HC Deb 01 July 2003 vol 408 cc311-34

Amendment proposed: No. 11, in page 241, line 32, at end insert `but no order under this paragraph shall appoint a date earlier than 1st December 2004.'.—[Mr. Prisk]

Question put, That the amendment be made:—

The House divided: Ayes 173, Noes 291.

Division No. 267] [8:58 pm
AYES
Ainsworth, Peter (E Surrey) Beggs, Roy (E Antrim)
Allan, Richard Beith, rh A. J.
Amess, David Bellingham, Henry
Atkinson, David (Bour'mth E) Bercow, John
Atkinson, Peter (Hexham) Blunt, Crispin
Bacon, Richard Boswell, Tim
Baker, Norman Bottomley, rh Virginia (SW
Baldry, Tony Surrey)
Barker, Gregory Brake, Tom (Carshalton)
Baron, John (Billericay) Brazier, Julian
Barrett, John Breed, Colin
Brooke, Mrs Annette L. Knight, rh Greg (E Yorkshire)
Browning, Mrs Angela Laing, Mrs Eleanor
Bruce, Malcolm Lait, Mrs Jacqui
Burnett, John Lamb, Norman
Burns, Simon Lansley, Andrew
Burt, Alistair Laws, David (Yeovil)
Butterfill, John Letwin, rh Oliver
Calton, Mrs Patsy Liddell-Grainger, Ian
Cameron, David Lidington, David
Campbell, Gregory (E Lond'y) Lilley, rh Peter
Campbell, rh Menzies (NE Fife) Loughton, Tim
Cash, William Luff, Peter (M-Worcs)
Chapman, Sir Sydney (Chipping McIntosh, Miss Anne
Barnet) Mackay, rh Andrew
Chidgey, David McLoughlin, Patrick
Chope, Christopher Malins, Humfrey
Clappison, James Marsden, Paul (Shrewsbury &
Clarke, rh Kenneth (Rushcliffe) Atcham)
Clifton-Brown, Geoffrey Maude, rh Francis
Collins, Tim Mawhinney, rh Sir Brian
Conway, Derek May, Mrs Theresa
Cotter, Brian Mercer, Patrick
Curry, rh David Mitchell, Andrew (Sutton
Davey, Edward (Kingston) Coldfield)
Davis, rh David (Haltemprice & Moore, Michael
Howden) Moss, Malcolm
Djanogly, Jonathan Murrison, Dr. Andrew
Dodds, Nigel Norman, Archie
Duncan, Peter (Galloway) Oaten, Mark (Winchester)
Duncan Smith, rh lain O'Brien, Stephen (Eddisbury)
Evans, Nigel Öpik, Lembit
Fabricant, Michael Osborne, George (Tatton)
Fallon, Michael Ottaway, Richard
Field, Mark (Cities of London & Paice, James
Westminster) Portillo, rh Michael
Flight, Howard Prisk, Mark (Hertford)
Flook, Adrian Pugh, Dr. John
Forth, rh Eric Randall, John
Foster, Don (Bath) Redwood, rh John
Fox, Dr. Liam Reid, Alan (Argyll & Bute)
Francois, Mark Rendel, David
Garnier, Edward Robertson, Laurence (Tewk'b'ry)
George, Andrew (St. Ives) Robinson, Peter (Belfast E)
Gibb, Nick (Bognor Regis) Roe, Mrs Marion
Gidley, Sandra Rosindell, Andrew
Gillan, Mrs Cheryl Ruffley, David
Goodman, Paul Russell, Bob (Colchester)
Gray, James (N Wilts) Sanders, Adrian
Grayling, Chris Sayeed, Jonathan
Green, Damian (Ashford) Shephard, rh Mrs Gillian
Green, Matthew (Ludlow) Shepherd, Richard
Greenway, John Simmonds, Mark
Grieve, Dominic Simpson, Keith (M-Norfolk)
Hague, rh William Smith, Sir Robert (W Ab'd'ns &
Hammond, Philip Kincardine)
Harris, Dr. Evan (Oxford W & Soames, Nicholas
Abingdon) Spicer, Sir Michael
Harvey, Nick Spink, Bob (Castle Point)
Hawkins, Nick Stanley, rh Sir John
Hayes, John (S Holland) Steen, Anthony
Heath, David Streeter, Gary
Heathcoat-Amory, rh David Stunell, Andrew
Hendry, Charles Swire, Hugo (E Devon)
Hermon, Lady Taylor, Ian (Esher)
Hoban, Mark (Fareham) Taylor, John (Solihull)
Holmes, Paul Taylor, Dr. Richard (Wyre F)
Horam, John (Orpington) Tredinnick, David
Howarth, Gerald (Aldershot) Trimble, rh David
Hughes, Simon (Southwark N) Turner, Andrew (Isle of Wight)
Jack, rh Michael Tyler, Paul (N Cornwall)
Jenkin, Bernard Tyrie, Andrew
Johnson, Boris (Henley) Viggers, Peter
Keetch, Paul Waterson, Nigel
Key, Robert (Salisbury) Watkinson, Angela
Kirkbride, Miss Julie Webb, Steve (Northavon)
Kirkwood, Sir Archy Widdecombe, rh Miss Ann
Willetts, David Younger-Ross, Richard
Williams, Roger (Brecon)
Wilshire, David
Winterton, Ann (Congleton) Tellers for the Ayes:
Yeo, Tim (S Suffolk) Mr. Robert Syms and
Young, rh Sir George Hugh Robertson
NOES
Adams, Irene (Paisley N) Cryer, John (Hornchurch)
Ainsworth, Bob (Cov'try NE) Cummings, John
Alexander, Douglas Cunningham, Jim (Coventry S)
Allen, Graham Cunningham, Tony (Workington)
Anderson, rh Donald (Swansea E) Curtis-Thomas, Mrs Claire
Anderson, Janet (Rossendale & Dalyell, Tam
Darwen) Davey, Valerie (Bristol W)
Armstrong, rh Ms Hilary David, Wayne
Atherton, Ms Candy Davidson, Ian
Atkins, Charlotte Davies, rh Denzil (Llanelli)
Bailey, Adrian Davis, rh Terry (B'ham Hodge H)
Baird, Vera Dawson, Hilton
Banks, Tony Dean, Mrs Janet
Barnes, Harry Denham, rh John
Battle, John Dhanda, Parmjit
Bayley, Hugh Donohoe, Brian H.
Beckett, rh Margaret Dowd, Jim (Lewisham W)
Begg, Miss Anne Drew, David (Stroud)
Bell, Stuart Eagle, Angela (Wallasey)
Benn, Hilary Efford, Clive
Bennett, Andrew Ellman, Mrs Louise
Benton, Joe (Bootle) Etherington, Bill
Berry, Roger Ewing, Annabelle
Betts, Clive Field, rh Frank (Birkenhead)
Blackman, Liz Fisher, Mark
Boateng, rh Paul Fitzpatrick, Jim
Borrow, David Fitzsimons, Mrs Lorna
Bradley, rh Keith (Withington) Foster, rh Derek
Bradley, Peter (The Wrekin) Foster, Michael Jabez (Hastings
Bradshaw, Ben & Rye)
Brown, rh Nicholas (Newcastle E Foulkes, rh George
Wallsend) Francis, Dr. Hywel
Brown, Russell (Dumfries) George, rh Bruce (Walsall S)
Browne, Desmond Gerrard, Neil
Buck, Ms Karen Gilroy, Linda
Burden, Richard Godsiff, Roger
Burgon, Colin Goggins, Paul
Burnham, Andy Griffiths, Jane (Reading E)
Byers, rh Stephen Griffiths, Nigel (Edinburgh S)
Caborn, rh Richard Griffiths, Win (Bridgend)
Campbell, Alan (Tynemouth) Grogan, John
Campbell, Mrs Anne (C'bridge) Hall, Mike (Weaver Vale)
Campbell, Ronnie (Blyth V) Hall, Patrick (Bedford)
Casale, Roger Hamilton, David (Midlothian)
Caton, Martin Hamilton, Fabian (Leeds NE)
Cawsey, Ian (Brigg) Hanson, David
Challen, Colin Harman, rh Ms Harriet
Clapham, Michael Harris, Tom (Glasgow Cathcart)
Clark, Mrs Helen (Peterborough) Havard, Dai (Merthyr Tydfil &
Clark, Dr. Lynda (Edinburgh Rhymney)
Pentlands) Healey, John
Clark, Paul (Gillingham) Henderson, Ivan (Harwich)
Clarke, rh Charles (Norwich S) Hendrick, Mark
Clarke, rh Tom (Coatbridge & Hepburn, Stephen
Chryston) Heppell, John
Clarke, Tony (Northampton S) Hesford, Stephen
Clelland, David Heyes, David
Clwyd, Ann (Cynon V) Hill, Keith (Streatham)
Coffey, Ms Ann Hoey, Kate (Vauxhall)
Cohen, Harry Hood, Jimmy (Clydesdale)
Colman, Tony Hoon, rh Geoffrey
Cook, rh Robin (Livingston) Hope, Phil (Corby)
Corston, Jean Hopkins, Kelvin
Cousins, Jim Howells, Dr. Kim
Cox, Tom (Tooting) Hughes, Beverley (Stretford &
Cranston, Ross Urmston)
Cruddas, Jon Hughes, Kevin (Doncaster N)
Cryer, Ann (Keighley) Humble, Mrs Joan
Hurst, Alan (Braintree) Organ, Diana
Iddon, Dr. Brian Osborne, Sandra (Ayr)
Illsley, Eric Owen, Albert
Ingram, rh Adam Palmer, Dr. Nick
Irranca-Davies, Huw Picking, Anne
Jackson, Helen (Hillsborough) Pickthall, Colin
Johnson, Miss Melanie (Welwyn Pike, Peter (Burnley)
Hatfield) Pollard, Kerry
Jones, Helen (Warrington N) Pope, Greg (Hyndburn)
Jones, Jon Owen (Cardiff C) Prentice, Ms Bridget (Lewisham
Jones, Lynne (Selly Oak) E)
Jones, Martyn (Clwyd S) Prentice, Gordon (Pendle)
Kaufman, rh Gerald Prescott, rh John
Keen, Alan (Feltham) Price, Adam (E Carmarthen &
Keen, Ann (Brentford) Dinefwr)
Kemp, Fraser Primarolo, rh Dawn
Khabra, Piara S. Prosser, Gwyn
Kidney, David Purchase, Ken
Kilfoyle, Peter Quinn, Lawrie
King, Andy (Rugby) Rammell, Bill
King, Ms Oona (Bethnal Green & Rapson, Syd (Portsmouth N)
Bow) Reed, Andy (Loughborough)
Ladyman, Dr. Stephen Robertson, Angus (Moray)
Lammy, David Robertson, John (Glasgow
Lawrence, Mrs Jackie Anniesland)
Laxton, Bob (Derby N) Roche, Mrs Barbara
Lepper, David Rooney, Terry
Leslie, Christopher Ross, Ernie (Dundee W)
Levitt, Tom (High Peak) Roy, Frank (Motherwell)
Lewis, Terry (Worsley) Ruane, Chris
Linton, Martin Russell, Ms Christine (City of
Lloyd, Tony (Manchester C) Chester)
Love, Andrew Ryan, Joan (Enfield N)
Luke, Iain (Dundee E) Salmond, Alex
Lyons, John (Strathkelvin) Salter, Martin
McAvoy, Thomas Sarwar, Mohammad
McCabe, Stephen Savidge, Malcolm
McCafferty, Chris Sawford, Phil
McDonagh, Siobhain Sedgemore, Brian
MacDonald, Calum Sheridan, Jim
McDonnell, John Simpson, Alan (Nottingham S)
MacDougall, John Singh, Marsha
McKechin, Ann Skinner, Dennis
McKenna, Rosemary Smith, rh Chris (Islington S &
Mackinlay, Andrew Finsbury)
McNulty, Tony Smith, Geraldine (Morecambe &
MacShane, Denis Lunesdale)
McWalter, Tony Smith, Jacqui (Redditch)
Mahmood, Khalid Smith, John (Glamorgan)
Mahon, Mrs Alice Soley, Clive
Mallaber, Judy Southworth, Helen
Marris, Rob (Wolverh'ton SW) Starkey, Dr. Phyllis
Marsden, Gordon (Blackpool S) Steinberg, Gerry
Marshall, David (Glasgow Stevenson, George
Shettleston) Stewart, David (Inverness E &
Martlew, Eric Lochaber)
Meale, Alan (Mansfield) Stewart, Ian (Eccles)
Michael, rh Alun Stinchcombe, Paul
Miliband, David Stoate, Dr. Howard
Miller, Andrew Stringer, Graham
Mitchell, Austin (Gt Grimsby) Stuart, Ms Gisela
Moffatt, Laura Tami, Mark (Alyn)
Mole, Chris Thomas, Gareth (Clwyd W)
Moran, Margaret Thomas, Simon (Ceredigion)
Morgan, Julie Timms, Stephen
Morley, Elliot Tipping, Paddy
Mountford, Kali Trickett, Jon
Mudie, George Truswell, Paul
Mullin, Chris Turner, Dennis (Wolverh'ton SE)
Murphy, Denis (Wansbeck) Turner, Dr. Desmond (Brighton
Murphy, Jim (Eastwood) Kemptown)
Naysmith, Dr. Doug Turner, Neil (Wigan)
Norris, Dan (Wansdyke) Twigg, Derek (Halton)
O'Brien, Bill (Normanton) Twigg, Stephen (Enfield)
O'Hara, Edward Tynan, Bill (Hamilton S)
O'Neill, Martin Vaz, Keith (Leicester E)
Vis, Dr. Rudi Wishart, Pete
Walley, Ms Joan Wood, Mike (Batley)
Wareing, Robert N. Woolas, Phil
Watson, Tom (W Bromwich E) Worthington, Tony
Watts, David Wray, James (Glasgow
Weir, Michael Baillieston)
White, Brian Wright, Anthony D. (Gt
Whitehead, Dr. Alan Yarmouth)
Williams, rh Alan (Swansea W) Wright, David (Telford)
Williams, Betty (Conwy) Wright, Tony (Cannock)
Williams, Hywel (Caernarfon) Tellers for the Noes:
Wills, Michael Gillian Merron and
Winnick, David Mr. Nick Ainger

