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Mr. William Cash (Stone) (Con):
We have had an object lesson today in the problems relating to the necessity for radical parliamentary reform. We all know that during the American revolution, it was a case of "No taxation without representation". Tonight, with no one at all on the Labour Back Benches, we have a situation of plenty of taxation but no representation, and I am extremely worried about the taxation proposals before us, for reasons that I have already identified. I am not being critical of those on my own Front Bench when I say that I am deeply worried that this Finance Bill is somewhat unprecedented-to my mind, at any rate, but I have been here for 26 years. To my knowledge, we have never been through this procedure before.
There have been proposals that have gone through rather rapidly in the wash-up stages, but I have never before witnessed what we have seen today.
The most important thing is to tell the British people the truth about the economy in the context of the public expenditure commitments, the cuts that will be required and the taxation that will be needed, which will supposedly be derived from the provisions in the Bill and other legislative measures, the effect of which the Government claim will balance off the deficit and reduce the debt.
My hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) and my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out that the most important thing is to regenerate the economy, and that in order to do so we must take an enterprise approach to manufacturing as well as to the service industries and to small businesses, to give them a chance to get up off their knees and to get the economy going again. I cannot see anything in the Bill-apart from one or two measures that our Front Benchers have identified-that would assist the small business community.
The national insurance issue is not even in the Bill, yet we know that it will cause immense damage to small and medium-sized businesses and to the people of this country at large, as hundreds of commentators have already said. I understand why it is not in the Bill, but its omission will have an impact on the Bill because there will be a greater requirement to raise more revenue as a result of what the Bill does contain. The real problem is that not a single penny-not one farthing-of public expenditure to pay for public services comes from anything other than private enterprise.
We all understand that public services are important and essential in their own way-no one on the Opposition side is advocating the abolition of public services; we are just asking for a proper and efficient public service sector-and the pensions that go with the sector are also important. As the CBI has commented over the last few days, public sector pensions are out of control.
The right hon. Member for Wokingham, my hon. Friend the Member for Braintree (Mr. Newmark) and myself call ourselves-or at least I call us-the Three Musketeers, as we have hammered away on the subject of the net debt for the best part of nearly two years. The reality is that the true debt this country carries has a huge significance for the amount of money that needs to be raised by taxation to fill the gap-and the amount of tax raised is woefully inadequate. According to the Office for National Statistics, it is in the order of £3 trillion. I received a letter from Sir Michael Stoner the other day, confirming my figures, as I had raised with him certain matters relating to this issue, and the House of Commons Library also confirmed them.
The figures vary between about £2.65 trillion and £3.21 trillion, but that is the minimum, as it gets worse if we add in the hidden costs of public sector pensions, Network Rail, private finance initiatives and nuclear decommissioning, on which an announcement has recently been made-and it is pretty horrendous. These amounts can be aggregated with the amount of debt to which the Government admit. Then there is the business of whether we include or exclude the financial sector interventions. If we include them, the situation becomes dramatically worse.
Mr. Redwood: Does my hon. Friend, like me, wonder who the Government think they are fooling? The markets are already making this Government pay a lot more to borrow than the German Government do, because they know that this Government have borrowed an awful lot more than the German Government have.
Mr. Cash: Indeed, that is completely true. I do not claim to be an expert economist by any means, but I am certainly trying to be analytical about the figures that I can see. I sometimes wonder whether the economists are quite as good as they are cracked up to be, because they quite frequently seem to get these things wrong. I acknowledge my right hon. Friend's point in relation to the veracity that can be attributed to the figures that we are given. As we saw only yesterday, in Greece there is a massive shortfall-
Madam Deputy Speaker: Order. The hon. Member must now focus his remarks on the Finance Bill that is currently before the House and on the measures contained in that Bill.
Mr. Cash: I entirely understand and accept the point you make, Madam Deputy Speaker. I also have to say that I am talking very realistically and in a practical way about the fact that the Finance Bill simply does not fill the gap created by the massive debt that has been accumulated. If the truth is not being told about the true level of the debt, it affects the Finance Bill and every provision in it. I regard this Second Reading as a kind of massive omnibus stand part discussion. This is the only opportunity to debate the issue, if I may say so, given that every single clause coming to its Committee stage will not be subjected to the clause stand part debates that normally take place with a Finance Bill. In addition, no amendments have been tabled-or, at least, none has been selected-from anyone other than the Government. The Committee stage will not take long, for the simple reason that there is no real opportunity to look at the context in which this massive deficit and massive gap in public expenditure can be filled.
