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Mr. Cash: That is very kind of you, Madam Deputy Speaker. The point that I was making is that the amount of money that is going to be raised by the Finance Bill to pay for public services includes, to a great extent, money that is needed to remedy the problems in the health service that we are experiencing in Stafford hospital. Last night, I attended a meeting with about 300 people.
Madam Deputy Speaker: Order. Important as what happened at Stafford hospital is, I now need the hon. Gentleman’s comments to relate to the content of this Finance Bill.
Mr. Cash: I could not agree more, Madam Deputy Speaker. I would simply say that ensuring the sorts of things that need to be adequately covered to deal with the debt problem that I have identified, however specific it may be, will require a proper degree of taxation that is fair and reasonable, but which does not undermine the commercial requirements of the companies that will be called upon to generate the necessary income and pay for the public expenditure to which I have referred.
There are many aspects of the Finance Bill that it is important to consider. There are individual matters in the Bill that will take up a great deal of time. Because the Government have a built-in majority, those measures will be passed almost without exception, but given the scale of the debt that has to be covered they will contribute nothing to the well-being of this country. Therefore, this Government will continue to churn out legislation, to over-regulate and to place impositions on the enterprise society, which needs encouragement, not inhibition and obstruction.
Not only is the Government’s failure even to carry through their manifesto promise on tax yet another example of how the Prime Minister and the Government are continuously losing authority and of how everything that he touches turns to dust, but it shows the range of their broken promises, some of which are in the Bill, which are a continuing indictment of the way in which this Government have conducted themselves. I firmly believe that the Finance Bill will be the final nail in this Government’s coffin, that their hope of conning the British people into believing that, somehow or other, the vast debt that has been accumulated will be covered by the Bill or by any other measures is an illusion, and that they will stand condemned by the electorate when we get to the general election next year.
8.34 pm
Mr. Christopher Chope (Christchurch) (Con): It is a great pleasure to participate in this debate, Madam Deputy Speaker. It is great to see my hon. Friend the Member for Fareham (Mr. Hoban) on the Front Bench, where he can respond to the cogent points made in the debate. A few years ago, I was on the Front-Bench Treasury team and he was a distinguished member of the Finance Bill Committee. He may recall that we discussed whether it was sensible to have targeted attacks on certain types of drinks, or to deal with alcohol in general. In his important contributions to the deliberations of that Committee he emphasised that we should not legislate in favour of one alcoholic drink over another beverage. I hope that no amendment that he moves in Committee will undermine that important principle that we established all those years ago.
Those thoughts take me back to the time when my hon. Friend the Member for Fareham worked as a research assistant for me. He was still at the London School of Economics, and he worked extremely hard without remuneration. We were under the great, happy glow of the prime ministership of Baroness Thatcher. It was wonderful when my hon. Friend the Member for Beckenham (Mrs. Lait) referred to the great baroness earlier. On Monday we celebrated the fact that it was 30 years since Margaret Thatcher became Prime Minister—
Madam Deputy Speaker: Order. There seems to be an outbreak of reminiscing. Perhaps the hon. Gentleman can make his contribution, which I look forward to hearing, in the context of the Bill.
Mr. Chope: Exactly, Madam Deputy Speaker, you anticipate my every word. Thirty years ago, Margaret Thatcher took action to get our country back on its economic feet. This Finance Bill stems from a Budget that does not add up, and as a result it will be some 30 years from now before we are able to get back to where we should be, having got rid of this enormous overload of debt.
The figures are mind boggling. They show that the Government will borrow £175 billion this year, and £1.4 trillion—a figure with 12 noughts at the end—over the next four years. In last year’s Budget, public net debt was expected to be 39 per cent. of GDP this year, but it is now estimated at 59 per cent. and likely to increase to 79 per cent. by 2013-14.
Those debts are unaffordable. The question raised by this Finance Bill is whether the imbalance between expenditure and income should be met by further taxes on the people, or by reductions in Government expenditure. I have no doubt that the Government have got the balance in the Bill wrong. They are delaying the expenditure reductions and saving some of the taxation proposals for a rainy day, so that in the run-up to the general election they will not be so apparent as they would otherwise be.
