§ Amendments made: No. 159, in page 203, line 32, column 3, at beginning insert
| 'In section 263(4), the words "as respects more than one surrendering company".'. |
§
No. 160, in page 204, line 25, at beginning insert—
'The repeal in section 263 of the Income and Corporation Taxes Act 1970 has effect in accordance with section [Group relief: modifications] (2)(b) of this Act.'.
§ No. 112, in page 207, line 4, at beginning insert—
| '1970 c. 10. | The Income and Corporation Taxes Act 1970. | Section 270(3). |
| 1975 c. 45. | The Finance (No. 2) Act 1975 | In section 58(12), the words from "(other' to "that Act)".'. |
§ No. 113, in line 4, column 3, at beginning insert—
| 'In section 65, in subsection (1)(b), the words from "and this" to the end and in subsection (7)(b), the words from "subject" to "above". | |
| In section 66, in subsection (4), the words from "and in" to the end. | |
| Section 67(2) and (3). | |
| Sections 68 to 70. | |
| In section 84, in subsection (3)(b)(ii), the words "if the disposal is within" and "that section". |
§ No. 114, in line 5, at end insert—
| '1981 c. 35. | The Finance Act 1981. | In section 41, in subsection (1) the words "or gains or losses" and in subsections (2) and (3) the words "gains or losses".'. |
§ No. 115, in line 5, column 3, at end insert—
| 'In Schedule 7, paragraph 2(2) and in the Table in paragraph 9, the second entry relating to section 58(12) of the Finance (No. 2) Act 1975.'. |
§ No. 116, in line 6, column 3, at beginning insert— 1225
| 'In section 58, in subsection (5) the words from "including" to "gains" and subsection (6)'. |
§ No. 117, in column 3, leave out lines 14 and 15 and insert—
| 'In section 88, in subsection (1) the words "and section 89 below" and "section 89 below", paragraph (b) and the word "and" immediately preceding it; and subsection (5A). | |
| Section 89.'. |
§ No. 118, in line 32, at end insert—
| '1984 c. 43. | The Finance Act 1984. | In Schedule 9, in paragraph 11 (1) the words "and 89". |
| In Schedule 13, paragraph 4 and paragraph 9(b) and the word "and" immediately preceding it.'. |
§
No. 119, in line 34, at beginning insert—
`The repeals in section 270 of the Income and Corporation Taxes Act 1970, section 58 of the Finance (No. 2) Act 1975, sections 65 to 70 and 84 of and Schedule 7 to the Capital Gains Tax Act 1979, section 41 of the Finance Act 1981, section 58 of the Finance Act 1982 and Schedule 13 to the Finance Act 1984 have effect with respect to disposals on or after 2nd July 1986.'.
§
No. 120, in line 39, leave out from '1983' to 'have' in line 40 and insert
'the Finance (No. 2) Act 1983 and Schedule 9 to the Finance Act 1984.'.
§
No. 121, in line 42, after 'Act' insert
'(other than those mentioned in paragraph (bb) below)'.
§
No. 122, in line 43, at end insert—
'(bb) in the case of gilt-edged securities as defined in Schedule 2 to the Capital Gains Tax Act 1979 and qualifying corporate bonds as defined in section 64 of the Finance Act 1984, with respect to disposals on or after 2nd July 1986, and'. — [Mr. Peter Rees.]
§ Mr. Peter ReesI beg to move, That the Bill be now read the Third time.
This is the final stage of a long and intricate legislative process. I ventured to say at the beginning of the debate on Second Reading that it was a good Bill, but I am ready to admit that it has been improved in Committee and on Report. There have been valuable contributions from Government and Opposition Members in Committee and on the Floor of the House.
The Bill may not have quite the same dramatic impact as last year "s Finance Bill and it has not had the same dramatic passage through the House. However, the Bill has been considered in Committee rather better than last year's Finance Bill. It has one inestimable quality, which I am sure will command the approbation of the entire House. Although it amounts to 98 clauses and 27 schedules, the repeals in schedule 25 remove many measures from the statute book and we are not making a net addition to the statute book.
