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5.47 pm
Mr. Michael Jack (Fylde): An intervention on the hon. Member for Glasgow, Govan (Mr. Sarwar) could have been arranged, but he had obviously given great care and attention to his remarks, and I wanted to hear him out. Had I intervened on him, I would have pointed out that the very pensioners to whom he referred at the beginning of his speech, whom he sought to help, have suffered as a result of, for example, the Government's removal of the payable tax credit. Some of the poorest pensioners in the hon. Gentleman's constituency, who perhaps receive a small income from shares bequeathed to them by earlier generations, are now paying more tax as a result of the proposals in the Government's previous Budget, which he so fulsomely supported.
The hon. Gentleman referred also to the removal of 700,000 children from poverty. We all desire an end to poverty conditions, but I recently tabled a question to the Prime Minister to find out his exact definition of child poverty. When I discovered that the definition was rooted in an analysis of what were called "households below average income", I suddenly realised that poverty was a moving target. Households with an income below average will find that their income increases over time, as overall incomes increase, so we may find that those 700,000
children remain within the same category for ever and a day. That is a false target. The hon. Member for Govan was lucky that I did not interrupt him on that point.
The debate is the start of the long process of considering the Finance Bill, which is shorter than those that we have been used to. The last Finance Bill that I had the pleasure of taking through the House was nearly twice as long as this one. However, the fact that there are fewer clauses does not mean that there are not plenty of proposals to question and criticise. That will be my purpose during my remarks.
On the day of the Budget, The Sun exclaimed in triumph, "Everyone a winner!" I am afraid that The Sun got it wrong because, like everybody else, it was seduced by the Chancellor's presentation on the day and did not examine the detail. Over time, people who have a house and no children will lose out because of the Budget. Honourable couples--married couples--who look after an aged relative for example, will lose out as a result of this Budget. Single people will also lose out. Right hon. and hon. Members have already mentioned those in industry and the road haulage industry who will lose out. Something like 4 million people will lose out as a result of the Budget, and I hope that in the course of the debate we shall tease out who the losers will be.
In his usual perceptive and carefully argued way, the hon. Member for Gordon (Mr. Bruce) put his finger on a very important point. This is a fiddly little Budget. It is a gift to accountants--it has so many intricate details that one really will need an expert to sort it out. I shall later show how in the arcane matter of, for example, schedule 3, which relates to clause 27, the Treasury draftsmen have done their worst and opened up a minefield. I hope that the Financial Secretary, who no doubt has penetrated schedule 3, will be able to answer the questions that I shall put to her.
The hon. Member for North Durham (Mr. Radice), who is the Chairman of the Select Committee on the Treasury, rather pulled me up when I smiled on hearing his Committee's findings on the Budget, but I was much taken by its conclusions on presentation. Given our involvement with Treasury matters, I suppose that we know something about presentation, and the hon. Gentleman was right to point the finger at me and say that I perhaps did some of that too. We all sometimes have to handle difficult messages, but this Budget took smoke and mirrors to the level of a new art form. I can think of some of the people who might have assisted in this, and they have clearly lost none of their skills in the transfer to the new Government.
I was particularly interested in the Select Committee's proposal for an element of independent audit, involving the National Audit Office and the Institute for Fiscal Studies. There is merit in that. It is important that people understand what the Budget is about. The voyage of exploration that we all have to undertake, looking at the detail of the "Financial Statement and Budget Report", is difficult. The Chancellor wanted to triumph on the day, and I am sure that he does not want his triumph taken away later, but he lays himself open to criticism.
I also welcome the Select Committee's finding that the Government should not wait for parliamentary questions to be tabled before reporting on the distributional effects of the Budget. The hon. Member for Gordon touched on that very point. I should like the Financial Secretary and
the Economic Secretary to answer fully the question that has recently been tabled and follows the same format as that asked by the right hon. Member for Blackburn (Mr. Straw) in 1981. Will they stop falling back on the excuse that it is difficult to estimate the impact of indirect taxation in terms of the overall impact of tax changes on many different levels of income? However difficult that task might be, the Treasury should at least be consistent. When the Government were in opposition, they were happy to have that information and to use it against the then Government--I have to say that they used it effectively. In this age of open government, the least that the Financial Secretary can do is to ensure that, when that question is retabled, it is properly answered. We need that transparency.
