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Finance Bill

I am grateful to my hon. Friend for reminding me of that very powerful point that he and others made during the debate. Clearly one of the areas in which there is huge uncertainty is the scale of the Government debt, both on and off balance sheet, and my hon. Friend the Member for Braintree has put together a paper to try to establish that. We have set out proposals for an office for budget responsibility, and one of its first tasks would be to quantify the true extent of Government indebtedness, so that we would know exactly where we were starting from, were we to form the next Government. We would then know the scale of the problem and could educate people about the challenges that we will face in tackling that debt. My hon. Friend the Member for Stone can be reassured that his thoughts have not fallen on deaf ears on these Benches. They may well have done so on the Government Benches, as the Government have always sought to deny the scale of the problem, but we have heard his message loud and clear. Two other themes emerged from the debate. The first is the failure of the Budget and the Bill to lay the foundations for the future. In a recession, a Budget should plot a clear path out of the economic crisis and prepare the economy for recovery. It should build the foundations for growth, a better climate for business and a better climate for savings and investment. That was the challenge that the Chancellor was set and the challenge that he failed last month. That failure in the Budget continues through into the Bill, which is a sign that the Government have run out of money, run out of ideas and run out of road. If we are to aid Britain's recovery, we need to make Britain a better place to do business, to retain businesses that are already here and to make Britain a prime location for inward investment. If we are to aid Britain's recovery, we need to tackle those problems so that the economy is built on sure foundations and not on shifting sands. The Budget gave the Government the opportunity to do all that by rebuilding savings and investments. The question that businesses will ask is whether Britain is a better place to do business as a consequence of the Finance Bill. Let me give some examples of where I think the Bill lets down businesses. Although there has been a broad welcome of the introduction of the dividend exemption, there are concerns that the cap in worldwide interest is complex and costly to implement. I am afraid to say that even these reforms do not appear to be stopping the flow of companies moving their headquarters out of the UK to more competitive tax jurisdictions. Only last week, Informa, a UK listed company, moved its tax domicile out of the UK to Switzerland because it believed that its taxes would go up as a consequence of the reforms announced in the Finance Bill. Clearly, there is more work to be done to build on those reforms if we are to ensure that we have a competitive economy for the 21st century. Another attack on Britain's competitive position in the Bill is clause 92, which requires senior financial officers to sign off that they maintain appropriate accounting systems. Many on the Labour Benches will see that as superficially attractive, but it has been sprung on business without any consultation and on what would appear to be a ministerial whim. It is a bit of red meat to satisfy Labour's union paymasters, but there is a lesson from the States attached to it. We should pay heed in the aftermath of Enron to the changes that the US imposed on accounting systems and controls. They imposed huge new costs on business with few benefits, and as a consequence businesses left the US and came to Europe. I believe that the provisions in the Finance Bill are yet another barrier to inward investment—the knee-jerk reaction that puts businesses off being based in the UK. Although Labour MPs might cheer these provisions, it is sadly their constituents who will pay the price. Such moves undermine the attractiveness of the UK as a place to do business and create an impression of an unpredictable, uncertain tax regime where rules can change overnight on a ministerial whim. Being competitive is about more than just rates; it is about certainty and predictability. The concerns that were expressed by my hon. Friend the shadow Chief Secretary about striking the right balance between the taxpayer and the tax collector impact on our competitiveness as businesses weigh up the benefits of different regime. Yes, the right regime of deterrents and penalties needs to be in place, but taxpayers need safeguards to ensure that those deterrents and penalties will not be used arbitrarily or unfairly. What about the Government's attitude to small companies—the vital engines for economic growth and the backbone of businesses in our constituencies? The Government increased the small companies rate of corporation tax from 0 per cent. to 19 per cent. and it is scheduled to rise to 22 per cent. In this Bill, the rate is held at 21 per cent. Businesses are asking whether it is still the Government's intention to increase the small companies rate to 22 per cent., and perhaps the Financial Secretary will answer that question when he winds up. The message to businesses from the Budget and the Finance Bill is clear. The Government have done nothing to improve competitiveness, nothing to make their lives easier and nothing to encourage them to expand. The Budget and the Finance Bill were also an opportunity for the Government to boost savings and savers. Radical reforms to the savings regime would help to build solid foundations for a sustainable economic recovery.