Finance Bill (Hansard, 12 July 1983)

§ Sir Hugh Fraser (Stafford)
On a point of order, Mr. Walker. I understand that, because the Finance Bill is so drawn, there is no question of discussing the new clauses. Perhaps you would give us a ruling on that.

§ The Chairman of Ways and Means (Mr. Harold Walker)
The new clauses are out of order because there are no specific Ways and Means resolutions to authorise them. For that reason, I cannot call them.

§ Sir William Clark (Croydon, South)
Further to that point of order, Mr. Walker. Could you explain to the Committee, and to me, why it is that there is no Ways and Means resolution, when we have had the previous Finance Bill, to which there were new clauses tabled, some of which were selected for debate? Why is it that this time new clauses would be out of order? Surely, if that is so it should have been made clear to those of us who tabled new clauses when we went to the Table Office. Had we been informed then that new clauses were out of order we would have been saved the bother of tabling them.

§ The Chairman
The position arises out of the circumstances in which the new Finance Bill has been put before the House, in the wake of the one that preceded the general election. The usual amendment of law resolution — such a resolution appeared in the previous Finance Bill — has been unnecessary for this Bill. For that reason, there are no specific Ways and Means resolutions that will cover the new clauses and enable them to receive the authorisation of Ways and Means resolutions.
In reply to the hon. Gentleman's query as to why he was not informed about this in the Table Office, I am entitled to remind the House that these matters should have been considered by the House when the Ways and Means resolutions were before it, and there was a further opportunity to discuss them on Second Reading.

§ Sir Hugh Fraser
Further to that point of order, Mr. Walker. I thank you for that explanation, but the matter still seems odd. Clause 15, the clause on DLT, has introduced a new principle that makes nonsense of DLT, which we believe to be a nonsense tax, and now we cannot speak about it at all. This seems a most peculiar way for the Government to proceed.

§ Mr. Robin Cook (Livingston)
Further to that point of order, Mr. Walker. As you will be aware, I have a separate point of order, which, by arrangement with the Chair, I propose to raise after the procedure motion has been moved. However, I should like to support the points made by the hon. Member or Croydon, South (Sir W. Clark) and the right hon. Member for Stafford (Sir H. Fraser). I do not think that we could have avoided the difficulty in which we are now when the House considered the Ways 779 and Means resolutions because it would have required a separate and distinct Ways and Means resolution to have provided that new clauses as drafted could be called. I am subject to correction, but I do not think that it would be competent for anybody other than the Treasury Bench to have moved such a resolution.
There is an additional difficulty with the Ways and Means resolution in that the resolution that paves the way for the controversial clauses in the Bill virtually replicates the terms of those clauses and therefore defeats any attempt to table an amendment to the clauses. It is a matter for the House to consider, that having devised a procedure that enables the House to scrutinise, weigh and challenge the legislation brought before it, it is now, in the context of Finance Bills, nearing the point at which it is allowing itself to be bounced into instant legislation that is not subject to the line by line amendment and scrutiny that we intend for the further Bills to which those resolutions are, after all, only intended as paving resolutions.

§ The Chairman
I understand the concern expressed by right hon. and hon. Members, but the Committee will recognise that this is not a matter for me or the Committee today. The Minister will have taken account of what has been said and will bear it in mind, and may wish to communicate with those who have raised this matter.

§ The Financial Secretary to the Treasury (Mr. Nicholas Ridley)
Further to that point of order, Mr. Walker. I have heard what my right hon. Friend the Member for Stafford (Sir H. Fraser), my hon. Friend the Member for Croydon, South (Sir W. Clark) and the hon. Member for Livingston (Mr. Cook) have said. These Ways and Means resolutions were narrowed to facilitate the particular clauses in the Bill, because this is an exceptional and unusual Finance Bill and there is little time left before it has to become law for the purposes of the collection of taxes. However, I can assure hon. Members that the number of matters left out of this Bill will be the subject of debate in the next year's Finance Bill and the point from which they date can be taken in that Bill. It is not the Government's intention to preclude debate and scrutiny. However, these proposals have to be got through before the House rises, and I suggest that the opportunity for discussing wider matters comes at a later stage.

