---

Finance (No. 2) Bill

Well, it implies that the Government are relying on the stick rather than the carrot. I would ask the Government to amend the figures in Committee so that this policy can actually work. Why not allow people a tax break if they buy cars that are available in Britain at the moment, if they are fuel-efficient and friendlier on the old carbon? It is a pity that when the Government get to inheritance tax in their blockbuster Bill, they do not do more to raise the threshold. I thought that, by cross-party agreement, inheritance tax was designed to deal with the super-rich leaving huge sums of money to their children or others, but it is now levied on most people in the south of England, and quite a few in the north, who are passing on their homes to their children. That was not the original intention, and the Government should recognise just how much house prices have risen by increasing the threshold, so that this is no longer a tax on those passing the family home on to other members of their family. I hope that the Government will think again about some of the measures affecting trusts. The point was well made by my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) when she said that many trusts were set up not in order to get round tax legislation in a legal way, but for perfectly good reasons relating to family circumstances such as divorce. It seems a great pity that such arrangements will now be caught by the legislation and will have to be re-examined at considerable expense, and perhaps reorganised—so I hope that the Government will think again. If the Government want an enterprise economy, they would be wise to revise their ideas on the abolition of the zero per cent. rate of corporation tax. That was the only corporation tax rate that I ever liked or approved of, and it was a great pleasure when this Government introduced it. They ought now to try to find ways of bringing the other rates down closer to it, rather than abolishing the one good attractive rate that we have. Such measures will work, although they might take a little time. Offering a zero rate to people setting up new and small businesses is an extremely good idea. They need the money that their businesses generate for all the bills that they have to pay, and it is good for them to have that extra incentive. The Government would also be wise to reduce the incidence of capital gains tax, which can send out the wrong signals in an enterprise economy. We live in a highly competitive world, as hon. Members on both sides of the House have noted in the Budget debate, and again today. The Government need to realise that the point that we reached a few years ago, when we had relatively low tax rates, has now been overtaken by events in eastern Europe, Ireland and many parts of Asia. Tax rates are being driven down by the competitive process of the world economy, and if we do not match the better rates we will see more investment going abroad and more people closing their factories here and setting them up elsewhere. There is growing evidence that we do not have to be a low-wage society to do well in this world. The United States of America and Ireland are very successful economies, but they are clearly not low-wage societies. However, we do need to be a low-tax society to do well. I urge the Government to live up to their rhetoric. They need to deregulate more, legislate far less, get rid of the great chunks of the Bill that are incomprehensible and not needed, and introduce lower tax rates for the enterprise sector. Then we might not need to worry quite so much about the productivity crisis in the public sector, because we would be generating more industrial and commercial activity elsewhere. I would also urge the Government to treat the productivity problem in the public sector very seriously indeed. It is already causing considerable political anguish in the run-up to the local elections, with the unfortunate stories about the sacking of nurses and doctors. These problems could be avoided if the Government were to get a grip on the cost of the bureaucracy.