Question accordingly negatived.

Remaining Government amendments agreed to.

Order for Third Reading read.

9.10 pm
Mr. Boateng

I beg to move, That the Bill be now read the Third time.

The Finance Bill has now benefited from scrutiny in Committee and on Report, and I should like to pay tribute to the work of all Members on both sides of the House who have contributed to what has been a thorough and good-humoured study of the Bill and its provisions. We have made considerable headway. A number of amendments were tabled that we felt able to accept, and they have undoubtedly played some part in improving the Bill during its passage.

The Chairman of our Committee, the hon. Member for Macclesfield (Sir Nicholas Winterton), described our consideration of this Bill as an example of Parliament working at its best, and I am bound to say that I thoroughly concur with him in that assessment. I want to thank those Front Benchers who spoke for the Opposition, and I should also mention those Back Benchers who are new to Finance Bill proceedings. One thinks in particular of the hon. Member for Tatton (Mr. Osborne), who made some extremely amusing and entertaining contributions to our deliberations. We will all remember his tour of the Vale of Tatton, which was one of the highlights. It has whetted many of our appetites for visiting his constituency.

On a serious note, I want to thank my right hon. Friend the Paymaster General, who was ably accompanied by my hon. Friend the Economic Secretary, for her leadership on the Bill. I should also mention my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), who is happily no longer with us, having joined the Government in another capacity.

It is right that the Finance Bill should receive careful attention and consideration from Members. It continues our commitment to enterprise and fairness, building a Britain of economic strength and social justice. The context for the Bill has been a continued challenging and uncertain period for the world economy. In recent years, we have witnessed not only a persistent global cyclical downturn but the first world slow-down for 30 years to affect every continent. Many leading countries have experienced recession during the past two years. Now, this Finance Bill positions the United Kingdom and our businesses to take advantage of the potential for renewed growth that exists in this country.

Mr. Redwood

Will the right hon. Gentleman give way?

Mr. Boateng

In a moment. The Bill builds on our achievements in creating a strong macro-economic framework, to create a more dynamic, flexible and productive economy. We have reformed the tax system to create an environment friendly to enterprise, promoting investment, innovation and skills. The Bill marks the next stage of reform, and I shall come to its detail in moment, after giving way to the right hon. Member for Wokingham (Mr. Redwood).