More significantly, the Bill sustains the momentum of fiscal reform. The abolition of development land tax did not entirely command the approbation of the hon. Member for Birmingham, Hodge Hill (Mr. Davis), but it is one of the features of the Bill. Other features are the indexation 1226 provisions for capital gains tax, the exclusion of gilts and certain corporate bonds from capital gains tax, which goes far to simplify an unduly complex tax, the simplification and modernisation of many of the stamp duty provisions and the unitary tax measures, which were debated in the early hours of yesterday morning and for which we are indebted to my hon. Friend the Member for Surrey, North-West (Mr. Grylls) and other of my right hon. and hon. Friends. I am sure that that measure will make a valuation contribution to the development of thought on both sides of the Atlantic on that complex issue.
Finally, I turn to the recommendation of the Keith committee on the administration of indirect taxes. I paid a tribute, which I shall not repeat, on Second Reading to the labours of that committee. It has produced a thoroughly painstaking and admirable piece of work. The fact that we have adopted more or less most of the recommendations in legislative form is eloquent testimony of our regard for the committee's work. I am sure that it will improve the administration of the taxes for which Customs and Excise is responsible while maintaining a fair balance between the interests of the administration and those of the taxpayer.
The provisions were inevitably long and complex and they have been properly subjected to close scrutiny in Standing Committee and on Report. It can be claimed that it was quite a feat that the recommendations of the Keith committee should have been implemented in legislative form within two and a half years of the first report, especially when it is borne in mind that there have been extensive consultations and the publication of draft clauses. That is indeed the way that this Administration likes to proceed in complex legislative fields. I also remind the House that it should be the prelude to further provisions next year in regard to direct taxation.
I assure the House and the country that the Government have not lost their appetite for tax reform. As further evidence of that, we shall be publishing in due course a Green Paper on personal allowances and other related subjects.
It was, I believe, a well-conceived, well-constructed, well-criticised and well-considered Bill. It has been improved by our various debates. On that basis, I have no hesitation in commending it to the whole House.
§ Mr. Terry DavisThe Chief Secretary will not be surprised to learn that we take a different view of the Bill. I think that his reference to the Bill as having been well criticised was intended as some sort of compliment. I see that he is nodding, so I take it as such. We are critical of the Bill in its overall strategy and also in its detailed provisions.
Whereas the Chief Secretary, understandably, regards the abolition of development land tax, at a cost of £50 million to the Exchequer, as a good thing, we regard it as something to be criticised. Similarly, we were and still are critical of the changes in capital gains tax, and of a measure tht I think the Chief Secretary overlooked in his contribution a few moments ago. He did not refer to the extension of VAT to newspaper advertisements — I am sure that it was an oversight — even though it was debated at length in the House. We regard that as one of the serious extensions of the taxation system and we seriously object to it.
1227 There were other features of the debates which are worth putting on record. In Committee, we discussed the increases in the excise duties on spirits, beer, wine, made wine and cider, and it became clear that there was no logic in the Government's approach to those duties. There were different increases in the duties on different drinks and there was no logical explanation for them; at least, there was no logical explanation given to the Committee.
Similarly, we had the benefit of a Minister from the Department of Transport during our consideration of vehicle excise duty. It was the unanimous conclusion of Opposition Members—and, I suspect, the conclusion of some Conservative Members — that there was no logic behind the Government's approach to vehicle excise duty. Again, there were different increases in the rates of vehicle excise duty for different vehicles. It was kindness that led us to terminate that debate, because we were getting no satisfaction whatever from the Minister who had been brought to the Committee to explain what was supposed to be the Government's thinking.
