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7.39 pm
Mr. Charles Walker (Broxbourne) (Con): Thank you for calling me to speak in this debate, Mr. Deputy Speaker. I am surrounded by four excellent gentlemen: my right hon. Friend the Member for Wokingham (Mr. Redwood), two knights of the shires-my hon. Friends the Members for South Staffordshire (Sir Patrick Cormack) and for Macclesfield (Sir Nicholas Winterton)-and my hon. Friend the Member for Stone (Mr. Cash). I am sure that if he pulls his finger out in the next few years, he, too, will be a knight of the shire or even a right hon. Gentleman.
This has been an excellent debate. I am not taken to acts of naked partisanship in the run-up to a general election, and I shall resist that temptation for at least the next 30 seconds. I have read the Finance Bill from cover to cover and it is very grim reading. It is a very concerning document. Its 167 pages are a metaphor for this Government's failing over the past 13 years. This is what we are left with: impenetrable clauses talking about figures and numbers that nobody could possibly understand unless they were working in a bank inventing impossible figures and numbers that would eventually bankrupt this country. It is not a document for growth: it is a document for further contraction in our economy.
We, in this place, have every right to be hugely concerned about this document, but the issue is not whether we are concerned: it is whether our constituents are concerned, and they should be. In this document, we have yet more hidden taxes-hidden taxes on middle-class families, hidden taxes on working-class families, frozen allowances and higher duties. Those will all damage people's quality of life. This is going to be a very short speech, as we prepare for the general election. The only people who are doing well out of this document are the people who publish "Tolley's Tax Guide", which has trebled in size over the past 13 years. If we have much more of this, it will treble again in just the weeks ahead.
Mr. Cash: Earlier in the debate, when my hon. Friend was not here, I ventured to suggest that we should consider a flat-rate tax. This legislation is so complicated and absurd that we have to find a way of reducing it. The rest of it is over-complicated for the people out there in our constituencies, and it is simply a milch cow for the accountancy and legal professions.
Mr. Walker: I agree. It is absolutely impossible, even for well-educated people who think they might have an understanding of these things, to penetrate the complexity of this document. As we speak, accountants and advisers around the country are popping champagne corks because they are the only ones who will benefit from this document.
I shall not try your patience, Mr. Deputy Speaker, because you will want me to talk about specific clauses, but as my right hon. Friend the Member for Wokingham has pointed out, there are so many clauses that it is impossible to do justice to even one of them, let alone all of them, in this truncated debate. I shall conclude by saying that we have had the boom and that this document represents the bust. It is a depressing and frightening 167 pages, and I am sure that the bulk of it will be rejected by my constituents, because it certainly is not an offer that they will feel able to sign up to.
Sir Nicholas Winterton: I am happy to put this question to my hon. Friend, but if he is unable to answer it, I intend to try to catch your eye, Mr. Deputy Speaker, to ask a single question of those on the Treasury Bench. Is my hon. Friend worried that the Budget does very little to reduce the Budget deficit? Unless we reduce our indebtedness in this country, the money markets are going to lose confidence in our ability to take sensible steps to do that. If they lose that confidence, we will lose our triple A credit status, which will immediately lead to increased taxation, increased interest rates and, I believe, increased unemployment. Is my hon. Friend, who is a young and virile Member of this House and who will go a long way in his parliamentary career, able to answer that question, or will I have to put it to those on the Treasury Bench in a speech, short though it will be?
Mr. Walker: This must not turn into a love-in, as we have serious matters before us, but I shall miss my hon. Friend greatly in the next Parliament.
The tragedy of the past 13 years is that all our constituents are left having to carry an enormous of burden of debt. The Government have no money: they spend our money on our behalf, and they borrow money on our behalf. Our hard-working constituents are left with the millstone of this Government's debt around their necks. That is a disgraceful legacy, and one that the Government should be ashamed of.
7.45 pm
Sir Nicholas Winterton (Macclesfield) (Con): I shall be brief, but I want to put a question to the two Ministers on the Treasury Bench.
Mr. Redwood: Where are the others?
Sir Nicholas Winterton: I am amazed that there is not a single Labour Back Bencher in the Chamber for the Second Reading of a very important Finance Bill.
This country is burdened with the greatest debt in its history. I am a long-serving Member of this House, and I come from a business background. In my view, the budget deficit is unsustainable. The Budget contains very few measures that will reduce it in a meaningful way that will regain the confidence of the financial markets.
If the money and bond markets lose confidence in this country and downgrade our triple A credit status, what will the Government do? Would that not mean that they would have to pay a great deal more for the money that they are continuing to borrow, and would that not lead immediately to emergency tax rises, rising inflation and the inevitable increase in unemployment that would cost a great deal of money?
This is a very truncated Second Reading debate, and it is most unsatisfactory to deal with a Finance Bill in only three hours. I am about to leave the House, but I am deeply concerned about the future of the country, as are most of my constituents in Macclesfield. My area has a lot of manufacturing industry, including high-technology centres and pharmaceutical development and production. I am concerned for the future of our economic growth and our economy.