I believe that this Finance Bill is so fundamental that we should have had a general election, so that it could be brought in by a new incoming Government. That is what has happened in Iceland: the Government there made a horlicks of the Icelandic economy—probably not as great as the horlicks that this Government have made of our economy—but at least they had the guts to go to the people and have a general election. That is exactly what should be happening here.
There is a big gap between income and expenditure. One of the more important documents that I have seen over recent days is an article in last Thursday’s Financial Times written by my right hon. Friend the Member for Haltemprice and Howden (David Davis). I am not going to refer to the whole article, but his conclusion is apposite to what we are discussing today. He said:
“The public are not fools and they are ready for politicians to think the unthinkable—70 per cent. see the need to bring public spending under control. They know that these issues will determine whether we slip unhappily into a miserable future in the economic second division, or find a route back to the vibrant and competitive economy we once were. They do not believe this government has the courage to tell them the truth. They are waiting for one that will.”
That sums up very succinctly the situation we are in at the moment. When people ask us what we would do to reduce public expenditure if we were in government, it is only fair that we should be able to give them answers. Earlier in that same article, my right hon. Friend did just that.
Ultimately, the way to reduce public expenditure is to create a climate in which the affordability of public expenditure can be questioned. In last week’s press, we saw a commentary from a former Labour party adviser suggesting that 20 per cent. cuts in public expenditure should not be unthinkable. If we could create a climate in which people thought along those lines, we really would be able to make an impact on public expenditure and thereby reduce the taxation burden.
Ireland is another country that has had a bit of a tough time in this economic downturn. There, they are reducing civil service pay by 10 per cent., and I think that Members of Parliament in the Irish Republic have also voluntarily taken a 10 per cent. reduction in pay. That might be saying the unsayable, or thinking the unthinkable, but that is exactly the kind of thing that is going on in the private sector at the moment. I have visited firms in my constituency where the workers are unable to work the hours that they used to, because they are on short-term working or losing their jobs altogether, and where the basic rates of pay and salaries are being reduced. Meanwhile, we have a burgeoning public sector and the Government are saying very little about how they are going to make the public sector affordable.
A lot of the proposals dealing with tax in the Finance Bill will create unaffordable tax burdens on the British people. My hon. Friend the Member for Beckenham referred to fuel duty and vehicle excise duty. Before the Budget I had hosts of letters—as I am sure many hon. Members did—saying that there had already been an increase in fuel duty in April and that the Government must surely recognise that that was an additional burden on the hard-pressed motoring public, for whom vehicle use was a necessity rather than a luxury. What did we get in return? This so-called listening Government have announced a further increase in fuel duty on 1 May, followed by a further one in September—or is it October?—another one in April, and so on. It is totally unacceptable that the Government should fleece the motorist in an attempt to find a solution to the imbalance that they have created for themselves in the economy between public expenditure and income. Increasing fuel duty does not correct that imbalance.
I hope that my right hon. and hon. Friends on the Front Bench will give us the opportunity to vote on some of these issues through amendments to the Bill in due course. The Government are proposing to burden the aviation industry a bit more, and to burden local taxpayers by increasing by a large margin the tax on waste products going into landfill. All those taxes have consequences—burdens on ordinary hard-working families.
Rob Marris: The hon. Gentleman clearly speaks with great passion about these issues. He wants measures in the Finance Bill to cut taxes, or at least not to increase them, and I think I am right in saying that he wishes to bring down markedly the very large Government deficit. He has also said that he is favour of cutting Government expenditure, so by how much would he cut it?
Mr. Chope: I have personally never been in charge of the Treasury, but I was for a time the leader of Wandsworth council, which was in a sense a little, local Government. When faced with a similar situation in about 1981, when there was a financial and economic crisis, our council found that resources coming in from the Government were going down and it saw affordability issues in respect of local taxation from households and businesses. In those days, of course, we had business rates that were a great burden on entrepreneurs. What happened then was that we as a council reduced our expenditure by some 20 per cent. in one year.