The Opposition regard the Bill as being particularly badly drafted. The Chief Secretary referred to the fact that the Bill consists of 98 clauses, yet during the past two days we have had to deal with 106 Government amendments at this late stage in our proceedings. We dealt with a considerable number of Government amendments in Committee, and since then there have been 106 amendments and new clauses tabled by the Government. I do not object to all of them; indeed, we welcome some of them, and are grateful for amendment No. 129, dealing with the problem of Cyprus sherry. In our earlier exchanges, I paid tribute to the Minister of State, Treasury, for the way in which he approached the problem. That expression of gratitude was sincerely meant.
Nevertheless, putting those very few concessions on one side, the large number of amendments to a Bill with only 98 clauses is significant. Indeed, it compares with only a slightly larger number of amendments that were tabled last year to a much longer Bill. It suggests to us that the draftsmanship on this occasion has been below the standard that we expect from the Treasury and from the Chief Secretary.
A large number of the amendments were moved formally by the Government tonight, showing that they were regarded by the Government as technical amendments. At the same time, we also object to the very short notice that has been given of some amendments tabled for consideration on Report. A few minutes ago my hon. Friend the Member for Thurrock (Dr. McDonald) protested about four amendments that were tabled on Monday. Four more amendments were tabled less than a week ago. Those amendments are significant and change the basis for calculating the value of a disposal for capital gains tax purposes. We regret the Government's treatment of the House in that way.
However, it would be unfair of me not to say that the Chief Secretary to the Treasury in particular has made a great effort to be flexible and co-operative and to consult the Opposition. The Chief Secretary responded to my request in Committee that the Treasury should consult the Opposition in more detail about proposed amendments that affect taxes on the heritage. The Chief Secretary responded to other points that were put to him in Committee. On this occasion, we were provided with a 1228 much more detailed explanation of amendments that were made on the nod on Report. I hope that this precedent will be followed next year.
In putting forward their amendments on Report, some at very short notice, the Government have ignored two or three obvious loopholes, among them the abolition of development land tax. It is unfortunate that the Government have not seen fit to seek our assistance and consult us about the way in which those loopholes could be closed.
Last year, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) pointed out that the price of the Finance Bill 1984 was £9.75. This year's Finance Bill, which is much shorter, costs £10.20. The increase cannot be justified.
§ Dr. MarekThe Bill can be criticised for not including what it ought to include, a point which I cannot develop on Third Reading. I can only refer to what it contains. This year's Finance Bill is much less damaging to the country than last year's. I support what was said by my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) about vehicle excise duty, which varies according to the number of axles on a lorry. The Treasury has not consulted the Department of Transport because there is no set of principles whereby lorries with different axles are taxed.
§ Mr. Campbell-SavoursHas my hon. Friend received the correspondence that I have received from hauliers about these new rates of tax? The Government are a net beneficiary, after expenditure on roads, from the tax on heavy goods vehicles. The road haulage industry is most aggrieved. In Committee we dealt in detail with the regional implications of the Government's taxation policy for heavy goods vehicles. If my hon. Friend has received any such correspondence, will he draw it to the attention of the House, in particular the comments of hauliers in North Wales who are most aggrieved by this year's Budget.
§ Dr. MarekI should like to oblige my hon. Friend, but unfortunately I have received no correspondence from hauliers in north Wales, or anywhere else, for that matter. However, I have received serious complaints from the county surveyor of Clwyd county council. Heavy lorries are damaging the surface of Clwyd roads particularly the bridges. Local authorities are in difficulty over strengthening these bridges, with very serious consequences. Their difficulties should be reflected in the Finance Bill. Thirty-two tonne vehicles with four axles damage the roads very much more than vehicles with five axles, or light vehicles.
My impression in Committee was that the Government did not know what guidelines they should adopt to ensure that vehicles covered their track costs. It was not clear how the Government defined track costs and I believe that a Minister said at one point, "It is a bit of a mess and we are just starting to put it right."