Several people have implied that the Bill's overall effect on the tax burden involves a rather arcane, ethereal debate with which we should not soil our hands. I shall spend a few moments considering that argument and refreshing our memory as to why it is important that we do not lose sight of such important points.
The measures that will determine the overall tax burden of the next three financial years combine measures introduced in the 1998 Budget with those introduced in 1999 Budget. We should not forget the interaction between the two. One of the elements of the lack of transparency displayed in the Budget is the Chancellor's unwillingness to relate that which is already in train to that which is coming. The Chancellor owed it to the House to present a more coherent picture by putting the two together. I shall make up for that deficiency.
Let me remind the House of one or two measures which have already been agreed and are coming. Mention has been made of the abolition of advance corporation tax. I shall touch on two aspects of it which I am sad that the Bill does not seek to address. The Bill does not address the £400 million hit on charities caused by the removal of payable tax credits. There is much in the Bill about new ways of charitable giving. There is something about companies being able to write off the full cost, for example, of materials that they give charitably, as if that will somehow make up for the £400 million.
I asked the Church of England what the impact would be on its accounts--it will lose £12 million. I am not certain how that money will be found in the rather sparse collections made at my church--I make no criticism of my constituents, but there are not many in church at 8 am on Sundays. Indeed, there are only about 25, and there are limits to what they can give. All the Churches, not just the Church of England, will have to make up the deficit. That is the kind of detail that the Chancellor does not like being exposed.
Mention has been made of what is turning into a savings farce--the introduction of individual savings accounts and the abolition of PEPs and TESSAs. It is interesting to note in the Red Book that that gives the Treasury a profit in the financial year that we have just entered of £60 million, and £10 million next year. This is just another subtle way of trying to make savings look good and make money for the Treasury.
Right hon. and hon. Members have also mentioned the 6 per cent. increase in the fuel duty escalator, and we shall mention it again.
The debate so far has saddened me in that there has been no real consideration of the level of taxation. What is the right level of tax burden? We have not had a proper
discussion about what we should tax. Comparisons are made between the lower marginal rates of tax in parts of continental Europe on items such as alcohol and diesel fuel and rates in the United Kingdom, but I am sure that no political party would advocate the 5 per cent. rate of VAT on fresh food which is typical of French taxation. That is a no-go area. It is important that all Front-Bench Members take note of the fact that, if they are to discuss levels of taxation, we should decide how much it is right for the public sector to take from the private citizen. At the same time, we should be honest with ourselves and say what are the tax go and no-go areas.
Another question that I want Ministers to answer is, what has happened to tax simplification? What has happened to the tax rewrite? Where are the clauses that people have been labouring on for the past two or three years? Labour embraced the exercise with enthusiasm when the idea was first mooted--I think that the hon. Member for Wrexham (Dr. Marek) was its appointee to the Committee. Neither the Finance Bill nor any Bill published in parallel with it contains any clauses relating to tax simplification. Indeed, tax complication is the essence of this Bill. What has happened to that exercise? The Bill and the Budget make no mention of it.
The Government cannot escape the fact that, over the next three years, taxation levels are set to rise because of various measures in the Bill. Table 1.3 of the Red Book reveals that some of those measures that have not been discussed are, for example, the next financial year's delayed action hit in terms of national insurance charges--£430 million in 2000-01 and £750 million the following year.
That table has an intriguing little section called "Securing the tax base". I should be grateful if, when the Financial Secretary winds up the debate, she would give a little more detail about what is going on in securing the tax base, because I discover that, in that section of the Red Book, the abolition of mortgage interest relief is said to be securing the tax base--as though it were a tax fiddle. However, in the Customs and Excise and Inland Revenue press release for that item--press release CW 3--I find an oddball collection of measures under the heading "Securing the tax base".
The press release says that the measures will yield "more than £1 billion". That sounds good. One might suppose that it meant £1 billion a year, but no: it is £1 billion over the next three years. A third of a billion--£300 million or £350 million--is not much, so would the Financial Secretary care to tell us what those inspectors, whom I bequeathed to the Treasury before I left, and who deal with the complicated tax issues of larger companies and other institutions have been doing for the past two years? They were retained because of their detailed tax knowledge. I remember that the last tax fiddle that they found was worth about £0.5 billion a year, and they told me that, every so often, they found such things; so why is such a small sum being spent on securing the tax base? What has been going on? Parliament deserves a report about that.
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