There is another real problem here. If we look for a second at the level of unemployment that needs to be paid for, we see that the figures we have been given are themselves unrealistic.
I believe that, according to the economic indicators in a House of Commons research paper, the International Labour Organisation has said that 2.6 million people are unemployed, but there are about 1,600,000 job claimants. Given the effective unemployment level that results if those figures are added together, and given all the revenue that must be raised, the Bill will have to fund the payment of 4.1 million people.
As I said earlier, not one penny of public expenditure will come from any source other than private enterprise unless we simply go to the printing presses and print the money off. Not a single penny to pay for the public services that people need-and we advocate that, but on a rational basis-will come from any other source. If a Government do not get growth and enterprise right, which means putting the cart and the horse in the right order, they will not be able to provide for public expenditure. That is the one thing that this Government-in fact, all Labour Governments-totally fail to understand.
Mr. Redwood: You run out of money.
Mr. Cash: Indeed: you just run out of money. I strongly believe, given the inadequacy of this Bill, that the Government are not merely gazing into a black hole but leading us into it. We are beyond looking over the precipice, we are actually in the black hole, and never in the history of British financial affairs and taxation has a situation been so dire.
Sir Nicholas Winterton: My hon. Friend could describe the situation even more clearly. The Government believe in continuing to fund the public sector-that is their policy-but are destroying the private manufacturing commercial sector that could fill in that black hole by funding public services.
Mr. Cash: I pay tribute to my hon. Friend, who is leaving the House at the election, for continually and rightly emphasising that point. In the last two years the extent of the public sector has increased by 200,000, and that is another burden that the Bill will not be able to fund. There is a massive problem, and the Government are making it worse.
Other Members have mentioned fuel costs. Farmers in my constituency have told me that the costs of fuel to them and to the rural community are huge, and I entirely agree with them. Hauliers, and others involved in road transport, are having to pay much more because of increases in fuel prices, as are ordinary road users. There are so many increasing costs.
As the Bill makes clear, there is also a problem of over-regulation. I have already quoted from page 69 of the Bill and the proposed new section 213J to the Finance Act 2004, which deals with the appropriate pension increase, so I shall not do so again. I will, however, refer to the provision relating to what is described as
"The appropriate lump sum increase",
because I think it would be unfair not to make the House aware of it.
I am sure that these provisions will not be understood by anyone except a very small elite-and, of course, the expensive accountants and lawyers who will be wheeled in to work it all out at enormous expense. The effect of over-regulation on those who are afflicted by it is in itself a disincentive that lessens our ability to run an efficient economy. People can spend all their time dealing with this. That applies to farmers dealing with the over-regulation of their affairs and with their tax problems, and to other small businesses. How are pensioners supposed to cope with this kind of thing, even if they are relatively well off? It is absurd to have legislation of this complexity.
The definition of the "appropriate lump sum increase" is
"(ACLS × CALSARF) - (UOLS × OALSARF)".
That is just the defined benefits arrangement in respect of the so-called "appropriate lump sum increase". That has to be weighed up with the "appropriate pension increase". which I cited earlier in an intervention. My right hon. Friend the Member for Wokingham mentioned allowances, about which new section 212J(1) says
"C or P"-
"has a relevant excess of allowances in relation to the relevant trade if-
RTWDV > BSV"
"Section 212K defines RTWDV and section 212L defines BSV."
Honestly, this is absolutely ridiculous. This is the kind of legislation that we are being asked to passed. We are only on the Bill's Second Reading; we are not going to be able to examine things in Committee; and this is pure, unadulterated absurdity.
Mr. Redwood: I wonder whether my hon. Friend will be able to catch the eye of the Exchequer Secretary, because I am sure that she would love to intervene to explain this.
Mr. Cash: I do not want to embarrass the Exchequer Secretary. I am sure that she does not have the foggiest idea what I am talking about. I find that slightly alarming, given that we are about to have a general election and all the birds have flown-there is not a single person standing or sitting behind her. They have all flown back to their constituencies and landed the British people with this nonsense, which we are debating.
The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): I was going to explain to the hon. Gentleman in my wind-up that these are formulae to value the defined benefit, and I assure him that they are understood by the pensions industry-the people who will have to use them. The industry has been consulted on them extensively.
