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Clause 67 ordered to stand part of the Bill.
Amendment proposed: No. 6, in page 218, line 34, leave out ‘6th April’ and insert ‘1st August’.— [Ed Balls.]
The Second Deputy Chairman of Ways and Means (Sir Michael Lord): With this it will be convenient to discuss Government amendments Nos. 7 to 9.
6.30 pm
Rob Marris: I welcome the transitional dates in the amendments in the name of the Chancellor of the Exchequer. The nationally known firm of independent financial advisers, Torquil Clark, is based in my constituency. Indeed, its office is about 100 m from my office and I know it quite well. In December I met people from that firm to discuss the announcement made in the pre-Budget report on the ending of tax relief on pension term assurance, and one of the things that they were concerned about was the suddenness of the transition. The amendments soften that somewhat, and they are welcome.
The hon. Member for Ludlow (Mr. Dunne) said that the transitional dates were not revealed until after this year’s Budget, and he referred to April, but in fact they were revealed on 21 March, in paragraphs 3 to 5 on page 47 of the Budget notes. I think that the Government are right to close the loophole, and that is why I have just voted in favour of clause 67, which will introduce schedule 18 if we agree to that schedule, as I expect we will. The amendments are helpful, as they set out the dates.
Government amendment No. 9 includes what I regard as a major drafting error: the sub-paragraph that it inserts starts with the word “But”, and it should not do so. I hope that on Report, the Government will remove the word. In addition, in the third line of the amendment, the verb “was” is used, but I think that the verb is conditional and should take the subjunctive form. It should therefore be “were”, not “was”, and I hope that the Government will look at that on Report. However, I welcome the amendments.
Ed Balls: I am grateful for my hon. Friend’s contribution, which was detailed, incisive and informed, as always. As usual, he draws from the detail to make a wider point about the future direction of the country. On clause 67, I am grateful for his support for the intention behind the legislation. As he said, we consulted the industry in detail immediately after the pre-Budget report to make sure that we got the transitional arrangements right. It was put to me in our previous debate that the Government were slow in coming up with transitional arrangements; it was said that we did not do so until April. In fact, we had already come up with transitional pipeline arrangements, but the Association of British Insurers told us in April that some policies risked not getting the proper treatment because insurers had taken longer to process claims than they and the ABI had previously expected. That is why the amendments prolong the transitional period. I will reflect on the language issue; I will have to take advice on my hon. Friend’s question about the word “But”—[Hon. Members: “Why?”] Because I do not know the answer.
Mr. John Redwood (Wokingham) (Con): Just to add to the Minister’s confusion, I suggest that he look at the numbering, too, as the amendments will result in sub-paragraph (5A) coming after a (5)(b) and conflicting with another (5)(a).
Ed Balls:
I will reflect on all those points. Obviously, it is important to ensure that we get our As before our Bs, and that we use “but” correctly in this important
legislation—which, as I said, will save £500 million over five years. However, Opposition Members have just voted against part of the legislation. I do not know where the shadow Chief Secretary to the Treasury or the shadow Chancellor were when that decision was made. We look forward to finding out where the shadow Chief Secretary will find the £500 million that she will need to pay for that decision. I fear that the right hon. Member for Wokingham (Mr. Redwood) will have to find further public spending cuts to make in his tax policy commission report, which we look forward to with avid interest, as he will not only have to fund his proposed tax cuts, but pay for a £500 million tax concession. We look forward to seeing those details, and I will reflect on the detail of the points raised. With that, I am happy to commend the amendments.
Amendments made: No. 7, in page 218, line 40, leave out ‘on or before 13th December 2006’ and insert ‘before the appropriate date’.
No. 8, in page 219, line 3, at end insert—
‘(4A) In sub-paragraph (4)(d) “the appropriate date” means—
(a) 13th April 2007 (in any case where, on the day of the making of the insurances in respect of which the policy of insurance was issued, the rights of the individual under the pension scheme included an actual or prospective entitlement to a pension), and
(b) 14th December 2006 (in any other case).’.
No. 9, in page 219, line 7, at end insert—
‘(5A) But where, on the day of the variation, the rights of the individual under the pension scheme included an actual or prospective entitlement to a pension, a relevant event does not occur by virtue of the variation if it was made in pursuance of a proposal made in writing (by whatever means) and received by or on behalf of the insurer before 13th April 2007.’.— [Ed Balls.]
Question proposed, That this schedule, as amended, be the Eighteenth schedule to the Bill.
Ed Balls: I want to pick up on a point made earlier about the use of the reserve powers to make regulations in the schedule. That is a complex subject. The Committee is in agreement—or at least, Labour Members are—on the intention behind the Bill but we want to make sure that future changes do not inadvertently lead to problems, and that is why we will not hesitate to use the secondary powers. The hon. Member for Buckingham (John Bercow) expressed concerns, but if there is any question of those secondary, negative resolution powers being used, I will make sure that I, or my successors, inform Opposition Members in writing of our intention to use the powers in plenty of time, so that we can ensure full consultation and consideration of the matter, both in the House and outside. With that, I hope that we can agree to schedule 18.
