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Mr. Brown: I have quoted the figures to the shadow Chancellor--37.4 per cent. down to 36.8 per cent. Let me add the figures that the Conservative Government were proposing for these years--1999-2000, 37.2 per cent.; 2000-01, 37.7 per cent.; and 2001-02, 38.1 per cent. The burden is lower than the Conservatives were planning. Will the shadow Chancellor now answer our questions? Does he agree that the minimum wage, the working families tax credit and the new deal are good for Britain?
Mr. Maude: The best the Chancellor can do is to contend that the tax burden is falling, under his fiddled definitions, from a level to which he himself has raised it. I must remind him that he is the Chancellor of the Exchequer--he has introduced these taxes. They have gone up in Budget after Budget. In every quarter, the tax burden has risen. These are the ONS figures--they show that the tax burden has risen.
Mr. Maude: I am not giving way for the time being.
It is in black and white in the report, but the Chancellor insists that black is white--that taxes are down when they are up, that promises have been kept when they have been broken, and that trust has been honoured when it has been betrayed. He goes on about how he is cutting one or two headline tax rates, but people know that what really matters is the tax burden--the total amount of the nation's income taken in tax.
No one is grateful for getting back the little that the Chancellor is giving with one hand when he is swiping so much more with the other--like a manager boasting about the one goal that his team scored, while omitting to mention the four that they let in. Will he use this opportunity today to get off the treadmill where he has got stuck? Let us call this national tax amnesty day. Why do the Government not just admit the truth?
Mr. Owen Paterson (North Shropshire):
Will my right hon. Friend give way?
Mr. Maude:
I will not give way for the time being.
Will the Chancellor persist in lecturing businesses about the rate of corporation tax, when the Confederation of British Industry says that the Government have increased tax massively and that the sums they give back are trivial by comparison?
That is the first, and the worst, broken promise. In opposition, Labour said that it would not increase taxes at all. In government, the tax burden has risen every quarter since Labour came to power. Labour has decided that its only option is to rewrite the truth. There is nothing in the Queen' Speech to salvage Labour's promise on tax. There is nothing to reverse the dead weight of extra regulation that the Government have heaped on business.
Where was the Bill in the Queen's Speech to set Government Departments targets to cut red tape over the years? There was no sign of it. It was all so different in those trusting times before the election when Labour was courting business with its manifesto promise not to impose burdensome regulation. Labour went through the whole process of courting--the wooing, the dinner dates,
the flowers, and the promises that it would still respect business in the morning. Now it seems that it was just a one-night stand. Regulation is rising relentlessly.
Mr. Dale Campbell-Savours (Workington):
Will the right hon. Gentleman give way?
We are told that everything will be all right because the Government have declared war on red tape. They might as well say that they are declaring war on themselves. What does the Chancellor say to business men who trusted Labour before the general election and now face extra red tape costing £5 billion a year? Will he say, "Sorry, we can't help it; we're in the grip of some hideous compulsion."? Even the Prime Minister admitted that some of the regulation is "over the top", but who does he think put it there in the first place?
Mr. Campbell-Savours:
Will the right hon. Gentleman give way?
The Queen's Speech refers to the Financial Services and Markets Bill, which is a chilling example of regulatory incontinence. It invests oppressive powers in a single, unaccountable, over-mighty institution. That concentration of power in one pair of hands has no place in a free society. There is no split between the chairman and chief executive, no properly independent board and no checks and balances. The Financial Services Authority will act as rule maker, policeman, prosecutor, judge, jury and executioner.
It is hardly surprising that the imminent legislation is frightening a lot of people in the City. They are reluctant to speak out lest they be identified as troublemakers and targeted by the FSA. I have heard senior people in the City speaking in chilling terms about the threats that they fear from the authority and the Bill. The Bill needs further changes to end that fear.
Mr. Maude:
I will not give way again. I have given way many times and I want to make some progress.
