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Mr. Tyrie: The Financial Secretary has just said that there will be some benefit in saving for most people, most of the time. What about the rest of the people?
Mr. Timms:
It is certainly worth while for the great majority of people to save for their retirements. At the time of the 1997 election, large numbers of people had
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an income of £69 a week. From this month, all of those people are entitled to an income of at least £109 a week, which is a massive change for the better. We have focused on addressing pensioner poverty in an extremely effective way through the pension credit.
On the specific point raised by the hon. Member for Chichester (Mr. Tyrie), the pension credit gives credit for savings. It removes the problem of large numbers of people being on 100 per cent. withdrawal rates, which was a result of how income support arrangements worked under the previous Government, and many more than 1 million people were affected by those 100 per cent. withdrawal rates.
I should like to spend time responding to many of the points that have been made, but I must be a little briefer than I would have been because of the interventions that I have taken. I need to comment particularly on the comments of the right hon. Member for Charnwood (Mr. Dorrell), who talked about the way in which tax thresholds have changed. Listening to him, an innocent observer would have believed that under his stewardship—as he told us, he was Financial Secretary after 1992— thresholds went up in line with earnings. Helpfully, I have been able to dig out what actually happened to the higher rate threshold in the period that he discussed. It is true that in 1991–92—the period leading up to the 1992 election—the threshold was over-indexed; one cannot deny that that occurred. However, in 1992–93, when the right hon. Gentleman was Financial Secretary, the threshold was not only not increased in line with earnings, but not increased at all—and, blow me down, it was exactly the same the following year and the year after that. It was frozen for three years in a row.
Mr. Dorrell: I compared the record over the period of this Government from 1997 to 2005, during which time 7.5 million people have seen their marginal rate of tax increase. For the period from 1979 to 1997, will the Financial Secretary confirm that the Conservative Government cut marginal rates of tax for all income tax payers during those 18 years?
Mr. Timms: The right hon. Gentleman is shifting the goalposts somewhat. He chided me about uprating thresholds, which we have done consistently; under his stewardship, those thresholds were frozen. Incidentally, the hon. Member for Chichester accused us of freezing the threshold, but we have not—we have consistently uprated it in line with inflation. Under the stewardship of the right hon. Member for Charnwood, the thresholds were completely unchanged for three years in a row; in this Budget, we increased them.
Mr. Tyrie: Will the Minister give way?
I want to come on to the other issue that the right hon. Member for Charnwood raised. Of course, it is true that nowadays people are earning more. More than twice the number of people are earning more than £30,000, more than £50,000 and more than £100,000 than in 1997. It is absolutely right that as people's real income rises so does
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the average tax that they pay. That is the basis of a fair, progressive income tax system, and that is the system that we have ensured that we have in place.
The right hon. Member for Fylde (Mr. Jack) made an interesting speech. I can tell him that we certainly are going to achieve our Kyoto targets. On vehicle emissions, we have a good record compared with other European Union members. For example, box 7.3 in the Red Book provides information about how the changes to company car tax have affected CO 2 emissions; that work will need to continue.
The right hon. Gentleman talked about biofuels, which is a subject of great interest to him. We have been very supportive of the growth in biofuels sales—that is why we introduced the 20p per litre level for biodiesel in 1992. I think that he will be aware, although he did not mention it, of the work that is going on in relation to a renewable transport fuels obligation. Good progress has been made on the feasibility study, and we are continuing discussions with industry on a possible enhanced capital allowance for the cleanest processing plants. That directly addresses the point that he made.
We have had an interesting debate, throughout which one point of consistent unanimity was the warm praise and generous tributes accorded to my right hon. Friend the Chief Secretary. It is clear from what everyone has said that the whole House wishes my right hon. Friend well in the future. To those tributes to him that have already been expressed, I add my own.
The Bill before the House builds on the stability that has been achieved in the past eight years, takes that stability forward and addresses the priorities of fairness and sustainable growth. I commend it to the House and I commend the values that underpin it to the people.
Bill accordingly read a Second time.
Motion made, and Question put forthwith, pursuant to Standing Order No. 63 (Committal of Bills),
Bill immediately considered in Committee.
[Sylvia Heal in the Chair]
Question proposed, That the clause stand part of the Bill.
4.30 pm
Mr. Francois
: I will make a few brief remarks on the clause, but before doing so I also want to refer to the Chief Secretary to the Treasury. I paid tribute to him when I wound up for the Opposition on the evening of Monday 21 March during the Budget debate, and the House will be pleased to hear that I do not propose to reprise all of that now. But I should point out briefly that the shadow Paymaster General, my hon. Friend the Member for Chichester (Mr. Tyrie), reminded the House a few minutes ago that a major power cut has
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taken place in south London today. To paraphrase Lord Grey, the lights are going out all over Britain for this Labour Government, so the Chief Secretary—
The First Deputy Chairman of Ways and Means (Sylvia Heal): Order. The clause under discussion is actually "Rates of tobacco products duty".
Mr. Francois: Thank you, Mrs. Heal. I was simply going to say that I wish the Chief Secretary to the Treasury all success in the future, and he has clearly picked the right time to get out.
We are now in Committee and in the curious position of having to deal with 106 clauses, in what is still a 1 inch thick Bill, in barely half an hour. Given our constrained circumstances, I will make just a few quick points on each of the clauses that we Conservatives wish to highlight.
On clause 1, I want to press Ministers on what actions they are taking to combat tobacco smuggling. That issue has been raised with me on a number of occasions, particularly by small retailers, who are seriously suffering from the effects of such smuggling. I am thinking of organisations such as "Retailers Against Smuggling", which have made several representations on that point. I also have a letter from the chief executive of the Tobacco Manufacturers' Association, who wrote very promptly—as recently as yesterday—about the matter. He said:
"I write to you with some urgency, as I understand that certain sections of the Finance Bill including the clause on increased tobacco tax, are soon to be debated in the House. We were disappointed that the Chancellor proposed increases in taxation, particularly the rises on hand rolling tobacco, where 73 per cent. consumed in the UK last year were non duty paid i.e. they avoided UK taxes.
The Treasury sub-committee warned in their recent report that the smuggling of hand rolling tobacco was 'out of control'. Furthermore we estimate that 28 per cent. of cigarettes consumed avoided UK duty . . . The Treasury sub-committee also reported that one in four shopkeepers were considering closing down as a result of the impact tobacco smuggling was having on their business . . . In the limited opportunity left to you because of the restricted time I would urge you to question Her Majesty's Government's thinking on this subject, and speak up for the small retailers whose livelihood is severely threatened as a result of these Budgetary proposals."
On that basis, I would like to ask the Financial Secretary—[Interruption.] Oh, I see that the Economic Secretary, who has direct responsibility for these matters, is now in his place—[Interruption.] He was in his place only for part of the debate, but has just re-entered the Chamber. Perhaps he will listen to my three questions and either he or the Financial Secretary will reply to them.
First, what further actions does the Treasury propose to combat tobacco smuggling in general? Secondly and more specifically, what measures are proposed to combat the smuggling of hand-rolled tobacco, which has become a particular problem? Clearly, small retailers are suffering disproportionately from the smuggling of that form of tobacco and Conservative Members want to know exactly what the Government propose to combat it. Thirdly, how will the Government ensure that controls remain in place, given the impending merger of Her Majesty's Customs and Excise and the Inland Revenue? I ask that question because,
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with any merger, it is sometimes the case that important measures can fall between two stools during the period of transition. That cannot be allowed to happen. I hope that the appropriate Minister will answer those three specific questions in a specific manner.
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