HC Deb 08 July 1992 vol 211 cc412-38
Mr. Beith

I beg to move amendment No. 10, in page 48, line 1, leave out 'income or gains' and insert 'income, gains or expenses'.

Mr. Deputy Speaker (Mr. Michael Morris)

With this it will be convenient to take amendment No. 11, in page 48, line 7, leave out 'income or gains' and insert 'income, gains or expenses'.

Mr. Beith

We last considered this issue at 4.35 am on 30 June. My comments were brief then because of the lateness of the hour, and I do not intend to speak at much greater length now.

The amendment is intended to make the law clearer so that the clause says what we think the Government want to say and—[Interruption.]

Mr. Deputy Speaker

Order. I should be grateful if hon. Members would depart in peace.

Mr. Beith

Nunc dimittis.

The Government seem to want to say what we think that they want to say but the clause does not say it. The amendment aims to ensure that the income minus expenditure basis is the accepted taxation position—that the net investment return on which a company is taxed is calculated by adding together a company's investment income and its capital gains from sales and subtracting expenses incurred in the same period. There is no quarrel over that.

The problem is that while the clause refers to the "I minus E basis" in subsections (3) (a), (4) (a) and (5) (a), it does not spell out what the "I minus E basis" is. In subsections (4) (b) and (5) (b), it refers to the calculation of the income or gains and does not mention expenses.

That fact has led to real concern in the life assurance industry that the clause may be interpreted by some tax inspectors as not allowing expenses to be deductible in the calculation of net investment returns. The tax inspectors might argue that Parliament deliberately did not include expenses in the clause mentioning the "I minus E basis" because Parliament does not mean that basis to allow for expenses to be deductible. That is especially of concern because the area can be a notoriously difficult one in which to agree on what are expenses.

We seek to clarify the position and to clarify what the Minister described in Committee as the widely held and long-standing interpretation of the law". —[Official Report, Standing Committee B, 30 June 1992; c. 463.] I hope that the amendment will prove helpful.

Mr. Dorrell

I can be a little more helpful to the right hon. Member for Berwick-upon-Tweed (Mr. Beith) on this amendment than I was on the previous one. There is no division of purpose on the subject. The clause as drafted is intended to have precisely the purpose that the amendment seeks to clarify. For various technical reasons with which I will not bore the right hon. Gentleman, the amendment does not have the effect that he intends.

I want simply to make the position clear to the House. The deductibility of management expenses is not in doubt. The application of the provisions relating to management expenses is secured by the definition of the "I minus E basis" contained in clause 64(3)(a). The "I minus E basis" is described there simply as the basis commonly so called (under which a company carrying on life assurance business is charged to tax … otherwise than under Case I of Schedule D)". In those circumstances, the normal provisions of the Taxes Act 1988 relating to expenses of management automatically apply. Nothing further in the clause is required to secure the full deductibility of the expenses of management. I hope that that clarifies the issue beyond peradventure.

Mr. Beith

I am grateful for that clarification. Although it may not hold in a court of law, it will certainly hold —I hope—in all the offices of the Inland Revenue, where it can be printed and set up on the wall. On that basis, I am more than happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.22 pm
Mr. Dorrell

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

A Finance Bill is always a long march. In the early days of spring, the Chancellor rises in an atmosphere of enthusiasm and anticipation, and unveils to the House and to the world his proposals for the tax provision in the following year. About three weeks later, there is a dull thud as the impenetrable prose of the Finance Bill is made available to the world. There then follows a series of late nights and high temperatures as the summer wears on and as the detail of the Bill is torn apart. As my hon. Friend the Member for Bristol, North-West (Mr. Stern) said, there has been a regrettable tendency in recent years for Governments to add later thoughts to the Bill as it proceeds. Finally, in the dog days of summer, a rather depleted band of enthusiasts gathers to celebrate the Third Reading of the Bill which has been the subject of such enthusiasm and anticipation on Budget day. Whereas enthusiasm and anticipation are the characteristics of Budget day, relief and exhaustion are perhaps the characteristics of the atmosphere when we get to Third Reading.

I suspect that such feelings are even more palpable than usual this year. Budget day on 10 March seems a long time ago. It was on that day that my right hon. Friend the Chancellor of the Exchequer set out his prescriptions for taxes in the coming year. Six days later on 16 March, in the salubrious quarters of the Royal Institute of Chartered Surveyors, the shadow Treasury team gathered in panelled splendour to tell us what it thought should be on offer instead.

The shadow Treasury team offered us 59 per cent. tax rates. It defined the rich as those earning more than £22,000 a year, on whom a new impost would he placed to pay for the Labour party's social programme. Three weeks later the people had a choice and the people chose the prospectus of my right hon. Friend the Chancellor of the Exchequer.

Mr. Betts

Part of that prospectus was a £28 billion public sector borrowing requirement. Is that prediction still correct?

Mr. Dorrell

We do not get into daily revisions of the expected PSBR. The current prediction is contained in the Red Book and, as the hon. Gentleman correctly remembers, it is £28 billion.

In a rational world, the fact that the people chose the prospectus offered by my right hon. Friend the Chancellor of the Exchequer rather than that offered by the right hon. and learned Member for Monklands, East (Mr. Smith) should have been fatal for the prospects of not only the right hon. Member for Islwyn (Mr. Kinnock) but the right hon. and learned Member for Monklands, East. It is an engaging idiosyncrasy of the Labour party that it is apparently on the point of crowning king the man chiefly responsible for engineering its electoral defeat.

Mr. Nicholas Brown

We have no intention whatever of electing the editor of The Sun leader of the Labour party.

Mr. Dorrell

It is curious if one thinks about it that every opinion poll not only during the election campaign but before it showed that Labour's Achilles' heel was thought to be the economy. We all know how accurate opinion polls are, but the margins by which people reported that opinion mean that we must attach some credibility to them. Labour needed to keep off the economy as much as some of my hon. Friends thought that we needed to keep off the subject of my earlier ministerial responsibility. The economy was held to he Labour's Achilles' heel. Yet the same opinion polls regularly reported that the Labour leader strongest in public affections was the very same right hon. and learned Member for Monklands, East who was responsible for the policy which was held to be the party's Achilles' heel. It is an interesting conundrum which the Labour party is still trying to work through.

Mr. Alex Salmond (Banff and Buchan)

An opinion poll last week showed 80 per cent. support for a referendum on the Maastricht treaty. Does the Minister hold that in high regard?

Mr. Dorrell

I was simply quoting the evidence. I am not a supporter of the right hon. and learned Member for Monklands, East. Still less do I believe that opinion polls are decisive on any issue. I am certainly not in favour of a referendum. I have never understood why it should be thought that a referendum is a necessary defence for a parliamentary democracy. The place where national decisions should be made in the United Kingdom is in this Parliament.

That point is somewhat outside the scope of a Third Reading debate, so I shall not pursue it. I sketched in a little of the political background to the Bill. It might have been thought that, against the background of the electorate's decision which was clearly in favour of the prospectus of my right hon. Friend the Chancellor of the Exchequer, the passage of the Bill would he a trifle subdued.

Mr. Mandelson

I am sorry that I was not present for the beginning of the Minister's speech. I was detained by a constituency matter. Before the hon. Gentleman leaves the political context of the Bill, would he care to set out in some detail the terms in which he spoke at the weekend when he described my party as a potent force that should not be underestimated and was likely to come back and win the next general election?

Mr. Dorrell

I certainly said that the hon. Gentleman's party should not be underestimated, but I did not predict that it would come back to power at the next general election. I said that it was important for us to ensure that we had a sound economic base so that the Labour party would be defeated by a larger margin at the next election than it was at the last.

As the electorate decided the main issue of this year's budget debate, and some of the key planks of my right hon. Friend's prospectus were passed in the short Finance Act just before the election, one might have thought that the passage of the Bill would be relatively quiet and sedate. After all, the chief interest of Opposition Members in the past few weeks has certainly not been the goings-on in Committee Room 10. There have been more absorbing activities elsewhere. However, this year's Standing Committee on the Finance Bill was fascinating.

It quickly became clear to my right hon. and hon. Friends that we were being treated to a sort of officer training school cadet force from the Opposition. A group of people had been selected by the regimental sergeant major of the Labour party, the hon. Member for Jarrow (Mr. Dixon)—a tightly knit group of politically motivated men, who were being honed for fast-stream promotion. Clearly, they were close to the seat of power, with great prospects ahead of them, if they passed the test and satisfied the hon. Member for Jarrow.

The hon. Member for Newcastle upon Tyne, East (Mr. Brown), who is deceptively charming and informal, was in charge of the troop. I noticed that he was watching his cadets, and I should tell him that they were watching him carefully. Whenever a furrow crossed his brow, they were nervous. They knew that he was close to the seat of power and had the ear of the incoming centre of power in the Labour party, so it was interesting to watch.

The all-powerful Member for Newcastle upon Tyne, East charmingly referred to his hon. Friend the Member for Wrexham (Dr. Marek) as, "Mr. Precis." We shall always remember him in that light.

Just to prove that even in the new model Labour party all is not Calvinistic virtue, the hon. Member for Brent, South (Mr. Boateng) was chiefly interested in his travel prospects to Bordeaux, and that detained the Committee on more than one occasion during our deliberations.