Mr. Cash: Part of the trouble is that the ordinary man in the street-the kind of person whom we meet during a constituency campaign when we wander around-is not from the pensions industry; I am talking about real people, who would not understand this any more than I suspect would any of the hon. Members who ought to be here in serried ranks behind the Exchequer Secretary but who have all flown off to their constituencies because they find it so embarrassing to listen to this kind of attack.
Mr. Hoban: The Exchequer Secretary said that these formulae related to pensions, but of course the formula that my hon. Friend read out related to capital allowances.
Mr. Cash: It did indeed, and I am so glad that my hon. Friend made that point. I was correctly referring to the formulae as relating to allowances, because the matter arose out of a point made by my right hon. Friend the Member for Wokingham, who always understands these things or at any rate does his best to do so.
Sir Nicholas Winterton: My hon. Friend rather quickly passed over the problems of rural communities and farming. I believe that he was referring, to an extent, to the increase in hydrocarbon taxes. Is he aware that in many rural communities there is little or no public transport and so people, in many cases those on low wages, including pensioners, cannot lead a reasonable standard of life if they do not use a car? Is he also aware that the cost of such usage is being dramatically increased through taxation year on year? Does he agree that this is a very serious matter?
Mr. Cash: I certainly agree with that. I mentioned the unhelpful and damaging increase in road tax and fuel tax for rural people in my constituency, as well as the fact that the number of buses is being cut back-I have just presented a petition to Parliament on that very subject-for all the reasons that my hon. Friend, who perhaps ought to be right honourable, has just mentioned.
In the last hour, I have just received an answer from the Exchequer Secretary, who is sitting in front of us. I received a holding answer on 16 March and the question was answered on 7 April, so I have had to wait a bit of time for it.
Sir Patrick Cormack (South Staffordshire) (Con): Was it worth it?
Mr. Cash: My hon. Friend asks whether it was worth it, and we shall soon find out. I want to ask the Minister to give me a proper answer to the question that I put. My question was:
"To ask Mr. Chancellor of the Exchequer, what changes in levels of (a) taxation"-
"and (b) public expenditure will be required to finance the requirement to repay loans made from the public purse to banks, as referred to in the Financial Services Authority's publication Financial Risk Outlook of 10 March 2010."
It will be noted that I tabled my question soon after the FSA produced its financial risk outlook. I had to wait the best part of a month to get the answer, but the fact is that the FSA report said that it was inevitable that a significant proportion of the money that would be required to finance the repayment of loans was going to have to come from the taxpayer. The figures are horrendous. That is yet another element of the gap that exists between the Government's Finance Bill and the ability to pay for the mistakes and problems that have been accumulating.
What answer did I get from the Exchequer Secretary? She might or might not know what the answer is-she might not have even seen it, I do not know-
Sarah McCarthy-Fry: Of course I have seen it.
Mr. Cash: She says that of course she has seen it, but in that case she should have improved it. The answer that I have just received is as bland as this:
"The Financial Risk Outlook discusses liquidity and funding support provided to eligible institutions. Responsibility for repayment of such support lies with the eligible institution itself."
That is not what the financial risk outlook says. It is appalling that I should get an answer at this late hour, just before the debate on the Finance Bill. It was only by chance that I happened to be passing the letter board as I went out of this debate and I received an answer on the subject of the monumental amount of taxpayer burden. It arises out of the monumental and wanton increase in debt that itself does not even touch on the amount of net debt, which gets up to as much as £3.1 trillion if the Office for National Statistics is to be believed-I repeat that "if". I have much more faith in the ONS than I used to have, and I hope that it and the new UK Statistics Authority will develop into something akin to the Public Accounts Committee and the National Audit Office and establish a reputation, as has been suggested by Sir Michael Scholar's strictures on the
Government in the past few days, which I must say I applaud, However, I discovered something from the ONS the other day that deeply concerns me and I refer, just this once, to a subject with which some people might associate me: the ONS statistical base is agreed by EUROSTAT and that is a warning to us all. It was EUROSTAT's statistical assumptions that led to the ability of certain accountants, lawyers and bankers to advise the Greeks to enter into arrangements that have led to the crisis there. In other words, the EUROSTAT arrangements look as though they did not enable true figures to be provided, which enabled the Greeks to get away with it. That is where this Government are heading.
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