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Dawn Primarolo: I am sure that the hon. Gentleman appreciates that in the case that was resolved last week, the court ruled in favour of the Inland Revenue on every count and leave to appeal was refused. It is important that proper dialogue now takes place. I hope that he and other hon. Members will support me in that. We have already written to the main body, the Professional Contractors Group. IR35 is the law of the land, but discussions about its implementation and the advice that is given would benefit enormously from the positive engagement of those who are still unhappy with it. I hope that he will agree and encourage others to engage positively with the Government on the matter.

Mr. Taylor: The Paymaster General is her usual winning self; I could not possibly refuse that encouragement. I hope that the PCG takes up her offer.

There is definitely a need, however, to achieve a clearer understanding, in all circumstances, of what constitutes an employee. Accepting that IR35 is the law of the land, it would none the less be better if we could obtain that clarification. There is frustration out there--in what are broadly described as the knowledge-based industries--that IR35 is still a problem. I have heard the Government referred to as a sales prevention agency; they are certainly a job confusion industry when it comes to IR35. The Minister of State, Home Office, the hon. Member for Hornsey and Wood Green (Mrs. Roche), rightly talks about changing immigration qualifications to bring in skilled workers, but many skilled workers in this country think that it might be easier to get jobs abroad. I stress that, even if the court was clear on the matter, some of the applications of IR35 regulations are less clear to people working in the industry. The Paymaster General should continue to be concerned about that.

I wish that the Chancellor had made better provision for inheritance tax. That may be a sensitive issue for Labour Members, but the inflation adjustment of the allowance for inheritance tax is not sufficient and needs radical

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review. Many people from all walks of life, in my constituency and elsewhere, feel trapped by the measure. It is important to send a signal that the trickle-down of wealth from one generation to the next is worth while. We should share that aim throughout the House; it is not something to be penalised. As always, the people who are most adept can better protect themselves from the ravages of inheritance tax than those who find, too late, that they have been caught by it.

I do not think that the Government have yet woken up to the fact that the damage that they did to pension funds through the changes to advance corporation tax continues to accumulate. All the good work--although I do not necessarily endorse the details--in encouraging people to take out pensions, such as the stakeholder pensions that have just come in, could be undermined by the apparent attack on pension funds.

This afternoon, I recalled that I had been rather far-sighted on that issue. I put the first question to the new Prime Minister after the last general election. I asked him whether pensioners would suffer damage from


He did propose those changes and pensioners suffered. The reality is that they are still suffering and the Government have not made up for the damage that was done.

On a related point, the Government could have taken up the constructive proposals on annuities that were aired because they would have benefited many pensioners.

I do not have time to go into many other small points. However, I increasingly come across a serious issue when I talk to pensioners in my constituency and elsewhere: it is one thing to bring in tax credits, but it is altogether different when the means-testing and all the other aspects--the reliefs, the clawbacks and the tapers--become so complicated that only professional advisers are capable of explaining them. Many people who should benefit from measures introduced by the Government simply do not have access to professional advisers, or have never taken professional advice; they may be reliant on citizens advice bureaux and similar organisations. I notice that Help the Aged described the system as "massively complex" and said that it involved "endless form filling". Will the Government please think about that?

The issue is serious. I do not necessarily attack the Government's right to use means tests, although I do not think that they are the correct way forward. However, introducing means tests creates obstacles for the people one most wants to help. So often, the people at the bottom of the pack are hit hardest. It is good that the lowest rate of income tax is 10p, but many people do not benefit from that because they pay no tax at all--they rely on benefits. I hope that the Government will take that on board.

In short, the Bill is a missed opportunity for a Government who want to appear radical and who expected further years in office. They could have taken up the constructive suggestions made by the shadow Chancellor to relieve savers from income tax, which would have been hugely beneficial, but which will now have to await the return of a Conservative Government. They could have given even more targeted help to pensioners. The Government could have helped those who

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are distressed by their great difficulty in understanding the tax system to obtain the benefits to which they feel that they are entitled.