The Government inherited the fastest-growing economy in Europe. For two and a half years they have chipped away at the very foundations of Britain's competitive advantage with new taxes and more red tape. They thought that everything would be easy with the golden legacy that they inherited. They are like the cocky cyclist who says, "Look, no hands." Because of the strength of the legacy, they thought that a few more regulations here, a bit more tax there and, while they were at it, a few favours thrown in for the trade unions would not matter. For a time it looked all right, but slowly and surely the proof comes through.
Productivity is another notable absentee from the policy pronouncements in the Queen's Speech. Last year, the Chancellor thought that it was the factor that mattered most. [Interruption.] He said that it was a fundamental
yardstick of economic performance and that poor productivity condemns a nation to being held back. This year--[Interruption.]
Madam Speaker:
Order. The right hon. Gentleman must be given a proper hearing.
Mr. Maude:
Thank you, Madam Speaker.
This year, the Chancellor promised in his Mais lecture that productivity would be the focus of his pre-Budget report, but he barely mentioned it in his statement. That is hardly surprising, as it has been disclosed that growth in productivity has fallen by two thirds since he took office. In the previous Parliament, it was 2.2 per cent. a year and now it is 0.7 per cent. Is he proud of that? How prudent is it to be presiding over an economy in which the seedcorn is being eaten away by degrading our productivity growth?
The next part of the great Labour lie is enterprise. Within days of announcing to the CBI tax cuts said to be worth £40 million to entrepreneurs, the Chancellor confirmed his plan to rake in £500 million under his IR35 proposals. It is a bit of a shame that he did not speak first to Mr. Peach from Aberdeen, who wrote to his local Member of Parliament.
Mr. Peach said--[Interruption.] Hon. Members should listen to this, because I guarantee that in every one of their constituencies there will be hundreds of people who are hit as Mr. Peach has been, and they might to like to know what the effect is.
Mr. Peach said:
The Paymaster General may come to regret her arrogant assertion that claims of a vast exodus are irresponsible and do not bear a moment's scrutiny. The fact is that the Government are hitting not only their old heartlands but the very people they persuaded to trust them before the election.
Mr. Maude:
I shall give way to the hon. Gentleman.
Mr. Campbell-Savours:
Persistence pays. I have a constituent called Mr. Peach, who is a good friend of mine, and we have interesting conversations. I am sure that he would like to ask the right hon. Gentleman the same question that he has been asked by my right hon. Friend the Chancellor several times during this debate--what is the Opposition's position on the working families tax credit and the national minimum wage? Will the right
Mr. Maude:
It is very interesting that the hon. Gentleman, like his right hon. and hon. Friends, has no answer to the problem of IR35. We said that it would drive people abroad and it is already doing so. The economy, the country and the new technologies will all suffer from that ill-judged measure.
The Chancellor and his colleagues have made much of the claim that, this year, the economy is likely to have done better than outside forecasters predicted. However, Labour Members omit to mention one simple reason for that--consumer spending this year has been much stronger than predicted. Why? Because saving has halved. Most people want to save, to make themselves independent of the state and build up security for the future. Saving is one of the most prudent actions possible, but it has halved. How prudent does the Chancellor think that is?
After the raid on pension funds, the abolition of TESSAs and PEPs, the introduction of the ISA--a bewildering financial instrument and a tribute only to the taste for financial complexity of the former Paymaster General--saving has fallen by half since the Chancellor took office. However, the Prime Minister said before the election, in 1996, that the whole of Labour's economic policy was geared to promoting stability, saving and investment. The only thing that he did not say was that the gear would be the reverse gear. The Chancellor should now admit that, judged by the Prime Minister's words before the election, Labour's policy on saving has been a dismal failure. When will the Chancellor admit that his short-term attack on saving will be cripplingly damaging in the long term?