The hon. Member for Hartlepool (Mr. Mandelson) thought heretical thoughts about private landlords and the contribution that they can make to a future resolution of our housing difficulties. That was an interesting speech and it was especially interesting to watch the reactions of some of his hon. Friends as he developed his argument. On my side of the Committee there was some enthusiasm for his ideas, but there was rather less on his.

I began to wonder on one of our longer nights whether there was any subject on which the hon. Member for Sheffield, Attercliffe (Mr. Betts) would not give us the benefit of his advice.

Mr. Betts


Mr. Dorrell

I do not think that there was.

Clearly, the Committee was made up of the stars of the future Labour party. I am not sure that that encourages me, but it was fascinating to have been a member of such a Committee.

Forty hours later—a day and a half on Report—we laboured mightily to bring forth a Bill which contains some important substance and I hope that the House will give it a Third Reading with a resounding majority.

My right hon. Friend the Paymaster General was responsible for some fundamental reforms on VAT and excise duty being written into the Bill, to provide the basis for the development of the single market within the European Community. He was responsible for some important provisions to improve the tax treatment of charities and of film production, and its encouragement in this country. The Bill will be remembered for those provisions.

My hon. Friend the Economic Secretary took responsibility for the inheritance tax provisions, which were the subject of substantial debate in Committee. It was an interesting debate because it highlighted some of the differences between the two sides of the House. My hon. Friend rightly stressed the importance of ensuring that those who build successful businesses are not presented with an enormous inheritance tax bill as a result of and as a reward for their efforts, but are given the prospect of seeing their business continue to develop and to provide economic activity, jobs and benefit for the community at large in the medium and longer term.

My hon. Friend the Economic Secretary dealt also with stamp duty, which is a slightly less comfortable—but none the less important—provision to ensure that when the Government introduce a time-limited tax incentive, the time limit will be observed and honoured. It is important that that happens.

I handled some important changes on the treatment of the married couples' allowance to ensure that it is more fairly available—

Mr. Chris Smith (Islington, South and Finsbury)

It is about time, too.

Mr. Dorrell

There is more rejoicing in heaven over a sinner reformed than over 10 virtuous men.

Mr. Beith

Ninety-nine virtuous men.

Mr. Dorrell

I understated the extent of joy in heaven.

Another interesting debate highlighted the difference between the two sides of the Committee over the business expansion scheme and its success in developing a venture capital industry and a vibrant small and medium-sized business sector.

Mr. Smith

That is why the Government are closing it down.

Mr. Dorrell

Indeed, we are now bringing it to an end because the scheme—whose avowed purpose is the building of a vibrant venture capital and small business sector— is well on the way to success.

We also had an interesting debate about enterprise zones in which, once again, the Opposition's preference for central planning and hostility to economic success by private sector entrepreneurs was demonstrated. Their prejudices were even demonstrated in the speeches made by the officer cadet corps of the modern Labour party.

Mr. Salmond

The Financial Secretary is describing all the jewels in the crown of the Finance Bill. Can he point to a measure that will lift the economy out of recession?

Mr. Dorrell

The most important change that my right hon. Friend the Chancellor introduced in his Budget on 10 March, as the House and the electorate are well aware, was the lowest starting rate of income tax for a generation. If the hon. Gentleman wants to know how to create the recovery that we all want, let me say that it is inescapably by ensuring that powerful incentives are available to provide the basis for the efficient operation of a free enterprise economy. When left to its own devices, the free enterprise economy is the most powerful wealth creation machine that anyone has yet devised. We are determined to provide the context to allow that free enterprise economy to do its work. It will then deliver improving living standards and an improving standard of public services for everyone who lives in this country.

I was about to mention an important, although relatively modest, change: the introduction of rent-a-room. It is a relatively late arrival in the Bill but was an important pledge in our election manifesto.

We also discussed the inevitable provisions on anti-avoidance, without which no Finance Bill would be complete. They seem to be planned to come up at four o'clock in the morning, which reflects not the Standing Committee's interests but merely the Opposition's careful planning to ensure that explanations on the most complex bits of tax law are left until all sane people are asleep.

There are important measures in the Bill. We should not forget the important contribution to the British statute book made by the hon. Member for Newcastle upon Tyne, East when I was able, early one morning, to accept his amendment to clause 56—demonstrating, as ever, that the Government are prepared to accept that not all wisdom occurs among Government Members in the House or in Committee.

The Bill contains important provisions. It is the final confirmation of the prospectus that my right hon. Friend the Chancellor of the Exchequer set before the House and the country from the Dispatch Box on 10 March. I commend the Bill to the House.

9.40 pm
Mr. Nicholas Brown

I am surprised that Conservative Members regarded our debate on the Finance Bill in Committee as a long march, but if they did, they were cheerfully led—although I cannot say that they were cheerfully followed. Indeed, I suspect that their followers were becoming increasingly sullen as the debate and long march progressed. For the Opposition, discussing the Finance Bill in Committee was not a long march but an opportunity that we readily embraced.

In moving Third Reading, the Financial Secretary wondered about the whereabouts of leading Opposition personalities. It might have been more instructive if he had wondered about the whereabouts of his predecessor, Francis Maude, or the former Economic Secretary, Mr. John Maples. For them, the general election did not have the happy outcome of which the Financial Secretary seemed so proud.

The Financial Secretary spoke of opinion polling, and was good enough to refer to the popularity of the next leader of the Labour party, my right hon. and learned Friend the Member for Monklands, East (Mr. Smith). He could have explored that subject a little further, and compared and contrasted the popularity of Labour's chief economic spokesman with what the opinion polls—I accept that they are not totally accurate—have to say about the popularity of his chief, the Chancellor of the Exchequer. That chief is so popular that the Conservative party hid him away as the general election campaign drew towards a conclusion.

This is an opportunity for us to reflect on what we have done and to review the main functions of the Finance Bill. Its major purpose is to set the chief rates of tax. Unusually, this year that was done for us before the election, so we dealt with the rest of the Bill in Committee. However, the Finance Bill has functions other than setting taxation rates. It reverses the decisions of courts that have gone against the Inland Revenue or the Customs and Excise. We have done a fair bit of that in the past few days. The Bill provides Members of Parliament with an opportunity to demand special tax concessions for one interest group or another about which they feel strongly for one reason or another.

The Finance Bill provides Treasury officials with an opportunity to place on the statute book detailed regulations that they have probably long treasured in their hearts. They succeed in getting the regulations past Ministers and then rely on the Government's majority to get them past the Committee—a Committee that vigilantly scrutinises such matters. The Finance Bill enables the Inland Revenue to catch up in the continuing game of close the loophole—mentioned by the Financial Secretary —that it plays with the tax avoidance industry.

It is not a devious strategy of the Labour party to ensure that such incredibly tortuous and complex issues are discussed in the early hours of the morning. We are not trying to make the Financial Secretary give a personal explanation—heaven forfend. The reason is that, when all hon. Members are committed to closing the loopholes, matters tend to be less controversial and can be taken at a time when our affairs attract less prominence. Those in the Inland Revenue involved in the game of close the loophole play with a handicap—Conservative Back Benchers, who invariably protest, question or demur when loopholes are closed.

The Bill also provides a vehicle for bringing in changes that belong more properly to other Ministries or even to separate legislation. I think not so much of this year's Bill as of the legislation relating to privatised ports of a couple of years ago. The Finance Bill can still be used in that way.

Increasingly, Finance Bills deal with harmonisation issues arising out of our membership of the European Community. Such Bills are also an opportunity for us to trail the great issues of the day. On Report yesterday, the Labour party had a chance to air its views on inheritance tax avoidance, the housing market and the recession, and the internationally important third world debt crisis. The Liberal Democrats also had the chance to raise matters that they feel are important. They focused on the position of employees who take their employers' vans for the night. It is of course for each party to determine its own priorities, but we were all very much taken with the right hon. Member for Berwick-upon-Tweed (Mr. Beith), who told us about his teenage days courting in what one Conservative Member unkindly described as a passion wagon.

As all who have served on a Finance Bill Committee will know, it is also a social occasion. After all, when else do civil servants get a chance to sleep with Ministers?

Most importantly of all, the Finance Bill Committee and Report stages provide the only opportunity for elected Members to scrutinise details of the Government's primary legislation on these matters, and it is this last function that has been at the heart of the parliamentary Labour party's approach over the last five years. Inevitably, the Government take the view that this is all rather inconvenient; that it takes too much time; that the Government should be able to get their way on a fixed timetable after listening to a few Opposition speeches and a larger number of pleas for special treatment from very interested Conservative Back Benchers.

I know that it will come as a shock to my hon. Friends to learn that there are Conservative Members who do not appreciate the speeches of my hon. Friend the Member for Wrexham (Dr. Marek) on value added tax. I am toying with an idea that will beat the Conservative party at its own game. The Conservatives have released a record of their former leader reading the Gettysburg address with an orchestrated background. Our party can do better. I propose a singularly British reply: the stirring speeches of my hon. Friend the Member for Wrexham on value added tax, with suitable musical accompaniment and an occasional—utterly authentic—moan of despair from the hon. Member for Beaconsfield (Mr. Smith). This should be released on a record—a long-playing record. I am confident that sales of this entertainment will exceed those of the American Gettysburg address.