Last night, as it so happens, I attended a reception at Wandsworth council to celebrate its 31st year under Conservative control, and it still has the lowest council tax in the country. I am delighted to see in his place on the Front Bench my hon. Friend the Member for Hammersmith and Fulham (Mr. Hands), because Hammersmith and Fulham council is fast catching up with Wandsworth on that sort—
Madam Deputy Speaker: I think that we have heard quite enough reminiscing, and quite enough celebrations, for this evening, so perhaps the hon. Gentleman will concentrate his remarks on replying to the hon. Member for Wolverhampton, South-West (Rob Marris).
Mr. Chope: I am glad that you, Madam Deputy Speaker, are joining in the sense of euphoria accompanying our nostalgic reflections. The hon. Member for Wolverhampton, South-West (Rob Marris) asked me what I would do, and I have told him what I did when I was council leader, which shows what can be done. I think that where there is a will, we need to find a way. As I used to say, necessity is the mother of invention. It is about time the Government realised the necessity of reducing expenditure.
Mr. Jeremy Browne: I would like the hon. Gentleman to engage with a bit more focus on this particular point. A number of Conservative contributors to this debate have said that they believe that the Government are taxing too much and that they are very concerned about the size of the budget deficit. That seems to lead to the conclusion that there would have to be significant spending reductions. What those reductions would be, however, is rather hard to discern. Is the hon. Gentleman really saying that at the next general election the Conservatives will propose to cut public spending by 20 per cent.? If so, that is something in the region of £130 billion less annual public spending than the Government are proposing.
Mr. Chope: I cannot predict what reductions in public expenditure will be needed by the time we have an incoming Conservative Government, but one thing I do know is that the longer they are delayed, the more drastic the measures will have to be. That is why I think we should have had a general election now; then we would have had a Government with the courage to face up to the necessity to control public expenditure now rather than at some time in the future. The hon. Gentleman may think that I am ducking his question, but I am being quite open in saying that we have to start talking in public about reductions in public expenditure of that order if we are to be able to match our deeds to the climate of austerity that may be required.
Mr. David Winnick (Walsall, North) (Lab): I would like to congratulate the hon. Gentleman on his honesty. If we heard the same honesty from the Opposition Front-Bench team, that would be highly commendable. The hon. Gentleman is known for his views, and we know precisely what sort of cuts in public expenditure he wants a Tory Government to undertake. The cuts that he talks about are undoubtedly those that such a Tory Government would carry out.
Mr. Chope: I was not here for the earlier part of the debate, but I imagine that the hon. Gentleman asked his own Front-Bench team whether they would do what was necessary to balance the books. I do not know what answer he got. The issue at the moment, however, is that if we do not reduce public expenditure, the burden on hard-working families will be even greater. That is a point that I made earlier in the year, when I introduced a private Member’s Bill on employment opportunities. As I said then, the minimum wage is currently £5.73 per hour. That equates to an annual income of £11,918 for a 40-hour week, but results in a tax and national insurance bill for £1,887 a year, leaving take-home pay at only £4.82 an hour. In other words, £1 an hour has been taken away from what the Government have said is the minimum needed to live on. The issue here is affordability.
I shall not refer to all the tables in the Red Book, but one of them deals with allowances, which are, I believe, the subject of clauses 2 and 3 of the Bill. According to that table, in 1996-97—the last year of the Major Government—the personal allowance for an individual was £3,765. This year it will be £6,475. The Government are saying that they have been able to increase the proportion of their earnings people can keep for themselves by some 75 per cent., but the problem is that meanwhile they are bragging about having increased public expenditure by 100 per cent.—doubling it—in the same period, thereby denying people the opportunity to have more money in their pockets to spend as they wish.
The position is bad enough for people on relatively low incomes, given that the personal allowance now applies at some £5,400 less than what would be the minimum wage for someone working a 40-hour week. However, that problem is small compared with the problem further up the income scale, where people move from the basic to the higher tax rate. Back in 1996-97 the basic rate limit was £25,500. In the current year it will be £37,400. That is not an increase of 75 per cent., as with the personal allowance, but an increase of only about 40 per cent.
