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Finance Bill

Madam Deputy Speaker, I do not think my hon. Friend was in the Chamber for your very wise advice to others in this debate—that we must stick to the contents of the Finance Bill, or to the things we would like to see in it, because some of us would have liked to move amendments to improve it, but we will not be able to do so owing to the restricted time. I fear that, because national insurance will be legislated for differently, it does not strictly fall within that remit. However, I think my hon. Friend stayed in order, because he wisely said that the national insurance increase could have such a damaging impact on the general state of the economy—it will definitely restrict growth and it is a tax on jobs, as even Ministers admit—that it could damage the revenues for which the Bill makes provision. At the beginning of the debate, I tried to tease out of the Minister by way of an intervention what he thought the revenue loss would be on his figures if we struck out or modified the four clauses to which Opposition Front Benchers object. He said that in a full year he thought it would cost £220 million. However, other measures in the Bill and more generally could lose the Government rather more revenue than that, because they have made such an assault on enterprise, business, growth and development that they might find that higher tax rates, far from yielding the increased revenue that their models predict, yield rather less or, in some cases, even lead to a drop. We may well find that there are timing differences on tax payments and that there is a change in the place of residence to which businesses and rich individuals might relocate. The Government might find that they have gone over the top with the rates and will have a problem filling part of their budget black hole through the tax revenue that they will collect if they stay in office. On all those grounds, this is a very bad Bill. It is not a Bill for recovery, because it does not offer the tax incentives for growth that one would expect to see. It confirms the pattern of taxing more and subsidising more that has characterised the more recent years of this Government's lack of progress. It greatly increases the complexity and detail of the tax code in a way that is wholly inimical to the wish of honest people to get on with earning a good living and running a good business, as my hon. Friends and I have sought to set out. Above all, it misses the main points because it does not tackle the spending side of the equation, which is being kept secret until after the election, or bring in some of the biggest tax rises that the Government are planning, which have to be introduced in another way. The Government are now attempting to drive the car of the economy with one foot flat on the accelerator pedal, trying to create as much easy money as possible, and the other flat on the brake because they are trying to restrict the banks as much as possible. That is, of course, the way to go absolutely nowhere. It surprises me that they can present a Finance Bill such as this and say that it is part of a package of recovery, when we have experienced the longest recession of any of the major economies and had about the feeblest signs up upturn. The Government say that that means we have done very well, but it clearly means that we have done very badly. It is quite obvious why—they chose the wrong point of the cycle at which to clobber and restrict the banks. They should have restricted, managed and regulated them properly on the way up and not brought them juddering to a halt as they did in 2007-08. The Government are still doing that to the banks, as I have been trying to illustrate to Members on the Treasury Bench, by taking £700 billion out of the balance sheet of our leading bank, the Royal Bank of Scotland, which they happen to own. No Treasury Minister has ever explained why they are doing that. This Bill contains provisions for another tax on banks—I understand how popular that is—but does not make provisions for expanding banks. Surely what we need, if we are to have a positive and strong recovery, is banks that can expand their lending to British business and individuals sensibly, so that there is an increase in private sector demand as well as the limited increases in public sector spending that the Government think represent the way to a recovery. Driving with one foot on the accelerator and one on the brake is the way to go absolutely nowhere. The Government are creating a lop-sided economy with fast-expanding public spending and fast-contracting private sector debt and activity in many areas. That is the way to national bankruptcy. This Finance Bill will not raise anything like enough revenue to pay for the huge amount of spending that they are proposing. Their model of running the economy will not lead to a rapid recovery of the kind that we desperately need, and it will not create the jobs that we need to get people off benefit. That is the type of public spending cut that I would like to see—really big cuts in the social security programme because people have gone back to work or got a job for the first time and do not need benefit any more. Surely that is a cut that we can all agree on, but the Bill will not deliver it because it does not provide the friendly tax environment for business and enterprise that must be required if we are to get a decent recovery. My right hon. Friend the Member for Witney (Mr. Cameron) made an excellent response to the Budget and reminded the House that, under this Government's lack of tender care, the UK has gone from being the fourth best tax regime for business in the free world to being the 84th best, which is a dreadful reduction in our tax competitiveness as a result of the measures in this and other recent Finance Bills. That is why our economy is not going anywhere—because of an anti-enterprise Finance Bill and because the Government will not sort the banks out properly. Until Ministers can explain to the House why they have pursued a boom and bust policy towards the banks, we will not have a proper explanation of the mess we are in, and until they come forward with a Finance Bill that is pro-enterprise, we are not going anywhere fast. I hope that this farce of a Finance Bill will end as soon as is humanely possible. We need a new Budget that does the spending and taxation together and is honest with the British people about both sides of the equation. We need a new Budget that leads to a proper Finance Bill that has rates of tax that might support and promote growth.