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Finance (No. 4) Bill

It is a pleasure to follow the hon. Member for Macclesfield (David Rutley), who made a number of important points. The first of those was that the recovery being sought by the Government is a private sector-led recovery. We would all say amen to that, but what concerns us on the Opposition Benches is the imbalance being created between a private sector-led recovery and the social model that we have espoused and continue to espouse. The Government are somewhat unbalanced when they attack the welfare state while at the same time seeking the recovery. The hon. Gentleman said that Opposition Members have not referred to corporation tax. Actually, I referred to it when the Chief Secretary to the Treasury wound up the Budget debate, because he omitted to say that the reduction in corporation tax to 22% would not come into effect until 2014. He amended that today and stated that that is the case. The Opposition welcome that, but we wonder whether the benefit of the corporation tax reduction will go into shareholder dividends rather than into growth. Although growth is a major topic in this debate, the Government have yet to say how a measure that will come into effect in 2014, which by my reckoning is two years off, will help growth. We have heard a lot about growth and, in particular, about national insurance holidays, which were mentioned by my hon. Friend the Member for Leeds West (RachelReeves). I will come back to that later. The hon. Member for Macclesfield mentioned business investment, which is important. The £20 billion scheme introduced by the Government is very welcome. I will also come to that later. The hon. Gentleman also mentioned Ronald Reagan. That was the second mention of him today. The hon. Gentleman talked about him in relation to alligators and cleaning the swamp. Earlier, my hon. Friend the Member for Leeds West referred to the Laffer curve, which was written on a napkin. It suggests that if one reduces taxation, one will get growth. It was pointed out on the Floor of the House that that does not really happen. Nevertheless, it is one of those myths that are in the system and that will stay there. The hon. Gentleman mentioned cutting the regulatory burden. I agree with that. When I was in opposition before, a Minister came to a meeting and showed us the regulations that the former Government had introduced and those that the Conservative Government of the time had introduced. The second pile was twice as high. A great amount of what the Government do increases red tape and the regulatory burden. We are therefore happy that there is an attack on red tape. The hon. Gentleman also mentioned Winston Churchill. This has been a day of famous names being thrown around the House. I will entertain the hon. Gentleman by telling him something that I imagine he does not know. The allowance that the Government are abolishing with their granny tax was brought in by Winston Churchill in 1925. That fact is little known, but my mind is full of useless and irrelevant information that I wish to share with the House. When Churchill made his Budget speech on that day, he used a whisky flask to replenish himself and, as he pointed out, to replenish the Treasury. The hon. Gentleman is therefore in good company in discussing these matters. The hon. Member for Christchurch (Mr Chope), who is still in the Chamber and following the debate with great interest, made a number of important and significant points. He contradicted the hon. Member for Cities of London and Westminster (Mark Field) on the issue of child benefit. The hon. Member for North East Somerset (Jacob Rees-Mogg) also spoke about universal benefits. The hon. Member for Christchurch, who describes himself as a humble Back Bencher, although we would not necessarily agree with that term, said that there is a debate to be had about universal benefits. He mentioned fairness and asked where the fairness is in the system. People who have children receive child benefit and those who do not have children do not. The word ““fairness”” is in vogue; it is the great word. It is used by Opposition Members and by Government Members. However, unless fairness is linked to values, we have no idea what it means and what it should come to. There is no great appetite among Opposition Members for attacking universal benefits. I congratulate the hon. Member for Christchurch because for a short while he was Chancellor of the Exchequer—not for a day, not for a week, but for the few minutes in which he made his speech and gave his own proposals. I predict that over the years, universal benefits will be whittled away. We are already seeing it. They will become lower and lower. As I tell taxi drivers when I talk to them about child benefit, free television licences for the over-75s and the winter fuel payment, in the years to come people will look at us in amazement and say, ““Did you really have those benefits in the past?”” That is the way things are going. My hon. Friend the Member for Leeds West talked about VAT and my hon. Friend the Member for Dumfries and Galloway (Mr Brown) talked about the VAT on caravans. I would like to talk about the sad event of the 5% VAT rate on church repairs ending. The Chancellor called it an anomaly. When I was the Second Church Estates Commissioner, the Church of England worked long and hard to persuade the then Chancellor, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), on this matter. The former Archbishop of Canterbury took him across to Lambeth palace and offered him a cup of tea or coffee—not the celebrated whisky of Winston Churchill. On the back of that, the then Chancellor understood the importance of the heritage and fabric of our churches, and agreed effectively to reduce the rate of VAT to 5% for three years. When he became Prime Minister, he made the change for the duration of his Government. It is a matter of regret to the Church that the rate has now been called an anomaly and will no longer exist. That is a great pity for the Church and will create problems in maintaining its fabric. My hon. Friend the Member for Leeds West made a very fine speech. When she was taking interventions, which she handled with great capacity and knowledge, there was confusion among Conservative Members about tax avoidance and tax evasion. Tax avoidance is legal, whereas tax evasion is not. I had the feeling that there was obfuscation among Conservative Members about the taxation regime for contributions to charity. The clear view is developing that the Chancellor will consider that matter again, which we respect and welcome. I will give my age away when I say that in the first Finance Bill on which I sat, which was in 1983, there was a measure that would have liquidated the co-operative insurance company. It would have wiped it out. We took the matter to Lord Lawson, who considered it and removed the measure from the Bill. We welcome the fact that the Government are looking at this issue and I am sure that they will take into account, among other representations, the statement made by the Archbishop of Canterbury. My hon. Friend the Member for Leeds West talked about the Ernst and Young ITEM Club and mentioned a number of facts from its report today. My hon. Friend the Member for Dumfries and Galloway and the hon. Members for Cities of London and Westminster and for Macclesfield also mentioned it. Its spring forecast makes it clear that this year we can expect 0.4% growth:"““ITEM says that what the economy needs now is for UK companies to invest their substantial cash reserves. The strong recovery in the UK is partly due to buoyant business spending, whereas in the UK investment has fallen to 12% below its 2008 level””." That is important and serious. There is a lack of investment and companies prefer to hold their money under the bed because of the Bank of England's concepts of moral hazard and too big to fail, and because of the Basel accords, which have a higher capital requirement. The banks are therefore reluctant to lend and, of course, companies are reluctant to borrow. That is an important and significant fact that we have to deal with. Ernst and Young also states:"““Ernst & Young's Eurozone Forecast, Spring edition suggests after a fall of 0.4% in 2012, Eurozone GDP is expected to grow by about 1% in 2013 and some 2% a year in 2015-16. This year, economic conditions will test policy-makers' commitment and ability to preserve the Eurozone in its current form, with large amounts of public and private sector debt to be re-financed, tighter credit conditions, job losses and further fiscal austerity.””" In these debates, we have been spared an attack on the eurozone and a declaration that the eurozone is responsible for our low growth. The eurozone sorted itself out in December.