I appreciate that there is a case for reviewing the way in which we handle the necessary and detailed provisions of the Bill. I have no doubt that I or my successor will be discussing these matters with the Government in the context of the Chancellor's planned changes in how we handle tax and public spending debates. We hae always been advocates of reform, and we will take a constructive view of these matters, but we will not give up our right to detailed scrutiny at our own pace. We will not be bullied into an unrealistically short timetable. If the sittings are few, it is likely, as I am sure the Financial Secretary has discovered by now, that they will last longer. It is possible to deal with these matters in a way that is satisfactory to all sides, and I look forward on my party's behalf to discussions about that before next year.

Mr. Beith

Is the hon. Gentleman saying that the amount of time taken, particularly in all-night sittings of the Committee, is a direct consequence of the Government's failure to agree the number of sittings, the procedure that he would have preferred, or is it simply a return to the old style of conducting Committee procedure, which many of us thought that the Labour party had passed over?

Mr. Brown

I was speaking generally, not specifically. The right hon. Gentleman is setting himself up as a "Newcastleologist", if such a thing exists, and putting forward the most peculiar interpretations of what are reasonably straightforward actions. I am making it clear to the House that we are happy to enter discussions on these matters, but we are not prepared to give up our right for a steady, thorough and forward-moving consideration of the Bill. If there is only a small number of sittings, it logically follows that we shall have to take more time within them. The hon. Gentleman should not read any more into that than what my words are intended to convey.

I mentioned the role of the Finance Bill in reversing court cases that the Inland Revenue and the Customs and Excise have lost or are about to lose. It may seem to dispassionate observers that the Bill has been about little else. Clause 23, and schedule 6 allow the Government to reverse the Court of Appeal decision in the J. Sainsbury plc v. O'Connor case. Clause 63, as it is now, has been much discussed and I do not intend to discuss it again, but it is, as everyone will agree. a reversal of a court case and potential court cases.

New clauses 7 and 8 reverse a special commissioners' decision in fiendishly complicated and rather unwieldy language, and the clause that we took on the Floor of the House yesterday on VAT reversed the High Court decision in the Commissioners of Customs and Excise v. L. Rowland and Co. (Retail) Ltd.

The Labour party has tried to help the Government in these matters and offered pre-emptive strikes to prevent future Bills of this kind. We tried to amend schedule 13, which clearly does not do what the press release says it is supposed to do, and we tried to amend new clause 11 because there appear to be anomalies in legislation on life assurance and friendly societies. No doubt other Finance Committees will hear about these matters again. As our pre-emptive strikes have not been accepted, I can only assume that Ministers regard it as a treasured part of the Finance Bill that they are able to reverse the decisions of the courts.

The Committee also discussed the relationship between the words of Ministers and the meaning of the Bill. The issue is at the core of the Pepper v. Hart court case, in which judgment has been made, although it has been reserved and is not expected until August. The issue before the courts was the status of comments made in Committee and on the Floor of the House relating to the underlying legislation. The case focused particularly on ministerial comments.

It is suggested that these comments affect the way in which the law is interpreted by the judiciary. It is a point of view that I know that the hon. Member for Beaconsfield holds dear. He suggested that we summon two journalists who hold the opposite view to the Bar of the Committee, convict and then hang them. I suspect that that is going a bit wide of the Committee's powers, but it shows how strongly the hon. Gentleman feels about the issue. However, if he feels that strongly, perhaps he would care to discuss it with the Economic Secretary, particularly in the context of the debate on inheritance tax.

The debate on clause 59, as it was then, was controversial. I said: Clause 59, through tax incentives, encourages entrepreneurs to hold on to assets rather than cash them. It encourages older people to keep their wealth in the form of business assets. Given all the extremities of old age, there may be other more appropriate forms for older people to hold their wealth. Those forms would be more suitable but for the bizarre financial privilege that the clause confers on a specific form of wealth holding. Oddly enough, there was support for that view from the hon. Members for Beaconsfield and for Crosby (Mr. Powell). I remind the Minister that he said: The hon. Member for Newcastle upon Tyne, East said … that the provisions … encouraged the holding and concentration of wealth. I do not believe that they do. If anything, the clause will make the decision between giving away during lifetime and holding until death more neutral. I pointed out to him: What the Minister is saying is obviously wrong, as Iwo of his hon. Friends have pointed out. He said: The clause and schedule will make the position more neutral between lifetime gifts and retaining assets until death. He later said: My hon. Friend the Member for Beaconsfield was worried that the provisions might encourage the retention of business until death. The provisions will make that less likely."—[Officio! Report. Standing Committee B, 30 June 1992; c. 404–14.] What the Minister appeared to have in mind was the inheritance tax incentive to give away money pre-death, provided that the giver survived for another seven years. What he did not take on board was the difference between paying capital gains tax on an asset and the base cost of that asset. If a business asset is gifted, it is possible to hold over the gain under section 165 of the Taxation of Chargeable Gains Act 1992. That would reduce the base cost by the amount of the gain—that is, the capital gain is not extinguished, just deferred. That compares with the position at death when assets bequeathed are received at their true value. That is reasonable, because inheritance tax is in principle due on that value.

If the Minister's words are to be interpreted by the courts at some future stage, he will need to reconsider what he has said and at least provide a clarification. I ask him carefully to consider what he has said and to talk it over with his professional advisers. He may then decide whether, at some time in the not too distant future, he should at least put his words in a more acceptable context.

In his opening remarks, the Financial Secretary referred to the speeches of Labour Members in Committee. He was right to do so, as even he, as an honourable opponent, spotted the quality of my hon. Friends whom the electorate so rightly sent here to serve their constituency interests. My hon. Friends went out of their way to try to help the Government through the pitfalls, such as the one that I have just described.

As the Paymaster General was stumbling over clause 1(4)(b), which dealt with joint and several liability, my hon. Friends the Members for Sheffield, Attercliffe (Mr. Betts) and for Ashfield (Mr. Hoon) were there to help him out of his difficulties. Indeed, my hon. Friend the Member for Ashfield was there again to help the right hon. Gentleman as he stumbled over the issue of duty paid. I thought that my hon. Friend provided the right hon. Gentleman with far more help than he received from Conservative Members. I would not want it to be thought that they played no part in our proceedings, but when they contributed to the debate, for example, the hon. Member for Bridlington (Mr. Townend) said: A chap may hire a van and go to Bordeaux with his wife. As there are two of them"— that was astutely spotted— they may buy 40 cases of wine, two cases of spirits and goodness knows how many cases of beer. They may bring a whole wagonload within the specified amount and then split it with their neighbour. That would be a private arrangement and I suggest that the provision will be impossible to police. Any law that cannot be enforced is bad law. That will filter through to the trade. I do not want the hon. Member for Brent, South to accuse me of being racist. I do not know why the hon. Member for Bridlington singled out my hon. Friend the Member for Brent, South (Mr. Boateng) as the person who would accuse him of racism; by the end of that speech, that view of him was widely shared.

The hon. Gentleman went on to say: but in the restaurant trade there are people from all parts of the world—Spaniards, Greeks, Italians, Pakistanis, Chinese and so on—many of whom do not have any respect for paying taxes."—[Official Report, Standing Committee B, 16 June 1992; c. 44–5.] I have sat through five Finance Bills, and I know that, if ever there was a bunch of people who resent paying taxes, it is members of the Conservative party. I shall take some convincing that that is peculiar to foreign people and unknown among our fellow citizens when a Conservative Member tells me so, and I certainly shall not be convinced on the evidence of Conservative speeches on five Finance Bills.

The Opposition speeches, however, were a joy to listen to. I am only disappointed, Madam Speaker, that you now occupy too elevated a position to preside over proceedings in Committee: I know that that will he a great disappointment to you as well. My hon. Friend the Member for Darlington (Mr. Milburn) made a very well-informed speech about an important part of his constituency's industrial base, but before that he had already quizzed the Paymaster General on regulations and statutory instruments.

My hon. Friend the Member for Hartlepool (Mr. Mandelson) made a good speech about the defence of good cause for those who fell foul of the VAT man, standing up for the rights and interests of the small business man—something that Opposition Members are often accused of never doing. Those points also worried my hon. Friends the Members for Leeds, East (Mr. Mudie), for Leeds, West (Mr. Battle) and for Hornsey and Wood Green (Mrs. Roche).

My hon. Friend the Member for Darlington made an effective speech about the powers of Customs and Excise. My hon. Friend the Member for Barrow and Furness (Mr. Hutton) came in strongly, not on Trident submarines but on section 1 of the Customs and Excise Management Act 1979, which showed considerable attention to detail on the part of one so new to our proceedings and promised much for the future. Not to be outdone, my hon. Friend the Member for Hornsey and Wood Green spoke about the Buchanan report and its effect on transport policy: that, too, showed a mastery of detail.