Rob Marris:
I bear in mind the fact that we are in Committee, so I wish to make some more drafting suggestions to my hon. Friend the Economic Secretary. First, with the greatest respect to the right hon. Member for Wokingham (Mr. Redwood), he is wrong about what is now sub-paragraph (5A) of the schedule, as amended. If he looks at line 22 on page 218 of the Bill, he will see a reference to “paragraph 5”, which is not bracketed. If he then looks at line 7 of page 219, where sub-paragraph (5A) has been inserted by
amendment No. 9, he will see that it follows sub-paragraph (5), and that is in brackets. He has miscounted, but he is right to be wary of the wording of the Bill. I suggest to my hon. Friend the Economic Secretary that the parliamentary drafting should not refer to “premiums” but to “premia”. “Premiums” occurs in lines 17, 20, 24, 28, 30, 31 and 39 of page 217 and in lines 2 and 20 of page 218.
My hon. Friend said that he would kindly look at the use of the word “But”, and that anathema and grammatical error also occurs in line 32 on page 217, in line 19 on page 218, and in line 20 on page 219. I urge the Treasury to have a word with its parliamentary draftspeople about the way in which the grammar of our language is used; after all, we are talking about statute.
Sir Nicholas Winterton (Macclesfield) (Con): Give him a job!
Ed Balls: The hon. Gentleman shouts that we should give my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) a job. I will reflect on the points raised. I do not want to get into the issue too deeply, but I am happy to consult Fowler’s “Dictionary of Modern English Usage” on the matters that have been mentioned. I do not know about the use of the words “premiums” and “premia”, but I know that Fowler allows people to go either way on the question of split infinitives, depending on their predisposition, and it may be that Fowler will tell us that some discretion is allowed on that point. However, I hesitate to dwell on those issues too long. Remembering last year’s Finance Bill, all I can say is that it was not our intention to make such mistakes. I await the Committee stage to find out the views of Mrs. Gauke on these matters.
Schedule 18, as amended, agreed to.
Mr. Christopher Chope (Christchurch) (Con): I beg to move amendment No. 3, in page 8, line 22, leave out ‘1st February’ and insert ‘21st March’.
The First Deputy Chairman of Ways and Means (Sylvia Heal): With this it will be convenient to discuss the following amendments:
No. 4, in page 8, line 23, leave out subsection (5).
No. 5, in page 8, line 27, leave out subsection (6).
Mr. Chope: Amendments Nos. 4 and 5 are consequential on amendment No. 3, because if the retrospective element is removed by amendment No. 3, the need for the remainder of the clause will be removed.
Today is the 10th anniversary of the winning back of the Christchurch constituency from the Liberal Democrats. I do not know whether it is a delightful irony or generosity of spirit that has resulted in the Liberal Democrat Front-Bench team supporting the amendment in my name today. It may indeed be both.
I applaud the fact that the Liberal Democrats are prepared to come into the Lobby to support those of us who are concerned about the principle of retrospective taxation.
I have raised this matter on a number of occasions in the House. The first time was on 31 January on a point of order, on the eve of the implementation of the increase in taxes. As a result of Mr. Speaker’s statement then, I applied for an Adjournment debate, which took place on 20 February. During the debate the Financial Secretary said that I would be able to return to the subject during the Budget debate and the Committee stage of the Finance Bill. He is right. I have taken up those opportunities, because we still do not seem to have persuaded the Government that they are doing the wrong thing by imposing retrospective taxation. That is why I hope the amendment will be supported this evening.
That has been the view of all my right hon. and hon. Friends, and we have been involved in sending standard letters to our constituents, drafted with the support of our Front-Bench team. Those standard letters included the following words:
“I do share your concerns about the implementation of the Chancellor’s APD increases, particularly the retrospective aspect. I know that many individuals and companies have been hit by the increased duty being levied on holidays that were booked before the Chancellor’s announcement.”—
holidays that were not only booked but paid for before the Chancellor’s announcement—
“It seems clear to me that Gordon Brown did not properly think through the consequences of this bungled raid on the travel industry. Indeed, a legal opinion received by the Conservatives suggests that the Chancellor’s actions may even be illegal as it has not been approved by Parliament.”
I am informed that in the judicial review that has been initiated, the Government have until the end of this week to submit their response to that claim, and that it is likely to be heard before the end of July. So it was not an idle threat that their illegal act would be challenged. This is being followed up, no doubt at considerable expense, by the travel companies, which are especially outraged by what has happened.
It is a long-standing convention of the House that Budget resolutions are not retrospective. That is why the amendment is designed to change the starting date for the air passenger duty increase from 1 February to 21 March—a seven-week deferral. The reason I chose 21 March is that that was the date of the Budget. There was a Budget resolution on the matter, but prior to that there had been no opportunity for any Member of the House to vote on the increase in taxation. We now have the opportunity to vote on it again.
