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Finance Bill

My Lords, I am delighted to do so; the noble and learned Lord, Lord Mackay, made a very good point. Like many of the Government’s policies, the bank bonus tax has been totally ineffective in practice, despite the strictures of the noble Lord, Lord Myners, which have often been very well argued and I often sympathise with them. It has been a long hard slog on the economy over the past year or two—both for Ministers and for opposition spokespeople. Perhaps I may be allowed a brief personal word—it is relevant to this debate and to tax: some of us were here until a very late hour this morning to ensure that non-resident Peers, if they want to sit in this House, should pay full British taxes. The Bill that I first introduced six years ago and have introduced four times was incorporated en bloc in the Constitutional Reform and Governance Bill this morning, apart from a slight change regarding the position of the Bishops. I thank the Government for finally accepting it; but why oh why did they wait until the last minute of extra time? Let us be fair: the Government initially did what was right and necessary to save the banks in the crisis in late 2007 and to stop our economy from collapse. But they have frittered away the opportunity to rebuild the economy properly after that emergency surgery. I could hardly believe my ears and was amazed—the Minister is verging on complacency—to hear him say that families and businesses have weathered the storm well. That will be pretty bitter news to the many people who, if they are not unemployed, are on compulsory short time. This includes not just, as in previous recessions, factory workers, but many people including solicitors and those in the service sector. There is a great deal of hidden unemployment in our country and there have been many pay cuts. The housing market is still in a very difficult situation. There has been something of a false dawn over the past few months in terms of house prices stabilising. That has happened mainly in the south of England; there has been no recovery across much of the country. The market remains flat and stagnant in many areas. House prices have been artificially supported by very low interest rates; as interest rates start to rise, as the Minister rightly pointed out in Question Time, and the markets are reflecting, that artificial support will be taken away. We are still in for several difficult years in the housing market. I do not propose to rehearse the general economic policies. We will all be out on the hustings shortly. I have already mentioned the simple and clear Liberal Democrat policy to make the first £10,000 of people’s income tax-free. That will take many lower-paid workers and pensioners out of tax. That is a fully funded tax cut which is covered by actual commitments on things that we will not do, as opposed to the phoney efficiency savings—I can call them only that—being offered by the other two main parties. The noble Lord also mentioned pensions. I am afraid that we are in a hopelessly complicated system. Again, typically, the Government, having accepted what we have been saying for many years about the unfairness of pension tax relief being offered at high rates to the richest, have again come out with a very fiddly and complicated system which even the pensions experts do not understand, never mind the Treasury and the Government. Thereby, I am afraid that there are very serious pressures on savers and pensioners. Again, the simple solution initially is to bring back immediately the link between earnings and pensions and not wait for several more years. I have one other separate point and question on Clause 59 of the Bill. If he cannot answer today perhaps the Minister will consider the matter carefully and write to me on the change highlighted in the Guardian and the Daily Telegraph in recent days which raised serious issues of civil liberties. It relates to the proposal to amend Section 106 of the Postal Services Act. At the moment the law is that postal packets containing suspected contraband can be opened only in the presence of the person to whom they are addressed—subject to certain safeguards. That will change and those safeguards will be removed. As one would expect, the Guardian is very concerned about this and is making comparisons with the Stasi in East Germany. The Daly Telegraph quoted a senior tax partner at Grant Thornton as stating: ""This seems like a very small and limited change, but it could be a very big step for increased powers for HMRC"." That has the ring of truth. He continued: ""Once new powers are in the hands of HMRC they tend to be extended"." Can we be sure that that does not conflict with Section 6 of the Human Rights Act? Can we also be told what safeguards are being offered? People talk a lot about the surveillance state. There may be a reason for such a measure in individual cases, but we would like it to be properly explained and discussed. This is not a place where we are able to intervene and argue directly about tax rates, but we have economic expertise to offer from all around the House. I hope and believe that whoever form the next Government we will be able to play a constructive part in rebuilding the nation’s economy.