When it came to dealing with bread-and-butter constituency issues, my hon. Friends the Members for Leeds, East, for Hornsey and Wood Green and for Barrow and Furness spoke on the clause relating to bingo duty with the enthusiasm of parliamentary veterans. The subject is of course important in constituencies where the club movement flourishes. My hon. Friends the Members for Hartlepool and for Attercliffe spoke of the importance of the vehicle excise duty clause and its impact on the disabled. My hon. Friend the Member for Leeds, West made an effective speech about charities, supported later in the debate on pensioners and the poor by my hon. Friends the Members for Darlington, for Leeds, West and for Hartlepool.

My hon. Friend the Member for Newcastle-under-Lyme (Mrs. Golding) contributed to our debate on the married couples allowance. My hon. Friends the Members for Barrow and Furness, for Hornsey and Wood Green, for Hartlepool and for Darlington spoke about capital taxes, and we heard effective contributions from the hon. Member for Wolverhampton, North-East (Mr. Purchase) and others on the business expansion scheme, the enterprise zones and inheritance tax.

I have made reference to the important contributions of the new Labour members of the Committee, but not in any partisan spirit. The Financial Secretary too referred to the excellent contributions from Labour Members, so it is only right that I should make what little reference can be made to the contributions from the Conservative side. The hon. Member for Slough (Mr. Watts) welcomed the clause that deals with club bingo, and declared his interest as an officer of the all-party clubs committee. The hon. Member for Esher (Mr. Taylor) also quite properly declared an interest as vice-chairman of the Association of Conservative Clubs and as president—I thought this a little more unlikely—of the East and West Molesey Conservative working men's club in Esher. I was slightly struck by the fact that there is a working men's club in Esher. As there is, it is wholly appropriate that the hon. Gentleman should be its president. In any case, he welcomed the clause on bingo.

The hon. Member for Bridlington told us that he was a wine merchant, and he went on to express the fears of the industry, to which I have already referred. He told us that he was a small business man, and he expressed the fears of small business men when we were discussing the business expansion scheme and inheritance tax. The hon. Member for Beaconsfield told us that he was a distinguished contributor to Accountancy Age magazine, and he went on to demand that the Committee hang two other contributors. The hon. Member for Slough complained that the Unit Trust Association had not invited him to dinner.

The hon. Member for Bournemouth, West (Mr. Butterfill) went one better and defended the lower-rate tax band as a work incentive for pensioners. That is probably the most feeble defence of that measure ever to have been advanced. However, the hon. Gentleman managed to go one better when he defended offshore unit trusts. He said that they were quite expensive to set up. There are many things that could be said about offshore trusts, but use of the cost of setting one up must be the feeblest evidence ever offered in mitigation.

The hon. Member for Stamford and Spalding (Mr. Davies), who is a continuing delight to the Labour members of the Committee, spoke up for capitalism, as he always does. When we discussed inheritance tax and other capital tax points, he told us that he was a director of Dewe Rogerson and a consultant to Morgan Grenfell. We were dealing with matters affecting those firms in relation to schedule 10. He spoke up for the interests of landowners. As we know, he is himself a landowner and a notorious sheep farmer. The hon. Member for Slough spoke up for one of his clients when we were dealing with the clause relating to BCCI and with schedule 11. He even moved an amendment which he hoped would affect the interests of his clients.

These are the forces that have shaped the Bill: altruism from the Labour side; interest—in some cases, vested interest, albeit declared—from the Conservative side. What sort of Act are we bringing into being, and what effect will it have on the great issues that affect the running of the British economy? My hon. Friend the Member for Attercliffe referred to the Government's economic forecasting. Their forecast outturn of gross domestic product is again 1 per cent., and the Financial Secretary told us today that he stood by that prediction. But the most likely outturn is nothing of the sort; it will probably be about one quarter of that.

The Government predict that investment will fall by 0.5 per cent. The likely outturn is a fall of 1.8 per cent. The Government forecast that our exports will grow over the year by 3.5 per cent. The likely outturn is now generally agreed to be about 2.4 per cent. The Government expect imports to grow by 1 per cent. Most forecasters expect them to grow by 6.9 per cent. The balance of payments deficit is forecast by the Government to be £6.5 billion. Most observers feel that a figure of £12 billion is closer to the truth.

According to the Government, retail prices are expected to grow by 3.75 per cent., but most forecasters believe that the Government cannot, even in the current economic climate, get that figure below 4 per cent. According to the Government's latest hypothesis, unemployment stands at 2.4 million. The likely outcome is 2.7 million. These are the issues that really matter to the British economy. It is absolutely clear that the Bill that we shall carry into law will have no measurable impact upon them.

10.11 pm
Mr. Beith

The speech that we have just heard demonstrates the truth of the proposition that the speeches made in the Finance Bill Committee by the shadow Treasury team would, placed end to end, stretch to infinity and probably back again. It is alarming to realise that when they get themselves programmed for long speeches they sometimes lose the code whereby the programming can be taken out again.

There was a classic occasion in Committee when the hon. Member for Newcastle upon Tyne, East (Mr. Brown) was not deprogrammed before he made an incidental speech on tobacco taxation, at a point when the strategy of long speeches had supposedly been abandoned. That most learned discourse, which I shall not fault for its understanding of the law, seemed to incommode certain of the hon. Gentleman's hon. Friends. It was not the occasion for one of the hon. Gentleman's regular swingeing denunciations of the idea of a ban on tobacco advertising, but we did get a touch of that during the proceedings, just to set the context for today's discussions across the Floor of the House. Nevertheless, it was a notable speech.

This is a Finance Bill of significant missed oppor-tunities, although it contains some good things. There is the rent-a-room scheme—straight from my party's 1987 election manifesto. There is inheritance tax relief and the transferability of the married couple's allowance, for which we have argued for a long time in successive Budgets. Those are useful provisions. There is a particularly unwelcome measure—clause 63, originally clause 52—which we have debated again today. I do not propose to go over the arguments again, but that measure in itself would be a strong enough reason for me to vote against the Bill.

Much of the rest of the Bill is innocuous. The vast majority of its provisions are totally uncontroversial and are not contested by any party. However, there are many missed opportunities. No provision is made for child care. Interestingly, that is the issue that the Opposition Front Bench abandoned in their shadow budget. [HON. MEMBERS: "No."] The Minister referred to the shadow budget and the problems that it presented at the time of the election. The process of dismantling it has begun, but it has begun from the wrong end. It is odd that the Opposition should have removed one of the potentially more popular features of their shadow budget instead of the ones which proved extremely unpopular during the election campaign. However, they are not disposed to support any widening of tax relief for child care.

There are no useful clauses in the Bill to deal with environmental issues, or to tackle poverty, or to help small businesses and the bureaucracy that they face, in the way in which small businesses could have been helped if significant changes had been made. If the clause on vans had been accepted, a lot of small business men would have had a lot less form filling to do and the tax position of a great many people who do not enjoy high incomes would have been eased by the scale charge that we proposed.

This is about the most inconsequential set of Finance Bill proposals that I can remember among the many Finance Bills on which I have served. Yet they led to the lengthiest debates and the lengthiest sittings of any Finance Bill Committee on which I have served. That seems an extraordinary paradox. One has to go back to 1984 and 1985 to find sittings of that length, and then controversial measures were being introduced.

There are various interpretations of the length of the Committee proceedings. One was hinted at by the hon. Member for Newcastle upon Tyne, East, but he backed away quickly when a possible truth seemed to emerge—that there had been some sort of breakdown and the necessary number of sittings had not been provided to meet the Opposition's requirements, so the remaining sittings had to be extended.

Then there is the training school scenario, which I suggested when we discussed the matter in Committee. and which the Financial Secretary mentioned earlier. The idea was that the Committee was to be a demonstration to newer Labour Members of what lengthy Committee proceedings were all about, and a test of their ability to carry them through. Indeed, we heard a sort of marks session just now, in which the hon. Member for Newcastle upon Tyne, East went through his list. He did not disclose the marks, but they were there in the tone of his voice, in his inflections and in the length of his descriptions. Those Labour Members all know where they stand, and whether they have passed or failed. Their cards have been marked, on the basis of those comments.

That is no way to examine legislation of this kind. There was a hint of contrition when the hon. Member for Newcastle upon Tyne, East said that the Opposition were ready to consider whether there were better ways to organise proceedings on the Finance Bill on which, subject to agreement and discussion, reforms could be based. There must be a better way than taking proceedings through from 4.30 in the afternoon to 8 o'clock the following morning, and being forced to add sudden Wednesday sittings because not enough clauses have been considered. There must be a better way than the uneven manner in which clauses are considered according to the state of relations between the parties rather than according to the intrinsic merits of the argument on the clause, its complexity or the difficulty of explaining it. It is time we reformed those procedures and carried them out more sensibly.

Attention to those matters would not solve the disagreements of policy, such as whether the Bill can meet the needs of a country in recession—we believe that it cannot—or whether it addresses issues such as poverty, which I mentioned. However, the sheer quality of legislation, and of the way in which it is considered, could be greatly improved if we organised our affairs on a basis which the outside world might understand. If any outsider had been around to listen to or observe half of what went on in the late hours of the night, that person would have been bemused and not a little derisive at the manner in which our proceedings were conducted.

