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Finance Bill

I am not sure that we would get progressive politics from a Liberal Democrat party that seems intent on massively shrinking the state. Nevertheless, it is important to debate the size of the state, as we did in the Budget debate and as we are doing on the Second Reading of the Finance Bill, and the kind of things that it provides using taxpayers' money, and that it does not provide, and how it pays for those things. Let me draw on my own past by way of illustration. In my early 20s, I spent several years as a truck driver and a bus driver. Thanks to a strong trade union, the Amalgamated Transit Union, in which I was actively involved when I lived in Canada—I continue to be a member of the Transport and General Workers Union and now Unite—we were the second highest-paid bus drivers in the world. In the early 1980s, I was taking home £10,000 a year. I saved a lot of that money, and I went to the Birmingham polytechnic, as it was then called, to study law. I had two years' study at the polytechnic, followed by two years as what was then called an articled clerk. After I qualified, I was a moderately low-paid solicitor before working my way up into partnership. So it probably took me over 10 years to get back to the economic position that I would have been in had I continued as a bus driver throughout that time. But I did get ahead, so that is an anecdote about investing for the future. I think that that is what we and this Government are faced with. Frankly, if the Conservatives were to win the next general election, they would also be faced with the issue of what the state does for the people who live within its borders, first to invest for their futures, and secondly to assist individual residents in investing for their own futures. When the Prime Minister was Chancellor of the Exchequer, he talked about abolishing boom and bust. I think we have to be careful about the way in which we use and interpret that phrase. I have to say that I never understood or interpreted the Prime Minister, as he now is, to be saying that through the economic policies of a Labour Government in one country among hundreds, we could abolish the cyclical nature of capitalism. Whether or not one accepts Kondratiev's long waves of about 40 years or alternative models, it is clear that capitalism for the last 250 years, in its fairly modern incarnation, we might say, has always been cyclical. My interpretation of the abolition of boom and bust was that it was more about lessening the troughs and lowering the peaks, if I may put in that rather graphic—I use the word in its true sense—way. I think that this Government did a pretty good job of that. We did not have a boom and we avoided the two recessions in the early part of the previous century that were evident, for example, in the USA. We were not booming in the way China or India have been, with 10 per cent. growth. Superficially attractive as that sounds, if we had had 10 per cent. growth, it would have created big strains on our economy and society. In this financial year, we are looking at economic contraction of up to 5 per cent. That is absolutely devastating for people who are losing their jobs, for businesses that are closing and for some people's standards of living, but it does mean that 95 per cent. of those in the work force are carrying on working. In terms of where we are as an advanced western industrial capitalist country, we need to bear in mind how deep the trough of this bust is. [Interruption.] I hear a sedentary, almost sotto voce, comment from the hon. Member for Taunton (Mr. Browne) about what all this has to do with the Second Reading debate of the Finance Bill. Well, we are facing difficult times and there are very worrying figures in the Budget about the massive amount of borrowing that is going on, as the hon. Gentleman himself graphically put it when he mentioned £480 million a day and £175 billion of borrowing for this year and almost the same figure next year. In examining a proposition, way forward or proposed course of action, however, I was brought up to examine alternative courses of action to test whether the proposed course—whether it was suggested by a parent, a teacher or whoever—was suitable. It is always a question of looking at the alternatives as well as at the proposed course of action. When it comes to alternatives, what do we find advocated by the hon. Member for Runnymede and Weybridge (Mr. Hammond), the shadow Chief Secretary to the Treasury? I have to tell him that he put forward a platitudinous position—transparency and certainty in taxation, simplification, a competitive tax regime, efficiency savings, the shibboleth of "tax neutrality" and so forth. They all sound wonderful, but one needs some flesh on the bones. I did not see much flesh being given straightforwardly, but I did see a "drip, drip, drip" in the hon. Gentleman's speech in respect of tax cuts. That is an understandable proposition to advance when faced with our economic situation. I do not think that it is a very good way forward, however; it may be coherent, but I think it is wrong. I do not want to be accused of being superficial or platitudinous, so let me mention fuel duty, bingo, corporation tax, inheritance tax for the very wealthy, state aid for venture capital trusts—okay, that is not a tax cut, but a spending commitment—cutting taxes on savers, cutting alcohol duty, not accepting pensions tax relief proposals at the higher rate and not accepting the 50 per cent. top rate of tax, which I agree is not a tax cut; it is a rejection of a tax rise.