Mr. Redwood

I am grateful to the Chief Secretary for giving way. Given the current rate of rise in house prices, does he think that the Government should now apply the regulator that they are thinking of applying—higher stamp duty and capital gains tax on principal residences—this side of the election, or does he see that that might be politically disadvantageous to them?

Mr. Boateng

I fear that the right hon. Gentleman is returning to his obsessions on the basis of a hypothesis that I simply do not recognise.

The Finance Bill marks the next stage of reform. Clauses 158 to 161 contain a package of measures to simplify the capital gains tax system. Clause 164 extends for a further year, to March 2004, the 100 per cent. first year allowance available to small businesses for spending on information and communications technology. Clauses 138 to 140 simplify and modernise employee share schemes, making them easier to administer and giving employees more flexibility. Following feedback from business, the Bill improves the way in which research and development tax credit works, allowing more businesses—particularly small and medium-sized enterprises, and more types of expenditure—to qualify. Clauses 132 to 134 freeze corporation taxes at 30 per cent. The main rate is lower than in any other major industrialised country.

The Bill builds on our policies for enterprise and innovation, but not at the price of fairness. Rather, it underwrites that fairness. To reduce the cost to business of locating and investing in disadvantaged areas and to support the regeneration of brownfield sites, clause 57 removes stamp duty from all non-residential property transactions in the 2,000 enterprise areas. On public services, last year's spending review set out our plans for an extra £61 billion of investment by 2005–06, with three quarters of the additional spending to go on health, education, transport, housing and the fight against crime.

We are implementing a programme of unprecedented investment linked to reform and modernisation, and this year we have introduced increases in national insurance contributions to fund improvements in the national health service. It is therefore right that the Government ensure that we have a tax system under which everyone pays their fair share. That is why this Finance Bill includes a wider package of measures to ensure a level playing field for taxpayers who fulfil their obligations.

The Bill introduces measures to tackle VAT fraud and avoidance—in particular missing trader fraud, which costs us billions of pounds and makes billions of pounds of profit for organised crime. It also takes action to prevent tax avoidance through manipulating share schemes, and provides further support for companies that want to operate schemes fairly. Action has also been taken to counter capital gains tax avoidance through offshore trusts and second-hand life insurance policies, and we have acted too to close a loophole in the controlled foreign company rules that allow some companies to escape UK tax on profits from extended warranties and credit protection insurance.

One of the most important aspects of this year's Bill is one to which we have given some attention in the course of our deliberations. Certainly, the hon. Member for Hertford and Stortford (Mr. Prisk) has spent a lot of time on it, as have I.

Mr. Prisk

I got no straight answers.

Mr. Boateng

The hon. Gentleman complains from a sedentary position that he got no straight answers, but I do not really think that is fair. It is a surprisingly ungracious remark from an hon. Gentleman whom we have rather indulged, at every stage of our deliberations. The hon. Gentleman made some good contributions, although he adopts what I can only describe as the Edgar Lustgarten approach to the promulgation of amendments.

Mr. Prisk

Is it not true that the claims for the Bill are fiction?

Mr. Boateng

I hear what the hon. Gentleman says. I do not want to go down that road, although I am glad that he knows about Edgar Lustgarten. I am surprised, though, as he is on the cusp of ignorance about someone who is known to everyone over 40.

Mr. George Osborne

Explain.

Mr. Boateng

The hon. Gentleman is nowhere near 40, so I will explain. Edgar Lustgarten was a barrister. In the 1950s and 1960s, as a second string to his bow, he found work providing voiceovers for B-rated movies and television programmes in which there was always a catalogue of heinous offences and wrongdoing. Those responsible were always confounded by the timely and precipitate intervention of the forces of law and order. I fear that the hon. Member for Hertford and Stortford rather cast himself in that role, and I now begin to draw my remarks to the detail of the Bill.

Mr. Deputy Speaker (Sir Alan Haselhurst)

I am extremely relieved that the Chief Secretary is doing that, as I would not want to think that he was filibustering his own Bill.

Mr. Boateng

I have a rather good example of the approach of the hon. Member for Hertford and Stortford. We spent some time on the issue of subsales in the course of our deliberations. The hon. Member for Hertford and Stortford gave it the Edgar Lustgarten treatment in this sense; there was a question, an answer and then a pause. Then, there was an exclamation and the suggestion somehow that—in responding to representations asking us to make provisions in relation to subsales and to recognise that off-plan sales were important—we had somehow done something wrong or were trying to cover something up, and that he, with determination and zeal, had discovered what that was. Nothing could be further from the truth.

The consultation process on the Bill has been second to none. We have listened, taken on board the points that have been made and amended the Bill accordingly. Rather than Edgar Lustgarten-like carping, there should be a warm welcome from the hon. Member for Hertford and Stortford.

Mr. Prisk

rose—

Mr. Boateng

I hope that the hon. Gentleman will now rectify his error.

Mr. Prisk

I will not tempt you, Mr Deputy Speaker, down any other literary avenues that the Chief Secretary wishes to pursue. Perhaps I could simply bring him back to the subject before us. On Report, he failed to answer a critical question. Having told us that this was a fine, good and solid Bill, why did he write to the shadow Chancellor to say that the Bill was so poor that it would take a couple of years to amend it?

Mr. Boateng

That was a typical Lustgarten technique. There is no evidence upon which the hon. Gentleman bases his assertion. No such words were used in the letter; instead, there was an affirmation of our commitment to ongoing consultation and to improving the legislation. The hon. Gentleman ought to welcome that, and not cast aspersions.

One of the most important aspects of the Bill has been the comprehensive modernisation of stamp duty, which we have brought into the 21st century. Over the next few months, we will continue to consult interested parties to ensure a smooth implementation of stamp duty land tax on 1 December. That will be backed up by a comprehensive education programme for solicitors, licensed conveyancers and other interested professionals. I have promised the hon. Member for Yeovil (Mr. Laws) an early opportunity to experience the benefits of the particular electronic tool that is being presented to assist accountants, as he expressed an interest in it.

Mr. George Osborne

The Chief Secretary persists in calling this new tax a stamp duty. Will he confirm that there is no stamp involved, and no duty?

Mr. Boateng

We have grown very fond of the hon. Gentleman in the course of our deliberations—[Interruption.] Well, I am of a naturally generous disposition. The hon. Gentleman repeats the same old canard. I referred him to the measures introduced in 1986 by his party, which sought to start the modernisation process but never got anywhere. This Government have had the determination, courage and commitment to modernise and, as a result, we have the SDLT, which we commend to the House, despite unhelpful attempts by Opposition Members to amend it. Where the provisions have been amended in a helpful way, we have accepted the proposals; where the amendments have not been helpful, we have resisted them. So far the House has been with us in resisting the Opposition's attempts to delay an important and welcome act of modernisation.

The Finance Bill also meets our environmental responsibilities to use our resources sustainably. To ensure that we carry out our responsibilities to future generations, it contains a carefully calibrated tax and economic incentives to encourage that, while not undermining the necessary incentives to promote the competitiveness of British business.

Mrs. Gillian Shephard (South-West Norfolk)

rose—

Mr. Boateng

I give way to the right hon. Lady, whose particular interest in biofuels will, I hope, be shared with us in tonight's proceedings.

Mrs. Shephard

My intervention will provide me with that opportunity. I am listening to the Chief Secretary talk about the Bill's environmental credentials, so I remind him that the proposed fuel duty reduction of 20p on bioethanol is in no way sufficient to match the Government's own objective to meet the biofuels directive. In that respect, I intend to meet the Economic Secretary—hopefully, with his encouragement—shortly.

Mr. Boateng

I know that the Economic Secretary looks forward to meeting the right hon. Lady. It will be good to see her back in the Treasury again, although I am bound to say that according to my recollection of her time as a Treasury Minister, that period was not characterised by the same environmental and fiscal incentives that have, in all fairness, characterised the present Administration's stewardship of the Treasury. She will correct me if I am wrong, but I do not believe that her record on that matter compares favourably with our own.

Mrs. Shephard

The Chief Secretary is misremembering our time in the Treasury. When he was my opposite number during a particularly memorable period in our lives, I do not recall him pressing that case. Furthermore, his own Government's stated objectives of meeting the requirements of the EU biofuels directive now oblige them to take action. I hope that he can reassure the House on that score.