10.17 pm
Mrs. Judith Chaplin (Newbury)

This is a good Bill, and I especially welcome it because of its measures to help businesses. Many businesses are in difficulties and many of the measures, together with those already passed as part of the Budget, will give substantial help, especially to small businesses.

Small businesses have already gained by the freeze in the uniform business rate introduced earlier, whereby no business rate can increase by more than inflation. Many of the businesses in my constituency have been faced with large increases because of the revaluation, so they will welcome the freeze, as will firms throughout the country. That revaluation was based on what may turn out to be a peak year for property values, so the reduction is fair and may relate more closely to the average rate over the five years than to that peak rate.

The Bill also helps small businesses through the changes in the VAT registration threshold, through the changes in the timing of payments and through the reductions in penalties, all of which are important for cash flows. I welcome them all.

The most important measure in the Bill for businesses was the increase to 100 per cent. in the relief on business assets for the purposes of inheritance tax. Too often in this country tax arrangements are designed to deal with a few exceptional cases and no regard is paid to how they affect the vast majority of taxpayers or their effect on the economy. Inheritance tax on business assets was just such a tax. Small companies were often destroyed or irreparably damaged because they did not have the liquid funds to pay the tax following the unexpected death of one of their major owners. I welcome the fact that that will stop, to the great benefit of small companies, which grow to form larger companies.

I have already expressed my concern that the change could lead people to hold on to assets to avoid capital gains tax on the increase in their assets in the long term. It has been suggested that, therefore, changes in inheritance tax should not be made. I urge Ministers to consider capital gains tax—a complex and distorting tax that does tremendous damage to the economy—and I hope that in future that will be high on their list of priorities.

Anything that reduces tax complexity is to be welcomed, as it allows the Inland Revenue and Customs and Excise to deal more effectively with those who, I am told, are now to be called "customers". That is a strange word to use because people have little choice in receiving this service.

A better service for everyone is, however, to be welcomed. I was rather concerned, therefore, to read a report that the Inland Revenue decision to contract out some of its secretarial and support work was being criticised because it was said that it would lower the standards of confidentiality in taxpayers' affairs. I have been a temporary civil servant and rather resent the implication that temporary staff are less aware of confidentiality than permanent staff. I very much hope that Ministers will agree that contracting out will not make taxpayers' affairs less confidential. It will lead to an improvement in the service, which we should all welcome.

10.21 pm
Mr. Betts

I did not want to disappoint the Financial Secretary by failing, in our final deliberations on the Bill, to persuade him of the path of truth.

I judge the Finance Bill by reflecting on what it offers my constituents and how it meets their needs. What will it do for them? Indeed, what have Finance Bills in the past 13 years done for them? I shall not go as far back as that because I can draw some themes from the Bill. What will it do for the problems of unemployment and housing? Having listened attentively to everything that Ministers have said, I conclude that the Bill does not address the needs of my constituents.

Themes have been apparent in much of the legislation which are consistent with the Government's simplistic view of the private sector and its workings and benefits. Often, the Government have seemed ashamed to admit public subsidies. Some of the examples of management incompetence have been breathtaking. They have generally been followed by a shambolic withdrawal of proposals with little apology or embarrassment for the mess that the Government have created, leaving the real problems facing so many constituents untouched and unaddressed.

There is a real problem with the growth and development of small businesses—a problem of survival through the recession at a time of high interest rates. Everyone accepted that small businesses are important to our future economic development. Despite the Government's overall commitment to a simplistic view of the free market and a philosophy of trying to get British industry lean and competitive—in too many cases, it has become skeletal and redundant for many firms in my constituency—when they introduced the business expansion scheme in the early 1980s there was probably some recognition of the positive role that they could play in helping firms start and grow in the early stages which would ultimately be of great benefit to the firms and to the people whom they could employ. A not inconsiderable amount of public expenditure was involved. I understand that in the past four years about £1 billion of investment was generated through that source, but in the past few years the implementation of what could have been a good scheme has been shambolic and a waste of taxpayers' money.

My constituents want jobs, but not many will get employment in collecting rare wines, not many will get employment in accumulating agricultural holdings, and not many will get employment in owning race horses. Yet money from the business expansion scheme has been spent on all those follies and ventures. The Government have steadily had to legislate for a scheme which they got wrong in the first place. A few people may have been employed in wine bars and restaurants, but those are not the type of businesses that we expected to expand when the scheme was set up, and they are certainly not the sort of businesses that we should now seek to support with public money.

What happened? There have been reforms to try to close some of the loopholes. Following that, there were measures to develop—and now measures in the Bill to develop further—the scheme to encourage housing provision. I do not deny that housing provision is important. Certainly, my constituents would benefit from an increase in the number of houses being built for them to rent. That would be important, but our argument is clear: the business expansion scheme was the wrong way to stimulate housing provision. The release of capital receipts for local authorities to spend would have been the right way.

I shall not repeat the lecture that I gave the Minister at 5 o'clock one morning about the failure of the Government's housing policy—[HON. MEMBERS: "Go on."] I could be tempted, but it might be a waste of time. After all, the Government's failures are there for all to see. They can be seen in the homeless young people on the streets of our cities. These are the 1990s, but a supposedly civilised and wealthy country is unable to care for people and put a roof over their heads. That is a failure of the Government's housing policy with which the business expansion scheme failed to deal, even though 90 per cent. of the expenditure under the scheme in the past two years has gone into housing and providing easy money for people with up to £40,000 to spend instead of dealing with the real issues facing small businesses.

What does the Bill do? Ultimately, it withdraws the scheme to help small businesses and leaves them in the position they were in before the Government introduced the scheme in the early 1980s. In the middle of a recession, with a lack of venture capital, with small companies searching for support and under pressure from their banks, what do the Government do? They walk away. That is the truth of the situation. Many Conservative Members who are concerned about and understand small businesses should start to worry about the lack of attention shown by the Government—their Government —to the needs of small businesses.

What other schemes have there been? There have been enterprise zones, and we have had some interesting discussions about provisions in the Bill for such zones. In this instance, the Government have made no concessions in terms of their absolute belief in the free market. They believe that if they remove tax obligations, blame the bureaucracy of local councils and remove that too, everything will be all right. There will be a free-for-all and a thousand flowers will bloom. We can take them around enterprise zones—it is not flowers that are blooming but weeds growing out of the rubble that remains.

A free-for-all? Well, there is some freedom from taxation for the businesses involved, but it is not a free-for-all because the taxpayer has paid. As I said in Committee, I believe that Sheffield was right to refuse an enterprise zone because, although we cannot get proper information from the Government about precisely how the money is being spent and what the effect of enterprise zones has been, it is fairly clear that they have not been an enormous success.

Let us consider the money involved. For instance, £2.5 billion has been spent on Canary wharf. That is a disgrace. The Government are now scrambling around to justify their folly and the monument that they have built to Thatcherism. That compares with only £50 million over five years for the development corporation in Sheffield, where there are real problems to address and real opportunities, if only the Government were prepared to work with the local authority and private business.

I was doing some sums on that £2.5 billion of expenditure. It is more money than the Government have allocated in rate support grant and revenue support grant to Sheffield city council over 13 years to provide for education, social services, environmental health, leisure, highways, refuse collection and all the other services that local authorities provide. It is an obscenity that cities such as Sheffield should be starved of resources when the Government are prepared to waste £2.5 billion on that folly of their own making at Canary wharf in order to justify their policies on enterprise zones.

We understand, although the House has not been told formally, that it may not: be a matter of moving civil servants down the road and of a leasing arrangement but that the Government may be considering buying Canary wharf. That may be the only way out of their problems. They will have to buy Canary wharf and spend a further £1.5 billion on the Jubilee line.

Few jobs have been created by the Canary wharf project, but lots of cash has been spent. The jobs that have been created have often been moved from nearby. The move from Marsham street is a classic example. Some jobs would have been created anyway. Many jobs are short-term, low-paid jobs which will not exist once the Government end the enterprise zone concessions. It is another shambolic mess of administration. The Government are not continuing enterprise zones because even the Government recognise that they have been a failure.

All the constituencies in which enterprise zones have been created—indeed, all constituencies in urban areas —have the same problems. They are the problems of dereliction, problems which need proper development plan and partnership arrangements between local councils and the private sector. Certainly Labour councils are willing to enter into those arrangements, and the private sector is mostly willing, but meaningful Government support is needed to make such arrangements work.

The rent-a-room scheme is based on the idea that somehow the private sector will solve our housing problems, just as it would solve our industrial problems. Incredibly, in the Standing Committee we heard comments from Conservative Members to the effect that the Labour party was somehow to blame for the failures of the private rented sector. Perhaps they failed to notice that their party had been in Government for the past 13 years.

I accepted many of the comments made by the hon. Member for Buckingham (Mr. Walden). He expressed reservations about the Government's housing policy. He spelled it out. Mortgage tax relief is a difficult issue, but the private rented sector in Britain will never prosper while the Government subsidise owner-occupation through mortgage tax relief. It is quite simple: the Government can fiddle around with schemes as much as they like, but they will not create a viable rented sector.