Overall, I am worried about the Government's economic judgment. I am concerned that their public expenditure plans may require much more boosting from an increase in taxation than would be wise. The Government have more homework to do. On the specific issues that I raised, I hope that there is still time for amendments to be tabled in Committee. If they are drawn up in the terms that I have suggested, I am sure that they will be greeted with acclamation on the Conservative Benches.

7.30 pm

Mr. Brian H. Donohoe (Cunninghame, South): This has been a popular Budget, and I am sure that the Finance Bill will deliver. About 42 per cent. of the population believe that the proposals are good for them personally, but, perhaps more important, 52 per cent. believe that the proposals will be good for the country. Furthermore, 55 per cent. of the population think that the Chancellor is doing his job properly, although listening to the Opposition, people would not think that that was so.

The Government have done a great deal to help my constituents, and the Budget will deliver more for them. We have already heard about the proposal on the minimum wage, which is very important indeed-- £4.10 is more than half as much again as those involved in the low-wage economy would have dreamed of in my constituency. Many of my constituents will benefit enormously from the increase in the minimum wage, but there is a problem: some charlatans in my constituency--and, I am sure, elsewhere--do not pay the minimum wage. I ask my colleagues to consider further policing of the minimum wage.

When a young trainee hairdresser in my constituency asked for the minimum wage, she was told that she would no longer have a job if she expected that increase. That is despicable, and the Government should ensure that that is not allowed to happen again.

In my constituency, 1,400 young people have benefited from the new deal, and more than 750 of them have entered full-time employment. Some 2,800 of my constituents have gained from the working families tax credit, which guarantees those in full-time work up to £214 a week.

The Budget behind the Bill builds on the progress that the Government have made since 1997. Under the children's tax credit, the hard-working families in my constituency receive £10 a week, and £20 for the first year of a child's life. It is good that those policies have been introduced in my constituency. There has been a £5 increase in the working families tax credit, which will guarantee £225 a week by October. The 10p tax band has been extended. Maternity leave has been increased from 18 to 26 weeks, and maternity pay will increase from £60 to £100 by 2003.

Most important, the Budget and the Bill will restore hope in my constituency, which the Conservative party neglected for a generation. In fact, a clear indication of just how well the Budget has been received is that the post offices in my constituency are now paying out almost a quarter more again than in previous weeks. That is a success in itself.

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In 1993, more than 4,650 people were unemployed in my constituency. In the 1980s, the figure was even worse. The Tories have absolutely no idea of the misery caused by unemployment. We have heard about constituencies with unemployment levels as low as 1 per cent., but some areas of my constituency have unemployment levels of more than 50 per cent. and three generations of some households have not worked. That problem is being addressed for the first time in a generation, but the policies are still not penetrating my constituency as they should. For example, unemployment there is still 3 per cent. above the national average.

I have heard people argue that there is a north-south divide. That is certainly true, but there is also an east-west divide. The east of Scotland is overheating and there has been substantial job drift from west to east. Unemployment levels are 40 per cent. in some parts of my constituency, but across the whole constituency it is 8 per cent. However, it is as low as 1 or 2 per cent. in the east of the country.

Something must be done, and more would be achieved by targeting public sector jobs, which are at our disposal, to the west of Scotland. Those jobs could include the armed forces jobs that are out for tender at present. I understand that about 5,000 will be created in a new training college, which the Army will set up, and that it has been argued that it should be based in the east of the country, but I would argue forcefully that it should be set up in the west.

In summary, the Government understand that the economy is based inside society itself and that we are talking about people, not just numbers. Number crunching is all very well, but the people whom I represent understand the issues only on the basis of the food that they have on the table. Prudence is sensible. A stable economy is essential--it is good for business and for the families in my constituency. It is certainly not pap, as some might say. Clearly, because of that success, for the first time in many years we can afford to rebuild the society in which we live.

The base work has been done, and we now have record spending on education and health in and around my constituency and record investment in young people. For the first time in a generation, pensioners have been helped in a way that they understand. Of course, all that would be destroyed if the Conservative party were to return to power at the general election, as it has already committed itself to saving about £16 billion on public spending. Those cuts would most affect those who need the help most in my constituency.


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