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Stephen Hesford (Wirral, West) (Lab): I welcome the hon. Member for Braintree (Mr. Newmark) to his place and congratulate him on his maiden speech [Interruption]if he has the courtesy to listen to the House following a maiden speech. However, I offer him a note of caution: the House often gives the benefit of the doubt about humility when an hon. Member makes a maiden speech. He mentioned the tradition of making a non-controversial speecha tradition that was well trodden and well spoken about in three other maiden speeches, on which I congratulate the hon. Members concernedbut he tried our patience in that regard.
I should also point out to the hon. Gentleman that, if he does pay heed to what the people say, he must want to reflect on the outcome of the general election, because much of the version of economics that he espoused was roundly rejected there. Although I welcome him to his place and congratulate him on his speechI look forward to doing battle with him and his colleagues in coming yearsI wish to offer him that note of caution.
In some sense, I follow the hon. Member for North Antrim (Rev. Ian Paisley) in saying that I speak with caution in this debate. This is certainly the first Finance Bill debate in which I have spoken in eight years, and I am no expert. Like him, I think that the detail is, of course, complex, but one cannot avoid these matters for ever. I understand that this is a rather small Finance Billit has only 72 clauses and 11 schedulesso I felt able to dip my toe into this economic debate.
On the Bill's background, it is sometimes said in Finance Bill debates that only two things are certain in life: one is death, the other is taxes. In terms of death, I want to place on record that the report of my electoral demise was premature. In terms of taxes, that is what the Bill is about. In terms of certainty about taxes, I look to the Liberal Benches and pose a question. We know that the 1p on income tax went by the board in previous elections. It is now reported that the 50 per cent. tax rate on income over £100,000 is about to go by the board. I wonder what the Liberal Democrat taxation policy will be at the next electioncertainly, as things stand, it will be uncertain.
Susan Kramer (Richmond Park) (LD):
I hope that the hon. Gentleman will forgive me if I do not fully understand the manner in which to address the House, like many other recent hon. Members who have made maiden speeches. Does he think it extraordinary for a party both to keep to its principles and to consider changing circumstances, thus adapting and rethinking its policies as it responds to them? It seems that he has
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asked my party why we do not review the current situation, yet constantly puts to us issues that are in the past.
Stephen Hesford: That would be a fair point, if there was a principle at stake. I understand that the debate in the Liberal party is whether it appears too left wing to the public to take constituencies from the Conservative party, which is why it wants to review its taxation policy. If the hon. Lady wants to persuade me that that is a point of principle rather than low politics, she can perhaps do so if she addresses the House later.
I endorse the words with which my right hon. Friend the Paymaster General opened the debate when she gave us a brief run-down of the economic climate, which is the background to the Bill. However, I want to widen those words. The Treasury under Labour has been an engine for beneficial social change and I have chosen to dip my toe in the water of Finance Bills at long lastafter eight yearsbecause this Bill follows on from that principle.
The Treasury, under my right hon. Friend the Chancellor and his Front-Bench colleagues, has not approached its business with the traditional dead-hand approach followed by the Conservative Government. The Treasury has been responsible for sustainable growth under Labour, which is set to continue. It has produced a climate in which we can afford public investment and enabled the party to set the trend for revitalising and modernising our public services. As several maiden speeches made by Labour Members have pointed out, the Treasury has helped to eradicate child poverty and underpin hard-working families. The Bill continues that trend. I do not wish to talk about the Bill in detail because this is a Second Reading debate, but I shall pick out a few aspects that support those propositions and are socially useful or business-friendly.
The hon. Member for Runnymede and Weybridge (Mr. Hammond) used the time-honoured debating tactic of threatening the House with complexity. He said any number of times that the matters in the Bill were complexno doubt they are. The hon. Member for West Suffolk (Mr. Spring), who might wind up for the Opposition later, is looking at me quizzically
Stephen Hesford: The point that I am making is that there is a simple principle behind the so-called complexity. I asked the hon. Member for Runnymede and Weybridge whether there would be a Division on Second Reading because although the simple principle behind the Bill is fairness, Conservative Members try to criticise it by saying that the provisions on tax avoidance are being over-strengthened. That demonstrates the difference between Labour and Conservative Members and the hon. Member for West Suffolk will no doubt explore the matter in Committee.
The Bill contains four elements relating to social justice. It has an environmental aspect and what I call a corporate social responsibility aspectthe anti-tax avoidance measures. It contains measures on pension assistance, it will encourage research and development and it will cut red tape.
I welcome clause 2, which will reform the fuel scale charges in line with the Government's wider environmental objectives. It will give tax incentives to
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less polluting cars because the VAT fuel scale charges system will be based on carbon dioxide emissions. I also welcome clause 6, which is in line with the VAT compliance strategy outlined by my right hon. Friend the Paymaster General. Clause 6 and schedule 1 are also in line with the principle of fair taxation because they deal with the disclosure of VAT avoidance schemes. Of course, the provisions are limited to firms with a turnover of more than £600,000, so it cannot be said that they are aimed at small business. As I suggested earlier, the measure represents a form of corporate social responsibility. I ask my hon. Friend the Financial Secretary his estimate of the amount that Treasury will gain from the measure during a full tax year.