I hope that the Treasury will insist that the Department of Transport should examine the issue over the coming year and provide details on how the vehicle excise duty tables can be put in order so that there is some fairness in the system and so that lorries cover road costs and the cost of ancillary services such as bridges and street lighting. The costs of accidents and environmental damage should also be included.
1229 I agree with my hon. Friend the Member for Hodge Hill that we were disappointed that there was not a brisk response from the Treasury. Ministers should at least have given the impression that they knew where they were going. We might have argued about that, but we never found out where they were going. I hope that a different attitude will be displayed next year.
§ Mr. Campbell-SavoursI do not know whether my hon. Friend grasped the point that I made in my previous intervention. I am sure that he wishes to do so, because he comes from an outer region.
The cost of heavy goods vehicle licences bears unnecessarily heavily on hauliers outside the major conurbations. Whenever a manufacturer in my hon. Friend's constituency wishes to supply goods to a major conurbation, he has to pay for haulage and those costs depend greatly on the cost of diesel and the price of a licence.
§ Mr. Campbell-SavoursI hope that my intervention can be kept as brief as possible.
§ Mr. Campbell-SavoursTransport costs must have implications for regional policy. Wales is as much a region as is Scotland, the south-west or Manchester. These matters should be taken into account by the Government when they set taxes for what are, in effect, infrastructure services in our areas.
§ Dr. MarekI do not want to talk about matters that should have been in the Bill, but I assume that the Treasury is taking account of the point made by my hon. Friend. We all have our views about whether diesel should be cheaper and excise duty abolished, with the extra cost being put on petrol.
The Bill includes a comprehensive set of tables. If one compares the rates in the Bill with those in previous Finance Bills it seems that much that was raised was ad hoc. Some things might have been raised in one year and others in another year. The top of a column might have been raised by £25 for the first five entries and by £45 for the next five entries. With reference to page 99, Table C(1) the bottom five entries might have been raised by £60 or £70 but no coherent strategy is evident as to what the Treasury was trying to get at.
The Bill is before us, and there is nothing that we can do about it now. I am not happy about it because I do not understand the system. I hope that the Treasury will be able to liaise with the Department of Transport to produce a set of principles by which we can be guided.
§ Mr. Campbell-SavoursIs my hon. Friend aware of the special procedure with regard to the introduction of some Bills whereby evidence can be taken prior to a Bill being considered in Committee? Would that not have been a good area in which to proceed on that basis?
Mr. Deputy SpeakerOrder. I hope that the hon. Gentleman will not pursue that matter on Third Reading. He knows that the House is required to consider what is in the Bill, not the procedures that led to it.
§ Mr. Campbell-SavoursIf I may complete my intervention—
§ Dr. MarekIf my hon. Friend wishes to be in order, I will of course give way in due course.
I deal next with VAT on newspapers, which I regret. This is not the type of thing that Labour would have done if they had been in Government. The newspaper industry was very worried about the provision. It forced it into two sections, the national press on one side and the local press on the other. The local press is not particularly healthy. It survives, and we have a very good local press, but it lives on shoestrings and cannot afford a large increase in cover price. Before the Finance Bill was published, it was feared that VAT might be put on the cover price of newspapers. It was not, for which I am thankful. However, VAT has been put on advertisements.
I cannot object very strongly to the imposition of VAT on advertisements, but I do object to the imposition of VAT on classified advertisements, by which people announce the birth of a son or daughter or a death, or an article for sale. The article offered for sale often is worth only £2 or £3, and the advertising cost must be about 80p which, with VAT 92p. If to that amount has to be added another 15 or 17p for the cost of a stamp, the exercise is made that much less economic. I am somewhat mollified by the fact that the Government, having put VAT on classified advertisements, are not receiving letters from newspapers, including local newspapers, to the effect that they will close down because they are experiencing serious problems. However, newspaper people are unhappy about what is happening.
