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Mr. Cash: Does my right hon. Friend agree that part of the problem is not just the complexity, but the consequence for and the burden on the taxpayer, who
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then has to employ accountants, lawyers, QCs and so on, at enormous expense, which thereby reduces our ability to be an enterprising nation?

Mr. Redwood: I entirely agree. I favour lower taxes because they are fair and raise more revenue, and I think they raise more revenue for that very reason. Lower and simpler taxes impose less of a burden on people, who are then more willing to work harder and do not have to spend so much of their working time dealing with complicated tax issues to avoid falling foul of growingly complex and difficult to understand legislation.

We are now in the position where many people subject to a specialist tax in their area cannot understand the formula or the rationale and need to take on expensive tax advice to comply with the legislation. This can apply to quite small businesses that do not have that kind of resource and are not used to employing expensive accountants or lawyers but are forced into doing so by the enormous complexity.

So it is with a very heavy heart that I see that the Government's dying wish is to go out as they came in and be remembered as the Government who did more than any other we have known to add to the volume of tax legislation and the complexity and imperfect working of the tax system. Many Governments have queued up to win that prize, but this Government have beaten the rest of them hands down with their doubling of the length and complexity of the tax provisions in this country. To slide out 167 pages, 71 clauses and attached schedules this late in the Parliament, and then to offer us no time in which to probe or examine them, is typical of them but a complete disgrace.

The time available this evening does not permit me to go through the Bill even generally, clause by clause, much as I would like to and my colleagues would be grateful if I did not. However, that illustrates what is wrong with the situation: a 71-clause Bill, tackling every major tax and quite a few minor taxes in the country, with a view to changing them in some way and often to increase the amount of money that they raise, will not be properly scrutinised because of the way the Government have decided to behave.

The Government claim to have made all the calls correctly but they need a Finance Bill to raise more money. This, of course, is not that Finance Bill, because it is the pre-election Finance Bill, and we have already heard from the Minister that it does not include one of their main tax-raising proposals, which, if they win the election, will be the national insurance tax increase. So we know that the Government would have to come back to the House with more tax-raising legislation, but we know also that, even with their limited ambitions for deficit reduction in the next year or two, there is still a big black hole in their total figures. We know that the Budget, when delivered, did not have a proper statement of spending plans and cuts. There was a global figure for many cuts, but we do not know where they will fall or how they will be handled. And we know that there was a global figure for tax increases. The Government will say that this Bill does some of the work on that, but it in no way covers all the increased tax revenue that they have forecast, because they wish a bigger share of the deficit reduction to be achieved by tax increases than the Conservative Opposition do.

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Sir Nicholas Winterton (Macclesfield) (Con): My right hon. Friend has just mentioned the imminent increase in national insurance, although it is not part of the Finance Bill. Surely, however, that must be part of our debate, because it will affect employment in manufacturing and commerce. At Prime Minister's questions today, the Prime Minister made great play saying that the increase was necessary to provide for education and the health service, but what is more important: increasing our manufacturing capacity and output, and thereby increasing our tax revenues; or harming manufacturing industry merely to sustain what are, I accept, important-education and the health service?

Mr. Redwood: Madam Deputy Speaker, I do not think my hon. Friend was in the Chamber for your very wise advice to others in this debate-that we must stick to the contents of the Finance Bill, or to the things we would like to see in it, because some of us would have liked to move amendments to improve it, but we will not be able to do so owing to the restricted time. I fear that, because national insurance will be legislated for differently, it does not strictly fall within that remit. However, I think my hon. Friend stayed in order, because he wisely said that the national insurance increase could have such a damaging impact on the general state of the economy-it will definitely restrict growth and it is a tax on jobs, as even Ministers admit-that it could damage the revenues for which the Bill makes provision.

At the beginning of the debate, I tried to tease out of the Minister by way of an intervention what he thought the revenue loss would be on his figures if we struck out or modified the four clauses to which Opposition Front Benchers object. He said that in a full year he thought it would cost £220 million. However, other measures in the Bill and more generally could lose the Government rather more revenue than that, because they have made such an assault on enterprise, business, growth and development that they might find that higher tax rates, far from yielding the increased revenue that their models predict, yield rather less or, in some cases, even lead to a drop. We may well find that there are timing differences on tax payments and that there is a change in the place of residence to which businesses and rich individuals might relocate. The Government might find that they have gone over the top with the rates and will have a problem filling part of their budget black hole through the tax revenue that they will collect if they stay in office.

On all those grounds, this is a very bad Bill. It is not a Bill for recovery, because it does not offer the tax incentives for growth that one would expect to see. It confirms the pattern of taxing more and subsidising more that has characterised the more recent years of this Government's lack of progress. It greatly increases the complexity and detail of the tax code in a way that is wholly inimical to the wish of honest people to get on with earning a good living and running a good business, as my hon. Friends and I have sought to set out. Above all, it misses the main points because it does not tackle the spending side of the equation, which is being kept secret until after the election, or bring in some of the biggest tax rises that the Government are planning, which have to be introduced in another way.

