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(Clauses 1, 4, 8, 189 and 209, Schedules 1, 23 and 33, and certain new Clauses and new Schedules relating to value added tax)

The hon. Gentleman asks whether I am sure. The record is open to scrutiny. In local government in Northern Ireland, when the Democratic Unionist party is in control of any council its rates are the lowest. In the Northern Ireland Administration at Stormont, where again we have control of the finances, we have more generous tax allowances for manufacturing industry and we have held local taxation frozen at the same point for the past four years and for the next three years. The hon. Gentleman asks from a sedentary position whether we are sure, but we stand on our record. When we have the ability to influence or the possibility of influencing taxation, we want to be a party of low taxation. My comments in this debate are predicated on such policy and should be set against that background. I want to address the reduction in the top level of tax from 50% to 40%, which I believe is a huge political mistake for the Government. More importantly, I believe that it will impact on the ability to deliver sound fiscal policy and economic policy across the United Kingdom while getting people behind the measures that are required to get us out of our dire present situation. The Government's main argument has been that this is a good, sound economic policy and that it is necessary for a number of reasons. It is necessary, first, because the 50p rate of taxation has not worked: it has not raised the intended revenue. Indeed, the Prime Minister today claimed that it had not raised any revenue, but if he had read the documents that his own Chancellor endorsed he would have found that that is not true. Although the Office for Budget Responsibility and Her Majesty's Revenue and Customs point out that the increase may have been less than expected, and they talk about it having been perhaps £1 billion less, they do not say that the measure did not raise any revenue. Part of the reason the figures for this year do not show the increase in revenue that the Government expected is that, as the HMRC report points out in paragraph 6.3, £16 billion to £18 billion of income was pushed forward: it was forestalled. But it cannot keep being pushed forward for ever, so, if we had looked at the figures over another year, we would have found that the revenue started coming in as the forestalled income started to be taxed. So the first argument that has been made—that the measure did not raise revenue—is not backed up even by the Government's own published figures. The second argument, which is being made here today, is that the change will raise more revenue because of the way in which people will change their behaviour. But, again, if we look at the figures that HMRC has published, we find that they are factual because they are based on what is happening at present with the static cost, and, then, that there are predicted figures—those that are based on what are called behavioural changes, about which there has been much discussion today. The one thing that we do know, because we can be absolutely sure of the figures, is the revenue that will be forgone as a result of the change. The forgone revenue is not up for debate, because we know what was collected and what people normally paid—which they are not going to pay any longer. The figures are clear: in the next financial year, 2013-14, £3.01 billion will be forgone; in the year after that it will be £3.35 billion; in the year after that it will be £3.7 billion; and in the year after that it will be £4.19 billion. That is what we know is going to happen, because those are the static figures, as the Minister has said from a sedentary position, and the Government hope that that will be offset by behavioural changes, but, even by their own admission in their own document, those changes are fraught with uncertainty. In evidence to the Treasury Committee, Mr Chote of the OBR said that there had been an ““heroic exercise…to disentangle”” all the factors that would be included in those behavioural changes, and that it was one of the six ““areas of particular uncertainty”” that had been identified. The changes are uncertain because—without getting into the technical phrase that has been used—““income elasticity”” is uncertain. The income elasticity figures are so uncertain that, according to the Institute for Fiscal Studies, the rate of taxation that could maximise the Government's revenue—the top rate of taxation—varies between 30% and 75%. Again, in evidence to the Committee, it was said that that the numbers are ““absurd”” in some sense, because the variations are so wide. So before we talk about a concrete, cast-iron economic case, let us just look at the assumptions behind the model and the assumptions on which the revenue that the Government boast about raising are based. Once we start peeling them away, we see that the figures for the behavioural effects, which conveniently just about offset the static cost, are less than certain. The third argument that has been made is that the change will help us to become more competitive because the high rate of taxation has had an impact on investment, on job creation and on the willingness of people to work harder and to declare their income in the United Kingdom. There is an odd thing about that argument, however, because if the Government are so certain of it why has the Chancellor, in answer to a question on the issue, indicated that he is going to initiate research into its broader macroeconomic effects? One would have thought that, if we were absolutely certain that it was what we needed to do to improve the performance of the UK economy, we would have done the research, known the dynamic effects and ascertained the macroeconomic impact. That has not been done. The Government are only now, after making the change, indicating that they are prepared to initiate the research into it. So we hear all the certainties, that we did not raise the money that we wanted to, and that we will raise the money that we want to from this new tax, but, if the Government are so certain of that, why are they not introducing it this year? If we are in such perilous times and they actually believe that the measure will raise more revenue, they should be rushing to introduce it, but they have delayed it for another year. The economic case for the change has not been made. As I said at the start of my speech, I am not against lower taxation. In Northern Ireland we have kept the tax regime—given what powers we have over taxation—as low as possible and sought to make adjustments by looking at administrative changes. Indeed, I am quite proud of the fact that in Northern Ireland this year we have cut the cost of the administration of government by 3.8%. Rather than raise money through taxation, we have looked for efficiencies in many different ways. When the hon. Member for Rhondda (Chris Bryant) talked about the political aspects of the change, the hon. Member for South West Norfolk (Elizabeth Truss), who is no longer in her place, said, ““We should not be concerned about the politics of it; we should only be concerned about the economics of it.”” I do not believe that any economic decision can be made in isolation from the political context in which it has to be made, and the political context in which the decision to reduce the top rate of taxation is being made is one in which the Government are saying to people, ““We are in a difficult economic situation, we have to reduce the deficit,”” and I agree. We have to get the economy back on a stable footing and to make sacrifices to do so. If one is in the public sector—