In the Finance Bill, we can expect some more small-scale measures, some foreshadowed in the pre-Budget report, which claim to help business. Businesses may be grateful for a few crumbs of support that slightly offset the hammering they are getting from rising tax and extra regulation, but they do not want those crumbs. The situation is starting to resemble what people used to say was Labour's approach: "If it moves, tax it; if it still moves, regulate it; and when it stops moving, subsidise it." Businesses do not want the trivial concessions that Labour now offers; they want the Government to stop beating them up.
The Government propose to bring forward a Bill introducing resource accounting. We support the principle--indeed, it was the Conservatives who decided to introduce it. My concern is not with what the Bill proposes to cover, but with what it fails to cover. It will exclude most of what the Government receive and, crucially, most of what they spend. The Government talk of greater honesty and transparency, but the proposed Bill would give the Treasury carte blanche to include or exclude items from the accounts at whim.
For example, there is nothing in the Bill to prevent the Government from reclassifying the working families tax credit as a tax reduction rather than a benefit expenditure, even though that would be a clear breach of international accounting conventions. We support resource accounting, but the Government are giving us creative accounting.
There is so much scope for fiddling the books that one begins to wonder whether the former Paymaster General, the hon. Member for Coventry, North-West (Mr. Robinson),
is doing some consultancy work for the Chancellor. The Chancellor has been universally condemned for his corruption of the national accounts. Sir Peter Kemp has said that the Chancellor is a statistical heretic. The OECD has said that he violates international accounting rules when presenting his figures.
We feel the same unease about the proposed Bill on private finance. We strongly support the private finance initiative, but the latest proposal must not allow the Chancellor to remove debt from the Government's balance sheet simply by means of more financial engineering.
The Government are proposing to introduce a Freedom of Information Bill. That should be about openness and honesty, but the Government still do not provide honest information about people's tax bills. Only one Labour Member is prepared to come clean about tax, and that is the hon. Member for Brent, East. He has stated:
The Queen's Speech is a blueprint for the short term. The Government courted the public's trust before the general election; since then, they have abused it. By their abuse of trust, the Government are undermining their own trustworthiness.
We heard how 1999 was to be the year of delivery. Perhaps it was: three facts of life under Labour have been delivered, and only one of them is new. Tax went up when a Labour Government were last in charge, and it is going up today. We have always known about Labour's obsession with more regulation and red tape, so it is no surprise that Labour's new regulations already cost the average small business £4,500 a year. Is that making them more competitive? Of course it is not.
The only new fact of life under Labour is the great Labour lie to sustain the false image that the Government have created. Just last Thursday, the Prime Minister said that
"I promised to let you know how IR35 would affect me.
Is the Chancellor proud of that?
I am pleased to say that it will, in fact, have no effect as I have obtained a contract with a top Internet solutions company in New York, for which I must thank the Government--without IR35 I would never have been looking . . . Given your Government's professed declarations of support for Information Technology and, in particular, internet technologies, I wonder if my skills are really the sort that you want to drive away from the UK.
As my family will be emigrating with me, you will lose my wife's taxes as well as my own . . . last tax year we paid some £26,000 in Corporation Tax, Income Tax and National Insurance . . . and for the current year . . . I would estimate a net loss . . . of £30,000".
"We haven't increased the top rate of tax and the standard rate of tax, but we have increased a lot of other taxes . . . we have done it with all these stealth taxes. I just think it would have been better to have honestly told people beforehand."
It is no wonder the Government do not want the hon. Gentleman to run for mayor. It is not because he will not sign up to the Labour party manifesto, but because he will not sign up to the great Labour lie--no wonder the Prime Minister says that it would be a disaster for the Labour party if the hon. Gentleman got selected.
"if people don't trust us with their money, they won't trust us with anything."
People do not trust Labour on tax any more, and they are right not to. The Government say one thing and do another. When they are discovered, they deny everything but carry on just as before. The corruption of the truth on tax is the new corruption in British politics.
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