§ Mr. Campbell-SavoursMy hon. Friend might want to extend the argument because he will recognise the major switch from direct to indirect taxation in the last five years. In 1979 the Conservatives went into a general election—
Mr. Deputy SpeakerOrder. We are discussing the Third Reading of the Finance Bill, not its historical background.
§ Mr. Campbell-SavoursMy hon. Friend made a statement and I was referring to the historical background because it was in order for me to suggest that there is a link between the Government's decision to raise indirect taxation and to reduce direct taxation, which is what they have been doing, although both types of taxation have increased. Will my hon. Friend comment on the fact that little things like VAT on fish and chips introduced in the last Budget, which was referred to—
Mr. Deputy SpeakerOrder. The hon. Gentleman must not comment upon last year's Budget. We are discussing this year's Finance Bill and we must stick to that.
§ Mr. Campbell-SavoursOn a point of order, Mr. Deputy Speaker. During discussions on this matter repeated references have been made to Government decisions on VAT, and in particular to the imposition of VAT on fish and chips. Reference was made to that because damage was inflicted on a particular sector. The argument about—
Mr. Deputy SpeakerOrder. On Third Reading debate is restricted to what is in the Bill. Discussions at previous stages are not relevant. The discussions to which the hon. Gentleman refers are not relevant. Debate must be about the content of the Bill.
§ Dr. MarekThe Bill has been discussed at length so I do not want to detain the House much longer, but I want to make one or two further points as briefly as possible.
There has been a shift to indirect taxation away from direct taxation. The income tax bands and personal allowances have been raised over the inflation rate so that those people who are at work benefit — over 4 million are not at work and cannot do so. However, the benefits are taken away because of the absurdly high interest rates caused by the Government's idiotic monetarist policies. The advantages for people with mortgages are nullified by the Government's economic policies.
Despite the shift from direct to indirect taxation, overall taxation has gone up under this Administration.
The capital gains tax changes were made by the Government late in the day. The provisions making those changes were tabled so late that I saw them for the first time only yesterday. I did not understand them when I read them then, and I do not fully understand them now. Time did not permit hon. Members to examine those provisions carefully or to take professional advice. Thus, we do not know if they are defective or if we could have improved them. It would have been better for the Government to have left such a change until, say, next year. Alternatively, they should have thought the matter through earlier, and tabled the necessary provisions in good time.
§ Mr. Campbell-SavoursMy hon. Friend may recall that in recent years there have been repeated capital gains tax reductions. In each case we have pressed Ministers to say how many people would be affected by, and the value of, the reductions. On each occasion when figures have been given, the Government have underestimated the revenue loss. When moving their amendments today, the Government refused to say how many people or how much revenue would be involved. They only said that the effect on the revenue would be negligible. Does my hon. Friend agree that next year we should table questions before the Finance Bill—
Mr. Deputy SpeakerOrder. One Finance Bill at a time, please. We are dealing with this year's, not next year's, Finance Bill.
§ Dr. MarekMy hon. Friend has, in part, made my speech for me. I shall not comment further on what he said or I would be out of order. The Chief Secretary said, I am sure sincerely, that he was unable to give an estimate of how much additional money would stay outside the Treasury's net as a result of the capital gains tax changes. Because the amendments to make those changes were tabled so late, we have had no real chance to form an opinion, and that is a major reason why the Opposition voted against them.
We have had this year a Budget for the rich. It is not designed to benefit the unemployed, single-parent families, pensioners or the disabled. Much of the Finance Bill is concerned with tax reliefs and incentives for a small minority of people. However, it does not do as much damage in that it does not go as far down that road as last year's Budget. Nevertheless, it takes a similar line and, 1232 because of that, I should like to vote against the Bill. But the hour is late and chances are that many hon. Members have gone away to sleep.
Opposition Members do not like the Budget and we would not have introduced such measures had we been in office. I am sure that within two years there will be a radical change in Budgets. Members of the present Administration will be sitting on the Opposition Benches and the Labour party will be producing its first Budget. I am confident that that will happen. Britain has almost been ruined under this Government. The Labour party will save it within two years.
