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Finance Bill

It is traditional for a Treasury Committee report to be tagged for debate on the Second Reading of the Finance Bill, so as Chairman of the Committee I am pleased to give a short speech on that report. The Treasury Committee's report on the 2008 Budget was published at the start of the recent recess and has been widely covered, but it was misrepresented in some quarters, not least in terms of forecasts. The Committee itself makes no forecasts for growth in future years, but we said that the outlook from the collection of independent forecasters indicated that the Treasury's forecasts were slightly optimistic. I will consider three aspects of the Finance Bill and its contents: first, the overall fiscal position; secondly, the measures to reduce poverty and the 10p tax rate; and thirdly, the scope and impact of measures affecting non-domiciled taxpayers. On the fiscal position, in many ways the Government's position is strong. Other than Canada, no G7 country has had a fiscal surplus in more years since 1997 than the United Kingdom, and compared with many EU countries our levels of public sector net debt are low. As a Committee, we understandably focused on the two fiscal rules that the Government have set themselves, and we highlighted two areas of concern. First, on the interpretation of the golden rule, we consider that it has been too closely linked to the timing of economic cycles, which has encouraged a position in which examination of the Government's overall fiscal position has been unduly focused on rather arcane controversies about the dating of the economic cycle. Secondly, the margins by which the Government expect to meet their sustainable investment rule relating to net sector public debt are tight, and seemingly highly dependent on the Treasury growth forecasts, which are at the top of the outside forecasts for growth in 2008 and 2009.