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Mr. Bercow: There are very few occasions on which the Paymaster General and I agree, but we do so at least in part today. She is guilty of a characteristic understatement in her critique of the Liberal Democrats, whose amendments are, frankly, hare-brained and madcap in equal measure—and there is nothing unusual about that. I say to the Committee and the hon. Lady that there is one thing of which we are not accusing the Government in relation to the Bill's tax increases, as distinct from a number of their predecessors: we are not suggesting that they are stealth taxes in any sense—far from it.

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The Liberal Democrats are hopelessly behind the times and have got it wrong. These tax increases are brazen, brutal and a triumph of hope over reality.

Dawn Primarolo: The hon. Gentleman has never knowingly understated anything in this House, and he rises to the challenge now.

I was trying to make the point that when the Opposition advance a principle in debate on the Floor of the House, it is their responsibility to ensure that their amendments would deliver on that principle. Perhaps the amendments have indicated to the hon. Member for Oxford, West and Abingdon how difficult it is to combine in practice the whole cascade of principles—progressiveness, fairness, certainty and delivery of necessary resources—that he articulates so readily. That is probably one of the many reasons why we are the Government and the Liberal Democrats are not.

The hon. Gentleman cannot even get his figures right. He went on to say that the amendments set out a much fairer method—that his party is committed to raising the money for the national health service, but in a different way. I have news for him: the amendments would raise less, not more, for the NHS. That is true even before taking into account the fact that, as experience has shown, the tax system has to be sensitive in understanding that people, especially those whose pay is in the higher earnings range, sometimes engage in finding ways not to pay tax. Benefits in kind, whereby people find other ways to have their salary paid, are a classic example.

Dr. Evan Harris: The Conservative spokesman described a 50 per cent. rate of tax on earnings of more than £100,000 as "obscene". Does the Paymaster General think it is obscene? If so, is that why she opposes it, or is she just frightened of the possibility of avoidance or evasion? This morning we heard that the Government are to clamp down on benefits scroungers—the poorest people who cheat the system. Why are they not equally committed to dealing with the best-off people who cheat the system through evasion?

Dawn Primarolo: That is a very poor intervention; I am disappointed in the hon. Gentleman. This is not a sixth-form debating society, but the House of Commons. I have explained patiently and carefully why the Liberal Democrat amendments would not deliver more resources for the health service and why they are not progressive. In fact, they have all the characteristics of stealth, in that the hon. Gentleman claims he is trying to advance one principle but his amendments relate to another. He claims, in his party's name, that what he proposes is fairer.

Fortunately, I do not have to account for the views of the shadow Chief Secretary to the Treasury, and I am sure that he is eternally grateful for that. He will advance his party's views. Equally, I can say without fear of contradiction that I have never flinched from advancing the views that I believe to be right, either in the House or anywhere else.

The principles of the Bill represent the fairest way to build on the Beveridge principles and to guarantee the extra resources that are necessary for the NHS. I look forward to the next group of amendments and to debating the reasons why it is right and proper that employers should make their contribution. I ask my hon. Friends to reject these

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amendments because they are incompetent, they would cut money from the health service, they are unfair and they reveal the Liberals undertaking a stealth tax.

Matthew Taylor: I shall respond briefly to the key points made in the debate.

Once again, we have heard the Conservatives advance the argument for not imposing tax increases while they remain unprepared to defend the logical consequence of that argument, which is that they believe the NHS should get less resources than the Government plan. That would mean patients not getting the doctors and nurses they desperately need. In that respect, there is nothing between us and the Government: we both believe that the NHS desperately needs that money. We have been arguing so for many years and we at least explained at the general election that we would raise taxes accordingly as we could see no other way of achieving that end. It is a pity that Labour did not do the same, but we are glad that it has now accepted that argument. People outside the House must understand that the Conservatives are hiding a stealth cut that would deny the NHS the doctors and nurses that it desperately needs to treat patients.

5.15 pm

We thank the Minister for her response, but let us be clear about the proposal. First, the contributions are a stealth tax because Labour did not present a case for them at the general election. We regret that, not simply because they should have been debated properly and democratically, but because there is public cynicism about politicians' promises—and that affects all political parties, not just the Labour party. The proposal has simply reinforced people's belief that they cannot trust politicians when it comes to getting votes at the ballot box, as what they do afterwards bears little relation to what they say in their manifesto.

Mr. Kevan Jones (North Durham): First, I am not quite sure how one hides a stealth tax. Secondly, the Liberal Democrats have set out plans for tax increases for those earning more than £100,000, and taxation for pensioners. Will "Focus" go through people's letterboxes in the next few weeks saying that the Liberals will put up taxes for those people?

Matthew Taylor: The hon. Gentleman asked how an increase in national insurance can be hidden. The answer is that one does not tell people about it before the election, which is how the Labour party behaved; that is what was stealthy. Everyone can see that now, but they do not have a chance to vote on it.

As for whether we would campaign on the tax rises, we did campaign on them at the last general election. We issued leaflets saying that taxes would have to rise and that ordinary taxpayers would have to pay an extra penny on their income tax, which is more than Labour Members did. However, they have effectively replicated our plans in their proposals for national insurance. We also spelled out the need for an extra increase for people on high earnings. Although some people agreed, others attacked

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our proposals, but at least there was a chance for them to do so, which is not what happened with the Labour party's hidden policies.

Mr. Jones: So, "Focus" will go out in the leafy suburbs of constituencies in the south-east, saying that there will be an increase in income tax for pensioners.

Matthew Taylor: We told people that before they voted, not after. The hon. Gentleman has no grounds on which to criticise us. Our strategy may have been foolhardy and risky and may even have lost us some votes, but we made sure that people knew where we stood before the election, which is more than the hon. Gentleman's party did.

The Minister said that our proposal would not raise as much money as the Government's, which is true. We made it clear before tabling our amendments that we would use the income tax route, which is broader based than national insurance and does not suffer from the problem of evasion that she raised. The only reason that the amendments did not include that proposal is that it would not be in order in our debate. To be honest, any Front Bencher will always criticise details of their opponents' proposals, which may even include a drafting error. However, we have made clear the principle of our amendments—there cannot be a Member in the Committee who misunderstands it—and we hope that it will be accepted.

Mr. Michael Weir (Angus): By and large, we are inclined to support the income tax route rather than the national insurance one. However, will the hon. Gentleman comment on the Government's point that there is a gap in the upper earnings limit of £100,000, which would mean that people earning substantial sums, like ourselves, would not pay increased national insurance, which is hardly fair?

Matthew Taylor: That is not right, because the hon. Gentleman would pay extra national insurance, as would everyone else. However, it is true that we would not extend the limit on national insurance from £40,000 to £100,000. That replicates our policy at the last election and, I think, the Conservative party's policy. We argued for an increase in the basic rate, which is roughly what the national insurance increase, as is, replicates. We argued also for an extra tax rate on those earning more than £100,000.

Dawn Primarolo: I remind the hon. Gentleman of what his amendments would do. Those who earn £100,000 would pay 11 per cent. on the first slice of their income—that is, up to the upper earnings limit. They would pay nothing on the second slice of their income up to £100,000. They would then pay 10 per cent. on everything above £100,000. A zero rate would be interposed. I am sure that the hon. Gentleman is fully aware of what his amendments would do. Perhaps he will explain why that is progressive.

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