Mr. Boateng

The right hon. Lady has had an uncharacteristic lapse of memory, but I can certainly assure her that we take our commitments in that respect very seriously indeed and that I look forward to hearing the outcome of her discussion with the Economic Secretary.

We now have new duty differentials for sulphur-free fuels and bioethanol; a new low-carbon band of vehicle excise duty for the lowest CO2 emission cars, which will allow motorists to save up to £110 per year by choosing those vehicles in preference to others; and an increase of £1 per tonne in the landfill tax rate for this year and the next to provide business certainty. Inevitably—

Mr. Redwood

Customers pay.

Mr. Boateng

I hear the right hon. Gentleman muttering, "Customers pay" from a sedentary position, but it is right to recognise the "polluter pays" principle, which has not divided the parties in the past—and it would be rather sad if it were to divide us now. We have taken a range of important initiatives, which I hope will find favour on both sides of the House.

The Finance Bill is also about meeting our responsibilities to those in need. The 10 per cent. Government supplement on gifts to charity through payroll giving is extended for a further year to April 2004. That will be welcomed in the sector and throughout the House. Importantly, clause 175 recognises the role of foster carers with an income tax exemption to support their recruitment and retention by ensuring that they are not unfairly taxed on the expenses that they incur in making their invaluable contribution to society. Also importantly, in clause 174 we act to ensure that payments made to adoptive families under the Adoption and Children Act 2002 will continue to be free of tax.

The Finance Bill continues our drive towards maintaining economic stability; our commitment to enterprise and fairness, which has enabled us to meet our responsibilities; and our drive to move forward with investment in public services, tackling poverty and social exclusion, despite the global turndown. I commend it to the House.

9.30 pm
Mr. Flight

I thank the Chief Secretary for his kind comments. Although there has manifestly been insufficient time, the Opposition have done our best to provide effective scrutiny of the Bill. The right hon. Gentleman put a good-natured gloss on what we feel is a bad Bill, which we shall vote against it for three essential reasons.

First, there simply has not been the time for proper scrutiny. Large chunks of the Bill will hang in mid air, unresolved and waiting for Inland Revenue guidelines or further consultation. That is no way to run a country's tax affairs. Secondly, in spite of the spin, virtually nothing in the Bill is positive for the economy or addresses the economy's pressing needs. Indeed, some of it could do substantial damage. Thirdly, behind all the language of tax avoidance, it is clear that the Bill has been about a lot of detailed work, scratching around to leech the tax system and to sweat the maximum possible revenue from all sorts of hidden, little, new stealth taxes.

This very day has given an example of the insufficient time allowed to address important territories. We did not have time to get round to several new clauses and important amendments. The time allotted in Committee was clearly inadequate for a long, complex and, dare I say it, not very well drafted Bill. The Government have been unacceptably arrogant in not giving way on allowing sufficient time. I have had the privilege of serving on three Finance Bills, and there is no record of our filibustering or wasting time. There has been constructive collaboration, and there was no need not to allow enough time and to put in knives that resulted in some things not being covered that should have been covered while leaving potentially too much time for some other matters. Much of the Bill had to be rushed to allow us to cover as much territory as possible. Although the Government have given full responses in many areas—even if we may not have been satisfied with them—there are many others in which responses are required.

As we all know, the Bill contains 180 pages rewriting the law on and changing the nature of stamp duty. Indeed, there is a new tax, and it is widely accepted that that was not properly consulted on. About 40 Government new clauses and amendments have been required to change that provision at this stage, for which only two and a half hours of debate was allowed. I should have hoped that the Government would take note of the measured House of Lords advice to delay until they could get those provisions right.

Schedules 21 and 22 are the other big area of tax law rewrite, and they relate to employee securities and options. They are not well drafted; much of schedule 22 is still quite impenetrable, and we believe that there may be unintended consequences for which the only break will be Revenue guidance. To have the Revenue acting in that executive capacity is somewhat less than proper. Allowing the Revenue discretion is not a proper alternative to getting the law correct in the first place.

With reference to the impenetrable drafting, the Institute of Chartered of Accountants said in its summary: This poor redrafting of a large section of newly rewritten provisions is disappointing. We are concerned that our members will start to question our commitment of time and resources to the project"— the tax rewrite project— if all that happens is that, within a few weeks of legislation being enacted, the Government makes wholesale amendments to it with no proper consultation. The result is that the case for us continuing our involvement in the Rewrite of the UK tax rules is undermined. We would welcome clarification as to the Government's policy concerning the Tax Law Rewrite project given the above comments. Even Government spin recognises that our tax system is already far too complex; it does not need the added problems and unintended consequences of complicated new tax legislation that has been poorly drafted and received inadequate scrutiny. Frequently, it is unclear how it will work.

As is traditional, the legal and accounting professions assist in the scrutiny of Finance Bills by making representations for improvements and pointing out shortcomings that are available at the Committee stage and on Report. As the Chief Secretary recognises, the Opposition have done their utmost to give voice to those representations, but much in the Bill is still not properly resolved; to quote the Foreign Secretary, there is a lot of Horlicks. Much has been left hanging in the air, waiting on Revenue guidelines and future consultation. I cannot believe that the Chief Secretary really thinks this is the best way to run a successful country's economy, let alone its tax laws.

It is clear that the normal two days were necessary for Report and Third Reading. Many of the Government's new clauses and amendments were tabled extremely late; I did not receive some of them until yesterday afternoon and I confess that I have not had time to digest them. The country knows that if it elects a Government with a large majority, it is bringing in an elected tyranny. By God, we certainly have an elected tyranny; it is not right for the Government to ride roughshod over the traditional co-operation in dealing with a measure such as the Finance Bill.

The Government might take notice of the fact that they are no longer so popular. They are behind in the polls and business and professionals are deeply displeased at being shortchanged by the Finance Bill.

Our second major objection is the negative nature of the Bill. Given the problems facing our economy, little in the Bill will have a positive material impact and boost productivity and the business sector. What is there for our pension funds and pension fund assets, which are in trouble and which will be so important to the stability of the economy in the near future and in the long term? What is there that will materially restore business profitability or encourage investment, which is at its nadir for many years?

Even ECOFIN—not a body of which I am deeply fond—pointed out that the UK economy's two weaknesses were our poor productivity record and, especially, the out-of-line growth in the number of claimants for disability and incapacity benefits. Although those are not Finance Bill matters, neither has been effectively addressed.

The Government say that the Bill is about enterprise and meeting their obligations to business. I suggest that, from its representations, the CBI views that as an entirely tongue-in-cheek comment.

There have been major contradictions. The Chancellor's speech included commitments to advance deregulation and to remove unnecessary legislation, but we are dealing with 447 pages of highly complex legislation that will be expensive for businesses to get on top of and implement. That is on top of the costs of assimilating the income tax, earnings and pension legislation rewrite.

The Budget's only positive proposal for middle England—it is not in the Bill—was the child trust fund, but where are the proposals? They were promised in the summer, but we are only 16 days away from the recess. I hope that the Government will be able to tell us when the proposals will be forthcoming. The general understanding is that, even after they have been forthcoming, nothing will be implemented until 2005, by which time it looks certain that the Government will be out of power.

My third point is that the reality that has emerged from scrutinising and debating the Bill is that it is largely about sweating the tax system. Significant new stealth taxes lie within virtually all the anti-avoidance measures. We have had a long debate about stamp duty, and the Red Book gives extra revenue figures of £350 million this year and £450 million next year. During the debates, the Government admitted that £190 million of that will come from the new lease duty this year and some £290 million next year, but the estimates emerging from the industry are truly concerning. The total stamp duty tax take could well rise from £6 billion to £8 billion. As has been pointed out, the cost to the retail sector alone will be £228 million. Indeed, it is extremely worrying that the only two sectors of the economy that are still reasonably robust are retailing and property, yet the Bill threatens major damage to both.

The change to stamp duty land tax was spun as a modernisation and reform of the system, but, as my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) pointed out, it fails to address the major problem of the slab that millions of citizens experience when buying and selling houses and it could leave first-time buyers with double charges when new housing estate lands are parcelled up among different builders. In that sense, the proposal has not addressed the full subsale issues.

As my colleagues have pointed out, for small to medium-sized businesses, including virtually every business in London, the cost of the lease tax could not just double or quadruple, but rise by 10 or 15 times, with 35-year leases. The dangers of that are clearly a freezing of commercial property mobility, a move to short leases, inadequate investment in infrastructure and a major undermining of something that we have been good at: retailing.

