REPEALS

HC Deb 01 July 1998 vol 315 cc384-435

Amendments made: No. 41, in page 385, line 27, column 3, leave out '589(9A)' and insert '589A(9A)'.

No. 14, in page 392, line 12, in column 3 at the beginning insert— 'In section 797(3B)(b), the words "or in accordance with subsection (3) of that section". In section 797A(5), paragraph (c) and the word "and" preceding it.'.

No. 27, in page 392, line 20, at end insert— '1990 c. 1. The Capital Allowances Section 76(3).'. Act 1990.

No. 28, in page 392, line 23, leave out 'This repeal' and insert—

1. '1. The repeal of section 76(3) of the Capital Allowances Act 1990 has effect in relation to every chargeable period ending on or after 12th May 1998.
2. 2. The repeal of section 42(6) and (7) of the Finance (No. 2) Act 1997'.

No. 40, in page 398, line 30, column 3, at end insert— 'In section 419(4), the words "by discharge or repayment".'. —[Mr. Geoffrey Robinson.]

Order for Third Reading read.

4.53 pm

Dawn Primarolo

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

This is the second Finance Bill of the Parliament. It continues the process, which the Labour Government started on their election in 1997, of modernising the British economy, with the objective of raising the sustainable rate of long-term growth and ensuring that everyone has a share in rising prosperity. The Bill implements the second Budget of my right hon. Friend the Chancellor of the Exchequer. The aim of the Budget is to turn ambition into achievement, encourage work, promote enterprise and support families.

The Bill is all about a Government keeping their promises and, in it, we continue our manifesto pledges. We have kept our promise to hold the basic and top rates of income tax at their current rates, which is delivered in clause 25. We have kept our promise to cut value added tax on domestic fuel to 5 per cent., which was delivered in the first Finance Bill, and not to extend VAT to food, children's clothing, books, newspapers and public transport fares. We have kept our promise to examine the tax and benefits system and announced the working families tax credit. We have kept our promise to reduce VAT on energy-saving materials for those in receipt of grants through Government and local authority schemes.

The Bill has sent the Opposition into confusion, especially the Liberal Democrats who, at times during the Bill's passage, were changing their policy positions as we progressed through the day, let alone the week. In Standing Committee on the Bill, the Opposition voted for amendments that would have cost at least £7 billion; in addition to which, they voted for amendments to the Social Security Bill worth £1.5 billion. The shadow Chancellor's view is that There is no moral content in voting for more public spending", but that is not a view we share. Which public services should be cut to make good the £8.5 billion? That is the question that the Opposition have to answer this evening. Which taxes would they increase? Would they prefer to create another debt mountain, like the previous Government?

Mr. Alex Salmond (Banff and Buchan)

On the subject of confusion, as the Bill has progressed through the Commons, has the Financial Secretary detected any change in economic indicators, for example, the exchange rate and the impact in terms of job losses, the upturn in interest rates and the unemployment figures? Has she detected any change in economic conditions and, if so, what is to be the Government's response?

Dawn Primarolo

What I have detected at this late stage is that the hon. Gentleman has finally participated in our deliberations, having seen no trace of him during the many hours, weeks and months in which we have debated both the Budget and the Bill.

The Bill introduces a number of measures to encourage work and to make work pay. Our reforms of the national insurance system will remove barriers to work that have faced many people in the past and will encourage employment. The new deal will be extended to provide new employment opportunities to the long-term unemployed, partners of the unemployed, the long-term sick, the disabled and disadvantaged communities. The working families tax credit will be a major reform of the tax system—necessary because the labour market has changed almost beyond recognition in the past 20 or 30 years—giving women the opportunity to combine family commitments with paid employment.

Throughout the country, firms are reporting skills shortages. At the same time, there is a huge pool of unused talent and the Government intend to ensure that we use that talent. People who want to work will be able to do so; they will be helped to find jobs and to stay in the labour market. We are determined to give them the skills and opportunities that they need, which is something the previous Government failed pitifully to do. The working families tax credit and the reform of the national insurance system, together with our increased investment in education, training and skills, will begin to ensure that we have a labour market that meets the needs of the 21st century. Those measures, taken together, will make it easier for people to get into work, especially families with children; they are about giving people a future and giving them the hope that they want for that future.

Mr. Derek Twigg (Halton)

I am pleased to hear what my hon. Friend has said. What does she think would have happened if Labour had not got in? What sort of future would those people have had?

Dawn Primarolo

I am sure that the Opposition can explain for themselves how they would have continued to fail to invest in skills and to preside over chaos in the tax system, particularly in regard to families with children, and how they would not have increased child benefit or ensured that young people have an opportunity to gain skills and jobs through the new deal. As we know, the Opposition opposed this Government's windfall tax.

