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Baroness Hogg: My Lords, the noble Lord may recall that I offered the page references earlier. Will he therefore accept from me the figures in the pre-Budget report which show that net tax and social security as a proportion of GDP in the last year of the previous government was 35.3 per cent; that this year it is 37 per cent and that by the end of this Parliament it will be 37.2 per cent?
Lord McIntosh of Haringey: My Lords, I have already made the comparison with the figures for the previous government. Of course the figures in the pre-Budget report are correct, and I have never attempted to say otherwise. This is becoming a theological argument. I am very serious. The differences between 35 per cent and 40 per cent of GDP are much more vulnerable to change through the GDP than through taxation measures, let alone as regards the taxation burden, which is much more affected by fiscal drag than by changes in tax rates.
I am not in any way saying that the accusations made by the Opposition are true but even if they were, the kind of figures being talked about--namely, the difference between 36.8 per cent and 37.2 per cent, or whatever--are of no fundamental economic significance. Economists who look at these issues and are concerned by the effect on economic behaviour know that expectations are the important consideration. They know that expectations of tax burdens have not changed significantly.
However, I do not wish to leave the noble Baroness, Lady Hogg, the noble Lord, Lord Cavendish, or the noble Lord, Lord Blackwell, who was most vehement, without a word on regulation. The figures simply do not bear out what was said. One can take the gross number of regulations. The statutory instrument register shows that the last government introduced over 10,000 statutory instruments between 1994 and 1996 compared with 8,500 in the two years from May 1997. But I do not claim that that has any real significance. Of our 8,500 regulations, only 384--it is 4.5 per cent--imposed any costs on business. The vast majority have no cost impact. Some are road closure orders. Some are
I do not think that we should pay too much attention to the claims that are made about the number of regulations. I believe that we have to take very seriously what is inevitably a continuing battle against over-regulation of business and in particular of small and medium enterprises. That is why we give such weight to the work of my noble friend Lord Haskins and his deregulation task force.
I could not quite understand the drift of the complaint about him by the noble and learned Lord, Lord Fraser. It seems that he is doing a rather good job in the Cabinet Office without being paid as a Minister. Everything he does is accountable to Parliament through Ministers in the Cabinet Office. If he is working well, as I think that he is, I do not see what complaint noble Lords can have.
Lord Fraser of Carmyllie: My Lords, the Minister took the time to intervene in the limited time I had to speak. I ask him to respond to the specific point I put to him. There is a reference in the gracious Speech to what the Government propose to do with regard to regulation. I put a specific point to him about what I understood lay behind the proposal. The noble Lord has now had about four hours to discover whether or not what I suggested was accurate. Could he now please respond to me?
Lord McIntosh of Haringey: My Lords, I thought that I was being kind in not responding to the noble and learned Lord. He suggests that there is something wrong in using secondary legislation to remove regulations imposed by primary legislation. I remind him of the Deregulation and Contracting Out Bill 1994 in which Mr Michael Heseltine, of his party, made a virtue of using secondary legislation to change primary legislation which was damaging. Does the noble and learned Lord suggest that we should not continue with that policy?
Lord Fraser of Carmyllie: My Lords, I seek to discover from the Minister the Government's policy on the matter. At this point he is being extraordinarily evasive about it. If the noble Lord wishes to say that he will pursue further what we intended, let him say so. Alternatively, if there is some further extension will he please explain what is meant by the expression to be found in the gracious Speech?
I also had difficulty with the argument about capital gains tax and business start-ups. My noble friend Lord Gavron, in his excellent maiden speech, made the point clearly, but I did not understand the argument of the noble Lord, Lord Jacobs, for a cut in capital gains tax for non-business assets. The whole point about singling out business assets for cuts in capital gains tax is to concentrate tax cuts precisely in response to the points made by my noble friend Lord Gavron, the noble Baroness, Lady Sharp, and others. The real need is for positive help for small businesses starting up, particularly high-tech businesses. We are establishing R&D tax credits to meet exactly the point the noble Baroness made. But to change capital gains tax in general, other than for business assets, as the noble Lord, Lord Jacobs, and the noble Baroness, Lady Hogg, appeared to demand, would be wide of the purpose and, I believe, a great mistake.
My noble friend Lord Lofthouse made a powerful plea for the mining and mining equipment industries. I can give him the undertaking for which he asked; that we shall study his speech carefully. However, I hope that to some extent he will be reassured if I reaffirm our commitment to a diverse energy base. That is the basis on which the much diminished coal industry carried on and it is an important issue for us in considering the matters he raised.
Several noble Lords commented on the DTI Bills, which were introduced by my noble friend Lord Sainsbury. I am pleased to say that many noble Lords were supportive. The noble and learned Lord, Lord Millett, in a particularly well informed maiden speech, welcomed the insolvency Bill and spoke about bad debts. As a businessman who was almost brought to bankruptcy by the bad debts incurred by others, I am cautious about changes to insolvency provisions. However, the report of the committee with which the noble and learned Lord was involved made a major contribution to our thinking on the subject.
My noble friends Lord Harrison and Lord Haskel, the noble Earl, Lord Selborne, and the noble Lord, Lord Blackwell, welcomed the e-commerce legislation. I thought that the noble Lord, Lord Blackwell, gave 0.3 of a cheer rather than three cheers in the context in which he properly set e-commerce. I hope that he is right about the opportunities it creates; I hope that he is wrong about our attitude to them. I hope and believe that he is wrong in suggesting that our general attitude towards business would inhibit the beneficial growth of e-commerce. The noble Lord complained that the Bill is a year late. That is true, but perhaps he will agree that the effect of consultation required us to think again about a number of key aspects. We have done so and the Bill is better as a result.