People who might be described as being on middle incomes are being savaged by increases in what are, in many cases, stealth taxes. The Government do not go up front and say, “The reason why you are paying so much more in tax is that we have refused to index your allowances in line with inflation”—let alone earnings. The burden on what might be described as the most productive part of the economy is becoming unbearable, unsustainable and unaffordable. We have reached a point at which people are saying, “Why bother to work?” because so much of their extra income will be taken in tax.
Of course, it will always be possible for those who are most mobile to move their businesses and activities overseas. It might be asked what we are to do about our captains of industry and key professionals and
entrepreneurs, but I shall not concentrate on that question. A much larger number of people will be adversely affected, as is strongly reflected in my constituency. I am thinking of those who might be described as ordinary hard-working families, who say that they cannot afford this Labour Government and want a general election now.
I hope that we shall have an opportunity to table amendments to clause 2, which deals with the income tax basic rate limit for 2009-10, and, obviously, to clause 3, which is related. As for clause 4, it appears to me that the Government think it would be reasonable in 2010-11 for someone earning £100,002 to pay back £1 of the last £2 in reduced personal allowance. In addition, they would have to pay 40p in the pound for each of those £2, so that would be another 80p gone. There would be nothing left for them. Some Labour Members may welcome that, but that is the politics of envy. This takes us back to the very high marginal tax rates that the Conservative Government of 1979 had to deal with so quickly when they first came into office. I hope that an incoming Conservative Government in the future will do exactly the same, but I respect the fact that a judgment must be made. Until we know when the election will be and we then see the books, we cannot make a decision on that.
It is great to be able to participate in an open-ended debate, as our speeches in this House are often restricted because of the Government’s inability to face up to the fact that democracy involves debate and the exchange of views across the Chamber. Discussion of the Finance Bill is the only occasion when Back Benchers are able to have such a debate, and I am pleased to be able to participate in it. I hope that my Front-Bench colleague, my hon. Friend the Member for Fareham, will not feel inhibited about the length of time that he can take to respond to the debate, and I also hope that the Minister will respond to all the points that have been made.
I expected my hon. Friend the Member for Stone (Mr. Cash) to refer to clause 56, which deals with MEPs’ pay, allowances and pensions under the European Parliament statute. The clause takes us back to other Government broken promises, such as the fact that they promised a referendum but did not give one, and that they promised not to increase the higher rate of tax but are doing just that. It also takes us back to the fact that the people who promote the Lisbon treaty want to move towards having a country called Europe. Fortunately, there is not a country called Europe at present, and as a result, although the salaries of MEPs will be paid by something called the European Community, the explanatory notes on clause 56 state that we do not have a double tax treaty with the European Community because it is not a country, so we have to legislate specifically for this. It is not a territory, and that is why clause 56 is in the Bill. I hope that in due course my hon. Friend the Member for Stone will have a chance to look into the constitutional implications of that.
Clause 91 sums up the Finance Bill and the attitude of the Government. It
“requires HM Revenue and Customs (HMRC) to prepare and maintain a Charter. The Charter will set out the standards of behaviour and values to which HMRC will aspire in dealing with taxpayers and others.”
In other words, there is no legal foundation, because there will be no remedy in law for any breaches of the charter. This is just an aspiration. It is a fraud upon the people to suggest that this is a charter. We know that when the Government consulted on the matter
“they suggested that there was no need for a Charter to be supported by legislation. But most respondents argued that a legal foundation would be the best way of ensuring that the Charter would be an effective and enduring document.”
So what have this Government done? Typically, they have introduced legislation that is absolutely meaningless because “aspire” is a term that cannot be challenged in court. I hope my Front-Bench colleagues will ensure that we have the opportunity to toughen up that clause during the progress of the Bill.
The Government have been full of aspirations on behalf of the people of this country, but they have failed those people big time. That is why I think that this is an appalling Bill, and I look forward to having the opportunity to vote against it this evening.
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