6.45 pm
During the vote on Budget resolutions, six of my right hon. Friends and 14 of my hon. Friends voted against motion 13 because we were concerned about the retrospective nature of the matter and because we regarded it as a constitutional outrage. I know that some of my right hon. and hon. Friends were concerned that to vote against the whole motion was going too far. That is why the amendment focuses
much more narrowly on the issue of retrospection, and simply changes the date by seven weeks.
Mr. David Wilshire (Spelthorne) (Con): Can my hon. Friend confirm that the amendments before us leave behind the generality of the debate? This is no longer a debate about air passenger duty itself. It is not about whether this is a permanent tax. It is about a one-off arrangement. It is focused narrowly on the abomination of imposing a tax before the Government have the authority of Parliament to do so.
Mr. Chope: My hon. Friend is right. I know that he would have been in the Lobby with us on 27 March had he been in the country, but he was away on overseas parliamentary business at that time. The amendment has been drafted so that it deals with the one-off period of seven weeks. It reflects the concerns shared by my right hon. Friend the Leader of the Opposition and my hon. Friend the shadow Chancellor of the Exchequer.
It may be immodest to recall that shortly after 31 January, when I raised my original point of order about the retrospective nature of the measure, I was having a sandwich lunch with my right hon. Friend the Leader of the Opposition, who congratulated me on the points that I had made and said that he very much shared my concern about the retrospective nature of the air passenger duty increase set out in the pre-Budget report and confirmed in the Bill.
I know that some of my colleagues are still worried about the cost of delaying the increase by seven weeks. It is a large cost in layman’s terms—about £100 million. That is an indication of the extent of this stealth tax introduced by the Chancellor of the Exchequer—a yield of about £100 million in seven weeks. Some of my colleagues are sensitive about supporting an amendment that could be misrepresented by the Government, who might say that we have a black hole in our calculations, and ask how we will manage to balance the books when we get into government if we have voted against the retrospective nature of the air passenger duty increase.
Mr. Wilshire: Can my hon. Friend confirm that my memory is correct—that when the extra tax was put on, we were told that it was nothing to do with general taxation or a black hole if it were not introduced? It was all to do with special measures that would be introduced in the future, which our amendment would simply delay by seven weeks.
Mr. Chope: My hon. Friend is right. We are talking about a seven-week delay. Once the measure is introduced it will continue for ever and a day, unless or until it is changed. I am sure that on clause stand part, and perhaps on the next set of amendments, we will have a chance to consider whether air passenger duty can properly be regarded as a green tax.
Let us put the £100 million cost of my amendment into context. It represents less than 0.02 per cent. of total annual public expenditure. That is £2 in every £10,000. Most people believe that about 40 per cent. of the money raised in taxes is wasted by the Government. As an Opposition, we are in the business of saying that we could save 0.02 per cent. of public expenditure in a year without any problems at all. Another way of
looking at it would be to say that that £100 million is only 1 per cent. of the money being wasted on the new NHS computer system. We are not talking about an enormous black hole that the Government can use to intimidate us into not voting against retrospective taxation.
Julia Goldsworthy (Falmouth and Camborne) (LD): If somebody bought a ticket before 6 December, when the announcement was made, and was travelling after 21 March, the date that the amendment suggests, would they not still be caught by the retrospective changes to the tax system?
Mr. Chope: The hon. Lady is right; the amendment is limited. I considered tabling another amendment stating that clause 12 should not apply in respect of anybody who paid for and ordered their tickets before 6 December. She has referred to another mischief, which is one of the reasons a number of us are concerned about clause 12 in general. In a sense, that is a separate argument. It is a strand of the same retrospection issue, but speaking in strict parliamentary terms, I am talking about not increasing taxes on people in this country without allowing Parliament to vote on those increases.
Although the Government say that they have only one Budget a year, they are using the pre-Budget report as an opportunity to announce tax increases—in this case, a tax increase of £1 billion a year—so the Chancellor can come along on Budget day and say, “This is a neutral Budget.” That is exactly what he did this time, having conveniently forgotten that he had already announced a £1 billion tax increase in his pre-Budget report, for which he had not legislated or obtained parliamentary approval. The issue is important, and I am glad that there is concern among Conservative Front Benchers and in the wider House about retrospection.
I want briefly to examine the idea that the tax is somehow justifiable because it is “green” or “environmental”. I will not get into what I think is partly a semantic debate about whether this is a proper environmental tax—although in my view it is not. Even if it were an environmental tax, Conservative party policy, which has been announced by my hon. Friend the shadow Chancellor, is that we support green taxes, but only if they are offset by reductions in taxes elsewhere. The shadow Chancellor put it this way when he addressed the issue in an interview in “The World at One” on 1 February, following my point of order on the previous day:
“I think there is a case for green taxes and bringing in an aviation tax but they should be replacement taxes”.
That is not consistent with saying, “We can’t vote against any tax increases proposed by this Government.” We have said, as a matter of policy, that we will vote against tax increases, and particularly those that purport to be green tax increases, unless they are accompanied by offsetting reductions in tax.
The amendment is modest, and it does not go as far as some would wish, but it states the important principle, which we should stick to through thick and thin in this House, that we should not introduce retrospective taxation.
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