Schedule 21 prompted sharp exchanges today. I will not repeat them in depth, but there was an act of bad faith. There was never any legal position, nor any suggestion, that employers would be liable for national insurance contributions if their employees exercised certain rights within three years and that the latter would be liable for income tax. Those changes could have been made for the future, but the proposals have been implemented by changing the tax law. Again, we have a new tax.

Unfortunately, we did not reach schedule 22 today, which leaves a great deal outstanding. In essence, the risk is that the definition of securities relating to employment is so wide that it could include employees who own shares in their companies. Even where shares are not part of a remuneration structure, employees could become liable to income tax and national insurance on the gains. The situation could be especially difficult for the venture capital industry and management buy-outs.

Contrary to what the Chief Secretary said, business and commerce have been given the impression that the Government are biased against employee option motivation. The Government have already wrecked unapproved options and are now tightening up other areas. They do not understand that it is crucially important for companies with a market capitalisation between £100 million and £500 million to get the right people with talent—the entrepreneurial drivers—and lock them in. Those companies have to compete with bigger ones, but they are too large to qualify for the enterprise management incentive scheme and they have new problems with the limited approved scheme. At least the Government are no longer claiming that the UK share option regime is comparable in any way with the positive aspects of the US regime.

Today, we debated the Government's reaction to the Eversden judgment. Although I appreciate the need to tighten things, their proposal amounts to a new stealth tax on people in middle England who want to transfer their houses to their children and let the old mother live there in her latter years. The Government did not even honour the commitments on bingo tax that the Chancellor made in his Budget speech.

The Chancellor is well aware of his over-optimistic forecasts on tax revenue. Goodness knows why a person who argues that he is so intelligent based his tax forecasts on the top of a nine-year boom period, because any practitioner could have told him that tax revenues were artificially inflated at that time. The situation has resulted in a depressing Bill that has the main objective of sweating out whatever additional tax it can. I remind hon. Members that taxation is increasing by 7.5 per cent. this year—more than £26 billion—in a climate that is less than healthy. Real household disposable incomes are expected to fall this year.

Mr. Redwood

Does my hon. Friend agree that, by a mile, this is the dearest tax bill ever presented, and does that make it the worst?

Mr. Flight

As my right hon. Friend knows, the subtle thing is that the taxes are not all in the Bill. A mass of advanced taxes was slipped in last year, or introduced via council tax or by another sleight of hand. The Bill is bad and the overall fiscal measures are extremely undesirable and the worst that I can think of. They are bad on bad.

Economists are increasingly worried that the massive increase in taxation is hitting consumer demand and that that could push the economy into recession. The threat to the property market is added to that. The Government span the Bill and the Budget by citing measures that would build a strong and more flexible economy, but this year's Ernst and Young survey shows that entrepreneurs' view of Government and Whitehall is at rock bottom. Taxation has increased by nearly 50 per cent. since 1996–97 and spending has increased by more than 50 per cent., but there has been a less than 20 per cent. increase in delivery. About 80 per cent. of the tax increase has evaporated through inflated public sector costs and higher bureaucratic and administrative costs.

It is a sad day for me—I say, jokingly, that that is not only because David Beckham has gone to Madrid—because my only son has left to make his career in America, as have so many talented young people to whom Britain does not offer the opportunity they want. The job situation for maturing graduates in this country is as dire as it has been for many years. Too many jobs in the public sector are non-jobs, and there is a dearth of new jobs in the private sector. As Digby Jones, head of the CBI, commented: We are bearing witness to a continual erosion of our competitive position. If the government wants a low-tax, flexible economy, we are not heading in the right direction. We are back to the socialist tax-and-spend failures of the 1970s when I went to work abroad—more taxes, more spending, more borrowing, more excuses and inadequate delivery. Voters are beginning to realise what is happening. The sooner this depressing, divided and incompetent Government are out of office, the better.

9.50 pm
Denzil Davies (Llanelli)

I want to raise a technical issue that relates to two clauses. It was mentioned briefly in Committee and concerns the possible interaction between clause 197 and schedule 42, and clause 148, with the developing jurisprudence of the European Court of Justice in respect of the "four freedoms", as they are described. In particular, I am concerned about the freedom of establishment, which impinges on the ability of member states to legislate in a traditional way on corporation tax and income tax.

I did not serve on the Committee, but I read the reports. Members of it will know that clause 197 and schedule 42 deal with controlled foreign companies, which have been mentioned. Controlled foreign companies are not new, and the clause and the schedule extend the ambit of controlled foreign companies to other areas. There is no objection to that. I am sure that every hon. Member knows that a controlled foreign company is usually a foreign subsidiary of a UK parent company and is located in a country where corporation tax is much lower than it is in the UK.

The Treasury Bench knows that the object is to charge the amount of corporation tax that would have been payable, had the foreign company been resident in the UK, on the UK parent company. There are exemptions and suspensions. The legislation does not apply to all countries or to most European Union countries, although it is uncertain whether it will apply to the 12.5 per cent. corporation tax rate in Ireland.

Although it was denied in Committee, the problem is that the clause could fall foul of the jurisprudence of the European Court if a resident company in the UK is taxed according to UK rules and a non-resident company in the UK is taxed differently. If that nonresident company is resident in an EU member state, there will be a conflict between the traditional way of raising taxation in all member states, which is based on residency and non-residency. As a result, there will be a contradiction and conflict between that and the so-called four freedoms, especially the freedom of establishment of companies within the EU. The problems created by the Court go well beyond controlled foreign companies. I am not saying that the legislation will be challenged, but challenges are occurring all the time, as many hon. Members know. I merely ask my right hon. Friends whether that problem has been considered, although I am sure that it has.

Clause 148 seems fairly innocuous. It changes the terminology from a tax on branches to a tax on permanent establishments, which is how double taxation treaties refer to what are, in effect, branches. Again, there is a problem. Recent cases, such as the Lankhorst case, relate to that well-known concept of the thin capitalisation rule. I will not go into that, but branches do not usually have capital; they rely on the capital of the company to which the branch belongs. It is possible to borrow money, pay interest, get a tax deduction and use the money as if it were capital in the company.

The hon. Member for Arundel and South Downs (Mr. Flight) raised the matter in Committee and my right hon. Friend the Paymaster General was confident in her reply. I do not criticise her reply when she said that she was happy that the challenges could not occur. She then said, "Of course, all this uncertainty will be taken into account in the ongoing discussions." I am not sure who the discussions are with, but that is how my right hon. Friend was reported. Probably the discussions are with either the Commission or with other countries. It is not a Eurosceptic point but a real problem. How do we dovetail or relate national corporation tax rules into the wider provisions of the European Union?

I do not know for how long the discussions will continue, but there is a real problem because we are losing money. If challenges are made, and certainly if there is a challenge made to the controlled foreign companies legislation, what is to stop a British company setting up a holding company in Luxembourg? There are rules that prevent companies from leaving the United Kingdom, but exit taxes are also under threat. In a French case the exit tax has been held—this is certainly the position in French courts—to be contrary to the rules of the European Union.

It is a real problem that extends beyond teachers paying income tax in France when they work across the border in Germany. I suspect that it will be examined. I suspect that the Treasury is much more worried than it makes out to be. I do not know the answer but an answer must be found to protect the revenues of this country, and to protect the money that comes into the Treasury as a result of taxing people in the normal and traditional way.

9.56 pm
Mr. Laws

There is no doubt that in terms of weight of paper and length, this is one of the heaviest and longest Finance Bills in history. There is little doubt, however, that in terms of substance it is probably one of the thinnest Finance Bills of the past 20 years. To me, at least, it suggests that the Government are running out of ideas and creative inspiration.

Our proceedings have been lightened from time to time by the turns of the Chief Secretary, but in terms of the substance of the Bill, all too much is missing. I shall make some general comments about the proceedings of the Bill and then consider the substance of some of the major elements of the measure, before relating it to the Government's wider economic policy.

