FINANCE BILL (Hansard, 14 July 1977)

§ Sir Geoffrey Howe (Surrey, East)

I invite the Chief Secretary to tell the House more about what lies behind this motion. Its main provision is to provide that all the new clauses relating to subcontractors and those caught up in the 714 certificate snare should be taken after Clause 17, which deals with the standard rate of income tax. From that it looks as if the Government face the problem that, if we look at New Clause 38—tabled by my right hon. and hon. Friends and myself and designed to secure a reduction in the amount withheld from contractors in the construction industry from 35 per cent. to 33 per cent.—in the light of the Chancellor of the Exchequer's declared intention, made many moons ago, to reduce the standard rate of income tax from 35 per cent. to 33 per cent., the simple consequential proposal to put into effect the Chancellor's original declared intention cannot be taken until after we have dealt with Clause 17. That will finally fix for the nation the standard rate of income tax as declared in the Budget for the year which is already one quarter gone.

Surely it is fantastic that, four months after the Chancellor declared in his Budget that he intended to introduced a change in the standard rate of income 807 tax from 35 per cent. to 33 per cent., by the beginning of Report we have still not had the terms of that reduction. The right hon. Gentleman said as long ago as last Christmas in his letter to the IMF that he would be introducing the reduction subject to a satisfactory agreement on pay policy. However, by the time that the Budget came no satisfactory agreement was forthcoming. Even on Report we still have no idea what the standard rate of income tax payable in this fiscal year will be, although the year is already one-third on its way.

I must protest at this increasingly curious and unsatisfactory way of inviting the House to deal with the taxation of the British people. It means that we are left in doubt at this dying stage of this dying Bill from this dying Government. The Chief Secretary is sinking finally beneath the waves.

Even now we are being asked to rearrange the order of the Bill because the Government still do not know whether they will reduce the standard rate of income tax. If they know, they have not told us. Sub-contractors who are affected by the clause do not know what will happen. It is probable that they will not know for some months. I ask the right hon. Gentleman to let us into the best kept Budget secret of the year—namely, whether the Chancellor will fulfil his Budget intentions. He should let the House know exactly what he has in mind, if anything.

The Chief Secretary to the Treasury (Mr. Joel Barnett): I think that at some stage the right hon. and learned Member for Surrey, East (Sir G. Howe) suggested that it was sensible to debate what the rate should be for sub-contractors' deductions after the House decided the basic standard rate of tax. I agree with him. I am sure the House will agree that that is the sensible course to take. It is the purpose of the motion that we should do exactly that.

As for its being fantastic that the House does not yet know the basic rate of tax, the rate in the Bill is 35 per cent. That would be the position whatever had happened or whatever my right hon. Friend the Chancellor of the Exchequer had said in his Budget speech. On Report the House of Commons can always change the basic rate of tax, or anything else, including personal tax allowances.

808 In fairly recent times it has been my experience that hon. Members do not always agree with the Government and from time to time seek to make changes in the wording of a Bill or the figures that appear in it. Surely there is nothing fantastic about that. Surely that is perfectly understandable. I think from time to time that those who disagree with me are wrong, but that is the democratic right of hon. Members.