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Finance Bill

May I begin with an apology, Madam Deputy Speaker? I missed some of the speeches that followed the opening of the debate, but I am afraid that I was receiving the award of an Industry and Parliament Trust fellowship—[Interruption.] I am grateful for the approbation of the House, and I commend the organisation heartily. I should add that my fellowship was largely with the Royal Bank of Scotland, although I am not sure whether that amounts to a declaration of interest. I am a veteran of many Finance Bills, both as Back-Bench Lobby fodder during the previous Conservative Government and as a Whip in opposition. I have been trying to work out what it is that I do not like about this Bill, and I suppose it is that it is nakedly and lamentably political rather than economic in its objectives. That causes me considerable concern, but there may be some poetic justice about it. An old saying in politics has it that a Budget that is well received on the day it is announced will prove to be badly received thereafter, and one that is badly received on the day will be well received thereafter. This Budget breaks that rule spectacularly—it was pretty badly received on the day it was announced, and it has unwound with spectacular speed every day since. It has got steadily more unpopular and discredited with every day that passes, so in that way at least the Chancellor of the Exchequer has rewritten the history books, and that is something. What will this year's Budget, and the Finance Bill that flows from it, be remembered for? I have decided that it will be remembered for its four Ds—distraction, deceit, delay and deficit. I associate "distraction" with the Bill because I am afraid that that is all that I consider the 50 per cent. tax rise and the other changes for higher income earners to be. The proposal is a bit of naked red meat thrown to Labour Members on the Back Benches behind the Chancellor but, even on their own figures, it will make a pathetically small contribution to the scale of the debt and the other problems facing the Government. Other commentators outside the Conservative party, such as the Institute for Fiscal Studies, suggest that the net revenue might be pretty close to zero. I shall return to that later. The second word of the four—deceit—flows from the distraction I have described. The Budget of a couple of weeks ago suggested that the bill for the problems facing the country would be paid for largely by the rich, but it will be paid for by every man, woman and child in the country, through increased taxation—miraculously, higher national insurance contributions are to be delayed until well into the next Parliament—and through the burden of debt that will be repaid by our children for heaven knows how many decades to come. That was profoundly deceitful, and a matter of considerable regret, but I do not think that the British people have fallen for it; they know better than that. This is what happens when people play politics with important matters. The third D stands for delay. The difficult choices will be delayed until 2011: a funny old year, safely after the next general election. The real pain will not be felt this side of the ballot box, but, again, I think that people know that is going on. If we look at the net figures, including the measures in Budget 2009 and the other measures announced in Budget 2008, we see a net outflow from the Exchequer of £21.26 billion in the financial year that has just begun, a net inflow of plus £4.6 billion in 2010 and, miraculously, a net inflow of plus £12 billion in 2011. The real pain is being delayed for reasons of political expediency. The deficit should be addressed now, not in two years' time. That deficit is the underlying concern. It remains unaddressed, and it is out of control. I am struck by yesterday's report from the National Institute for Economic and Social Research. I shall quote from the report on it in The Daily Telegraph, as I have not seen the NIESR report. It states that the NIESR believes""it would be all but impossible for the Government to return Britain's total public debt to 40 per cent. of gross domestic product, currently equivalent to £600 billion, until 2023"." Terrifyingly, the NIESR also provides the shape of what future Budgets and Finance Bills might have to be, and offers three basic options to solve the problem:""The first was to raise the state pension age, from 60 for women and 65 for men, to 70 between 2013 and 2023."" I have been doing the calculations, and I reckon that that would catch me nicely. I shall be 60 in 2015, and 68 in 2023, so it looks like retirement at 70 for me—and for many of us in the House. That illustrates the scale of the problem. The second option was to raise the basic rate of income tax by 15p in the pound. I accept that these proposals offer a single-club solution, but they give an idea of the scale of the problem. The final option was to cut Government spending by a tenth, which would be a very serious step indeed. I am a Select Committee Chairman, which I enjoy, and I know that Select Committees choose their words with great caution. I was struck by the Treasury Committee's summary for this debate. It was prepared in a great hurry, and we owe the Committee a debt of gratitude for the speed with which it came to its conclusions. Its summary states:""Whilst it is possible that the Government will meet its growth forecasts, on the available evidence this is an optimistic assumption."" Those are calm, measured words, but they frighten me. I think that the growth forecasts are optimistic, and that they are there to make the debt burden look less frightening. I think that they will prove to be optimistic, and that the debt burden will be much higher than the Government are currently saying.