Given the general way in which the Finance Bill has been handled this year, I shall make three requests. I suspect that they would be shared and to some extent mirrored given the comments made by the occupants of the Opposition Front Bench. First, can we in future have some foreknowledge of Budget day from a Government who tell us that they believe in fiscal transparency, clarity and predictability in fiscal policy? Do we have to continue with a situation where Budget dates are fixed by the Chancellor of the Exchequer one or two weeks in advance to suit the needs of the Labour party's media management? If we believe in fiscal transparency, let us and those outside the House who want to know when the Finance Bill will be introduced each year be informed well in advance. Let the date be fixed every year.

Secondly, whether this is a thin Bill in terms of substance, no doubt the measures in it are important to many people—not only tax accountants but business people throughout the country. It is vital that we have the necessary time to scrutinise all the measures in the Bill.

Opposition Front Bench Members who are responsible for scrutiny of the Bill have done a good job in covering a large portion of the Bill this year, but a number of amendments, new clauses and portions of the Bill have not been scrutinised, including some of the amendments and new clauses that were tabled for consideration today in the earlier part of our proceedings. I ask the Chief Secretary to consider next year reinstating consideration on Report and Third Reading over two days rather than one elongated day. I ask him to ensure that consideration in Committee is sufficiently lengthy to enable us to consider all parts of the Bill. In addition, the length of the Bill—447 pages to cover a relatively sparse amount of policy and substance—is of concern. The Government are determined to try to make the Finance Bill more accessible and shorten the existing legislation, but they appear to be doing so without any eye for the new measures that they introducing, their length and the way in which they are increasing the complexity of our tax system.

I am afraid I have only two generally positive comments about the Finance Bill. One relates to the report, which has already been mentioned, produced by the Economic Affairs Committee in another place. It is immensely useful, even if we do not want the other place to involve itself too much in financial matters, for us to be able to draw upon the Lords' undoubted expertise. If the Government do the House and people outside the courtesy of allowing us to know in advance when the Budget will take place, it may even be possible for the Economic Affairs Committee to anticipate those developments so that we can have its report before Committee proceedings conclude, as happened this year.

Before I go on to the substance of the Bill, I should like to make a slightly more generous comment, and thank the Chief Secretary, the Paymaster General and the Economic Secretary both for the generally good natured and sometimes humorous way in which they have conducted proceedings and for their willingness to amend provisions on different issues, including the stamp duty issue affecting social housing tenants that we discussed today, in the light of representations from the Opposition.

The Bill is relatively insubstantial and includes some extremely worrying measures. There is a series of tax changes of great complexity, but there is little or no evidence that the Treasury has given any thought whatsoever to the question of whether those changes justify the amount of money spent on them. There are concerns about whether the change to stamp duty in deprived areas will be abused. Will it benefit small, deprived communities in the parts of the country that it sets out to benefit, or will it merely help the big commercial enterprises that are often based in the inner cities? The Government have not provided any assessment of the economic benefit of those measures.

Today, we debated tax reliefs on savings, and the Economic Secretary made an admission, which he did not regard as surprising, that the Government are spending billions of pounds of tax relief on savings without the slightest idea of whether they are doing anything more than shifting savings from one class of savings instrument to another. We have had no assessment at all of whether the change has any economic value in increasing the total stock of savings. The Government are spending a great deal of money on research and development tax credits, but we do not know whether they are of any benefit because the Treasury do not seem to be carrying out any scrutiny of whether the expenditure of Government money to pay for tax revenues forgone makes any sense. It is extraordinary that the Treasury should insist that other Departments should achieve good value for money in their expenditure while it is making no analysis whatsoever of immensely expensive tax changes.

Mr. Redwood

Does that mean that the Liberal Democrats would take away those tax reliefs?

Mr. Laws

The right hon. Gentleman will know that we would remove certain tax reliefs, not least the film tax relief, which was originally introduced by the Government in the expectation that it would cost £20 million to £40 million. However, within a couple of years, behind the backs of Ministers, "Coronation Street" and other programmes were categorised as films, and the cost of the relief had increased from £30 million or £40 million to £200 million, then £300 million and £350 million. We ought to subject such measures to much greater scrutiny in the House, and I am very surprised indeed that the Chancellor and Treasury officials should allow Treasury Ministers to get away with all those ill-thought-out reliefs—there seems to be no ongoing assessment of their economic value.

There is an extremely worrying lack of coherence in the Treasury—one would expect to find it there of all places—about the way in which the tax system treats similar types of activity. Earlier, we had a debate in which I appeared to irritate the Economic Secretary by asking him whether the intention was to create a level playing field for different forms of tax on gambling. He is laughing now. He thinks that that is amusing. Apparently, it is not the Government's policy that there should be a level playing field. It is the policy of the Government to send out through the tax system a signal that certain types of gambling are better than others. I do not understand that at all. I do not understand how the economists and officials in the Treasury and the chief economic adviser, for whom I have the highest regard, can allow Ministers to get away with such ill-thoughtout measures.

On the overall thrust of tax policy, we must wonder whether the Government are committed to fairness in tax, as they have long boasted. Shortly after the Government came to power in 1997, we tabled questions asking about the tax burden by income deciles—figures for which the Labour party in opposition had been asking and on which it had been getting parliamentary written answers since 1979, and using them to taunt other parties about the effect of their tax policies. It was interesting that within about a year of the Government coming to power, that series was abolished. Apparently, it was far too complicated to assess the effect of tax policies on each income decile.

It seems that a lot of work would have to be carried out to produce a new series, and we have not seen it yet. With the increase in council tax being forced through by the measures being taken by the Chancellor—one of the most regressive taxes that the Government have yet thought up—we are not surprised that they do not intend to produce that series, as it would show how regressive certain elements of their tax policy are.

When we link all that to the Government's economic performance, we see a Government who came in initially in 1997 with a clear and, in certain respects, ambitious agenda. They gave the central Bank of the United Kingdom operational independence, even though that was not in their manifesto, and we welcomed that. They had a clear agenda, whether or not one agreed with it, on public expenditure, and they wanted to restore the public finances to a strong state. They wanted to end the dithering on the euro, and they wanted to prepare and decide, rather than wait and see.

What do we see in all those areas now? A failure of the Government—failure on the economy, where productivity growth is as low as it has been for 10 or 20 years, and lower than in the period before they took over. If we do not have productivity growth, how will we get extra money into public services without an ever-rising tax burden? We see the budget balance returning to significant deficit, and perhaps even to structural deficit, after a short period of surplus. We see the tax burden going back up and the Government having to use taxes such as national insurance. Because of the political pledges that were given not to change income tax, they have found a mirror-image tax. It is not surprising, therefore, that people feel such distrust of the Government.

On public services, we see an increasingly centralised system of delivery that cannot possibly work and which is letting down the British people. On the euro, it is difficult to see what the difference is between the wait-and-see policy that was derided, and the prepare-and-decide policy that we were to get.

Mr. Stephen O'Brien

Hope and pray.

Mr. Laws

The hon. Gentleman is probably right.

The Finance Bill is a complacent Bill from a Government who have run out of steam and from a Chancellor who has little to be complacent about.

10.8 pm

Mr. Redwood

The Chief Secretary tonight made a bad fist of a very bad case. He dared to tell the House that the Budget is about stability, enterprise and fairness. It is about none of those things.

Let us take the case of enterprise. Can the Budget be said to be a Budget for enterprise, when all the moves on corporation tax are to increase the tax and make it more difficult for business to shield its hard-earned and dwindling profits? Can it be said to be a Budget for enterprise when the cornerstone of the Government's policy this year is a big hike in employer and employees national insurance? Labour introduced a tax on jobs, and dares to tell the House that the Budget is a Budget for enterprise and jobs. Can it be said to be a Budget for enterprise when we see a fundamental restructuring of stamp duty and land taxes, in a way that is likely to be damaging to retail and property, two of the sectors that have so far survived rather better than others from the depredations of the Chancellor, who is always taking more and more money away? Can this year's Budget be said to be a Budget for stability? Of course not.

The Finance Bill contains the seeds of the Government's own undoing. They have foolishly decided to use their huge majority to grant themselves the powers to start to tax the property sector, particularly people's homes, more highly as a means of regulating the economy. I give them this warning tonight: if they do that—if they increase stamp duties on homes under the powers that they are taking, or if they decide at some future date to introduce capital gains on the principal residence, as they have threatened to do in recent documentation—they could well overshoot and destroy the one remaining thing that is keeping the economy going.