Clause 7, which is titled, "Charge to income tax on lump sum", is what I would call a pension-assisting scheme. It will give pensioners added flexibility when retiring because, if they take a lump sum, they may be assessed according to their final salary or a year later according to their retirement pension. [Interruption.] I welcome the hon. Member for Grantham and Stamford (Mr. Davies) back to the Chamber and hope that he is feeling himself again.
Clause 13 relates to corporation tax exemption for organisations. It will benefit scientific research organisations and enable them to take wide-ranging research and development opportunities in addition to those development opportunities that my right hon. Friend the Chancellor has tried to entrench in the economy. It will remove red tape to boost R and D.
I welcome clause 47, which is small but will create opportunities to cut red tape. It will introduce the power to make regulations to facilitate the stamp duty land tax process through e-conveyancing initiatives. I am not an expert in the field, so I would like to know for my own benefit the categories of individuals or companies who will benefit most from the measure.
I have dipped my toe into the water of the Finance Bill and welcome what has been described as the second Finance Bill. It continues our aim of social justice and introduces an element of corporate social responsibility. I do not know whether I will have the opportunity to serve on the Standing CommitteeI have not served on a Finance Bill Committee beforebut if I do, I look forward to debating the Bill in more detail.
I congratulate my hon. Friend the Member for Braintree (Mr. Newmark) on a fine maiden speech. I do not agree with what the hon. Member for Wirral, West (Stephen Hesford) said. I thought that my hon. Friend set out with admirable clarity his motivation as a politician, which, in my view, is exactly what should be contained in a maiden speech. I congratulate my hon. Friend on his expression of his motivation and vision, as well as his description of his constituency, as I congratulate the hon. Members for North Ayrshire and Arran (Ms Clark), for Newport, East (Jessica Morden) and for Bristol, East (Ms McCarthy) on expressing to the House their alternative political vision that motivated them and brought them here as well. We have
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heard four good maiden speeches and I confidently expect that we will hear one or two more before the debate has concluded.
It has been said that this is the second half of a Finance Bill of which we have already debated the first half. As others have made it clear that they do not claim any great expertise in the detail of the Bill, I will not put myself ahead of that and claim an expertise that others, wisely, have disavowed. It is not appropriate in a Second Reading debate to try to go through all the detail of the various tax avoidance points that are more properly debated in Committee.
I want to draw out two principles that are important for consideration at Second Reading and which should inform the development of tax policy in this and future Bills. The first principle is one to which I referred in a brief intervention on my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond). I hold absolutely no brief for those who market tax avoidance schemes and, like my hon. Friend, I make it crystal clear that I support well-thought-through, clear and well-defined anti-tax avoidance measures. There is no dispute between the two Front Benchesand, indeed, between Conservative Back Benchers and the Treasury Benchon the need to ensure that the Revenue is protected. When people bring forward artificial avoidance measures, Ministers should be supported when they take steps to protect the Revenue. As a former Financial Secretary to the Treasury, I can say that there is a kind of camaraderie between us and it is important that we have some group therapy to ensure that this important principle is defended. I make no apology for that.
When we introduce anti-tax avoidance measures, we should observe some important principles. The first is that if we propose measures that are based on additional discretion for the tax authoritiesthe measures in this Bill concerned with combating tax arbitrage are a clear case in point, where there is an enhancement of the discretion granted to the tax authorities under clauses 24 and 26we should do so only in clearly defined circumstances, mindful always of the need to protect the principle of taxpayer certainty. That is why I made the, I think, correct linkage that if we are to enhance discretion for the tax authorities, hand in hand with that should go a greater acceptance than has been our tradition in this country of binding tax clearances granted by the Revenue to the taxpayer when the taxpayer seeks the opinion of the Revenue before making certain dispositions in their affairs.
I am well aware of the resistance within the Revenue to that principle. Revenue and Customs, as we must now call it, says, quite rightly, that it is not in the business of giving advice to taxpayers and that if a taxpayer wants advice, he should go to his accountants. Free advice from the Revenue is not part of its businesses. That is perfectly true, but if a specific proposal is taken to the Revenue in an area of tax policy where the authority has an acknowledged discretion, it is entirely right that the taxpayer should be able to get a ruling in advance of implementing that proposal on how the Revenue will exercise its discretion. I regard that as part of the deregulation agenda.
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It is worth considering the alternatives. One is that the taxpayer constantly has to weigh a range of different possible outcomes and the only winners will be the tax advisers who go to the nth degree to tease out all the possible options. That cost and waste of time and effort within a business could be eliminated simply by the Revenue telling the taxpayer in advance how the law will be enforced in a given set of circumstances that the taxpayer is planning to create.
I do not disagree with the principle contained in these clauses on combating tax arbitrage, and I absolutely do not want us to make tax arbitrage easier. However, if we are to introduce greater discretion as a way of combating tax arbitrage, it is reasonable to ask that there be greater certainty available to the taxpayer through the principle of greater availability of binding clearances given by the Revenue.
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