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Matthew Taylor: I would go a little further. It is not just a matter of those forms of debt, but debt in the wider economy-family indebtedness right through the economy. When we look at the figures as a whole, they show Britain not as a relatively low-debt economy, which the raw Government data still do, but as one of the most indebted nations in the world. Such issues are fundamental to what has happened to the British economy and to our response. They will be pivotal to the success or otherwise of whoever is in government in a few weeks' time.
In addressing the issues, we need to consider two big questions. The first relates to timing. I am not a simple Keynesian but I believe nevertheless that around the world-it is not just a British issue-we are coping relatively well with a massive shock to the banking systems and the wider economies of the world. The reason why our unemployment has not risen as projected and why growth is resuming, albeit at low levels, is that there has been willingness to invest massively to counter the withdrawal of credit by the private sector by maintaining and bringing forward significant Government spending. That means that the timing of the withdrawal of that spending, and the degree to which we can expect the private sector to pick up the necessary investment that will keep the economy moving forward and growing, is absolutely fundamental to whoever is in government.
The knockabout in the papers, which will involve all sides, portrays a Conservative party looking for earlier cuts, while Labour and the Liberal Democrats say that the timing is not yet right, which I believe is fundamentally correct. Anybody tempted to say, when they are being canvassed on the doorstep, "I am not interested. You're all just the same. It makes no difference how I vote," should be under no illusion: what we have seen in the past 12 months, and the response to it, and what we shall see in the next 12 months and the response to that, will be absolutely critical to what happens next in the wider economy.
We may disagree about the timing. We may disagree-and we do-about when the decisions should be taken, but for people to throw away their vote in the election, or perhaps not vote at all believing that their vote makes no difference, would be the wrong call.
Madam Deputy Speaker (Sylvia Heal): Order. I have allowed the hon. Gentleman some latitude, because this is a Second Reading, but it is of the Finance Bill rather than the economy in general. Perhaps his remarks in future could bear some relation to the Bill before the House.
Matthew Taylor: Thank you, Madam Deputy Speaker.
Mr. Redwood: Will the hon. Gentleman give way?
Matthew Taylor: I will in a moment, but I want to make the point that the decisions we are debating-about which taxes to raise and about how many taxes there are-fundamentally underpin both the question about the timing of the withdrawal of Government spend, and my next question, which is the balance between how much is raised through tax and how much is delivered through cutting back spending. There is a third issue, which is the fairness of distribution.
Mr. Redwood: Will the hon. Gentleman clarify what the Liberal Democrats think about the wisdom of making cuts of £700 billion on the RBS balance sheet in a single year? The Government shrank the balance sheet by that amount-it is half of national income, judged by UK standards-so what impact will that have on tax revenue and activity levels?
Matthew Taylor: I will not go into the technicalities, but we need to be straight about the balance sheets and to tackle the underlying problems in the banking sector. We need to separate the investment and gambling side of what the banks do from the retail side, and we therefore need substantial further reform.
Stewart Hosie: The hon. Gentleman is right about timing and the balance of the way in which we tackle the deficit, but on the last day of the Budget debate, his colleague, the hon. Member for Twickenham (Dr. Cable), made the point that the Liberal Democrats were on the same page as Labour. The UK will have no fiscal stimulus this year. Real-terms cuts are beginning this year, and £57 billion will come out of the economy in the single year of 2013-14. Does the hon. Gentleman think that that balance is right?
Matthew Taylor: The evidence from the economy is that we are just about there. If we spend too much, we build up debt or tax problems for the future, but if we spend too little, the economy falls down. The small but real growth that we see suggests that, broadly speaking, the present balance might be right, but the question is whether the detail-that is what we are examining in the Bill-is correctly drawn, and I do not believe that that is the case.
Mr. Hands: Will the hon. Gentleman tell us what the savage cuts for which his party's leader has called might involve?
Matthew Taylor: The hon. Gentleman invites me-
Madam Deputy Speaker: Order. I remind all hon. Members of my earlier comments about the fact that we are discussing the Finance Bill.
Matthew Taylor: We have set out a series of tax changes that should be in the Bill. They are largely designed to move the burden that we are asking people to weather away from those on lower incomes. To pay for that, we would ask the more privileged on higher incomes to sacrifice some of their allowances, which I have never thought fair in any case. For example, we would deal with the distortion created by the tax reliefs on pensions that give more support to those on the highest incomes than people on the lowest, especially because we know that those on the lowest incomes are the people who struggle the most to have sufficient pensions.
The Conservatives propose a series of measures that are effectively tax cuts, but we do not believe that that is right either, because we need to prioritise maintaining economic growth and targeting those areas that require more support, especially education and giving those from the poorest backgrounds the opportunity to come out of the circumstances in which they were born.
Mr. David Gauke (South-West Hertfordshire) (Con): Will the hon. Gentleman give way?
