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Mr. Straw: First, I commend the very responsible approach taken by my hon. Friend's constituents as represented by the mosque in Ilford, which I well remember visiting.

Secondly, I cannot give a time line, but with good fortune, one better consequence of the current crisis and the international attention being paid to it may be that both sides understand the need better to develop a sophisticated nuclear doctrine, and above all, the need to improve their back-channel methods of communication so as to avoid a nuclear war starting by accident or misunderstanding.

Several hon. Members rose

Mr. Speaker: Order. We must move on.

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Point of Order

4.40 pm

Dr. Julian Lewis (New Forest, East): On a point of order, Mr. Speaker. My point of order arises from a report in The Mail on Sunday yesterday, to which I have drawn your office's attention, by that newspaper's political editor. You will recall that, throughout the last Parliament and at various times during this Parliament, various hon. Members have complained that Government announcements have been made to the media before being made to the House. The political editor of The Mail on Sunday claims to have documentary evidence that that practice dates from a meeting at No. 10 Downing street during the last Parliament, called by the communications director at No. 10, Alastair Campbell, in which he stated:

That seems to suggest a pattern, and a hand behind that pattern, of flouting parliamentary convention. I should be most grateful to you, as I am sure many other hon. Members would be, if you would endeavour to investigate this matter.

Mr. Speaker: I will not comment on media articles—it is not for me to do so—but I reiterate that I want Ministers to come to the House when any important matter has to be announced, rather than releasing a statement to the press. I hope that that helps the hon. Gentleman.

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Orders of the Day

National Insurance Contributions Bill

Considered in Committee.

[Sir Michael Lord in the Chair]

Clause 1

Primary Class 1 contributions

4.41 pm

Dr. Evan Harris (Oxford, West and Abingdon): I beg to move amendment No. 1, in clause 1, page 2, line 4, leave out—

'the current upper earnings limit'

and insert "£100,000".

The Second Deputy Chairman of Ways and Means (Sir Michael Lord): With this it will be convenient to discuss the following amendments: No. 2, in clause 1, page 2, line 8, leave out "1 per cent." and insert—

'10 per cent. on earnings over £100,000'.

No. 4, in clause 1, page 2, line 30, leave out—

'the current upper earnings limit'

and insert "£100,000".

No. 5, in clause 1, page 2, line 34, leave out "1 per cent." and insert—

'10 per cent. on earnings over £100,000'.

Dr. Harris: These amendments were tabled by myself and my hon. Friend the Member for Truro and St. Austell (Matthew Taylor), whom I am pleased to see in his place. I had imagined that we might be joined at some point in our proceedings by the Chief Secretary to the Treasury, the right hon. Member for Brent, South (Mr. Boateng), who deserves to be congratulated on his new position. Indeed, I hope that he will join us in today's debates.

It needs to be said at the outset of this debate that the Liberal Democrats welcome the resources for the national health service that will be provided under the Bill. However, we have four very clear concerns. First, the resources have come five years too late. Secondly, in the sense that they were not advertised at the last election, they have been introduced by stealth. Thirdly, we do not believe that the Bill represents the fairest way to act. Fourthly, we believe that significant difficulties will be created for business—in particular, but not only, manufacturing business. These amendments represent an attempt to resolve the last of those problems.

Significant difficulties will be created for those who run and work in businesses by the Government's decision to use a rise in employers' contributions to fund the health service. For that reason, we propose in the amendments a 10 per cent. national insurance contribution rate above the current upper earnings limit—indeed, above earnings of £100,000 a year. That is as close as we can get, using the vehicle of this Bill, to a selectable amendment that reproduces our policy to fund public services in the fairest possible way and to do so progressively and by avoiding placing extra burdens on business.

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Taken together, these amendments—especially if considered with amendment No. 3, which has not been selected for debate—would provide an alternative approach to funding the health service, instead of raising employers' contributions. There may be disagreements between those on the Treasury Bench and ourselves; they may consider that our proposal would be too fair and too good for business because they want to penalise business. I hope that they will accept, at least, that it is a statement of our position. When we say that we want improvements in the health service, it is right that we are asked how we will pay for them, just as the Government have said how they will pay for them. We have set out the ways in which we shall do so, as I am doing now. In contrast, Conservative Front-Bench Members are on much more difficult ground, as I suspect, for reasons that we may share, that they will express their concerns about the impact on business of the rise in the employers' national insurance contribution. They will have to answer—the hon. Member for Buckingham (Mr. Bercow) is perhaps eager to address this now—how they would pay for improvements in the health service if they are not going to support some of the measures in the Bill.