Now the Government are introducing tax relief for the rent-a-room scheme. In Committee we pressed the Minister at some length about how much the scheme would cost. He was just about awake in that debate early in the morning. He said that it would cost £2 million to £3 million. I will not quibble about the amount of money because in a different debate today we argued that £2 million was not a lot of money. It amounts to a small attempt to tackle an enormous problem. The £2 million to £3 million tax relief will go not only on newly rented rooms but on rooms which are already rented out. The addition to the amount of housing space available for homeless people is minuscule.. Perhaps the Government will eventually admit that that scheme was a failure, too, but it is already a failure in that it is no solution to the real housing crisis affecting our major cities. It offers no hope to homeless young people, and does not provide better accommodation for people living in deplorable conditions in the private rented sector or for young people with children who are living in high-rise accommodation and want to move to low-rise properties.

The Finance Bill follows the same track record—an over-reliance on the private sector and a failure to recognise the contribution that the public sector can make, balanced by hidden public subsidies, a lack of open government right the way through, and appalling managerial incompetence on behalf of the Government.

The Finance Bill fails to tackle the real problems of urban areas—the problems of homelessness and the lack of sufficient housing. It fails to tackle the problems of the lack of industrial investment, and offers no coherent approach to small businesses struggling to grow or to survive in the middle of the longest recession since the war, which was also created by the Government's actions.

In the midst of recession, the Finance Bill offers no solutions to unemployment, and no stimulus to economic activity, despite the fact that the Government should admit that their projections of gross domestic product as my hon. Friend said, ought to have changed since the Budget, because all the financial commentators have changed theirs.

By all reasonable tests, the Finance Bill is a failure. The Government may have won the election, but they are not winning the battle against the long-term economic decline of this country. They are not even fighting that battle and, ultimately, the electorate will find them out.

10.36 pm
Mr. Christopher Gill (Ludlow)

I shall detain the House for only a few brief moments, and shall resist the temptation to take issue with the hon. Member for Sheffield, Attercliffe (Mr. Betts).

First, on behalf of the House, I should express our gratitude to the members of the Committee for the time and wisdom that they brought to deliberations on the Finance Bill. I am sure that those of us who were not in Committee were well blessed to be in our beds when they were kept from them.

On the Third Reading of Finance Bills in the past year or two it has been my habit to draw hon. Members' attention to some features of our tax regime. The six main taxes of the revenue—income tax, corporation tax, petroleum revenue tax, capital gains tax, inheritance tax and stamp duty—raised £80.4 billion in 1991–92. Against those six main taxes are 87 reliefs and allowances, totalling £88.63 billion. The reliefs and allowances come to £8 billion more than the six taxes levied. I want to impart to Treasury Ministers that there is enormous scope for a radical Chancellor to simplify our tax regime dramatically, while decimating the rates of tax.

My hon. Friend the Member for Newbury (Mrs. Chaplin) rightly had some harsh things to say about capital gains tax. She might be interested to know that there are reliefs and allowances against capital gains tax worth £2.66 billion, even though the tax only raises £1.2 billion. The situation is even more interesting for inheritance tax, where the reliefs and allowances amount to more than £5 billion, whereas the tax raises only £1.3 billion.

I am grateful to the House for bearing with me while I ride that hobby horse. I have said it before on the Third Reading of Finance Bills and I think that I am getting my message through. I think that I am correct in saying that there is one less relief and allowance this year than at the equivalent time last year. So my message is obviously getting through to the Treasury Bench.

I welcome this well constructed and well targeted Bill, which I am sure the House will approve.

10.39 pm
Mr. Mandelson

I am stimulated to intervene at this late stage in the debate by the fine quality of the contributions made by my hon. Friends in this Third Reading debate.

The limitations of the Bill clearly illustrate that the central criticism of the Government is not that, in the full range of their economic and fiscal policies, they look to individual firms and companies to provide the main engine of enterprise in our economy. That view is shared on both sides of the House. The main criticism of the Government is that they expect firms to undertake that task in isolation and are prepared to give so little support to enable companies to be more successful engines of growth and enterprise in our economy. Firms do not look to the Government to do everything for them—far from it—but they do not expect a responsible Government like ours to do so little, especially when Governments of all colours in every other European country are doing so much more for their companies.

No debate during the lengthy course of the Bill's proceedings has better illustrated the paucity of the Government's strategy for dealing with the country's problems than that on the housing crisis and the collapse of the Government's measures to deal with it. The lesson of that crisis goes to the heart of the Government's failing and reveals the tragic contrast between the promises that they made before the election on 9 April and the collapse in hope and confidence in their policies that has taken place since the election. Time has shown the housing measures announced by the Government in December last year to be ill thought through gimmicks, packaged and hyped to people who need not empty gestures but real help to alleviate their housing and personal finance crises.

To take the mounting mortgage arrears crisis off newspaper front pages, the Government struck a rather crude bargain with mortgage lenders: in return for building societies devising a range of mortgage rescue packages and negotiating a variety of arrangements with housing associations, the Government agreed to pay the mortgage interest element of income support direct to lenders and conceded to building society demands for a freeze on stamp duty to kick-start the slumbering property market. In return for a mortgage rescue lifeboat, building societies persuaded the Government to throw in a stick of dynamite to break the logjam in the housing market. Unfortunately, the lifeboat has turned out to be a threadbare raft and the dynamite a disappointingly damp firework.

In February, a Shelter report speculated that some 40,000 families might be saved as a result of the Government's package. That prediction was dismissed at the time, notably by Government spokesmen, as "miserably pessimistic". Instead, the predictions made by Shelter earlier this year have proved, lamentably and tragically—no one derives enjoyment or satisfaction from the failure of the Government's policies to deal with the housing crisis—to be not miserably pessimistic but wildly optimistic. One report, if it is to be believed, calculates that the Government's measures have saved no more than 12 homes and a handful of families.

Across the country, the package has been a sad failure. In my constituency of Hartlepool, there was a 24 per cent. increase in repossession orders last year. Already, in the first quarter of 1992, 102 mortgage possession actions have been entered in the county court of Cleveland. Some 66 suspended orders have been agreed, and a further 15 have been made by the courts.

In rehearsing those figures, I do not need to point out that they represent considerable human misery and tragedy for the families involved. They have suffered considerably during the past two years in the course of the second recession that was manufactured in Downing street and brought about as a failure of the Government's economic policies. It has been a financial blight on their lives, and they have had to find any penny they could lay their hands on.

Mr. Alan Duncan (Rutland and Melton)

In his speech so far, the hon. Gentleman has mentioned the word "crisis" about 13 times. Everything that he has said seems to have smacked of the late Prince of Wales saying nothing more than "something should be done." Will the hon.

Gentleman advise the Houe of specific measures that he believes should be included in the Finance Bill? Otherwise, his reputation as an exciting operator might take a sudden plunge.

Mr. Mandelson

After their party has spent 13 years in government, we can expect Conservative Members to tell us a little more about what should be done to solve this country's crisis in housing and the economy.

The pattern is now prevalent, not only in my constituency but many others like it, not only in the northern region, but across the country, not only in the west midlands and Yorkshire, but in London and the south-east. Many orders have been placed against families in my constituency, threatening the repossession of their homes, taking away their pride in that asset—the castle in which they have invested their savings and from which they have taken so much satisfaction.

If those orders are enforced by county courts in my constituency and others like it, at least one family a week will face the repossession of their home. In many constituencies, more than one family will face the loss of their home. That is not only a tragedy: it is a scandal. I am sure that the hon. Member for Rutland and Melton (Mr. Duncan) accepts that it represents a serious crisis in the personal affairs and finances of those families who were so tragically affected.

Those families are trapped in mortgage misery that is not of their making. Thousands of them are marooned in the housing market. Some of them have to watch the value of their houses fall below the size of their mortgage. Others are simply trapped in their homes, unable to find a prospective buyer who will pay a reasonable price for their home to enable them to move—in many cases, to follow their families or to take up the jobs that they have been lucky enough to obtain in other parts of the country.

The main plank in the Government's policies, the chief weapon in their armoury, has miserably failed so far to prevent the continuing collapse of the housing market this year. I refer to the stamp duty holiday. Transactions were down 23 per cent. in the first five months of the year. Understandably, the fear is that the Government's refusal to extend the relief will kill off any struggling signs of life in the housing market, and there are precious few of those.

Home owners, mortgage lenders and house builders, like everyone else in the economy, have been tragically misled by the Government, ever keen to answer with an empty promise any criticism made of them as their policies fail once more to deliver the goods.

This country is crying out for relief from the recession. All hon. Members will know from their surgery experience how constituents come to them begging for relief, to be spared the continued misery that the recession is causing them and their families. It is tragic that this Finance Bill will do nothing to bring relief to the countless people across the country whom we represent here.

We can only hope that the recent warning issued by the Financial Secretary will come true. Many of us were interested in his speech, delivered at the Conservative party's weekend school in a location not a million miles from Nottingham. That speech, never made during proceedings on the Bill, probably said more about the inner feelings and true fears of Conservative Members than any speech made on this Bill.

The Financial Secretary issued a warning to his own party to the effect that the Labour party may have been defeated and may be a slumbering giant but it still contains the strength, the potency and the skill to return and fight and win the next general election. The hon. Gentleman's right hon. and hon. Friends would do well to heed his warnings.