§ Mr. Robin Cook
I now raise the separate point of order of which I have given advance notice, on which I am advised of a prospect of success if it is a legitimate point of order, and which I have the temerity to raise knowing that there is now a fresh mind as Chairman of Ways and Means. I submit my problem for the consideration and deliberations of that mind. I apologise to the House that this will necessarily be a rather lengthy point of order, but it is necessary to describe the full Byzantine complexity of the difficulty with which the Opposition is faced. Our difficulty comes in tabling amendments to clause 1 because of the legal convention under which the House operates that only the Royal Prerogative exists to raise 780 Supply, and therefore it is not competent for the Opposition or any Back Bench Member to propose an increase in taxation or a reduction in tax relief.
In the generality of taxes, this does not give rise to difficulties because that ruling is qualified on the basis that the existing law establishes the status quo of the tax levy. Therefore, if the Government propose a relief that reduces that tax below the status quo, it is then competent for the Opposition to amend a new relief to limit it to any point between the status quo and the proposed reduction. Thus, were the Government to decide that they were in error in doubling VAT and were to propose a reduction of VAT from 15 per cent. to 8 per cent. in their Finance Bill, it would be competent for us, were we to choose to do so, to table an amendment limiting that reduction to, say 12.5 per cent.
There is one exception to that commonsense approach, and that is income tax. The exception arises because the legal fiction is that income tax is not a permanent tax. It may have been with us since the days of Pitt. but it is not a permanent tax. It is an annual tax, and every year the Treasury considers afresh, with careful consideration. whether it requires income tax, and having reluctantly decided that it does, it brings forward a fresh clause giving authority for income tax to continue for a further year. As income tax would automatically lapse without the fresh clause, it follows that there is no law setting out the status quo for income tax as there is with VAT or other taxes.
This legal fiction has certain hilarious consequences. It means, in the context of today's debate, that the Government are not cutting the higher rate bands on income tax by 14 per cent. On the contrary, the Government are imposing a fresh and unanticipated burden upon the higher paid. However, other consequences are rather less hilarious. The Committee is severely restricted in what amendment it can propose to such a proposal. Were the Government to propose to double thresholds for the higher tax bands, and it is not inconceivable that the Government would propose to do so in the future, it would be improper and incompetent for any other hon. Member to seek to reduce that doubling of the threshold.
The Committee would be left with the choice of accepting that doubling or voting against clause stand part. If the Committee were to vote against clause stand part, it might find itself in the same position as that in which the Opposition found themselves with the last Finance Bill in the previous Session. The Committee would also be voting against the clause that contains the authority for the standard rate of income tax. Thus, were the Committee to carry that resolution opposing clause stand part, it would abolish income tax in toto, although that is not what it would be seeking to do.
This problem flows from the legal fiction that income tax is an annual tax. Were the man in the street to be told that income tax is not a permanent tax and that the procedures of the House of Commons operate on the assumption that income tax is subject to imminent abolition, I suspect that he would consider that to be further striking proof of just how out of touch Members of Parliament were with reality. Nor does that accord with the current state of the law. In 1977 and again in 1980 the House provided explicit statutory power for the indexation of income tax, which makes sense only if we assume that income tax is a permanent tax likely to be renewed year by year.
781 Yesterday the Opposition were advised, contrary to previous advice, that their amendments to clause 1 were in order because of the singular circumstance that earlier this year there had already been a Finance Act which established a status quo on income tax for the current year. The only precedent for that was in 1979 when there were also two Finance Acts. In other words, such a combination of circumstances arises only when a general election intervenes. Sadly, I suspect that an election will not intervene next spring, however desirable it might be. Therefore, it is proper to put this to the Committee and to seek your guidance, Mr. Walker, as to whether the position is satisfactory. I should make it clear that I am not challenging the ruling. Within its premises, the ruling is logical and consistent. Indeed, in its sheer dottiness it has a certain quaint charm. Nevertheless, it is nonsense, even if it is purely logical nonsense.
My questions to you, Mr. Walker, are as follows. First, have I stated the interpretation of the ruling correctly in its full absurdity? Secondly, do you consider this state of affairs satisfactory? Thirdly, what advice can you give me as to the course that I should pursue to find a more satisfactory procedure that would allow the House to carry out the task of scrutinising legislation, which all the textbooks tell us that we possess?

§ The Chairman
I am grateful to the hon. Gentleman for having given me notice of the point of order. It raises important matters, which have profound implications for the procedures and practices of the House in handling its financial business, but they are not matters for me today. My duty is to deal with the Bill before the Committee and to apply the rules as they stand. The hon. Gentleman, being an experienced Member, knows that he must find other ways of raising the fundamental matters to which he referred. I allowed him to put his case in detail as others may wish to consider his words and to respond to him. Nevertheless, it is not a matter for me today.

§ Mr. D. N. Campbell-Savours (Workington)
On a point of order, Mr. Walker. I wondered whether you, as Chairman of the Committee, would allow the Financial Secretary the right to reply to a suggestion that I wish to put to the Committee in the light of the Chancellor's statement last week about cutting public expenditure and the introduction last week of this Bill providing for additional benefits of £400 million.

§ The Chairman
I cannot see how that has any relevance to the business before the Committee. The hon. Gentleman must seek some other opportunity to raise the matter.

§ Mr. Campbell-Savours
Further to that point of order, Mr. Walker. As I had not yet made my point of order, I wonder on what basis you could possibly have ruled it out of order. My suggestion is that, in the light of the Chancellor's statement last week cutting public expenditure, the Finance Bill should be withdrawn from the Committee stage in so far as it relates only to 3 per cent. of the population. My point of order to you Mr. Walker, is that the Financial Secretary should be given the opportunity in the House today to make a statement withdrawing this second Finance Bill of 1983 in the national interest.

§ The Chairman
I do not think that that is a point of order. Perhaps the hon. Gentleman will seek some other way to draw it to the attention of the Financial Secretary.