It is higher house prices that are keeping up confidence to some extent. It is higher house prices that are enabling people to borrow to supplement their squeezed incomes and keep up their spending patterns. It is higher house prices that are sustaining a modest level of confidence in a corporate sector that has otherwise been sandbagged and knocked badly by the Chancellor's tax depredations in recent Budgets. If the Government use their enhanced powers and new taxation base to take more money out of the housing sector, they will rue the day. They will do themselves considerable political damage as well as undermine the one remaining part of the British economy that still survives and works in their favour.

I do not think that the Government have yet learned the brutal lesson that they should have learned from their previous higher taxes. This year's Budget and Finance Bill are about higher tax. They are based on the proposition to which the Government have worked for the past four years, which is if they see a stream of income or money going into the private sector, they can take as much of it they like and do no damage—the private sector deserves such treatment. In the moral universe of the Chancellor and the Chief Secretary, it is necessary to take a big chunk of that money away from the private sector and use it for their own spending purposes.

Mr. Boateng

That is absurd.

Mr. Redwood

The Chief Secretary says that, but he should look at the evidence. At the end of the 1990s, the Government saw a successful telecommunications industry, so they imposed a £22.5 billion windfall tax on that industry and more or less destroyed it. They destroyed jobs, investment and prosperity—they destroyed the very engine of growth at the peak of that market's growth. Then, the Government saw pension funds and thought, "What an easy target. Let's take £5 billion a year off pensioners—they won't notice, they're too old to complain." That, of course, did grave damage to pension funds and helped to produce a bigger collapse in the stock market in Britain than was seen overseas.

This year's Budget and Finance Bill threaten to do the same thing to employment and to housing, so I renew my warning to the Government that they should back off from the housing market. They should understand that it is the last remaining thing that makes part of their growth forecasts credible. No private sector forecaster thinks that the Chancellor has a hope in hell of achieving the growth in the economy that he forecasts for the next two years. We all know that his revenues will fall short and his expenditures will exceed his Budget. We all know that this Finance Bill, the biggest tax bill ever presented to the British people, will not be enough. I promise the Government that if they go ahead and use the extra powers that they are taking over the housing market, not only will the taxes not be enough, but they will fall short by a massive amount and trigger a substantial disaster.

The Chief Secretary says that this year's Budget is a Budget to produce fairness. What is fair about a Government who tax the poor to pay the fat cats in the quangos and the government sector? What is fair about a Government who expand the bureaucracy and the government sector—

It being nine and a half hours after the commencement of proceedings on the first Ways and Means motion relating to the Bill, MR. DEPUTY SPEAKER, pursuant to Order [this day], proceeded to put forthwith the Question already proposed from the Chair.

Question put, That the Bill be read the Third time:—

The House divided: Ayes 285, Noes 175.