It is the failure of the Government's economic policies —this Bill has done nothing to ameliorate that failure— compounded by the missed opportunities represented by this Bill which will further boost the already considerable strength of the Labour party and enable it to come—I have every confidence in this—to the aid of the country before all hope is lost, at the next election.

10.54 pm
Mr. Nicholas Brown

The Financial Secretary, that happy warrior, reaches his journey's end. Before we vote on Third Reading, I have two things to say to those of my hon. Friends who served with me on the Committee. The first and obvious thing is thank you. The second, and perhaps less obvious, is that there are worse things to be called, even in this place, than "officer cadets".

For me, this is the end of five years of serving on Finance Bill Committees, so I also take this opportunity to say thank you to my Front-Bench colleagues, the hon. Members for Islington, South and Finsbury (Mr. Smith), for Brent, South (Mr. Boateng), for Wrexham (Dr. Marek) and for Newcastle-under-Lyme (Mrs. Golding). A better bunch of colleagues and comrades a Member of Parliament could not wish for.

As the Bill reaches its journey's end, the country will know that its contents are not the fault of the Opposition. I urge my hon. Friends to vote against it.

10.55 pm
Mr. Dorrell

Journey's end indeed! The Bill completes the legislation founded on the Budget that my right hon. Friend the Chancellor of the Exchequer introduced on 10 March. It was based on the lowest starting rate of income tax for a generation, and on the commitment to extend that low rate of income tax right through the payers of standard rate tax and to see that commitment carried out as soon as may be. It was based on the commitment to ensure that the top rate of income tax was not allowed to rise above 40 per cent.

The House will remember that, six days after that Budget was presented, the Labour party presented an alternative Budget that promised a 59 per cent. top rate of tax and defined riches as beginning on an income of £22,000 a year. Three weeks later, the country made its choice. It is now for the House to give effect to that choice and to carry the Bill into law.

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

The House divided: Ayes 303, Noes 250.

