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House of Commons

Thursday 26 January 2006

The House met at half-past Ten o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Self-assessment Tax Returns

1. Andrew Rosindell (Romford) (Con): What estimate he has made of the number of individuals who will miss the deadline for submitting the self-assessment tax return in 2005–06. [45613]

The Paymaster General (Dawn Primarolo): About three quarters of returns have already been received by Her Majesty's Revenue and Customs, and we expect the overwhelming majority to arrive by the deadline.

Andrew Rosindell: Does the Minister agree that hard-working British taxpayers are facing fines because they are overburdened by a highly complicated tax system? Will she give an assurance today that she will simplify the tax system and spend more time chasing those who habitually avoid paying tax?

Dawn Primarolo: I can confirm to the hon. Gentleman, as he has not noticed, that we are already doing that. We have removed more than 1 million—[Interruption.] I cannot help it if the hon. Gentleman does not do his research properly. He may have noticed that more than 1 million taxpayers have already been removed from self-assessment, and 1.5 million are now using the shortened return, which has been welcomed by the National Audit Office. In addition, the NAO's reports specifically recommended that the HMRC should use penalties in order to pursue those who persistently fail to submit their tax returns on time. That is precisely what we are doing. It is in the interest of all taxpayers and I am sure that, on reflection, the hon. Gentleman will agree that the Government are pursuing the strategy that he advocates.

David Taylor (North-West Leicestershire) (Lab/Co-op): It is a bit much for Conservative Members to talk about complexity. The system that we inherited—I speak as an accountant who was involved at the time that it was implemented—was a disastrous mess in 1995–96. It was a shambles. Will my right hon. Friend accept my thanks for improving it in the intervening nine or 10 years and introducing internet filing? Can she
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reassure me about one aspect on which the hon. Member for Romford (Andrew Rosindell) is right when he says that that there is unacceptable complexity—namely, the account statements sent to individuals and clients? They need to understand hieroglyphics and ancient Greek to be able to plough through such a statement.

Dawn Primarolo: I assure my hon. Friend that the self-assessment system, the returns, the forms and the advice are constantly under review. It is because of those reviews that we have been able to make returns unnecessary for 1 million people, and allow a further 1.5 million to use a shortened return. I pay attention to the points that my hon. Friend makes, but I remind him and the House that the self-assessment regime collects some £17 billion a year, and the overwhelming majority of taxpayers are complying with their obligations.

Mr. Nigel Dodds (Belfast, North) (DUP): The HMRC is encouraging more and more people to submit their returns via the internet, and as the deadline looms for this year, a number of my constituents and businesses have reported problems with using the internet and downloading the various forms. Can the Paymaster General look into that and reassure people that it will be a smooth process?

Dawn Primarolo: I shall certainly look into the point that the hon. Gentleman has raised. Internet filing has expanded considerably and is working well, but if a huge number of people leave it right to the deadline and then try to get on to the system, I cannot say what the consequences will be in terms of waiting time. All the information provided to me as the Minister is that e-filing is working very well and taxpayers should have access to it.

UK Economy (Growth)

2. Mr. James Gray (North Wiltshire) (Con): What his latest estimate is of growth in the UK economy in each of the next three financial years. [45614]

The Chancellor of the Exchequer (Mr. Gordon Brown): The latest estimates for growth are contained in full in the pre-Budget report. I can announce that as part of our growth strategy for equipping ourselves to tackle globalisation, we will be holding a series of international forums attended by global business leaders on the future of financial services, digital electronics, science, education, health care and modern manufacturing, the conclusions of which will inform our Budget and spending review.

Mr. Gray: Is it not astonishing that the Chancellor of the Exchequer cannot even bring himself to say the figure included in the pre-Budget report—1.75 per cent. growth for the United Kingdom? That compares with 3.6 per cent. in the United States, 2.9 per cent. in Japan and 2.6 per cent. in Australia. Why is it that those countries, which are just as exposed to the world economy and to oil prices as we are, have higher growth than ours? Why are we 19th out of 25 countries in the European Union and bottom of the growth league?