Alongside all of that reform, the Government are promoting enterprise. We need to promote enterprise alongside labour market reform to create a dynamic business sector, which is an essential part of any economic policy. We have put in place a corporation tax regime to encourage long-term investment. We have the lowest rates ever and we are abolishing advance corporation tax. Business has widely welcomed those changes. We have cut the small business rate of corporation tax to 20 per cent. from next year. Both business corporation tax rates will be held at the new levels or lower for the lifetime of this Parliament—an undertaking that the previous Government never gave, which shows the confidence of this Government in their policy and in our firms.

Dr. Nick Palmer (Broxtowe)

Is my hon. Friend aware that during questions to the Chancellor this week, the shadow Chancellor said that he did not realise that the gap between Britain and Europe was widening on corporation tax? He thought that we were getting closer to Europe and becoming less competitive. Does it worry her that we do not have an Opposition who are in command of their portfolio?

Dawn Primarolo

I am sure that the shadow Chancellor will settle into his new position and will get up to speed on the relevant facts with regard to corporation tax.

The Government have also undertaken long-overdue reforms of the capital gains tax system to promote enterprise, reward risk-taking and encourage long-term investment in place of a culture of short-termism and expediency. The Bill introduces tapers, which will reduce CGT on business and non-business assets held over the longer period. The effective rate of capital gains tax will be 10 per cent. for business assets held for 10 years. It is right in principle that everyone should pay a share of tax on their gains.

Sir Robert Smith

Has the hon. Lady worked out the consequences of the Finance Bill, should the Government fail to control inflation? How much real tax will people pay, if one takes into account the inflation of assets?

Dawn Primarolo

If the hon. Gentleman had been able to hear all the deliberations through the long consideration of the Bill, he would realise that the prudent approach to the economy being taken by my right hon. Friend the Chancellor will deliver stability, investment and the security and sustainable growth that the country badly needs.

The Bill also introduces the new university challenge fund—a public-private partnership to provide £50 million in venture capital to help turn good research into good business, which is badly needed in this country.

There will be a further boost to first-year capital allowances to help fund investment—remaining at 40 per cent., rather than 25 per cent., for a further year. That is another indication of the Government's determination to ensure that businesses can grow and that investment is created.

The Government have also invested in the environment. We are committed to an annual increase in road fuel duties of at least 6 per cent. in real terms, which is slightly more than the previous Government's commitment of 5 per cent. The increase will help us to keep our commitment to greenhouse gas targets, which are crucial in meeting our Kyoto obligations. We will be consulting soon on measures to graduate vehicle excise duty to encourage the use of less environmentally damaging cars. The reduction, under clause 16, of up to £500 in vehicle excise duty for lorries and buses that meet the new low-emission standards and the changes in duties on diesel duties and road fuel gases will help to reduce the impact of transport emissions on local air quality. That is a vastly important measure.

In addition to climate change and local air quality, we are dealing with land use and sustainable waste management. The landfill tax, which was introduced by the previous Government, was an important first step in environmental taxation. The increase in the standard rate from next year should encourage waste producers to reduce their waste and to seek more sustainable ways in which to deal with it.

The Budget was about fairness. We inherited from the previous Government a situation in which one child in three grew up in poverty—this Government are determined to tackle that. We targeted support where it was most needed—on families. From next April, child benefit for the oldest child will increase by £2.50 a week, with an equivalent increase for poorer families through the family premium of income support and jobseeker's allowance—that is the largest ever increase. The new child care tax credit will pay 70 per cent. of the costs of child care—up to £100 a week for one child, and £150 a week for two or more children. To help fund the package to support children, we have reduced the married couple's allowance from 15 per cent. to 10 per cent. from April 1999.

Fairness also means ensuring that people pay their proper share of tax. The Bill contains a number of anti-avoidance measures to close loopholes and to prevent abuse of the system. That is why we ensured that the foreign earnings deduction loophole was closed.

The Government will continue to ensure fairness in the rates at which people pay their tax and that people pay what they are required to pay.

The Bill reforms inheritance tax to tighten up the rules on public access to inheritance tax-exempt assets. It is right in principle that exempt assets that are supposed to be open to the public are open to the public—that makes the system fairer.

We are encouraging savings as an essential part of our strategy. The Bill introduces the new individual savings accounts, which make it easier for people to save. Extending the savings habit to more people is absolutely essential.

The Bill reinforces our commitment to economic stability and to the promotion of enterprise. It shows our determination to modernise the tax and benefits system to make work pay. It is another step in delivering what we promised less than a year ago—long-term stability, with opportunity for the many, not only the few. The Bill is another milestone in the Labour Government's progress to those objectives, and I commend it to the House.

5.7 pm

Mr. Heathcoat-Amory

The Finance Bill—all two volumes and 400 pages of it—is one long exercise in tax raising, and Conservative Members make no apologies for having voted against its tax-raising measures.