Division No. 59] [10.57 pm
Adley, Robert Ashby, David
Ainsworth, Peter (East Surrey) Aspinwall, Jack
Aitken, Jonathan Atkinson, David (Bour'mouth E)
Alexander, Richard Atkinson, Peter (Hexham)
Alison, Rt Hon Michael (Selby) Baker, Rt Hon K. (Mole Valley)
Allason, Rupert (Torbay) Baker, Nicholas (Dorset North)
Amess, David Baldry, Tony
Ancram, Michael Banks, Matthew (Southport)
Arbuthnot, James Banks, Robert (Harrogate)
Arnold, Jacques (Gravesham) Bates, Michael
Arnold, Sir Thomas (Hazel Grv) Batiste, Spencer
Beggs, Roy Forth, Eric
Bellingham, Henry Fox, Dr Liam (Woodspring)
Bendall, Vivian Fox, Sir Marcus (Shipley)
Beresford, Sir Paul Freeman, Roger
Biffen, Rt Hon John French, Douglas
Blackburn, Dr John G. Fry, Peter
Body, Sir Richard Gale, Roger
Bonsor, Sir Nicholas Gallie, Phil
Booth, Hartley Gardiner, Sir George
Bottomley, Peter (Eltham) Gamier, Edward
Bottomley, Rt Hon Virginia Gill, Christopher
Bowden, Andrew Gillan, Ms Cheryl
Bowis, John Goodlad, Rt Hon Alastair
Boyson, Rt Hon Sir Rhodes Goodson-Wickes, Dr Charles
Brandreth, Gyles Gorman, Mrs Teresa
Brazier, Julian Gorst, John
Bright, Graham Grant, Sir Anthony (Cambs SW)
Brooke, Rt Hon Peter Greenway, Harry (Ealing N)
Brown, M. (Brigg & Cl'thorpes) Greenway, John (Ryedale)
Browning, Mrs. Angela Griffiths, Peter (Portsmouth, N)
Bruce, Ian (S Dorset) Grylls, Sir Michael
Budgen, Nicholas Gummer, Rt Hon John Selwyn
Burns, Simon Hague, William
Burt, Alistair Hamilton, Rt Hon Archie
Butcher, John Hampson, Dr Keith
Butler, Peter Hanley, Jeremy
Butterfill, John Hannam, Sir John
Carlisle, John (Luton North) Hargreaves, Andrew
Carlisle, Kenneth (Lincoln) Harris, David
Carrington, Matthew Haselhurst, Alan
Carttiss, Michael Hawkins, Nicholas
Channon, Rt Hon Paul Hawksley, Warren
Chaplin, Mrs Judith Hayes, Jerry
Chapman, Sydney Heald, Oliver
Churchill, Mr Heathcoat-Amory, David
Clappison, James Hendry, Charles
Clark, Dr Michael (Rochford) Heseltine, Rt Hon Michael
Clarke, Rt Hon Kenneth (Ruclif) Hicks, Robert
Clifton-Brown, Geoffrey Higgins, Rt Hon Terence L.
Colvin, Michael Hill, James (Southampton Test)
Congdon, David Hogg, Rt Hon Douglas (G'tham)
Coombs, Anthony (Wyre For'st) Horam, John
Coombs, Simon (Swindon) Hordern, Sir Peter
Cope, Rt Hon Sir John Howarth, Alan (Strat'rd-on-A)
Cormack, Patrick Howell, Rt Hon David (G'dford)
Couchman, James Hunt, Rt Hon David (Wirral W)
Cran, James Hunt, Sir John (Ravensbourne)
Currie, Mrs Edwina (S D'by'ire) Hunter, Andrew
Curry, David (Skipton & Ripon) Jack, Michael
Davies, Quentin (Stamford) Jackson, Robert (Wantage)
Davis, David (Boothferry) Johnson Smith, Sir Geoffrey
Day, Stephen Jones, Gwilym (Cardiff N)
Deva, Nirj Joseph Jones, Robert B. (W H'f'rdshire)
Devlin, Tim Jopling, Rt Hon Michael
Dickens, Geoffrey Kilfedder, Sir James
Dicks, Terry King, Rt Hon Tom
Dorrell, Stephen Kirkhope, Timothy
Douglas-Hamilton, Lord James Knapman, Roger
Dover, Den Knight, Mrs Angela (Erewash)
Duncan, Alan Knight, Greg (Derby N)
Duncan-Smith, Iain Knight, Dame Jill (Bir'm E'st'n)
Dunn, Bob Knox, David
Durant, Sir Anthony Kynoch, George (Kincardine)
Dykes, Hugh Lait, Mrs Jacqui
Eggar, Tim Lawrence, Sir Ivan
Elletson, Harold Legg, Barry
Emery, Sir Peter Leigh, Edward
Evans, David (Welwyn Hatfield) Lennox-Boyd, Mark
Evans, Jonathan (Brecon) Lester, Jim (Broxtowe)
Evans, Nigel (Ribble Valley) Lidington, David
Evans, Roger (Monmouth) Lightbown, David
Evennett, David Lilley, Rt Hon Peter
Faber, David Lloyd, Peter (Fareham)
Fabricant, Michael Lord, Michael
Fenner, Dame Peggy Luff, Peter
Field, Barry (Isle of Wight) Lyell, Rt Hon Sir Nicholas
Fishburn, John Dudley MacGregor, Rt Hon John
Forman, Nigel MacKay, Andrew
Forsyth, Michael (Stirling) Maclean, David
Forsythe, Clifford (Antrim S) McLoughlin, Patrick
McNair-Wilson, Sir Patrick Smith, Tim (Beaconsfield)
Madel, David Soames, Nicholas
Maitland, Lady Olga Spencer, Sir Derek
Malone, Gerald Spicer, Sir James (W Dorset)
Mans, Keith Spicer, Michael (S Worcs)
Marlow, Tony Spink, Dr Robert
Marshall, John (Hendon S) Spring, Richard
Marshall, Sir Michael (Arundel) Sproat, Iain
Martin, David (Portsmouth S) Squire, Robin (Hornchurch)
Mates, Michael Stanley, Rt Hon Sir John
Mawhinney, Dr Brian Steen, Anthony
Mayhew, Rt Hon Sir Patrick Stephen, Michael
Merchant, Piers Stern, Michael
Milligan, Stephen Stewart, Allan
Mills, Iain Streeter, Gary
Mitchell, Andrew (Gedling) Sumberg, David
Mitchell, Sir David (Hants NW) Sweeney, Walter
Moate, Roger Sykes, John
Monro, Sir Hector Tapsell, Sir Peter
Moss, Malcolm Taylor, Ian (Esher)
Needham, Richard Taylor, John M. (Solihull)
Nelson, Anthony Taylor, Sir Teddy (Southend, E)
Neubert, Sir Michael Temple-Morris, Peter
Newton, Rt Hon Tony Thomason, Roy
Nicholls, Patrick Thompson, Patrick (Norwich N)
Nicholson, David (Taunton) Thornton, Sir Malcolm
Nicholson, Emma (Devon West) Thurnham, Peter
Norris, Steve Townend, John (Bridlington)
Onslow, Rt Hon Cranley Townsend, Cyril D. (Bexl'yh'th)
Oppenheim, Phillip Tracey, Richard
Ottaway, Richard Tredinnick, David
Page, Richard Trend, Michael
Paice, James Trotter, Neville
Patnick, Irvine Twinn, Dr Ian
Patten, Rt Hon John Vaughan, Sir Gerard
Pattie, Rt Hon Sir Geoffrey Viggers, Peter
Peacock, Mrs Elizabeth Waldegrave. Rt Hon William
Pickles, Eric Walden, George
Porter, Barry (Wirral S) Walker, Bill (N Tayside)
Porter, David (Waveney) Waller, Gary
Portillo, Rt Hon Michael Ward, John
Powell, William (Corby) Wardle, Charles (Bexhill)
Rathbone, Tim Waterson, Nigel
Redwood, John Watts, John
Renton, Rt Hon Tim Wells, Bowen
Richards, Rod Wheeler, Sir John
Riddick, Graham Whitney, Ray
Rifkind, Rt Hon. Malcolm Whittingdale, John
Robathan, Andrew Widdecombe, Ann
Roberts, Rt Hon Sir Wyn Wiggin, Jerry
Robertson, Raymond (Ab'd'n S) Wilkinson, John
Robinson, Mark (Somerton) Willetts, David
Roe, Mrs Marion (Broxbourne) Winterton, Mrs Ann (Congleton)
Ross, William (E Londonderry) Winterton, Nicholas (Macc'f'ld)
Rowe, Andrew (Mid Kent) Wolfson, Mark
Ryder, Rt Hon Richard Wood, Timothy
Sainsbury, Rt Hon Tim Yeo, Tim
Shaw, David (Dover) Young, Sir George (Acton)
Shepherd, Colin (Hereford)
Shepherd, Richard (Aldridge) Tellers for the Ayes:
Sims, Roger Mr. Robert G. Hughes and
Skeet, Sir Trevor Mr. Timothy Boswell.
Smith, Sir Dudley (Warwick)
Abbott, Ms Diane Benn, Rt Hon Tony
Adams, Mrs Irene Benton, Joe
Ainger, Nick Bermingham, Gerald
Allen, Graham Berry, Dr. Roger
Anderson, Donald (Swansea E) Betts, Clive
Armstrong, Hilary Blair, Tony
Ashton, Joe Boateng, Paul
Austin-Walker, John Boyce, Jimmy
Banks, Tony (Newham NW) Boyes, Roland
Barnes, Harry Bradley, Keith
Battle, John Bray, Dr Jeremy
Bayley, Hugh Brown, Gordon (Dunfermline E)
Beckett, Margaret Brown, N. (N'c'tle upon Tyne E)
Beith, Rt Hon A. J. Bruce, Malcolm (Gordon)
Bell, Stuart Burden, Richard
Byers, Stephen Gerrard, Neil
Caborn, Richard Gilbert, Rt Hon Dr John
Callaghan, Jim Godman, Dr Norman A.
Campbell, Mrs Anne (C'bridge) Godsiff, Roger
Campbell, Menzies (Fife NE) Golding, Mrs Llin
Campbell, Ronald (Blyth V) Gordon, Mildred
Campbell-Savours, D. N. Graham, Thomas
Cann, Jamie Grant, Bernie (Tottenham)
Chisholm, Malcolm Griffiths, Nigel (Edinburgh S)
Clapham, Michael Griffiths, Win (Bridgend)
Clark, Dr David (South Shields) Grocott, Bruce
Clarke, Eric (Midlothian) Gunnell, John
Clarke, Tom (Monklands W) Hain, Peter
Clelland, David Hall, Mike
Clwyd, Mrs Ann Hanson, David
Coffey, Ann Hardy, Peter
Cohen, Harry Harman, Ms Harriet
Connarty, Michael Harvey, Nick
Cook, Frank (Stockton N) Henderson, Doug
Cook, Robin (Livingston) Heppell, John
Corbett, Robin Hill, Keith (Streatham)
Corbyn, Jeremy Hinchliffe, David
Cousins, Jim Hoey, Kate
Cryer, Bob Hogg, Norman (Cumbernauld)
Cummings, John Home Robertson, John
Cunningham, Dr John (C'p'I'nd) Hood, Jimmy
Dafis, Cynog Hoon, Geoffrey
Dalyell, Tarn Howarth, George (Knowsley N)
Darling, Alistair Howells, Dr. Kim (Pontypridd)
Davidson, Ian Hoyle, Doug
Davies, Bryan (Oldham C'tral) Hughes, Kevin (Doncaster N)
Davies, Ron (Caerphilly) Hughes, Robert (Aberdeen N)
Davis, Terry (B'ham, H'dge H'I) Hughes, Roy (Newport E)
Denham, John Hughes, Simon (Southwark)
Dewar, Donald Hutton, John
Dixon, Don Ingram, Adam
Dobson, Frank Jackson, Glenda (H'stead)
Donohoe, Brian H. Jackson, Helen (Shef'Id, H)
Dowd, Jim Jamieson, David
Dunnachie, Jimmy Janner, Greville
Dunwoody, Mrs Gwyneth Jones, Barry (Alyn and D' side)
Eagle, Ms Angela Jones, leuan Wyn (Ynys Môn)
Eastham, Ken Jones, Lynne (B'ham S O)
Enright, Derek Jones, Martyn (Clwyd, SW)
Etherington, Bill Jones, Nigel (Cheltenham)
Evans, John (St Helens N) Jowell, Tessa
Fatchett, Derek Kaufman, Rt Hon Gerald
Faulds, Andrew Keen, Alan
Field, Frank (Birkenhead) Kennedy, Charles (Ross, C & S)
Fisher, Mark Kennedy, Jane (L'p'I Br'g'n)
Flynn, Paul Khabra, Piara S.
Foster, Derek (B'p Auckland) Kilfoyle, Peter
Foulkes, George Kinnock, Rt Hon Neil (Islwyn)
Fraser, John Leighton, Ron
Fyfe, Maria Lestor, Joan (Eccles)
Gapes, Mike Lewis, Terry
Garrett, John Litherland, Robert
George, Bruce Lloyd, Tony (Stretford)
Llwyd, Elfyn Robertson, George (Hamilton)
Loyden, Eddie Robinson, Geoffrey (Co'try NW)
Lynne, Ms Liz Roche, Ms Barbara
McAllion, John Rogers, Allan
MacDonald, Calum Rooker, Jeff
McFall, John Rooney, Terry
McKelvey, William Ross, Ernie (Dundee W)
McLeish, Henry Rowlands, Ted
McMaster, Gordon Ruddock, Joan
McNamara, Kevin Salmond, Alex
McWilliam, John Sedgemore, Brian
Madden, Max Sheerman, Barry
Mahon, Alice Sheldon, Rt Hon Robert
Mandelson, Peter Shore, Rt Hon Peter
Marek, Dr John Short, Clare
Marshall, David (Shettleston) Simpson, Alan
Marshall, Jim (Leicester, S) Skinner, Dennis
Martlew, Eric Smith, Andrew (Oxford E)
Maxton, John Smith, C. (Isl'ton S & F'sbury)
Meacher, Michael Smith, Rt Hon John (M'kl'ds E)
Meale, Alan Smith, Llew (Blaenau Gwent)
Michael, Alun Soley, Clive
Michie, Bill (Sheffield Heeley) Spearing, Nigel
Milburn, Alan Spellar, John
Miller, Andrew Squire, Rachel (Dunfermline W)
Mitchell, Austin (Gf Grimsby) Steel, Rt Hon Sir David
Morgan, Rhodri Steinberg, Gerry
Morley, Elliot Stevenson, George
Morris, Rt Hon A. (Wy'nshawe) Strang, Gavin
Morris, Estelle (B'ham Yardley) Straw, Jack
Morris, Rt Hon J. (Aberavon) Taylor, Mrs Ann (Dewsbury)
Mowlam, Marjorie Taylor, Matthew (Truro)
Mudie, George Thompson, Jack (Wansbeck)
Mullin, Chris Tipping, Paddy
Oakes, Rt Hon Gordon Turner, Dennis
O'Brien, Michael (N W'kshire) Tyler, Paul
O'Brien, William (Normanton) Vaz, Keith
Olner, William Walker, Rt Hon Sir Harold
Orme, Rt Hon Stanley Wardell, Gareth (Gower)
Pendry, Tom Wareing, Robert N
Pickthall, Colin Welsh, Andrew
Pike, Peter L. Wicks, Malcolm
Pope, Greg Williams, Rt Hon Alan (Sw'n W)
Powell, Ray (Ogmore) Williams, Alan W (Carmarthen)
Prentice, Ms Bridget (Lew'm E) Wilson, Brian
Prentice, Gordon (Pendle) Winnick, David
Prescott, John Wise, Audrey
Primarolo, Dawn Worthington, Tony
Purchase, Ken Wray, Jimmy
Quin, Ms Joyce Young, David (Bolton SE)
Radice, Giles
Randall, Stuart Tellers for the Noes:
Raynsford, Nick Mr. Eric Martlew and
Reid, Dr John Mr. Thomas McAvoy.

Question accordingly agreed to.

Bill read the Third time, and passed.