Mr. Brown: Perhaps the hon. Gentleman would add that we have been growing faster than France,
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Germany, the euro area and the European Union as a whole. Perhaps he will also add that since 1997 the growth rate of the British economy has been far superior to the growth rate achieved in 18 years of Conservative Government. Perhaps he would like to remind the House that inflation is half what it was in the Conservative years, and interest rates and mortgages are half what they were in the Conservative years.

Mr. Sadiq Khan (Tooting) (Lab): Does my right hon. Friend agree that one of the reasons why we have had a record period of economic growth is our commitment to economic stability and social justice? In that regard, does he welcome the consensus—for this week, anyway—on the fact that economic stability should take priority over tax cuts?

Mr. Brown: The shadow Chancellor might want to stand to remind us of the remarks that he made only a few weeks ago congratulating Labour's success on macro-economic policy, telling us that Labour has improved the macro-economic management of the UK economy, and saying that there is public confidence in Labour's ability to manage the economy. That, I believe, is what the public think as well.

Sir Peter Tapsell (Louth and Horncastle) (Con): Are the Chancellor's growth estimates influenced by the strictures from Europe on his failure to remain within the public expenditure limits imposed on him by the stability and growth pact, of which, unlike me, he was such a great admirer when the Bill on the Maastricht treaty was before the House?

Mr. Brown: The answer is no. The reason is that we have two fiscal rules. One is the golden rule, where current expenditure should be paid for by revenues—a golden rule that we are meeting and will meet. That is in contrast to the last—[Interruption.] If I may so, the last Conservative Government had two economic cycles. They failed to meet the golden rule in the first economic cycle by £150 billion and they failed to meet it in the second cycle by £250 billion, so we will take no lectures from the Conservatives on that. As for the hon. Gentleman's advice on economic policy, I would have thought more of it had he supported the independence of the Bank of England.

Mr. Dennis Skinner (Bolsover) (Lab): Is the Chancellor of the Exchequer aware that growth in the Bolsover economy is pretty good, continuing on track? The Shirebrook pit enterprise is nearly completed—2,000 jobs in that area alone. There will be another 5,000 at the Markham and Bolsover industrial site, when the new motorway intersection, which I have championed for the past five years, starts at Easter. We have got unemployment down to half of what it was when the Tories carried out their brutality of closing the pits. Everything is on stream—[Interruption.] I want the Chancellor—

Mr. Speaker: Order.

Mr. Skinner: I have not dealt with—

Mr. Speaker: Order. Bolsover sounds like Utopia.
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Mr. Brown: I think that the whole House would agree, not just in Bolsover but across the United Kingdom, that there are 2.3 million more jobs in the British economy than there were in 1997. Even in the most difficult circumstances of last year, an extra 220,000 jobs were created. Unemployment is half what it is in Germany, half what it is in France, and virtually half what it is in the euro area. Unemployment is lower than in the United States of America.

Sir Michael Spicer (West Worcestershire) (Con): Why has the rate of productivity gone down ever since this Government took office?

Mr. Brown: Productivity has been rising every year. The only years in which it has fallen in Britain were years of Conservative Government. The only years in which manufacturing productivity fell were years of Conservative Government. Productivity has been rising in every year of this Labour Government and manufacturing productivity has been rising as well. The hon. Gentleman is chairman of the 1922 committee and he should get a researcher to get his facts right.

Mr. Brian H. Donohoe (Central Ayrshire) (Lab): I disagree fundamentally with the Chancellor of the Exchequer when it comes to that God-awful tune at half-past 5 in the morning. Its demise will certainly do something to improve the economy of the country. On a particular constituency point that worries me, there are problems attached to high energy costs. I understand that assurances are about to be given to the Chancellor about that, and will he reinforce that this morning?

