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Chris Grayling: This has been a wide ranging and fairly complex Finance Bill. As my right hon. Friend the Member for Fylde (Mr. Jack) mentioned, it is the first experience of a Finance Bill for my hon. Friends the Members for Cities of London and Westminster (Mr. Field) and for Fareham (Mr. Hoban) and me. I have been impressed by the good spirit that has existed both in Committee and in these debates today. Having listened to all the arguments, however, there are still a number of points on which I take great issue with the Government over what they are trying to do.
The issues relating to business taxation touched on by my right hon. Friend the Member for Wokingham (Mr. Redwood) a moment ago are at the heart of my concerns. The debate about national insurance contributions has taken place under a different umbrella, but that is part of a complex range of issues relating to business taxation which reflects a careless approach to business by the Government. I do not think that they understand what they are doing. Nor do I think that they understand the implications of their actions for individual companies and for industrial sectors. Moreover, the Government are doing this at a time when it is only too clear that business is under pressure. I was flicking through the financial pages this morning, and thinking that, in recent yearsprobably since the late 1980s I could not remember seeing quite such consistent bad news right across the corporate spectrum.
Precisely when the storm clouds seem to be gathering, the Government have chosen to put significant additional taxes on business. I fundamentally disagree with the comment made by the hon. Member for Kingston and Surbiton (Mr. Davey) following my intervention. Whatever the rights and wrongs of the debate on the euro, they cannot be dealt with now, but the new taxation measures on business will affect business now, they will affect profitability this year, they will cost jobs, they will cost investment and they will make a cash difference to companies when they can ill afford it. The consequence of thatinevitably, in my viewwill be seen in the employment market.
We have discussed extensively the Bill's impact on the North sea oil industry, which is probably the most acute example of the Government's failure to understand the consequences of what they are doing. The Government, in all their arguments on the North sea, remind me of a mugger who takes someone's wallet, but is kind enough to give him back the bus fare home.
The Government talk about the capital allowance that they are making available, but at Question Time a couple of weeks ago the Chancellor referred to the £500 million that he is levying from the industry. He cannot take £500 million out of an industry that employs 300,000 people and is a significant part of the employment base, not just in Scotland, but across the country, without affecting jobs and investment.
The Budget's cumulative tax measures will have an adverse effect on businesses beyond North sea oil. We have discussed the impact of the aggregates levy and the climate change levy. In Committee, we talked about the problems that the aggregates levy will pose in remote areas where such companies are often the principal local employer and a real driving force in the local economy, yet its continuing provision will remove funding from those companies and local communities and take it back to the metropolitan areas. That, inevitably, will affect communities in such areas.
There are, undoubtedly, good points for business in the Budgetno Government ever do everything badlybut equally there are fundamentally ill-thought-out measures. We have discussed the shortcomings of the mandatory e-filing proposals as well as the implication of the zero tax rate for small listed companies and the failure to extend that same benefit to unincorporated companies. Likewise, the measures to tackle the deductions to payments to subcontractors where there are undoubted anomalies go some way to solving the problems, but it is far from clear that they have dealt with all the difficulties that my constituents and others have raised with me.
The Bill also contains inconsistencies. We heard this afternoon and in Committee that the Government wish to raise duties on alcopops to tackle health and social issues, but they are also cutting duty on strong ciders, which we know are also a contributing factor to the problems that the Government are trying to address through the alcopops measures. There are vehicle excise duties adjustments for low-emission cars, yet, as I argued in Committee, the measures for vans do not reflect the changes in that marketplace.
My other big concern is key workers and the impact of the tax increases on the labour shortages in London and the south-east, to which my right hon. Friend the Member for Wokingham referred, as well as in other parts of the country that are affected by high housing costs and other high costs of living. We discussed the raised national insurance contributions during proceedings on the National Insurance Contributions Bill, but this Bill will enact a freeze in personal allowances, which will add another burden. That burden will be relatively small, but it will also be another straw on the camel's back for public service workers who find it increasingly difficult to live and work in the south-east.
As my right hon. Friend the Member for Wokingham said, the more the Government tax those people, the more difficulty they have buying a house under the stamp duty system. That will make it less likely that they stay and work in our high-cost areas and less likely that we will have good, effective public services in those areas. If that happens, we will undermine the very areas that deliver the tax revenues that support public services across the country.
I believe that the Finance Bill fails badly, and it comes from a Government who do not understand that if they put up taxes on an industry, it will cut jobs and invest less. The Government do not understand that if they increase the complexity of tax rules and tax regulations for small businesses and make their life more complicated, fewer people will take the trouble, invest the time and work the long hours that it takes to run a small business.
The Government do not understand that if they put up taxes for key workers, even in relatively small amounts, those people will not stay in the most expensive parts of our country. They will look to work elsewhere, and our labour and skill shortages as well as the absence of teachers, nurses and doctors will get worse.
This Budget, and this Finance Bill, fail to address problems that are manifesting themselves throughout our country. For that reasonalong with many others that we have discussed in detail over the past couple of monthsI shall be joining my colleagues and voting against Third Reading.
Mr. Mark Hoban (Fareham): I share the experience of my hon. Friend the Member for Epsom and Ewell (Chris Grayling)this is my first Finance Bill. I thought it would be remiss of me not to participate in its closing stages.
I see a number of strands in the Bill. Let me say first that from time to time the Treasury has betrayed what could be described as a lack of understanding of the way in which businesses and people work. One example is the complexity of the relief for community and sports clubs, which have to jump through a number of hoops to claim it. Requiring treasurers of such small clubs to calculate how much expenditure is allowable and how much is not places a burden on them that I think will restrict take-up in many instances.
Mandatory e-filing has been mentioned. A few days ago it was reported that the Inland Revenue could not even allow its staff to use e-mail. How much confidence will small businesses have in their ability to transmit their tax returns to the Revenue electronically if at this stage the Revenue cannot even sort out its own e-mail system? It is legitimate for people to ask whether it is appropriate for them to deal with the Revenue when it has manifestly failed to provide services for its own staff.
In this and other debates, we have discussed the differential tax treatment of small businesses. It was interesting that the Paymaster General carefully used the word "company" rather than the word "business" this evening when welcoming the changes. In fact, many small businesses will lose out. I am not thinking just of sole traders; many other large unincorporated businesses and, in particular, partnerships will not be able to take advantage of the reliefs. Those that can will see a move towards incorporation, along with the costs involved in becoming a limited companythe costs of maintaining registers of shareholders, directors, mortgages and debentures, and of opening books for public inspection. The Government should consider changing the balance to remove the possibility of any deliberate or even implicit policy in favour of incorporation.
Rob Marris: The hon. Gentleman seems to be advancing a curious, if interesting, argument. If I have not understood it properly, perhaps he will correct me. He seems to be saying that if the costs of incorporation outweigh the tax breaks in the Bill, a small business will not incorporate. So what? The business will be where it
Mr. Hoban: What we do not want to do is impose unnecessary regulatory burdens on small businesses. Yes, there will be a financial incentive if the tax benefits of incorporation exceed the costs, but do we really want to impose those costs? We do not want to place an ongoing burden on small businesses; we want those businesses to focus on building themselves up, rather than complying with rules and regulations dreamt up to keep them occupied.