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Mr. Robert Flello (Stoke-on-Trent, South) (Lab): I offer my humble apologies for not being in the Chamber earlier to listen to a fascinating debate; I was detained elsewhere. I would like to take up the point about unjust enrichment and the tobacco companies making profits, on which no duty is paid. Does my hon. Friend agree that the situation is perverse, in that people become ill through the use of tobacco products and then use the national health service, which illegally imported tobacco deprives of funding? Therefore, there is a double whammy in terms of people suffering and having to use the NHS when there is not the money to support their treatment.
Stephen Hesford: I agree. My hon. Friend makes the point and the House has heard it: there is that unholy link between evasion and cost. There is a willingness to deal with a product that inflicts costs on society, but not a willingness to pay the associated dues.
The Finance Bill is complex, and deals with what might be considered arcane issues. Clause 17 deals with value added tax on buildings and land. Such small measures are precisely the sort of provisions set out in what has been criticised as an over-lengthy Bill—but they are measures to which the Chancellor should be directing his attention. I understand that clause 17, in a small way, rests in the category of business-friendly deregulation. It defines the law governing VAT on certain land transactions, making a complex area more business-friendly and more easily understood. I understand that the business community has gone out of its way to welcome the clause; I too welcome it.
I do not agree that this is an over-lengthy Bill. It is clear to me that there are many measures within it worthy of mention; I will not detain the House by detailing them all, but I shall pick out three or four, and I am sure that other hon. Members could pick out other provisions at their leisure. For example, clause 19 is an anti-VAT fraud measure. Missing trader intra-community fraud is, I understand, a significant VAT avoidance fraud. It is highly sophisticated, and a well-
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organised criminal attack on VAT. The clause seeks to remove that criminal activity. I welcome that, and support the provision.
Clause 25 comes under my heading of business-friendly deregulation. It simplifies corporation tax for small businesses without, as I understand it, placing any additional burden on small businesses to access that element of deregulation.
Clause 28 is also a business-friendly tax measure. It is designed to reduce tax on research and development costs. It will reduce the tax element on R and D in a particular industry that has significance in the area that I represent—the pharmaceutical industry, which is one of our major manufacturing industries. It remains in the UK because of the climate that my right hon. Friend the Paymaster General and others have gone out of their way to create and facilitate. The clause is an additional small measure that helps a business-friendly climate for the pharmaceutical industry to continue.
There is clearly a benefit for our constituents. They may not understand what large companies do or even know their identity, but such companies have a beneficial effect for every constituent who is represented in this place. I am talking about new cancer drugs coming on stream. Some such drugs are being developed in Liverpool, just across the water from my constituency. A number of my constituents work in the pharmaceutical industry, and they do a very good job in producing those new products.
I ask, rhetorically, why clause 28 has not been presented to the House before. It is about tax relief for costs incurred by pharmaceutical companies in recruiting volunteers for trials. That seems to be an eminently suitable measure, which will encourage research and development.
Chapter 3, which consists of clauses 31 to 53, deals, as other hon. Members have said, with film financing. The Opposition have a different view about how the provisions will work and why they have been included, but they rewrite the relevant taxation so that it is business-friendly for the film industry. I certainly support the Chancellor's aim of encouraging a vibrant British film industry; small-scale independent companies that air their films on Channel 4 will benefit, as will large- budget films.
Clause 62 is a social measure that falls within the four parameters that I set at the beginning of my speech.
Stephen Hesford: My hon. Friend is anticipating me by referring to the fact that that small provision exempts from taxation facilities provided by companies that offer eye tests for people who work with visual display units. That is an eminently sensible social measure.
Finally, clause 172 deals with the climate change levy, about which many right hon. and hon. Members have spoken in detail. I welcome the fact that the Chancellor has included an uprating in the Bill, which makes the climate change levy more effective, keeping pace with the cost of fuel and so on. However, two political points need to be made. First, as was said in the Budget debate, Opposition Members do not support the levy, which is surprising. As I said at the outset, we need to identify the
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issues on which we can all agree. Opposition Members do not agree with the levy on principle, and they do not agree with the uprating.
David Taylor (North-West Leicestershire) (Lab/Co-op): The building materials industry in my constituency does not oppose the principle of the climate change levy, but it is concerned about the fact that it continues to be ratcheted up. It believes that a climate change agreement with more substantial penalties for breaches would be more effective, both fiscally and economically.
Stephen Hesford: My right hon. Friend the Paymaster General has heard my hon. Friend's suggestion, so I am sure that she will take it into account.
There is a second, equally sharp divide between the Government and the Opposition. My right hon. Friend the Chancellor of the Exchequer introduced the climate change levy in 2000. It is not something that he thought up in the summer as part of a leadership election campaign. It is not something that he thought up after the manifesto for the 2005 election was written, only to reject it because he thought he had to appeal to a different audience. In contrast to the Leader of the Opposition, he embraced such policies at the beginning of the century by introducing a measure that, year on year, has helped us to meet the Kyoto targets. If the Opposition abolished the climate change levy I do not know how they would make good the deficiency. They criticise us for not making progress on climate change, but I have yet to hear how they would do so. The levy is an extremely effective measure that is responsible for removing 28 tonnes of CO 2 emissions a year, so I am delighted that it is uprated in the Bill.
Record numbers of my constituents are in work, and their wages are higher than they were when we came to power. More of my constituents own their own homes than was the case in 1997. The Bill introduces green and social measures, as well as fiscal responsibility, fair taxation and business-friendly measures. My constituents will benefit from it, as they have done in previous years from previous Finance Bills.
7.56 pm
Peter Viggers (Gosport) (Con): I am grateful for the opportunity to contribute to our debate. It has gradually become apparent to me in the past hour or two that, amazingly, a Government with a large majority do not have Members who wish to speak up for the Bill in the House of Commons. I am aware of the parliamentary in-joke that the best way of keeping a secret is to make a speech on the subject in the Chamber between 7 and 9 pm, but it is surprising that the Government do not have Members who are anxious to support them. Personally, I am not surprised, because this is a nasty little Budget implemented by a huge, horrid Finance Bill of 475 pages. That does not include the explanatory notes, which comprise about 600 pages.
That represents a continuation of Government practice. They are good at spending taxpayers' money, but not so good at recognising the need to encourage and stimulate efforts to create wealth in our community. I am not surprised that the hon. Member for Wirral, West (Stephen Hesford) was concerned about productivity in the public sector. We can measure
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productivity in the private sector and we are concerned about it. Given all the money that is spent on the public sector—millions of pounds have gone in—and given that there is reorganisation after reorganisation, with hundreds of skilled workers being laid off and national health service waiting lists increasing, Government Members had to fight hard to say that public sector productivity is good. However, we can measure what goes in and we can see what comes out or what is achieved, so we know that that is not the case.
Overall, the world is doing very well, with dramatic growth, but our comparative position is less good. Globalisation is of massive benefit worldwide, and allows low-wage economies to manufacture, produce and distribute goods cheaply, so that they and their markets benefit. Transport improvements and low agricultural costs provide worldwide easy access to food markets, so that good, cheap food can be readily distributed. The availability of tourism leads to the sharing of benefits and access to capital markets means that London has benefited enormously as the leading market in many financial operations, including foreign exchange. It is therefore not surprising that the International Monetary Fund global growth forecast has just been upgraded from 4.3 per cent to 4.9 per cent. next year. This year, growth is 4.8 per cent., and last year it was 5.3 per cent. Internationally, the signs are extremely good.
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