My noble friend Lord King was kind enough to refer to the Limited Liabilities Partnership Bill, which I introduced last week and which will have its Second Reading next week. I hope that noble Lords will feel ready to take part in that debate.
Before referring to particular Bills, I want to respond to the point made by the noble Lord, Lord Cavendish, about the delivery of public services. That is most relevant to the e-commerce Bill. I do not know whether he appreciates the significance of the Prime Minister's dedication to the cause and the pledge which the Prime Minister gave. The noble Lord called it a modernising big idea; I do not know that we call it that particularly as I am not using the word "modernising" in this speech. The Prime Minister is certainly dedicated to the idea of electronic government; of opening up all the possibilities of electronic communication between government, taxpayers, citizens and all who have to deal with government in any respect.
I shall quickly race through the three important Bills which I must introduce to your Lordships. The first is the Government Resources and Accounts Bill, which is the implementation of resource accounting and budgeting--the biggest reform programme in the management of public finances since the time of Gladstone.
The noble Lord, Lord Cavendish, asked whether that meant that the Treasury had finally understood the difference between capital and revenue. The Treasury will not like my saying so, but the answer is "yes". The Bill will enable the full implementation of resource accounting and budgeting. It will improve the way in which Parliament votes and scrutinises public spending. Departments will produce the equivalent of the main financial statements as in commercial accounts, in particular, a balance sheet and the equivalent of a profit and loss statement. That does not mean that the Treasury is wrong to ignore cash accounting. As my noble friend Lord Gavron said, cash flow is important to a small business. It is important also to the Treasury. Large amounts of interest money are dependent on it. Therefore the two forms of accounting will be run concurrently for a considerable time. We shall be able to use those as the means by which public spending is planned and controlled.
The Financial Services and Markets Bill has properly attracted a great deal of comment. As stated in the gracious Speech, financial services lie at the heart of a modern economy. The financial services industry is one of our country's greatest success stories. It accounts for 7 per cent of our national income, employing over one million people. The City of London is one of the three leading global financial centres. It owes its success to its reputation for innovation and integrity. The noble Lord, Lord Bagri, with his distinguished service at the London Metal
The Bill establishes a single statutory regulator--the Financial Services Authority--which will be a world class regulator for a world class economy. It will have a coherent set of powers, clear lines of accountability and clarity of purpose. We want to have light-touch regulation where possible and consumer protection where necessary. The FSA will have statutory responsibilities to maintain market confidence, protect customers, promote consumer awareness and reduce financial crime. Whether it will provide the positive duties which my noble friend Lord Grabiner, in an excellent maiden speech, described as being against the common law, I do not quite know. I do not believe that what I have said is an answer to him.However, we have made a lot of progress in the Bill. It was published in July 1998. The noble Lord, Lord Burns, and his joint committee published their excellent report. In response to the comments made, I believe that it is fair to say--as would the noble Lord, Lord Burns, if he were here--that although we have been accused of ignoring him, we have accepted almost all of the recommendations and have agreed still more of them in principle. There are a few areas where we have reasoned and reasonable disagreements with him or where decisions are yet to be made. One of those areas is in relation to mortgages, to which my noble friend Lord Grabiner again referred. I was going to reply to the noble and learned Lord, Lord Fraser, but I see that he has gone so I shall not answer him. Therefore, we have taken account of the interests of both the City and of consumers in the formulation of the Bill.
The noble Lord, Lord Boardman, suggested that somehow there was unreasonable statutory immunity for the FSA. The only immunity is for civil action for damages for actions in good faith. That immunity was supported by the Burns Committee. In every other respect there is a great deal of accountability by the committee. The financial community will have access to an independent tribunal. There will be an independent complaints investigator. The FSA will be subject to judicial review. The arrangements in the Bill fully reflect the requirements of the European Convention on Human Rights. Consumers will be protected by a single, one-stop shop ombudsman.
I miss the noble and learned Lord, Lord Fraser. I want to make a point to him and I shall. Exactly what he asked for will be provided in a code of market conduct to demonstrate clearly what is considered acceptable practice by practitioners.
The third Bill I turn to is the child support, pensions and social security Bill. However, before I do that, perhaps I may say to my noble friend Lady Wilkins, who made an impressive maiden speech, that the issue she raises of young people leaving care and living
Again trespassing to some extent on Department of Health matters, the noble Lord, Lord Rix, urged the rights of people with learning disabilities. Perhaps he will not mind my saying that he reminds me of the Trotskyists I used to know in the Labour Party who gain one victory and want something else. They are quite right. Good luck to the noble Lord.
I find myself in great disagreement about the Bill with the noble Earl, Lord Russell. I believe he misunderstands the Bill to a considerable extent. The noble Earl states that instead of reforming the Child Support Agency, we should go back to the courts. Apart from anything else, that was not the conclusion of the Commons Select Committee, chaired by his honourable friend Archy Kirkwood, which unanimously took the view that we should not go back to the courts. Apart from anything else, the courts only dealt with cases involving divorce and property. Even then their enforcement record was not all that good. Three-quarters of the cases with which the Child Support Agency has to deal do not involve divorce or property. They involve issues of compliance rather than enforcement. I urge the noble Earl to bear that in mind when he debates the Bill with my noble friend Lady Hollis.