Matthew Taylor: If I were to give way to the hon. Gentleman, I think that we would both be reminded that we are already straying a little far from the Bill.
Let me reiterate that the first issue relates to timing and that the second relates to distribution and the fairness of what we do. I do not believe that what the Government are doing in that regard is good, but what is offered by the Conservative party is worse, as it rewards those who have rather than those who have not. Our approach is designed to reward hard-working people on low incomes, and we believe that the Bill should relieve the tax burden on such people. In a way that other parties have not, we have set out specific cuts that need to take place to services and things that we do not believe are necessary, and I do not step back from that.
I started by saying that, clearly, this Finance Bill goes to the heart of the debates that will take place during the general election campaign. Clearly, whoever is next in government will make real decisions that will affect families all over the country. Twenty-three years ago, I came into Parliament on Budget day, after the by-election that followed the tragic death of my predecessor, David Penhaligon, who was the finance spokesman for the Liberal party, as it then was. I had been working with him on economic policy and I happened to be from Truro, so I was asked to stand in that by-election. I am leaving the House at the general election, because I do not believe it is a great place for the dad of a two-year-old and a three-year-old to be when they are at school in Cornwall and I am here. I think it is time for a change anyway, after having been here for 23 years. It may be a relief to all that I am leaving. It has been a privilege to represent the seat.
My first speech was made during the debate on that Budget and my first Committee work was on that Finance Bill. I saw that through, then a general election was called and I had to do it all again, so I became familiar with Finance Bills more quickly than anybody really deserves, particularly at the age of 24. Nobody should be under any illusion that what we had then in government was a fundamentally different approach to the tax system and spending from what we have today. Nobody should be under any illusion that what we had in response to recession in the 1980s and again in the 1990s was fundamentally different from what we have seen recently-more Keynesian, positive investment to keep down unemployment and no talk of unemployment being a price worth paying. However, in my view, the balance has not been got right on fairness-we see inequality increasing, not narrowing, in this country. The balance has not been got right in terms of setting out the real detail of what needs to be done to tackle the problems.
It behoves this place to be more honest with people, and it behoves the general election campaign to be more honest than it has been. I hope that the result of the leaders' debates and the challenges put down by the press and the public during the campaign will force out of everyone more detail than I dare say the manifestos will supply. That is one of the great advantages of democracy: the unexpected question from a member of the public often finds the detail that Parliament rarely does.
I hope that, for my children, the election will result in a Government who are committed to investment in education and the protection of the environment. Especially
because my three-year-old has been going through cancer treatment and I have seen the real impact of the investment in the NHS at Great Ormond Street hospital, I hope that it is true-all the leaders say so-that all three parties are genuinely committed to investment in a national health service that is free for all at the levels and in the ways that people need when they need its help. To those who think that there is a lot of money sloshing around, I say that some of the facilities and staff at Great Ormond Street are undoubtedly among the best in the world, but anyone who thinks that it is overfunded needs to spend a little time there.
I am delighted that the leaders of all three main parties have young children, because that keeps their feet on the ground. I am delighted-not about the reasons why-that both the Conservative and the Labour leaders understand the importance of the NHS, because they have had children who have had to be recipients of the best care in the world. Let us keep it like that.
6.43 pm
Mr. John Redwood (Wokingham) (Con): I remind the House that I have declared in the Register of Members' Financial Interests the fact that I advise an industrial and an investment company.
This is a disgraceful end to a dreadful Parliament. Tonight, we are invited to hasten through the large and contentious Digital Economy Bill, which we were able to debate only briefly yesterday, revealing the degree of disagreement about it. At the same time, we are given a very short time to debate Second Reading of the Finance Bill, and several other Bills have been rushed through today.
Of course, Ministers are right to say that any Government coming to the end of their term or seeking re-election in springtime may need to put a Finance Bill through Parliament quite quickly, but the convention has always been that if they need to do that, they put through a short, basic Bill, just to keep the revenues flowing in, and they make the big decisions in a later Budget, when there is proper time for a big Bill and proper scrutiny.
It really does beggar belief that we have been placed in this invidious position yet again. Most people in this country who are interested in politics have had 6 May in their diary as the general election date for many months. It appears that the only person in the country who had not got that clarity of view was the Prime Minister, but he got there in the end, and decided that the election would indeed be on the date that everyone else had put into their grids, plans and media schedules. So why on earth did the Government not hold the Budget at the beginning rather than the end of March? Why on earth, having held a late Budget, did the Government not get on with a more rapid preparation of the Finance Bill? In the past couple of weeks, when the House has not been that busy, we could have had a stab at debating it properly.
I do not object to having a Finance Bill that keeps the revenues coming in over the election; of course I understand the need for that, given the amount that the Government are spending and having to borrow. But I do object to being given 167 pages of Finance Bill on almost the last
day of serious parliamentary business, and to being told that there will be just a few hours in which to debate all its stages.
