income tax, based on the margins of income; rather, it has what is known as a slab effect. Thus, under the Government's proposals, if one bought a home for £119,999, there would be no stamp duty land tax to pay—not a penny. However, pay a pound more for that house and the tax will be £1,200. That is because the tax rate applies to the whole price, not just the margin. The effect is repeated at the £250,000 threshold. At £249,999, the tax is 1 per cent., but at £250,000 the tax bill trebles, rising from £2,490 to a massive £7,500—a trebling of the tax bill for a £1 price change.

What is wrong with that? First, it is unfair. Secondly, and I hope that the Financial Secretary will address this point as I understand that it is his direct ministerial responsibility, it distorts the house price market. If someone knows that at £250,000 there will be a trebling of their tax bill, it cannot be beyond the wit of the civil service to realise that they will attempt to avoid the price of the house or flat rising to £250,000. I would not necessarily condone or agree with individuals who took such decisions, but they will occur.

The Government's answer was to put in a whole raft of bureaucratic and complex administrative procedures to try to clamp down on the problem, whereas they should have had the temerity and courage to reform the tax and remove the anomaly at source, thereby removing the need for any form of avoidance activity. On numerous occasions, the Opposition have pressed that point on the Government but, sadly, they have been deaf to reason.

The problem is repeated not just at £250,000, but also at £500,000. The Government's tax policies are encouraging tax avoidance. In previous debates with Treasury Ministers, I have tried to understand with them exactly why the paperwork was growing. After all, under the old stamp duty, which had been in existence for 300 years, we could manage with just one piece of paper. Only a one-page form was required, yet under the apparent modernisation of stamp duty what do we have? Twelve pages of forms to fill in, with 43 pages of notes that try to explain them. What nonsense. Why are the Government so firmly set against reforming the tax and so determined to go down that bureaucratic route? It seems anomalous and I am afraid that most first-time buyers will decide that the Government are not interested in the problem and do not care. The Government simply want their 9 per cent. revenue increase and that is all that matters to them.

I want to consider briefly the commercial aspects of stamp duty land tax and the removal of the relief for disadvantaged areas. I recall that we were told when debating the issue with Treasury Ministers that this crucial relief would bring hope and joy to the many urban deprived areas and that it was something that the Chancellor felt passionately about—so he got rid of it, and he did so because he needed somehow to find the money to pay for the tiny increase from £60,000 to £120,000. Of course, he discovered that there was £340 million tucked down the back of the sofa, and he thought that he could use that without anyone noticing. Sadly, for him, they noticed.

I shall correct the figures that the Chief Secretary identified. He said that there was a £90 million difference between the £340 million that the disadvantaged area tax relief changes bring into the Treasury and the
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£250 million that will go out because of the domestic change. However, another £20 million is tucked away in the Red Book in relation to dealing with tax avoidance. I hope that he will be able to clarify the total figure—I believe that it is about £105 million—by which the Chancellor is ahead.

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