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Chris Grayling: The hon. Gentleman's comments highlight the often two-faced nature of Liberal Democrat politics: on the one hand, he criticises the Government on manufacturing industry and is concerned about the predicament that it faces; on the other, he supports tax increases that place a huge additional burden on manufacturing industry. Can he explain that?
Mr. Davey: The hon. Gentleman has not been listening. When we debated the key problem facing manufacturing, I spoke about the exchange rate. Had I spoken about the rate of taxation, he would have a point, but the key problem facing manufacturing is the exchange rate because they are the major exporters in our economy. He need only talk to a few manufacturers to know that. It is possible to be in favour both of a higher rate of tax to ensure that the health service has the money that it needs and of an exchange rate that is competitive and assists our exporters, which is why we support the euro.
There are a few problems with the details of the Billthe North sea oil issues and the freeze in personal allowances, for example. I think that the cut in the starting rate of corporation tax to 0 per cent. is a mistake, as the hon. Member for Arundel and South Downs explained. However, the Bill contains some good measures, such as those on amateur sports clubs, the tidying up of film tax relief and the streamlining of VAT.
The Government have some way to go on the simplification agenda. The Bill adds some complexities. They should continue some of the good work but also go much further. I have a radical suggestion to make. One reason why we have an annual Finance Bill is the Provisional Collection of Taxes Act 1968. We do not need a huge Finance Bill every year. One reason why the tax system is so complicated and weighty is that the Chancellor, Customs and Excise and the Inland Revenue want to get their sticky fingers on the statute book every year. We should move to a system in which a full Finance Bill is introduced every other year. That would enable the Government to undertake even more consultation on draft clauses. In the years when we did not have a proper Finance Bill, we could have a small Bill that followed the Provisional Collection of Taxes Act, to make sure that income tax and corporation tax could be collected each year. That would mean that we would not keep adding so much extra taxation legislation every year, which by its nature has a degree of complexity.
Mr. Davey: I am grateful for the hon. Gentleman's intervention. If we moved to a biennial Finance Bill, I would not want that Bill to be twice the size of the present annual Bill. The purpose of the idea is to stop the tax legislation juggernaut. I think it would complement the way in which the Government are now trying to consult.
I am delighted that the Government did a U-turn by understanding that taxation needed to increase if we were to make essential investments in our public services. I have some concerns about the amount within the economy as expressed. Similarly, I have some concerns about the way in which the Government are presenting their public finances. However, overall it was a tax rise that was needed both by the health service and to ensure that our public finances are on a secure footing. For that reason alone, we shall be giving the Bill our support in the Lobby.
I acknowledge the excellent work that was carried out by my hon. Friends the Member for Fareham (Mr. Hoban), for Cities of London and Westminster (Mr. Field) and for Epsom and Ewell (Chris Grayling), who were considering their first Finance Bill. They performed an admirable task.
On the Government Benches there was a sort of game of musical chairs. We started with the Financial Secretary who became the Chief Secretary, while the Economic Secretary was promoted to be the Financial Secretary. In the past few days, we had the pleasure of welcoming the Economic Secretary to the Treasury, the hon. Member for Wentworth (John Healey), as the new kid on the block. I tried my very best to try to read the new body language of Treasury Ministers, not always with great success. However, I think we learned something about what goes on in their minds by their demureness and the way they communicated with us.
The hon. Member for Wolverhampton, South-West (Rob Marris) marked himself out by developing an interesting line of asking the uncomfortable question but without quite getting himself into the uncomfortable position. The Government have found someone on the Labour Benches who is prepared to ask the difficult question, and the Bill's scrutiny was made the stronger as a result.
For a moment, I shall take up the thoughts that have been expressed by those on the Opposition and the Liberal Democrat Front Benches about the complexity and length of legislation. With no disrespect to those who have spoken of the subject, perhaps they did not press the Government to give us a definitive statement. A Bill of more than 500 pages and in excess of 125 clauses illustrates that we have added much more legislation to the statute book, and it shows that the world is a complex place and that tax law reflects it.
I would not go so far as the hon. Member for Kingston and Surbiton and suggest that we should have a biennial Bill. Sometimes there are people who seek to avoid their just deserts. A Finance Bill must move quickly to secure the revenues for whichever Government were legitimately elected. Over the years, I have received representations from the Chartered Institute of Taxation, the Institute of Chartered Accountants in England and Wales, the Confederation of British Industry, the British Chambers of Commerce and many other individuals and organisations, all of whom, notwithstanding the tax law rewrite exercise, call for work to simplify our tax system and to improve its scrutiny.
It is time to assemble a body under Treasury chairmanship, including parliamentary representatives with an interest in the subject and, more importantly, practitioners, to try to map out an agenda to simplify the tax system and improve its operation. The idea that simplification can do the surgeon's job of cutting chunks wholesale from the tax system is not realistic. The Government, and indeed the previous Government of whom I was a member, have always looked for opportunities to remove unnecessary legislation. Making legislation work better and making it more understandable, however, as well as the need to consider the effect of the tax code on the economy, provide a perfectly legitimate opportunity for people involved in tax to have their say.
I should be grateful if the Financial Secretary in her winding-up speech nodded in that direction, and accepted the need for the Treasury to consider a meeting of interested parties to try to find a way forward. There is universal support for that, and not of a party political nature, deriving from a genuine and rational wish to establish a better tax system, which would build on pre-legislative scrutiny and the rewrite exercise for the benefit of all of us.
In conclusion, I have often asked Treasury Ministers for an explanation or economic, arithmetical or algebraic justification of the formulae used to support their position. In a world of increasing transparency, with greater pressures for freedom of information, the Treasury must re-examine the need for clearer statements on the economic effect of its measures and their justification; the way in which things have been calculated; and indeed the very oil of the systemdetails on tax revenue. I have asked for forward monthly projections from the Treasury, which are required for resource accounting and with which Departments illustrate their cash flows, but so far the Treasury has been reluctant to make that information available.
If our country's financial institutions are to map the progress of the economy, it is important that information on the cash flow of the British economy be made available to them on a regular basis. On the question of simplification, however, I hope that the Treasury is willing to be more sympathetic and call the type of meeting which I have suggested.