Previous SectionIndexHome Page


6.57 pm

Mr. Andrew Mitchell (Sutton Coldfield): The hon. Member for Waveney (Mr. Blizzard) made an eloquent and powerful speech. I know that the Chief Secretary to the Treasury heard most of it, but he did not hear the first part. I hope that the right hon. Gentleman will read the speech, because the hon. Gentleman made important points on behalf of the North sea oil industry.

I draw the House's attention to my entry in the Register of Members' Interests and, in particular, to the fact that I am a director of the investment bank, Lazard.

I shall have several disobliging comments to make about the Bill, but I wish to start by making it clear that, during my enforced sabbatical from the House, I watched the Chancellor's first five Budgets from the City. It has to be said that the right hon. Gentleman is highly respected in the City for those Budgets. His prudent phase was highly respected on three grounds in particular.

The first is that he gave independence to the Bank of England. I can say with honesty—it is recorded in Hansard—that I was in favour of such a measure 10 or 12 years ago when the Conservative party was against it. Giving the Bank its independence was a brilliant move. The economy is still benefiting from the wisdom of that decision. I have always been opposed to allowing itchy-fingered interventionist politicians to get their hands on the levers of interest rate policy. It is much better to leave them to the structure that the Chancellor has put in place. I thoroughly support that.

Secondly, the Chancellor is respected in the City because he read the crisis that took place in the Asian economies in 1997–98 correctly. Commentators, bankers and economists all said that the crisis presaged a systemic failure in the world economy that would ripple across Russia, creating defaults there and would intensify great

30 Apr 2002 : Column 865

difficulties in Japan and problems in America. We were all wrong. The Chancellor was correct, and he earned enormous praise.

Thirdly, the Chancellor has won great respect in the City for his work on third-world debt relief. He built on progress made under the last Conservative Government and has taken a major step forward.

The Chancellor's first five Budgets—the Budgets of prudence, which I missed—were extremely good. The present Budget and Finance Bill were introduced against an encouraging international background. The United States is coming out of recession with an incredibly robust economy, and the United Kingdom will clearly be bolstered by that. Rates here will inevitably have to rise in future, but probably not before the end of the year. The Budget and the Bill have therefore been introduced against a comparatively benign and certainly improved economic background.

Turning to the Bill, I agree that the Government are right to take another look at arrangements for domicile. It is offensive that a hard-working doctor in Sutton Coldfield earning £60,000 or £70,000 a year should pay 40 per cent. tax and national insurance, but a senior City professional living in London earning 10 times as much or even more should pay no national insurance and very little tax. Nevertheless, we operate in a tax-competitive market; many of the finest people who operate in such a regime can operate anywhere. When the Government look at that regime and the issues involved, they will have to bear in mind the fact that the City of London, with its enormous strengths, gains additional strength from its tax-competitive position.

The Government operate within a global economy, as the Chairman of the Treasury Committee and my right hon. Friend the Member for Fylde (Mr. Jack) made clear. It is difficult for Governments to work within that framework. The economy of London has more in common perhaps with New York than with Sunderland. Much of the top end of the London property market is driven by non-UK concerns and the global economy, presenting a serious challenge to Governments wishing to tax it effectively and treat it aright. Nevertheless, it is right that the Government should take another look at that. I also welcome their measure on VAT simplification.

I shall now turn to the reasoned amendment and make some critical comments about the Bill. The 500 pages of new legislation published seven days ago for the House to examine underline the fact that, despite his many virtues, the Chancellor is a compulsive meddler, changing things that he has already changed. The Liberal Democrat spokesman mentioned the Budd committee, a sub-committee of the tax law review committee created by the Institute for Fiscal Studies, upon which he, the hon. and learned Member for Dudley, North (Ross Cranston) and I served. During my time on that committee, I heard a number of practitioners talk about the way in which we scrutinise Finance Bills and about the effectiveness of Finance Bill Committees, and was struck by the inadequacies of the way in which legislation progresses as Parliament becomes virtually a rubber stamp.