My hon. Friend the Member for Fareham (Mr. Hoban) and his Front-Bench colleagues wisely said to the Government that they must strike out three of the nasty little tax increases and new taxes that they wanted to place in the Bill, and I am delighted that the Government have agreed to do that; that is an improvement to the version of the Bill that we have in our hands for this debate. So recent was the agreement that we do not even have the right document to debate; the one that I have still does not have the necessary changes or amendments to the Government's line. The Government must have known that the Opposition would not let through the new taxes or tax changes, which would have had adverse effects on important groups in our country, yet we are still given a text that implies that those measures will be introduced.
Like my hon. Friend the Member for Fareham, I welcome lowered bingo duty, the exemption from stamp duty and the other few crumbs in the Bill that recognise that Britain is now a grossly overtaxed country, and that high taxes are now an impediment to enterprise, growth and success-things that all Members here surely want. However, we had to listen to the Minister wandering off the subject and saying, in his opening remarks, that the Government got every economic call right, and I find that very difficult to accept.
This is the Government who said that they had abolished boom and bust, but they put the economy through the biggest boom and bust that any of us have ever seen in our lifetimes-a boom and bust far bigger than anything inflicted on this country since the great recession of the 1930s. This is the Government whose calls included building a debt mountain in the public and private sectors with easy money and low interest rates up to 2007, and who then decided to trigger an avalanche of debt collapse and collapsing asset prices by withdrawing all the money and restricting the banks too late in the cycle. That threatened the banks themselves and brought the system almost to its knees. This was the boom-and-bust Government to beat all boom-and-bust Governments. This is the Government who did unparalleled damage to our economy, yet the Minister dares to come here this evening to make party political points about how they got everything right. He should be concentrating on this mean and miserable Finance Bill, which he wishes to rush through without proper scrutiny.
Why do we need proper scrutiny of a Finance Bill? We need it because many people's livelihoods and working futures depend on the tax legislation that this and other Governments put through Parliament. Every one of the clauses could create joblessness, difficulty for a business, or problems for someone trying to wrestle with the complexities of an economy scarcely out of recession and performing very lamely and badly.
The Bill ranges extremely widely. We are asked to agree to items on income tax, corporation tax, capital gains tax, stamp duty land lax, inheritance tax, alcohol and tobacco duties, vehicle excise duties, fuel duties, environmental taxes, gambling, new taxes, losses and capital allowances, charities, the remittance basis relating to taxation, and international tax matters-and I am not even halfway through the list that we are invited to consider.
It is an insult to the people we represent, to the House of Commons and to democracy that the Government say they wish to strengthen that we are given this very shortened time when most colleagues wish to be back in their constituencies, starting to dust down their campaign plans, or carry on with the campaigns that some have already started, for obvious reasons, particularly those who worry about how their electorate might respond to the way that the Government whom they support have been handling events.
It is difficult to allow all this to go through without proper scrutiny because it means that none of these clauses has been properly tested. We have not had the chance to consult experts outside on whether each of the clauses will do what the Government intend, and we have not been able to consult people who will experience the impact of those clauses to see whether what the Government intend is fair and reasonable, given the parlous state of the British economy as we meet here this evening.
Mr. Cash: Just to take one example, which I hope to come on to in a moment, does my right hon. Friend, or could anybody, including the Ministers, have the foggiest idea what the "appropriate pension increase" is when it is defined as (ACP x CAPARF) - (UOP x OAPARF)?
Mr. Redwood: Indeed, that has defeated me, and my hon. Friend is right to point out that that is exactly the kind of complexity that in a normal Committee stage we would ask a Minister to explain, and a good Minister would be able to explain it and a not-so-good Minister would know an official who could help to explain it, and we would also have had the chance to consult people who are experts in the field so that we could either pass over something quickly because the experts said it was perfectly reasonable, or they would say it would not work or would have unforeseen consequences. The inability to give it such attention will doubtless mean that the Government and their successor will come to regret the legislation, and will doubtless mean that some future House of Commons has to reopen these issues and put them right.
There is also a very complicated formula relating to capital allowances on page 81, similar to the pension formula that my hon. Friend read out. I will not detain the House by reading it out, because it is quite obvious that no one here today is equipped to discuss it sensibly. It means that these complicated matters will go through on the nod, not only with insufficient explanation but probably proposed by Ministers who have not teased them out and understood them fully, and certainly approved by a House of Commons that has not had the chance to do its normal job.
Voters elect to this House a variety of people with a range of experiences, talents and skills, and often individual Members have the experience needed to tease something out. But the complicated area of tax law, where the whole panoply of accumulated tax law is enormous, thanks to this Government's legislative energy, is one area where we all feel that we need some professional advice before we can do our job of scrutinising the Finance Bill.
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