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Stewart Hosie (Dundee, East) (SNP): We have heard again about the Bill's length, which, at 475 pages, is no doubt to give the impression of action on tax and the economy. Many of its clauses, however, do nothing of the sort. Many clauses tinker round the edges of issues rather than addressing them fundamentally, others are simply damaging and unnecessary, and at least one is at odds with what the Chancellor said only a few short months ago and shows confusion in the heart of the Treasury.

I will deal first with clauses 6 and 7 on hydrocarbon oil duty. For the consumer, in the real world, fuel prices are rising inexorably. In parts of Scotland, a litre of diesel or unleaded has now crashed through the £1 barrier. Surely that was the time to introduce a sensible fuel price regulatory system, which would be sufficiently sensitive to moderate fuel prices at the pump at times of high world oil prices, rather than simply to increase oil duties as normal, notwithstanding that the rises will not come into effect until September.

Along with the expected and unfettered rise in fuel duty, car owners will be affected by the changes in clause 13 to vehicle excise duty. The Scottish National party broadly welcomes changes that make vehicles with heavy CO 2 emissions more expensive to run, particularly if they offer a real disincentive to unnecessary use of such
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vehicles. At the top end of the scale, however, there is almost no disincentive whatever. The other side of the argument is that the Treasury must surely recognise and understand the massive difference between a working four-wheel-drive vehicle taking animal feed up a snowy field in late spring to early lambs and a "Chelsea tractor" sitting outside a posh flat in Kensington. I hope that the Government will at some point accept an amendment that will force them at least to report on the Bill's impact on working vehicles, whether four-wheel drives on hill farms or Land Rovers or other four-wheel-drive vehicles used, for example, in mountain rescue.

Clause 26 removes the small companies relief. Corporation tax was charged at 0 per cent. up to £10,000. At £10,000, there is marginal relief at 19 400ths up to £50,000 at which the business rate of 19 per cent. applies. The small business rate applies up to £300,000, with marginal relief up to £1.5 million, calculated at 11 400ths. Clause 26 abolishes the starting rate. The policy is described on page 190 of the Red Book as "tackling tax motivated incorporation", and will cost £50 million this year but produce revenue for the Government of £390 million in 2007–08 and £530 million the year after. It might be a positive disincentive to incorporation—the reason why the 0 per cent. rate was introduced in the first place—but I suspect that it will also feel like a disincentive to start and incorporate any business taken alongside the additional burdens of the higher business rate in Scotland and, for many small businesses, rocketing fuel costs.

Clause 30, however, on first-year allowances for small enterprises, appears to assist and provide an incentive for small companies. It was first announced in the pre-Budget report in 2005, and increases the rate from 40 per cent. to 50 per cent. for one year from April 2006. In December, the Chancellor estimated that 4.2 million businesses would benefit. However, the Red Book shows the estimated cost to be nothing for this year and £60 million for 2007–08, with a yield of £15 million in 2008–9. For 2007–08, if there is a cost of £60 million, and assistance to the value of £60 million, the average benefit to the 4.2 million businesses would be £14.28. I wonder what might be the cost of a small business's accountant achieving additional relief of some £14.

Clause 61 has been mentioned by many Members, and is described in the lobby briefing as repealing

That brief sentence masks the report on the BBC on 26 March suggesting that some 2,000 people could lose their jobs after the Government pulled the plug on the scheme. Perhaps Labour thinks that 2,000 lost jobs are a price worth paying for the £300 million that the Chancellor will claw back over the next three years.

Talking of clawing back money, North sea oil has been a honeypot for the Government. Clause 149, entitled "Attribution of blended crude oil," will take another £200 million out of the North sea over the next three years. That is an extraordinary move, following the £2 billion tax take announced in the pre-Budget report—extraordinary because on 30 March, a week after the Budget, the Paymaster General told me in a
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written answer that in the pre-Budget report of 2005 the Chancellor had announced a package of measures for the North sea and that

Dawn Primarolo: Will the hon. Gentleman give way?

Stewart Hosie: I will happily give way.

Dawn Primarolo: I think that the hon. Gentleman is confusing two issues. I should be happy to write to him in more detail, but the commitment to which he refers relates to the level of taxation. Clause 149 is a protection measure, relating to money that should be collected but will not be unless we prevent the operation of a particular mechanism. The answer that I gave the hon. Gentleman holds true. I have been absolutely direct with the House and with him. This is a protection measure of the kind that we constantly introduce in all parts of the tax system to ensure that we collect money for which the House has legislated.

Stewart Hosie: I hear what the Paymaster General says. I am certain that she is saying it with a straight face, and believes what she is saying. However, as I said earlier, she told me that

I am sorry, but I believe that changes in the blended oil regime for North sea oil made a week before I received that answer represent a change in the oil taxation regime.

Dawn Primarolo: I realise that the hon. Gentleman may have misunderstood what was said to him, but I object in the strongest possible terms to the implication that the answer that he received from me was not correct. It was. It is not my fault that the hon. Gentleman does not understand all the details in the clause, and I will definitely write to him at length explaining them.

Stewart Hosie: I understand why the Paymaster General is being so defensive. I may have inferred something slightly different from what she meant. According to the standard English that I was taught at school, however, a change in the blended oil regime means a change in North sea taxation. I suspect that we shall have to agree to differ.

This Finance Bill follows the Chancellor's 10th Budget, and like others it has failed to rise to the challenges facing not just the United Kingdom economy in general but the Scottish economy specifically. I say that not least because we have experienced three full quarters of falling manufacturing growth. That recession in Scottish manufacturing—the loss of 100,000 Scottish manufacturing jobs—and the loss of 1 million manufacturing jobs in the UK have not been addressed to any significant degree in the Budget, or in the Bill. There has not been a single measure designed to give Scotland a much-needed competitive edge, and indeed the tax proposals will leave thousands of small Scottish businesses worse off.
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In the small print of the Bill are an additional £33 million in taxes on the profits of Scotland's small and medium-sized businesses, which leave them lagging further behind competitors elsewhere in Europe. The modest changes in research and development provision, although welcome, do nothing to reverse a fundamental imbalance. While the UK spends some 1.1 per cent. of gross domestic product on R and D, the figure in Scotland is half that. Given that our major competitors spend more than 2.5 per cent., our position is terrible.

The Bill was designed to bail out the Chancellor once again. It contains new laws to put into effect the £2 billion raid on the North sea that was announced in the pre-Budget report and an additional £200 million through the change in the blended oil regime, and it will leave future jobs, new exploration and new development in the North sea sector hanging in the balance.

Let me make a final point about fuel. The high cost of fuel that is being paid by our businesses is forcing companies in my constituency to add surcharges of 25, 26 and 27 per cent. on goods as they leave the factory gate. People in my constituency on low and modest wages are paying gas and electricity increases many times the official rate of inflation. In short, when it comes to fuel, the Chancellor has grabbed more money from the North sea. The Government have made some attempt to deal with climate change through the change in vehicle excise duty, but they are doing absolutely nothing to defend business by moderating the cost of energy, and doing nothing to assist those on low and modest wages through the—

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