Division No. 268] [10.14 pm
AYES
Abbott, Ms Diane Campbell, Mrs Anne (C'bridge)
Adams, Irene (Paisley N) Casale, Roger
Ainsworth, Bob (Cov'try NE) Caton, Martin
Alexander, Douglas Cawsey, Ian (Brigg)
Allen, Graham Challen, Colin
Anderson, rh Donald (Swansea E) Clapham, Michael
Anderson, Janet (Rossendale & Clark, Mrs Helen (Peterborough)
Darwen) Clark, Dr. Lynda (Edinburgh
Armstrong, rh Ms Hilary Pentlands)
Atherton, Ms Candy Clark, Paul (Gillingham)
Atkins, Charlotte Clarke, rh Tom (Coatbridge &
Austin, John Chryston)
Bailey, Adrian Clarke, Tony (Northampton S)
Banks, Tony Clelland, David
Barnes, Harry Clwyd, Ann (Cynon V)
Battle, John Coffey, Ms Ann
Bayley, Hugh Cohen, Harry
Beckett, rh Margaret Colman, Tony
Begg, Miss Anne Cook, rh Robin (Livingston)
Bell, Stuart Corbyn, Jeremy
Benn, Hilary Corston, Jean
Bennett, Andrew Cousins, Jim
Benton, Joe (Bootle) Cox, Tom (Tooting)
Berry, Roger Cranston, Ross
Betts, Clive Crausby, David
Boateng, rh Paul Cruddas, Jon
Borrow, David Cryer, Ann (Keighley)
Bradley, rh Keith (Withington) Cryer, John (Hornchurch)
Bradley, Peter (The Wrekin) Cummings, John
Bradshaw, Ben Cunningham, rh Dr. Jack
Brown, rh Nicholas (Newcastle E (Copeland)
Wallsend) Cunningham, Jim (Coventry S)
Brown, Russell (Dumfries) Cunningham, Tony (Workington)
Browne, Desmond Dalyell, Tam
Buck, Ms Karen Davey, Valerie (Bristol W)
Burden, Richard David, Wayne
Burgon, Colin Davidson, Ian
Burnham, Andy Davies, rh Denzil (Llanelli)
Byers, rh Stephen Davis, rh Terry (B'ham Hodge H)
Caborn, rh Richard Dawson, Hilton
Campbell, Alan (Tynemouth) Dean, Mrs Janet
Denham, rh John Kidney, David
Dhanda, Parmjit Kilfoyle, Peter
Dismore, Andrew King, Andy (Rugby)
Dobbin, Jim (Heywood) King, Ms Oona (Bethnal Green &
Donohoe, Brian H. Bow)
Dowd, Jim (Lewisham W) Ladyman, Dr. Stephen
Drew, David (Stroud) Lammy, David
Eagle, Angela (Wallasey) Lawrence, Mrs Jackie
Efford, Clive Laxton, Bob (Derby N)
Ellman, Mrs Louise Lepper, David
Etherington, Bill Leslie, Christopher
Field, rh Frank (Birkenhead) Levitt, Tom (High Peak)
Fisher, Mark Lewis, Terry (Worsley)
Fitzpatrick, Jim Linton, Martin
Fitzsimons, Mrs Lorna Lloyd, Tony (Manchester C)
Foster, rh Derek Love, Andrew
Foster, Michael Jabez (Hastings Luke, Iain (Dundee E)
& Rye) Lyons, John (Strathkelvin)
Foulkes, rh George McAvoy, Thomas
Francis, Dr. Hywel McCabe, Stephen
George, rh Bruce (Walsall S) McCafferty, Chris
Gerrard, Neil McCartney, rh Ian
Gilroy, Linda McDonagh, Siobhain
Godsiff, Roger MacDonald, Calum
Goggins, Paul McDonnell, John
Griffiths, Jane (Reading E) MacDougall, John
Griffiths, Nigel (Edinburgh S) McKechin, Ann
Griffiths, Win (Bridgend) McKenna, Rosemary
Grogan, John Mackinlay, Andrew
Hain, rh Peter McNulty, Tony
Hall, Mike (Weaver Vale) MacShane, Denis
Hall, Patrick (Bedford) McWalter, Tony
Hamilton, David (Midlothian) Mahmood, Khalid
Hamilton, Fabian (Leeds NE) Mahon, Mrs Alice
Hanson, David Mallaber, Judy
Harris, Tom (Glasgow Cathcart) Marris, Rob (Wolverh'ton SW)
Havard, Dai (Merthyr Tydfil & Marsden, Gordon (Blackpool S)
Rhymney) Marshall, David (Glasgow
Healey, John Shettleston)
Henderson, Ivan (Harwich) Martlew, Eric
Hendrick, Mark Meale, Alan (Mansfield)
Hepburn, Stephen Michael, rh Alun
Heppell, John Miliband, David
Hesford, Stephen Miller, Andrew
Heyes, David Mitchell, Austin (Gt Grimsby)
Hill, Keith (Streatham) Moffatt, Laura
Hoey, Kate (Vauxhall) Mole, Chris
Hood, Jimmy (Clydesdale) Moran, Margaret
Hoon, rh Geoffrey Morgan, Julie
Hope, Phil (Corby) Morley, Elliot
Hopkins, Kelvin Mountford, Kali
Howarth, George (Knowsley N & Mudie, George
Sefton E) Mullin, Chris
Howells, Dr. Kim Murphy, Denis (Wansbeck)
Hughes, Beverley (Stretford & Murphy, Jim (Eastwood)
Urmston) Naysmith, Dr. Doug
Hughes, Kevin (Doncaster N) Norris, Dan (Wansdyke)
Humble, Mrs Joan O'Brien, Bill (Normanton)
Hurst, Alan (Braintree) Olner, Bill
Iddon, Dr. Brian O'Neill, Martin
Illsley, Eric Organ, Diana
Ingram, rh Adam Osborne, Sandra (Ayr)
Irranca-Davies, Huw Owen, Albert
Jackson, Helen (Hillsborough) Palmer, Dr. Nick
Jenkins, Brian Picking, Anne
Johnson, Miss Melanie (Welwyn Pickthall, Colin
Hatfield) Pike, Peter (Burnley)
Jones, Helen (Warrington N) Pollard, Kerry
Jones, Jon Owen (Cardiff C) Pope, Greg (Hyndburn)
Jones, Lynne (Selly Oak) Prentice, Ms Bridget (Lewisham
Jones, Martyn (Clwyd S) E)
Kaufman, rh Gerald Prentice, Gordon (Pendle)
Keen, Alan (Feltham) Prescott, rh John
Keen, Ann (Brentford) Primarolo, rh Dawn
Kemp, Fraser Prosser, Gwyn
Khabra, Piara S. Purchase, Ken
Quinn, Lawrie Stringer, Graham
Rammell, Bill Stuart, Ms Gisela
Rapson, Syd (Portsmouth N) Tami, Mark (Alyn)
Reed, Andy (Loughborough) Thomas, Gareth (Clwyd W)
Robertson, John (Glasgow Timms, Stephen
Anniesland) Tipping, Paddy
Roche, Mrs Barbara Trickett, Jon
Ross, Ernie (Dundee W) Truswell, Paul
Roy, Frank (Motherwell) Turner, Dennis (Wolverh'ton SE)
Ruane, Chris Turner, Dr. Desmond (Brighton
Russell, Ms Christine (City of Kemptown)
Chester) Turner, Neil (Wigan)
Ryan, Joan (Enfield N) Twigg, Derek (Halton)
Salter, Martin Twigg, Stephen (Enfield)
Sarwar, Mohammad Tynan, Bill (Hamilton S)
Savidge, Malcolm Vaz, Keith (Leicester E)
Sawford, Phil Vis, Dr. Rudi
Sedgemore, Brian Walley, Ms Joan
Sheridan, Jim Wareing. Robert N.
Simpson, Alan (Nottingham S) Watson, Tom (W Bromwich E)
Singh, Marsha Watts, David
Skinner, Dennis White, Brian
Smith, rh Chris (Islington S & Williams, Betty (Conwy)
Finsbury) Wills, Michael
Smith, Geraldine (Morecambe & Winnick, David
Lunesdale) Wood, Mike (Batley)
Smith, Jacqui (Redditch) Woolas, Phil
Smith, John (Glamorgan) Worthington, Tony
Soley, Clive Wray, James (Glasgow
Southworth, Helen Baillieston)
Starkey, Dr. Phyllis Wright, Anthony D. (Gt
Steinberg, Gerry Yarmouth)
Stevenson, George Wright, David (Telford)
Stewart, David (Inverness E & Wright, Tony (Cannock)
Lochaber)
Stewart, Ian (Eccles) Tellers for the Ayes:
Stinchcombe, Paul Gillian Merron and
Stoate, Dr. Howard Mr. Nick Ainger
NOES
Ainsworth, Peter (E Surrey) Chope, Christopher
Allan, Richard Clappison, James
Amess, David Clarke, rh Kenneth (Rushcliffe)
Atkinson, David (Bour'mth E) Clifton-Brown, Geoffrey
Atkinson, Peter (Hexham) Collins, Tim
Bacon, Richard Conway, Derek
Baldry, Tony Cotter, Brian
Barker, Gregory Curry, rh David
Baron, John (Billericay) Davey, Edward (Kingston)
Barrett, John Davies, Quentin (Grantham &
Beggs, Roy (E Antrim) Stamford)
Beith, rh A. J. Davis, rh David (Haltemprice &
Bellingham, Henry Howden)
Bercow, John Djanogly, Jonathan
Beresford, Sir Paul Dodds, Nigel
Blunt, Crispin Duncan, Peter (Galloway)
Boswell, Tim Evans, Nigel
Bottomley, rh Virginia (SW Ewing, Annabelle
Surrey) Fabricant, Michael
Brake, Tom (Carshalton) Fallen, Michael
Brazier, Julian Field, Mark (Cities of London &
Breed, Colin Westminster)
Brooke, Mrs Annette L. Flight, Howard
Browning, Mrs Angela Flook, Adrian
Bruce, Malcolm Forth, rh Eric
Burnett, John Foster, Don (Bath)
Burns, Simon Fox, Dr. Liam
Burt, Alistair Francois, Mark
Butterfill, John Garnier, Edward
Calton, Mrs Patsy George, Andrew (St. Ives)
Cameron, David Gibb, Nick (Bognor Regis)
Campbell, Gregory (E Lond'y) Gidley, Sandra
Campbell, rh Menzies (NE Fife) Gillan, Mrs Cheryl
Cash, William Goodman, Paul
Chapman, Sir Sydney (Chipping Gray, James (N Wilts)
Barnet) Grayling, Chris
Green, Damian (Ashford) Price, Adam (E Carmarthen &
Green, Matthew (Ludlow) Dinefwr)
Greenway, John Prisk, Mark (Hertford)
Grieve, Dominic Pugh, Dr. John
Hague, rh William Randall, John
Harris, Dr. Evan (Oxford W & Redwood, rh John
Abingdon) Reid. Alan (Argyll & Bute)
Harvey, Nick Rendel, David
Hawkins Nick Robertson, Angus (Moray)
Hayes, John (S Holland) Robertson, Laurence (Tewk'b'ry)
Heath, David Robinson, Peter (Belfast E)
Heathcoat-Amory, rh David Roe, Mrs Marion
Hendry, Charles Rosindell, Andrew
Ruffley, David
Hermon, Lady Russell, Bob (Colchester)
Hoban, Mark (Fareham) Salmond, Alex
Holmes, Paul Sanders, Adrian
Horam, John (Orpington) Sayeed, Jonathan
Howard, rh Michael Shephard, rh Mrs Gillian
Howarth, Gerald (Aldershot) Simmonds, Mark
Jack, rh Michael Simpson, Keith (M-Norfolk)
Johnson, Boris (Henley) Smith, Sir Robert (W Ab'd'ns &
Keetch, Paul Kincardine)
Key, Robert (Salisbury) Soames, Nicholas
Kirkbride, Miss Julie Spicer, Sir Michael
Kirkwood, Sir Archy Spink, Bob (Castle Point)
Knight, rh Greg (E Yorkshire) Stanley, rh Sir John
Laing, Mrs Eleanor Steen, Anthony
Lait, Mrs Jacqui Streeter, Gary
Lamb, Norman Stunell, Andrew
Lansley, Andrew Swire, Hugo (E Devon)
Laws, David (Yeovil) Taylor, Ian (Esher)
Leigh, Edward Taylor, John (Solihull)
Liddell-Grainger, Ian Taylor, Matthew (Truro)
Lidington, David Taylor, Dr. Richard (Wyre F)
Thomas, Simon (Ceredigion)
Lilley, rh Peter Tredinnick, David
Loughton, Tim Trimble, rh David
Luff, Peter (M- Worcs) Turner, Andrew (Isle of Wight)
McIntosh, Miss Anne Tyler, Paul (N Cornwall)
Mackay, rh Andrew Tyrie, Andrew
McLoughlin, Patrick Viggers, Peter
Malins, Humfrey Waterson, Nigel
Marsden, Paul (Shrewsbury & Watkinson, Angela
Atcham) Webb, Steve (Northavon)
Mawhinney, rh Sir Brian Weir, Michael
May, Mrs Theresa Widdecombe, rh Miss Ann
Mercer, Patrick Willetts, David
Mitchell, Andrew (Sutton Williams, Hywel (Caernarfon)
Coldfield) Williams, Roger (Brecon)
Moss, Malcolm Wilshire, David
Murrison, Dr. Andrew Winterton, Ann (Congleton)
Norman, Archie Wishart, Pate
O'Brien, Stephen (Eddisbury) Yeo, Tim (S Suffolk)
Öpik, Lembit Young, rh Sir George
Osborne, George (Tatton) Younger-Ross, Richard
Ottaway, Richard Tellers for the Noes:
Page, Richard Mr. Robert Syms and
Paice, James Hugh Robertson

Question accordingly agreed to.

Bill read the Third time, and passed.