§ Mr. Campbell-SavoursIt seems that the House is most eager to hear what I have to say! Therefore, I shall speak briefly, although bluntly and to the point. The measure of the Budget is the assessment of it in my constituency by industrialists, trade unionists and the general public. Over the past five years, industrialists in the northern region, especially in the Workington constituency, have had what can only be described as a hell of a time. Throughout my constituency, factories have been emptied; whole industrial estates have been laid bare; new plants, opened under Labour in the 1960s, have been shut; and the 3,000 jobs created under Labour Administrations in the 1970s have been wiped out in net terms.
§ Dr. MarekI apologise to my hon. Friend for interrupting him when he is referring to a serious set of statistics. I hope that he will not forget the extra 50 or so redundancies at Cinzano that the Government have declared tonight.
§ Mr. Campbell-SavoursI am glad that my hon. Friend said that the Government had "declared" those redundancies, because that reflects precisely my constituents' feelings about the loss of large manufacturing units in west Cumbria. They blame the Government.
The people, many of whom voted Conservative in 1979 and 1983 increasingly recognise that the Budget has failed to meet their expectations of what would come about with the election of a Conservative Government. In Brecon and Radnor a couple of weeks ago, I found that wherever I knocked on the doors, the people were talking about the uncaring nature of Government policy. I was stunned by their knowledge of the contents of the Finance Bill. They identified the Budget's deficiencies. They saw it not as a Budget for jobs, as the Government had presented it, but as a Budget for unemployment, and they were right. Every one who watches the Friday morning BBC programme and examines the net—
§ Dr. MarekIt is not only a Budget for unemployment. The national insurance changes mean that it is a Budget for low wages for those in employment. It is a doubly damaging Budget.
§ Mr. Campbell-SavoursMy hon. Friend is absolutely right. We all know that the Government intend to farce wages down in many sectors of the economy. The argument about market forces placing pressure on wages is deployed only to reduce the wages in the regions, especially in areas such as mine in west Cumbria. We reject that approach. People in the north of England who have always voted Conservative also reject it, because 1233 they believe that it is unfair. They do not believe that people's lives should be played with as this Government have done in successive Finance Bills.
My constituents wanted a Budget that would open new factories, increase demand, stem the flow of imports, create new jobs, increase wages, raise living standards and fund additional social services and public provision generally. They have seen the reverse. Those things will not happen this year, and, if what the Chancellor said last Sunday is to be taken at face value, not even the Brecon and Radnor by-election result will change the course that the Government have set for themselves. The Opposition can only appeal for a re-examination of what is happening and a re-examination of the Government's future policy. Unless the Government move on that important front, all we can see is more and more misery in our constituencies.
Mr. Deputy SpeakerOrder. I should be grateful if the hon. Member would address the Chair rather than present his back to me.
§ Dr. MarekI apologise, Mr. Deputy Speaker. My hon. Friend made an important point because this Administration have been in office and presented Budgets for six years. This Finance Bill contains nothing new. The Government are caught up in their policy of trying to bring down inflation, which they see as their first priority, maintaining high interest rates and cutting public expenditure. They are caught within their economic dogma. Their Budgets cannot therefore be any different. On reflection, it is what many of us expected. Will my hon. Friend argue for them to break out of their straitjacket, admit that their policies are failing and have new economic policies and a new Finance Bill?
Mr. Deputy SpeakerOrder. I hope that hon. Members will not start talking about a new Finance Bill. One Finance Bill at a time is sufficient. Let us discuss the one that is before the House.
§ Mr. Campbell-SavoursWe are discussing a Finance Bill that was rejected by a number of Conservative Members. They said that the Bill was inadequate and asked for reflation. That is my case.
§ Question put and agreed to.
§ Bill accordingly read the Third time, and passed.