The Government are now attempting to drive the car of the economy with one foot flat on the accelerator pedal, trying to create as much easy money as possible,
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and the other flat on the brake because they are trying to restrict the banks as much as possible. That is, of course, the way to go absolutely nowhere. It surprises me that they can present a Finance Bill such as this and say that it is part of a package of recovery, when we have experienced the longest recession of any of the major economies and had about the feeblest signs up upturn. The Government say that that means we have done very well, but it clearly means that we have done very badly. It is quite obvious why-they chose the wrong point of the cycle at which to clobber and restrict the banks. They should have restricted, managed and regulated them properly on the way up and not brought them juddering to a halt as they did in 2007-08.

The Government are still doing that to the banks, as I have been trying to illustrate to Members on the Treasury Bench, by taking £700 billion out of the balance sheet of our leading bank, the Royal Bank of Scotland, which they happen to own. No Treasury Minister has ever explained why they are doing that. This Bill contains provisions for another tax on banks-I understand how popular that is-but does not make provisions for expanding banks. Surely what we need, if we are to have a positive and strong recovery, is banks that can expand their lending to British business and individuals sensibly, so that there is an increase in private sector demand as well as the limited increases in public sector spending that the Government think represent the way to a recovery.

Driving with one foot on the accelerator and one on the brake is the way to go absolutely nowhere. The Government are creating a lop-sided economy with fast-expanding public spending and fast-contracting private sector debt and activity in many areas. That is the way to national bankruptcy. This Finance Bill will not raise anything like enough revenue to pay for the huge amount of spending that they are proposing. Their model of running the economy will not lead to a rapid recovery of the kind that we desperately need, and it will not create the jobs that we need to get people off benefit. That is the type of public spending cut that I would like to see-really big cuts in the social security programme because people have gone back to work or got a job for the first time and do not need benefit any more. Surely that is a cut that we can all agree on, but the Bill will not deliver it because it does not provide the friendly tax environment for business and enterprise that must be required if we are to get a decent recovery.

My right hon. Friend the Member for Witney (Mr. Cameron) made an excellent response to the Budget and reminded the House that, under this Government's lack of tender care, the UK has gone from being the fourth best tax regime for business in the free world to being the 84th best, which is a dreadful reduction in our tax competitiveness as a result of the measures in this and other recent Finance Bills. That is why our economy is not going anywhere-because of an anti-enterprise Finance Bill and because the Government will not sort the banks out properly. Until Ministers can explain to the House why they have pursued a boom and bust policy towards the banks, we will not have a proper explanation of the mess we are in, and until they come forward with a Finance Bill that is pro-enterprise, we are not going anywhere fast.

I hope that this farce of a Finance Bill will end as soon as is humanely possible. We need a new Budget that does the spending and taxation together and is
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honest with the British people about both sides of the equation. We need a new Budget that leads to a proper Finance Bill that has rates of tax that might support and promote growth.

7.5 pm

Stewart Hosie (Dundee, East) (SNP): The right hon. Member for Wokingham (Mr. Redwood) is right about the lack of time to debate and scrutinise the Bill. We would normally have about three months, but today we have about three hours. It is not simply the lack of scrutiny by right hon. and hon. Members; it is the lack of scrutiny by outside professional bodies that do such an invaluable job for us all. Only a few years ago, the Government introduced the real estate investment trust regime, which they had to change within a year or two, and which was subjected to intense internal and external scrutiny. However, many of the measures in the Finance Bill are being subjected to no scrutiny whatsoever.

I do not intend to speak for long, but my main concern is that, although this might be billed as a Finance Bill for growth and fiscal consolidation, as far as I am concerned it does very little to encourage the key thing-growth in the economy. It has been mentioned already that the national insurance changes, which will limit businesses' ability to recruit and take spending power away from local economies, are not in the Bill, but many other things are. It includes provisions for three fuel duty rises-that is in addition to the three that we have had in the past 12 months or so. A 17 per cent. rise in fuel duty-that makes it six rises over just two years-is massively over inflation and hugely damaging.

The Bill also includes higher duty on Scotch, which will do precisely nothing to tackle the issue of problem drinking and antisocial behaviour that follows, but will, of course, have a huge impact on the manufacturers and distillers. The Bill also freezes tax allowances, representing a real-terms cut in take-home pay for real people and taking more spending power out of local economies. It takes no recognition of the fact that for many people the real inflation rate is about 50 per cent. higher than the published rate used by the Government. With tax allowance thresholds frozen, that is a double whammy when it comes to spending power and inflation.

The Bill is linked to the Government's fiscal responsibility plan, which, at its heart, is simply for deep and savage cuts-cuts deeper and tougher than even under Baroness Thatcher. It is worth reminding ourselves that the Bill is the starter to many of the cuts to come, which will include real-terms cuts to budgets this year, but without a comprehensive spending review to tell us where they will come from, and £57 billion out of the economy in 2013-14. For the avoidance of doubt-people should remember this-that is nearly £20 billion in tax rises and nearly £40 billion in service cuts, which represents nearly 3 per cent. of gross domestic product, assuming that the Government's forecast of 3.25 per cent. growth in four of the next five years is remotely achievable.