I served on five Finance Bill Committees—several with the Financial Secretary to the Treasury back in the late 1980s and early 1990s—and I believe that we must be self-critical in appraising the usefulness of the work done in Committee. If Parliament is to have a serious influence

30 Apr 2002 : Column 866

on the development of Finance Bills, it should certainly look at the suggestion of my right hon. Friend the Member for Fylde about establishing a Standing Committee on taxation. If it is to be involved in consultation, it should be involved at an early stage. I put it to the Chief Secretary that there is merit in having much more extensive debate after the pre-Budget report in November, perhaps even sacrificing a day or two from the spring part of the annual cycle, so that the Treasury and Treasury Ministers can listen to Members on both sides of the House during their consultation, rather than Parliament's putting in time and effort now.

If Parliament is to be effective, it must be able to call expert witnesses. The Budd committee looked at whether there could be a Committee of both Houses. If the Government are unwise enough to proceed with their proposals for an elected second Chamber, perhaps that would remove some of the objections to a Joint Committee. The Budd committee questioned the extent to which Members of Parliament are willing to influence, or interested in influencing, the development of the tax regime. A challenge for everyone in the House is whether we can make any difference to Finance Bills when they reach this stage in their progress. I hope that the Government will seriously consider having a much more detailed debate on their proposals in November. They have been pretty generous and good about putting tax changes out to consultation; in this round, there were three specific areas on which there was extensive consultation with practitioners and professional bodies, which I welcome. The more that can be done, the better, if we are to have more effective consultation and introduce better tax legislation as a result.

The amendment also deals with the burden of taxation. The House does not reflect strongly enough on its deep responsibility to justify every penny of taxation taken off the hard-working taxpayer. The burden of taxation since 1997 has increased enormously. There were approximately £270 billion of tax receipts in 1997, and we are now heading towards the staggering figure of £400 billion, which is a massive increase. Many people question the extent to which they are getting value for money. I do not wish to rehash points made in the Budget debates about spending on health care, transport, and law and order and tackling crime, but many people wonder whether they get value for money from the enormous amount of taxation that is raised. Looking at the Chancellor's assumptions about growth in the Budget and reading what the Item—independent Treasury economic model—club said, I wonder whether, after five prudent and sensible Budgets, this Budget is the other side of the coin and in due course will be seen as reckless.

The Chief Secretary is the taxpayer's guardian. The enormous amount of taxation—every penny of it—must be justified to people who pay it. The House should be a great deal more careful to honour its duty to justify taking large amounts of money from hard-working people.

Mr. Tom Harris: Does the hon. Gentleman not recognise that headline tax figures alone do not reveal the whole story? Is he aware that even with projected increases over the next three or four years, the total

30 Apr 2002 : Column 867

percentage of tax as a percentage of gross domestic product will be lower in 2005–06 than it was at any point under the Conservatives?

Mr. Mitchell: One can do anything with the figures, as the hon. Gentleman eloquently made clear. My point is unanswerable: huge amounts of taxation are taken off hard-working people, and have to be justified. It behoves the House to honour that duty more often than is usually the case in our debates. Looking at the enormous amount of money recently loaded on to tax on income, we can only reflect on the fact that on the "Today" programme, on television in interviews with Mr. Dimbleby, and on page 10 of the last Labour manifesto, the Government made it clear that they had no intention of raising taxes on income, which is precisely what they have done. We can debate that, and the electorate will cast their judgment in due course. I merely point out that the Government have passed draconian and largely commendable legislation on the financial services industry, and that if they had issued a prospectus on tax on income, they would now be in serious trouble with the Financial Services Authority and would have got into hot water for producing such a misleading document.

A great deal of extra money is to be spent on health care. The Government are guilty of a massive dereliction of duty in their failure to put the reforms in place before they put in the extra money. It is astonishing that the money should be provided as it has been. The leverage for getting the reforms that are desperately needed in the health service has been thrown away because of the way in which the matter has been handled.

The Government will live to regret the fact that they have missed out on the key economic lesson of the past 50 or 60 years: that it is competitive, decentralised markets, not monopolistic, tax-financed institutions, which deliver for consumers. The NHS is not about a set of buildings or a set of staff. It is about a set of values. It is about being free at the point of need—[Interruption]—but the debate about whether or not the provision of health care should be private is a ridiculous debate.

Those on the Labour Benches continually go on about the fact that the Conservatives have yet to produce their plan on health. They will have to wait for that. We are serving the public and the taxpayer well by ensuring that we look around the world at all the other ways of delivering health care, and that we come back and give our plans to the House when we are good and ready, not as part of the ebb and flow of debate with the Chief Secretary.


Next Section

IndexHome Page