4.45 pm

Mr. John Bercow (Buckingham): The hon. Gentleman will not be surprised to know that I await the explanation of his arguments with eager anticipation, bated breath and beads of sweat on my brow. Given that he has just referred to an amendment whose purpose and effect would be to limit the size of national insurance contributions paid by employers, will he confirm whether an amendment that has been tabled by Liberal Democrats will confine the limit on national insurance contributions by employers to those in Great Britain? The Liberals appear to have neglected to consider the situation in Northern Ireland.

Dr. Harris: If that is the best that the hon. Gentleman can do on this key issue—I believe that the amendment to which he refers has not even been selected in this group—it shows the weakness of his position. The Chairman of Ways and Means has made his selection, and my intention is to make the general point that the funding of the health service should be progressive. For preference, that should be done without putting extra burdens on business, but, in the end, the health service needs to be funded.

I had hoped that the hon. Gentleman would answer the point that I put to him, and I hope that he will do so. If he opposes some of the resources of this Bill—I share some of the concerns that he may express later about some measures—he must state which parts of the health service he wants to cut, which parts he will not allow to grow, or what other taxes he would increase. That is important. However imperfect the drafting of our amendments, they are a genuine attempt to explore why the Government have chosen to go down this path.

Our approach to raising the resources that are needed for the health service is progressive. We made it clear in our alternative Budget that we wanted a 50 per cent. rate of income tax for those earning more than £100,000—the very well-off and those best able to afford such a rise—to pay for this vital public service. Clearly, it is not possible to frame amendments to propose such a rise in income tax. As the next best thing—given that the

10 Jun 2002 : Column 617

Government have sold the pass on the upper earnings limit—we would have liked a much better method than this tax on jobs, which is a much more second-rate option.

The Government must say why they are opposed to the proposal set out in these amendments. They must have considered it, given that the upper earnings limit is no longer sacrosanct. Given the 1 per cent. increase in the upper earnings limit, the Government have conceded that it is not absolute, regardless of what they failed to say about it before the election. The drawbacks must therefore be addressed. It does not appear that it is unfair, because we would be asking high earners to pay more. It does not appear that it is the sort of tax that can easily be avoided—clearly, that will be an issue in relation to taxing high earners. Given all the evidence that a 50 per cent. rate on incomes over £100,000 is about the going rate worldwide, it is difficult to envisage how people will move their earnings abroad, especially when, in this context, we are talking about a payroll tax that is much more difficult to avoid. In New York, for example, when taken together with local taxes, the tax on salaries equivalent to £100,000 is about equivalent to the rate under our proposal.

Are the Government concerned that our proposals are not explicit enough? I do not see how one could be more explicit than saying before the election that we wanted to ask the better-off to pay more tax in a fair way for the health service. We restated that proposal in our alternative Budget and we are seeking to make that case in Committee today.

The Government cannot argue that our proposals are not a transparent way of raising money. The complexities that the Government have already introduced into the national insurance contributions system do not give them strong grounds on which to attack the transparency of our approach.

There are strong reasons for seeking to make the changes proposed by the amendments. They would raise approximately the same amount of resources as the Government intend to raise from their tax on employers that will result from the Bill's proposals for employers' national insurance contributions. We weighed up whether we would prefer the money to be raised via our approach or from employers' national insurance contributions. Because of the significant drawbacks on business that will result from the tax that the Government propose, we believe that our approach is preferable.

It is peculiar that the Government should seek to raise so much of the money for the health service from a tax on business. In previous debates such as that on the 1999 measures to deal with pollution, the Government have said that they did not want to tax jobs. They said that that would be bad and that employers' national insurance contributions would be reduced when other taxes on pollution went up. However, the bad tax that the Government have previously opposed is now being used as a vehicle.

We believe that the top priority is extra money for the health service, but we do not believe that the Government's approach, as set out in the detail of the Bill, is the right one. Raising the employers' contribution will cause problems for employers, manufacturing and the businesses facing difficulties in exporting because of the strong pound. In addition, public service employers, including those within the health service, will lose money as they gain. It is not clear that the Government have taken that point into account.

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It is clear that the amendments would be fairer and would not have such a severe impact on business. Our proposals are transparent and it would not be possible to avoid them. Those are strong reasons for supporting the amendments, and I ask, Sir Michael, that we be allowed to vote on amendment No. 2, which expresses the bulk of what we are trying to say. The Conservatives must also explain where they would get the money from if not from a tax on business.

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