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Philip Davies (Shipley) (Con): We heard from the Chairman of the Select Committee, the right hon. Member for West Dunbartonshire (Mr. McFall), about the report issued today by that Committee. It includes a statement that in the context of trying to deal with climate change, the Government's position in not raising air passenger duty for the fifth year running is incoherent and unconvincing. Does the Chief Secretary accept that the Government are not making the fullest possible use of taxation mechanisms to deal with climate change?
Mr. Browne: I knew that the reference by my right hon. Friend the Member for West Dunbartonshire (Mr. McFall) to his Committee's report would encourage others to trawl the report. I am not surprised that the hon. Member for Shipley (Philip Davies) picked a headline from the report—the reference to air passenger duty. In due course, as I explained to my right hon. Friend, the Government will respond in the normal way to the report, dealing with matters in some detail. As for the cost of air transport, as the hon. Gentleman will know, a number of airlines have introduced fuel surcharges. For example, British Airways charges £8 for flights in Europe, which is equivalent to a 60 per cent. increase in air passenger duty. British Airways charges £35 for non-European flights. These charges have not had an appreciable impact on demand.
The Government keep all these matters under strict review. Standing at the Dispatch Box within hours of the report having been published, having had the opportunity of going through it only once, I do not accept that what is in the report is necessarily the proper interpretation of the evidence that the Select Committee heard. There is still room for the Government's response to the report, as the hon. Gentleman would expect.
It is correct that air passenger duty was frozen in the Budget, and has been frozen every year since 2001. Decisions need to be considered in the context of wider social and economic factors, such as the current volatile
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oil market and the experience of surcharges in relation to that volatile market that we have recently seen. The Government believe that the most effective approach to addressing the international challenge of aviation emissions is through a trading scheme. That is the Government's current view, and it has been in the public domain. The Government are continuing to press for the inclusion of aviation in the EU emissions trading scheme as soon as possible after agreement. The hon. Gentleman will have to wait further for a more detailed and comprehensive response to the Select Committee's helpful report.
The Government's approach to environmental matters has been welcomed by environmental organisations such as Greenpeace. The Green Alliance said that my right hon. Friend the Chancellor of the Exchequer
However, as the Chancellor has made clear, we need strong leadership to take the tough decisions required to tackle climate change.
Rob Marris: I am grateful to my hon. Friend for giving way again. He has set out the many laudable steps taken by the Government to deal with emissions of climate-changing gases, for example. What measures are there in the Budget for taxation to deal with the adaptation of the United Kingdom to climate change that is inevitable? What are the tax measures in the Budget and the Finance Bill in that regard?
Mr. Browne: I have to tell my hon. Friend that to my knowledge there are none; I think that that is the honest answer to his request. As I said to him earlier when he raised the same issue using a slightly more tangential approach, I accept that there are responsibilities beyond what can be done in the Finance Bill in response to environmental and climate change.
Mr. Doug Henderson (Newcastle upon Tyne, North) (Lab): May I suggest to my right hon. Friend that some of the provisions affecting research and development may well lead to measures to help to tackle emissions?
Mr. Browne: Of course, the provisions on research and development could lead to diverse approaches to scientific matters. There must be room for scientific developments to respond to the very challenge that my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) has drawn to the attention of the House. I am therefore grateful for the assistance of my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) in highlighting, if not a direct provision, that potential support in the Bill, for the benefit of our hon. Friend the Member for Wolverhampton, South-West.
The Bill provides a platform of stability, and is another step towards realising our vision of a productive, competitive, enterprising Britain, which leads the world in new industries, with better technologies, first-class education, effective environmental stewardship and more highly skilled jobs with higher wages, as I have said. The Bill provides new choices for parents, investment and
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reform in public services, and initiatives to meet the energy and environmental challenge. It secures fairness for each child by investing in every child, and equips Britain for the global challenges ahead. Our drive in government is to improve the UK's position as the best location for inward investment by strengthening our reputation as one of the world's finest locations for higher education, by promoting London as the world's leading international centre for financial and business services, and by investing in skills.
Only by working together can productivity and fairness advance, and in 2006 we have an opportunity—indeed, a duty—to achieve that goal. We have an opportunity to sustain long-term investment in public services and in infrastructure. We have a duty to meet the fiscal rules, to support the needs of business and to make necessary long-term investments. The Bill prepares us to take that opportunity and to fulfil our duty by supporting enterprise, productivity, innovation and business with stability and growth. The Chancellor set out a Budget for the future, and for a strong and strengthening economy. The Bill helps to makes it a reality, and I commend it to the House.
4.12 pm
Mrs. Theresa Villiers (Chipping Barnet) (Con): I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:
"That this House declines to give a Second Reading to the Finance (No. 2) Bill because the provisions contained in its two volumes and 475 pages increase complexity and instability in the tax system, discouraging business investment and damaging productivity and penalise hard-working prudent families seeking to provide responsibly for their future; and because the provisions undermine attempts to improve IT skills by abolishing the UK's Home Computer Initiative, damage enterprise by abolishing the 0% rate of corporation tax, leave the UK with an ever-rising tax burden that damages its competitiveness and fail to prepare the country for the challenges and opportunities of the globalised world economy."
I am pleased to follow the Chief Secretary, who opened our debate. I look forward to working constructively with him and his team on this important Bill and welcome the contribution made by the Treasury Select Committee in a report that will help, I am sure, to inform our debate. We broadly support what the Government seek to do in a number of provisions, but of course we wish to examine the details in Committee. We will look positively at anti-avoidance provisions, but we will seek to ensure that they target genuine tax loopholes and do not involve excessive compliance costs and complexity. I welcome the Chief Secretary's confirmation that the Government wish to ensure that those provisions operate proportionately. In the past, that has not always proved the case, so we will endeavour to ensure that the Bill achieves that aim.
We welcome, too, the attempt in clause 19 to crack down on MTIC—missing trader intra-community—fraud, but we are concerned that the Bill does not include an implementation date,. Given the vast sums lost to the Exchequer as the result of such fraud, I hope that the Paymaster General will assure the House in her reply that the Government have received the necessary
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EU derogations or that they are confident that they will receive EU permission to put those proposals into effect. With certain reservations, we welcome part 4, which deals with real estate investment trusts. My hon. Friend the Member for Rayleigh (Mr. Francois) will expand on that topic in his winding-up speech.
Turning to the more controversial matters, in Finance Bill debates in the past nine years, it has almost become a ritual for the Opposition to express grave concern, not just about tax increases but about tax complexity. As we are about to embark on scrutiny of the Bill's two volumes, 181 clauses and 25 schedules, I imagine that this year will prove no exception. For example, Ernst and Young's Chris Sanger said of the Budget press notices:
"Confusion has been heaped on complexity. This is not the way to keep businesses in the UK or encourage them to invest here."
We have 23 clauses and two new schedules on film tax alone, on top of lengthy existing legislation. As the hon. Member for Rhondda (Chris Bryant) pointed out, this is a matter on which there have been repeated amendments to legislation over the past few years.
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