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Finance Bill

I am grateful to you, Madam Deputy Speaker. As I understand it, the Government have introduced the new tax measures—the 50p top rate of income tax, the abolition of pension relief for high earners and a whole raft of other measures—because of the catastrophic borrowing figures. I have been asked by MPs of all parties what we can do to make those figures less catastrophic. I do not wish to challenge anyone's authority, but that seems to me to be entirely central to the Bill. The right hon. Member for Birkenhead made a speech all about debt, rather than about the specific tax proposals, but these matters are obviously interrelated. From memory, I think that the baby bond costs about £500 million a year, and we need to ask some hard questions about that. Can we afford such measures? I sat on the recent Statutory Instrument Committee in which Labour and Conservative Members supported it, but I do not think that it is affordable. Can we afford to continue paying tax credits to people earning far higher than average wages? The Government obviously think that we can, otherwise that policy would change. My understanding is that the Conservative party does not dissent from that view. I say to the other two parties that we cannot carry on spending that amount. We also need to review our military commitments. Some people in the Conservative party think that we should scrap Trident; some think that the fleet should be scaled down from four to three. That is the debate that we should be having. Can 50 per cent. of young people in this country go to university? There are many more questions, but I will move on. The Labour Government wanted the state to do more with more, but that is in the past. We are not even in a position now to try to do more with less. We are now in an era in which this and subsequent Governments will have to try to do less with less. At the same time, our tax system needs to incorporate greater fairness and greater incentives to work. Labour's recession cannot be used as an excuse to avoid helping low and middle-income earners to make work pay. One of the worst features of the Budget and the Finance Bill is the impact they will have on people on relatively modest incomes. That is why the starting threshold of about £6,000 for income tax is too low—it should be £10,000 a year. We need to come up with ways of rebalancing the tax system that are more ambitious than those in the Budget, in order to give people on low and middle incomes greater opportunities to keep a higher proportion of their household income, and greater incentives to work.