Mr. Cash: I am extremely grateful to my hon. Friend for giving way. My constituency is close to his, and I share his concern. He has led on the question of manufacturing for a great many years, through his all-party group and in other ways. Manufacturing in Staffordshire has fallen by 18 per cent. in the last three years. That is what he is talking about, and it is what worries us so much.
Sir Nicholas Winterton: I do not think that I need respond to my hon. Friend, who has made the point very clearly. I agree with everything that he said.
I believe that we are owed a response, because so many serious economists, as well as commentators on the economy of this country and on Government policy, are deeply concerned. We do not want to worsen the recession that we have had, but neither do we want to fall back into it. We must take serious steps to reduce the debt that this country has incurred.
We cannot go on living on other people's money. We have got to produce money to reduce our debt, and the budget deficit that, sadly, has been built up by this Labour Government. Through you, Mr. Deputy Speaker, I make a plea for those on the Treasury Bench to make a proper and constructive response to what I believe is a very serious question. As my hon. Friend the Member for Stone (Mr. Cash) said, I came into this House championing manufacturing industry. I go out doing the same because, as I have said before, it is the only source of sustainable non-inflationary economic growth. It can drag this country out of the dire problems that it faces at this time. Please let the people of this country-and me, as I have raised the question-have a sensible and proper response in the wind-up speech.
7.49 pm
Mr. David Gauke (South-West Hertfordshire) (Con): It is a great pleasure to wind up this relatively brief Second Reading debate on behalf of the Opposition. I thank Members for their contributions.
The hon. Member for Truro and St. Austell (Matthew Taylor) spoke for the Liberal Democrats, standing in for his colleagues. He made the fair point that only limited time was available for the debate, although if more time had been allowed I do not know whether we would have heard more contributions from his parliamentary colleagues; perhaps not. It was his final speech in the House, and he must be one of the youngest Members to retire after 23 years. On behalf of the whole House, I wish him, and in particular his eldest son, well in the future.
I thank my right hon. Friend the Member for Wokingham (Mr. Redwood) for an excellent speech. He highlighted the need for professional advice and input for our deliberations on these highly technical matters.
There have been only two working days since the publication of the Bill, so we have not had the opportunity to receive professional input as we would normally do.
The hon. Member for Dundee, East (Stewart Hosie) raised the issue of fuel duty, and made a persuasive case for our fair fuel stabiliser policy, on which we are consulting. My hon. Friend the Member for Stone (Mr. Cash) argued that nothing in the Bill would assist small businesses, and that the real debt figure is considerably higher than the Government would admit to-a point that was also made by my right hon. Friend the Member for Wokingham, and has been made in the past by my hon. Friend the Member for Braintree (Mr. Newmark). I think that my hon. Friend the Member for Stone described them as the Three Musketeers.
No Second Reading debate on any subject is complete without a contribution from my hon. Friend the Member for Broxbourne (Mr. Walker)-or perhaps I should call him my hon. and virile Friend, to use the terminology of our hon. Friend the Member for Macclesfield (Sir Nicholas Winterton). My hon. Friend the Member for Broxbourne persuasively made the case that it was not possible to scrutinise the Bill properly in the time available.
Finally, I thank my hon. Friend the Member for Macclesfield. I know there is a convention in the House that Members are not supposed to make speeches or interventions before they make their maiden speech. I am grateful that no such convention applies to Members after they have made their valedictory speech. I had the great pleasure of winding up after my hon. Friend's valedictory speech during the Budget debate, and it was an equally great pleasure to hear him address the Chamber again this evening.
This is, we hope, this Government's final Finance Bill. Over the past 13 years our taxation system has developed a reputation for complexity and unpredictability. It has acquired a reputation for stealth taxes and the use of tax policy as a means to lay political traps for opponents rather than as the fairest and most efficient way of raising revenue. The Bill contains elements of all those attributes.
The Bill could have taken the minimalist approach and focused only on matters that needed to be addressed urgently. The Chartered Institute of Taxation made that point in a hurried but none the less professional submission, saying that
"the challenge to the Government is, quite simply, why any clauses more than those necessary to provide for the continuation of income tax and setting of duty rates should be passed."
It makes the point that a number of technical or practical problems might well be detected, given the limited time available to consider the Bill.
My hon. Friend the Member for Fareham (Mr. Hoban) highlighted several aspects of the Bill about which there could be difficulty. For example, clause 24 and its related schedule, which relate to pensions, are particularly complex. Clauses 31 to 33, which relate to charities, also contain numerous complexities, and the Chartered Institute of Taxation states:
"as far as we are aware the detail of these proposals has not been consulted on."