I do not believe that this is a Finance Bill for growth, and I am not at all convinced that the Government's plan for fiscal consolidation has any credibility. As the right hon. Member for Wokingham said, there is no time to go through the Bill in any considerable detail, but it is worth highlighting one or two of the clauses. The changes in clause 1 to rates and thresholds will mean a real-terms tax rise and a real-terms cut in
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take-home pay. Clause 3 and the changes on small profits rates and fractions will have an impact on small businesses. I happen to welcome clause 6 on the relief for first-time buyers and the increase of the threshold to £250,000 for first-time buyers. However, a first-time buyer still needs to get a mortgage, and even if they can only get 80 per cent., they will still need to find £50,000 in cash to buy a £250,000 home. There cannot be very many people in the Minister's part of east London who have a spare £50,000 in their pockets for a deposit for a house. I suspect that even those on the Tory Front Bench might struggle to find that kind of loose change, so although I welcome the move, it is slightly surreal.

Sir Nicholas Winterton: The hon. Gentleman has just talked about the amount that individual first-time buyers might need to put down to obtain a mortgage from a bank or building society. However, I hope he will accept that part of the problem in this country was that we were giving people too much money to buy houses with. In some cases Northern Rock was giving people 125 per cent. of the capital value. That surely led to some of the problems. Is there a figure that the hon. Gentleman believes it would be right for people to put down as a meaningful deposit on a mortgage?

Stewart Hosie: I would not want to set the business model for any bank or building society. If there was a particularly wealthy individual to whom it was quite safe to lend 100 per cent., it would be quite safe to do so. For others, the old rule of three or three-and-a-half times one salary, or two or two-and-a-half times a joint salary seems to make perfect sense. The hon. Gentleman is absolutely right: we cannot go back to lending at five times joint salary based on future pension provision; that was an act of absolute madness. But as his right hon. Friend the Member for Wokingham said in a debate a few weeks ago, if we need to invoke counter-cyclical measures from time to time when we begin to grow out of the recession, then perhaps we need to look again at some of the rules and restrictions.

With clause 12-this bears repetition-we are seeing six fuel duty rises in just over two years. With record prices at the pump and the barrel price having gone up by, I think, $30 in a year, that could be catastrophic for the haulage sector, for families and for those who need to drive to work, and the measure is, of course, inflationary in its own right.

Mr. Charles Walker (Broxbourne) (Con): I would like to raise my concerns in support of the hon. Gentleman's speech. With the price at about $80 a barrel, petrol is now more expensive at the pump than it was last year, when the price was $150 a barrel.

Stewart Hosie: The hon. Gentleman is absolutely right. As we have seen those rises in the barrel price-something like $2 in the past month, $10 in the past six months and $30 in the past year-we have seen a corresponding rise in the price at the pump. This issue is within the Government's control: they get the duty, but they also get a VAT windfall when the price at the pump goes up. In addition, as the barrel price rises, they get more North sea corporation tax, from the normal corporation tax and the ring-fenced regime. There are therefore windfalls for the Government from VAT, their own duty rises and North sea corporation tax, which is why the fuel duty regulator-or the Conservatives' version
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of a fair fuel stabiliser, or whatever some of the sensible Members on the Labour Benches called the measure-is exactly the right thing to introduce. Should the Conservatives win the next election, I hope they can be held to their promise to introduce their version of the fuel duty regulator quickly, to smooth out spikes in prices at the pump.

Mr. Redwood: I agree with the hon. Gentleman, but can he confirm that while tax is now two thirds of the pump price-the Government's imposition is a big reason why the price has gone up so much-the huge devaluation of the pound also means that the sterling price of oil has gone up far more than the dollar price?

Stewart Hosie: The right hon. Gentleman is right about the impact of currency fluctuations. He is right that duty and tax amount to approximately two thirds of the price of a litre, but the real killer is in wholesale diesel. Before tax, our diesel is among the cheapest in Europe; after tax, it is possibly the most expensive. From my point of view, as a Scot in an oil-rich nation, I find that quite abhorrent, especially when people are struggling to make ends meet and when we are seeing six rises-a 17 per cent. hike-in fuel duty over two years.

Schedule 1 deals with the levy on bankers' bonuses. The Minister said, as the Chancellor has previously, that it had brought in £2 billion, but the bankers do not pay the tax: the banks pay it. If there is £2 billion in the Treasury coffers, there is £2 billion less to lend to real people in the real world. As for scrutiny of these proposals, schedule 1 is 21 pages long, and we could easily have a two-day debate on that schedule alone to ensure that there were no loopholes in it. Instead, we are going to skip over it in the next hour-and-a-half.

This Bill is not a plan for recovery or growth; it is not even part of the package of proper fiscal consolidation. It is merely a harbinger of the deep and savage cuts to come. The Prime Minister said today, "We cannot cut our way to recovery, but we could cut our way to double-dip recession." That was hyperbole-delivered in the style of practised statistics oratory-but given the real-terms cuts now proposed, and the £57 billion that will come out of the economy in a single year a couple of years hence, why are those on the Treasury Bench not listening to him? Why do they think that the cuts proposed in the Bill and in their other measures will lead to anything other than a return to recession?

7.16 pm

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