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Lord Higgins: My Lords, I am deeply grateful for the trouble that the Minister has gone to so far as this matter is concerned. Is he saying that 80 per cent. of the working families tax credit will appear as part of the social security budget?

Lord McIntosh of Haringey: My Lords, I did not say it would appear as part of the social security budget; I said it would appear within the Annually Managed Expenditure. Frankly, I do not know the answer offhand as to in which category it will appear, but it will appear as public expenditure. Anyone can aggregate or disaggregate the figures as they wish.

We then had some debate about wage inflation. The conflict between the fears of the Treasury Select Committee which reported today and the London Business School which reported this morning is significant. We do not in any way underestimate the dangers of wage inflation. We systematically seek to separate out wage increases which are the result of increases in productivity from those which are not. We are properly concerned about the latter category.

Noble Lords also referred to the unemployment figures. The noble Lord, Lord Marlesford, expressed great interest in the constituency figures, which are only claimant unemployment, whereas, as my noble friend Lord Bruce rightly recognised, we have moved from emphasis on the claimant unemployment to internationally recognised figures for employment based on the Labour Force Survey. I believe that that is a recognised improvement. There was criticism from the noble Lord, Lord Boardman.

Lord Marlesford: My Lords, that may well be but the fall in the figure of unemployment is quite remarkable. In the United Kingdom between the years 1996 and 1998--a period for which, in terms of unemployment, the previous government had some responsibility--total unemployment fell by 37 per cent.

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It may be that absolute figures are different, depending on whether you use the ILO or the claimant measure. The proportion of the fall is very considerable.

Lord McIntosh of Haringey: My Lords, of course, and no one denies that there has been a fall and the two sets of figures go in parallel. I remember the late Lord Wyatt of Weeford accusing me of throwing 500 people onto the dole by using higher figures derived from the Labour Force Survey. He said: "Where shall we find the money for them?"

I turn now briefly to the remarks of the noble Earl, Lord Dartmouth, about secondary legislation. There has been no change in the practice. The same proportion of tax legislation arises in secondary legislation or primary legislation as in the past. Secondary legislation is useful because it allows for proper consultation with the professions and business and other interested bodies.

As for corporation tax, there was general agreement that we ought to get rid of advance corporation tax. Doing so meant that we had to change the method of payment of corporation tax. We did so by phasing in over four years the system of instalments. That change applies only to 20,000 out of 700,000 companies in this country.

The change means an increase in corporation tax take in one single year, but after that the figures are the same as they would have been in previous years, except that, as I made plain in my opening speech, corporation tax is at a lower level than ever. I repeat to the noble Lord, Lord Higgins, that in total we shall take £1.5 billion less in corporation tax over the period of this Parliament than would have been the case under the old system.

On capital gains tax, I do not accept even the view of accountants that the situation will in the longer term be more complex. Of course, while we have indexation and the taper for investments which cover both periods, we have to calculate on both bases. But in the longer term, first, the indexation calculation is frozen and will never change again. Secondly, in the longer term there will be fewer and fewer indexation calculations and more of the simpler taper calculations. The most important point about capital gains tax--I refer to those who mentioned the abolition of retirement relief--is the distinction which is made between business assets and other assets. I believe that that is an important change for small businesses. I sold the majority share in my business in 1988 after 25 years. Because I was under 60, I did not receive any retirement relief at all. Retirement relief was subsequently improved, although it was extremely difficult to get.

However, with the taper, all the investments which I had had in a business asset over more than 10 years would have been taxed only at 10 per cent. That is a real improvement for small businesses. Therefore, I do not accept the charges which have been made.

On heritage assets and conditional access, we shall be quite flexible. For example, the conditional access requirement could well be fulfilled not by a "burglar's charter" but by having the assets exhibited in a local museum or gallery for part of the year. That has been generally welcomed and negotiations are still going on about it.

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Starting with the noble Lord, Lord Boardman, there have been criticisms about the distinction between capital and current expenditure. I must insist that the distinction which we are making--and we are doing it, not just talking about it as it has been talked about for 40 years--is consistent with the national accounts. It will be consistent with the European System of Accounts and it will be made to work. The important point is that when there is any disposal of assets, whether directly by central government or by local government, the receipts from that disposal of assets will be required to be used for investment purposes and not for tax cuts or for current expenditure, as they were under the Conservative government.

I must correct something I said earlier about growth projections in the Economic and Fiscal Strategy Report. I misread something that I had been told. In fact the growth projections for the Economic and Fiscal Strategy Report and the CSR were the same as those in the Budget. I apologise for that mistake.

I have dealt with working families' tax credits. I must reply to the noble Lord, Lord Higgins, about his understanding that it is not the case that we are continuing to plan for a surplus on current Budget accounts. I have given the figures. We are still planning for a surplus on the current Budget of £7 billion, £10 billion and £13 billion over the next three years. Government plans show net debt falling to less than 40 per cent. of GDP, which is exactly what we were saying before. It is only sensible to look at the debt in relation to the size of the economy, not in cash terms.

Some doubt was expressed as to whether there would be upward pressure on interest rates as a result of our spending plans. The Monetary Policy Committee has met since our spending plans were published and it did not raise interest rates. So I believe we can be assured of that.

The noble Lord, Lord Newby, expressed concern about advance corporation tax abolition and the effect particularly on elderly shareholders. The Paymaster General has undertaken to review the position of shareholders of modest means who are non-taxpayers. He has met Age Concern to discuss it and will announce his decision as soon as possible.

I shall write to the noble Lord, Lord Lucas, about the issue of tax simplification to which he referred. But it is a general concern. We recognise its importance. We think that self-assessment, after the first year, will make life much easier for taxpayers rather than the reverse. For tax returns submitted by September, self-assessment will not be required. Therefore, anyone who is in any fear of being confused by complicated tax has only to submit his return by September to get out of it. We have even won prizes for our instructions from the Campaign for Plain English, and that surprised me as much as it will surprise your Lordships.

Lord Higgins: My Lords, I do not underestimate for one moment the difficulty of replying to a debate like this and I apologise therefore for interrupting the Minister again. However, were we not told in March

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that there would be a reduction in the National Debt during the course of this Parliament? Is that still the case?

Lord McIntosh of Haringey: My Lords, we were told that there would be a reduction in the National Debt as a proportion of GDP, and that is what will happen. That is what I understood the noble Lord to be talking about.

A specific point was made by the noble Lord, Lord Higgins, in relation to CAT marks for individual savings accounts. We have just completed the consultation exercise on that and shall be considering the responses and announcing the decisions in due course. Therefore I ask the noble Lord to be patient on that matter.

I am sure that I have omitted many other aspects of this debate. It has been extremely complex, long, and well informed. I am grateful to all noble Lords who took part in it. If I have missed out any points that I ought to have covered, I shall certainly write to noble Lords, though whether I shall do so in the next two days is another matter.

I believe that, on the whole and with few exceptions, there has been some consensus that the Government are tackling the economic problems of this country with a degree of seriousness which the country, in due course and now, will commend, recognise and respect. I commend the Bill to the House.

On Question, Bill read a second time; Committee negatived.

Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution of 9th March), Bill read a third time and passed.

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