My hon. Friend also talked about clause 36, which relates to penalties in respect of offshore income, and might affect the nationals of countries with which we do not have tax information exchange agreements. He
also highlighted the position of the Gurkhas who have settled here, and raised the prospect of Joanna Lumley turning her attentions to Treasury Ministers; they may or may not find that an appealing thought.
Clause 56 deals with stamp duty land tax and partnerships, and the Chartered Institute of Taxation says:
"the clause as drafted will catch many transactions carried out for commercial reasons."
Clause 57 addresses the disclosure of tax avoidance schemes, and the institute says:
"we still have concerns about the breadth of the legislation."
It makes the point that given that implementation will not take place until autumn,
"it seems bizarre to rush it through in the first Finance Act".
The institute also raised concerns about clause 58, but we have succeeded in arguing that that should be removed from the Bill.
In many ways, the Bill introduces greater complexity, yet it is clearly not receiving the scrutiny that such measures normally receive. The situation helpfully supports an argument that Conservative Members have been making for some time: we need to do much more to improve scrutiny. We argue that it is necessary to publish draft legislation at the time of the pre-Budget report-in advance of the publication of the Finance Bill-to allow for proper scrutiny, including pre-legislative scrutiny by a parliamentary Committee. We would also establish an office of tax simplification that could advocate reforms to our tax law to make it less complex.
We will let these clauses through. Tackling avoidance is a perfectly reasonable intention-we have no difficulty with it-but we make a commitment that we will listen to representations made by professional bodies on the technical and practical implications of the Bill, and if appropriate return to those matters. I hope that the Exchequer Secretary will make a similar commitment. Many aspects of the Bill have not received the necessary pre-legislative scrutiny, and the Bill is clearly not getting the legislative scrutiny that one would expect, so there is a fair chance that it will contain errors that would have been picked up under the normal process. I do not believe for a moment that the normal process is sufficient in itself, but I hope that the hon. Lady will make a commitment that if her Government are re-elected, and if there are representations that deserve a proper response in a second Finance Bill this year, they will, if necessary, make revisions. We are certainly prepared to consult on these technical matters and to consider them further.
I have referred to the complexity and unpredictability in the tax system, but let me touch on stealth taxes. I am delighted that we will manage to remove three of those taxes from the Bill. The first is the increase in duty on cider: an increase 10 per cent. above inflation that does not focus on super-strength cider-a focus for which we have long argued-was a regrettable move and we are pleased that we have forced the Government to drop it from the Bill, or at least amend the provision. There will be a clear choice at the general election on whether it is implemented.
We have raised concerns about the policy on furnished holiday lettings ever since it was announced in last year's Budget. The proposed change in taxation treatment could affect 45,000 jobs and 60,000 businesses, and have a serious impact on various rural and seaside areas.
Lembit Öpik (Montgomeryshire) (LD): I apologise for not having been here for the entire debate. Does the hon. Gentleman agree with me that the change in holiday lettings taxation could not only seriously disrupt the potentially lucrative holiday lettings sector in areas where, for example, farmers are seeking to diversify, but force that business abroad? That would be utterly counter-productive, not only for the British economy but for British tourism.
Mr. Gauke: Clearly, there could be a serious impact on British tourism, which would be regrettable. That is why we proposed reforms that would be revenue-neutral, and we want to consult further to protect revenue and ensure that individual parts of the country are not heavily affected by the Government's proposal, which would damage tourism and wider communities. We are pleased to have got that out of the Bill.
Mr. Redwood: I congratulate my hon. Friends on getting those unpleasant taxes out of the Bill. Will my hon. Friend confirm that, as this is a Finance Bill, the Government, who have a majority in this place, can still do what they like, because the other place cannot stop the Bill?
Mr. Gauke: Of course, the other place does not have a view on the Bill. It is a matter of timing, and I am pleased that those of my hon. Friends who were engaged in negotiations on the wash-up were able to achieve three measures that prevented tax rises. Of course, they are only temporary measures. Stopping them properly is not in our hands or the Government's; it is in the hands of the British people.
The third tax I should mention is the landline duty-a levy that the Business, Innovation and Skills Committee described as
"both regressive and poorly targeted. It would have a much greater impact on the less well-off who will pay for an enhanced service which only a minority will enjoy."
There is a clear choice at the general election. We could continue with the present Government and see further tax rises-not just the three that I have mentioned, but the substantial increases in national insurance contributions, which are opposed overwhelmingly by businesses. We could continue with the present Government, who regard parliamentary scrutiny as nothing more than an inconvenience where tax law is concerned, or we could change to our policy of pre-legislative and parliamentary scrutiny. We could continue with a Government who believe in heaping yet more complexity on to our tax system, or change to a Conservative Government who are committed to simplifying the tax system.
We will not oppose Second Reading of the Bill. We have mitigated some of its worst effects, but it symbolises the present Government's approach, being about higher taxes, greater complexity and lack of scrutiny. That approach has run its course. It is time for a change.
8.4 pm
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