Mr. Brown: The signature tune at 5.30 in the morning is a good one, even if it does not include the music of Ayrshire, which is my hon. Friend's home county. On energy prices, we recognise that there has been a doubling of oil prices over the past 18 months—it has affected every economy in the world. What is remarkable in those circumstances—the Monetary Policy Committee of the Bank of England has referred to it—is that inflation in this country remains low. We remain on target for inflation, and I can think of no decade in which oil prices have doubled when inflation has been kept so low. That is a tribute to the macro-economic framework that we have developed over the past eight years.

Dr. Vincent Cable (Twickenham) (LD): As the Chancellor is committed to locking in the benefits of growth and financial stability, why has he not done more to take advantage of the extraordinarily low prevailing long-term interest rates by converting a large amount of public debt—not just a token 0.1 per cent.—through refinancing, thereby saving the taxpayer a great deal of money? Is the Treasury asleep?

Mr. Brown: We have taken advantage of that. It was this Government who announced the 50-year issue, and I hope that the hon. Gentleman will acknowledge the fact that we did so. I have to say to the hon. Gentleman, who is a rock of stability in this changing Liberal landscape—even though one of the people he is not supporting for the leadership is keeping a close eye on him today—that not even a 50-year issue would solve
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the problems that the Liberals have with their public spending policies. He has dropped his tax policy, but even in the past few days all his spokesmen—on children, on transport and on London—have been announcing increased public spending plans. One time, one day, his figures will have to add up.

Anne Snelgrove (South Swindon) (Lab): What matters most to hard-working families in my constituency—which, coincidentally, is next door to that of the hon. Member for North Wiltshire (Mr. Gray), who asked the original question—is maintaining a stable economy. What assessment has my right hon. Friend made of how best we can equip workers and families in our constituencies for the future challenges of globalisation?

Mr. Brown: The first thing for families is the child tax credit. I am very disappointed that the shadow Chancellor wants to cut that credit. The second thing is education spending, which we are doubling in my hon. Friend's constituency and throughout the country. The hon. Member for North Wiltshire (Mr. Gray) complains about our economic policy and implicitly suggests that we are spending too much, but I have here the statement that he issued on his website on 11 January 2006. He stated:

demanding that we spend more, not less. Perhaps he should have a word with the shadow Chancellor.

Mr. George Osborne (Tatton) (Con): The Office for National Statistics confirmed this week that the Chancellor's growth forecasts for last year were hopelessly wrong. Looking forward to his next growth forecasts, what does he identify as the greatest risk? Is it the inadequate savings, the large and persistent current account deficit or the slowdown in productivity growth?

Mr. Brown: The greatest risk would be to pursue the policies of the shadow Chancellor. It is absolutely clear that he would put stability at risk: he is considering a flat tax; he would introduce a third fiscal rule; he would cut the new deal; and he would cut the child tax credit. All those policies that are giving stability and prosperity to the British economy, but the hon. Gentleman's policy would put that at risk. He likes to give the impression to the public that he is a policy-free zone, but the abolition of the new deal, cuts in tax credit, the consideration of a flat tax and, if I may say so, the third version this week of a third fiscal rule, would all put the stability of the economy at risk.

Mr. Osborne: The Chancellor says that we are the same old Tories, yet the Prime Minister says that we are changing our minds. One day, they will sort out their attack. In the meantime, assuming that the Chancellor has finished planting Union jacks in everyone's front garden, will he turn his attention to productivity growth? The trend rate of productivity growth has fallen while he has been Chancellor, as the Monetary Policy Committee noted this week. In 1998, he said that productivity growth was

How is he measuring up?
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Mr. Brown: Productivity has risen every year under this Government. Manufacturing productivity continues to rise. Growth in the British economy is higher every year on average than it was in the Conservative years. The Conservatives are going to have to face up to that. Let us have a bit of consistency from the shadow Chancellor. He congratulated me on my success with macro-economic policy and said that I had improved the macro-economic management of the UK economy. He said that there was public confidence in Labour's ability to manage the economy. He said that Labour had established economic credibility. He said that it was the Conservatives who had lost their reputation for economic competence and that it was the Conservatives short-term opportunism that was hampering long-term policy. If he agrees with that, it is his own party that he should be criticising, not me.

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