Mr. Andrew Love (Edmonton)

The right hon. Gentleman talks about tax-raising measures, but would not the amendments that the Opposition tabled in Committee have imposed another £6 billion to £7 billion in taxes?

Mr. Heathcoat-Amory

The hon. Gentleman cannot even understand his party's Bill. Although he was on the Standing Committee, he cannot have been alert—we voted and argued against the Labour Government's tax increases, which have already done so much damage to the economy. If he cannot understand the difference between taxation and expenditure, he should not have been on the Standing Committee.

Last year, the Government targeted savings in their tax measures, and we are already seeing the damage that that caused. In this Finance Bill, they have targeted businesses. All businesses, which we try to represent, will suffer from an increase in corporation tax and from other measures—such as the increases in stamp duty and in road vehicle duties—that will damage the competitiveness of British industry in the wider world and hit the employment market in the United Kingdom.

We have already had an economically illiterate intervention from the hon. Member for Broxtowe (Dr. Palmer), who clearly cannot understand the difference between a nominal tax rate and the actual tax paid by businesses. If he does not believe me, perhaps he should read the Red Book, where the extra £2 billion from corporation tax advance payments is clearly set out.

Dr. Palmer

The shadow Chancellor, on one of his rare visits to the Chamber, said that the rates—not the total impact—of corporation tax and income tax were narrowing between Britain and other countries. That is the point that I was questioning.

Mr. Heathcoat-Amory

The hon. Gentleman is wrong to say that my right hon. Friend is a rare visitor to the Chamber, but he will have noticed that the Chancellor makes no visits here at all, preferring to address the European Parliament rather than to defend his policies here. He prefers addressing media conferences organised by Mr. Rupert Murdoch to dealing here with the fiasco that his economic policies have created. In our term of office, we cut the rate of corporation tax from 52 per cent. to 33 per cent., and the Government are now raising the effective rate by £2 billion a year, as is clearly shown on page 18, line 8 of the Red Book, which I commend to the hon. Gentleman.

As only one example of their mean-minded measures and regressive taxation, the Government have ended the arrangement whereby those working overseas do not have to pay United Kingdom tax if they are abroad for 365 days. That will hit, not the tax avoiders and big earners, but the ordinary workers—nurses, engineers, aid workers—who cannot time their absences so that they can become non-UK tax residents. [Interruption.] The Government should be ashamed of that regressive measure.

The Financial Secretary talked about child care measures, but they are not even in the Bill. The Bill will enact all the tax-raising measures, and we are still awaiting any of the benefits that are meant to flow from them.

The new capital gains tax system is a fiasco, and I predict that we will need a rewrite. The system is far too complicated, and probably unworkable, and it is already backfiring on the Government. In a mean-minded way, the Government have withdrawn the retirement relief that benefited small businesses and replaced it with a tapering system that will give each Goldman Sachs partner an extra £16 million. Those are new Labour's priorities.

We extracted one or two small concessions from the Government. Because of the opposition and arguments of Conservative Members, they climbed down on dividend tax credits for non-taxpayers; there is to be a gaming duty revision; and they signalled that they would in due course accept our proposals for the reform of stamp duty and of the corporation tax payments for businesses affected by seasonal variation.

Labour Members were entirely silent in Committee and virtually silent on Report. As always, it is the Conservative party that defends the rights of taxpayers and businesses. The concessions may have been minor, but they were significant.

The Budget confirmed all the broken pre-election promises of a Labour Government, and the electorate will not forget that. I invite my right hon. and hon. Friends to vote against Third Reading.

5.13 pm

Mr. Malcolm Bruce

There are some inherent unfairnesses in the Bill that the Government have not addressed. I give them credit for the fact that, on matters such as individual savings accounts and the tax credit for non-taxpayers, they have recognised the force of the arguments: they have changed the rules on ISAs and intend to amend the tax credit provisions as soon as they can find the right formula.

That is welcome, but the fact remains that the Bill contains provisions that grow out of an unbalanced economic policy. It was interesting to see that Labour Members simply did not believe that changes to the foreign earnings rules would hit people such as overseas aid workers. They will hit people from my constituency such as overseas construction workers and those in the oil and gas industry.

It may be arguable that the package should involve a payment of taxation but, as we all know, many such people are on two or three-year contracts that were entered into on the clear understanding that the relief was part of the deal. This is effectively retrospective taxation on those people, and the Government should have taken some account of that.

Sir Robert Smith

Will my hon. Friend give way?

Mr. Bruce

No, I have only a short time.

The Government failed to recognise that they have completely distorted the capital gains tax regime. Abolishing the 100 per cent. retirement relief will clearly hit hard the small business people, farmers and others for whom the business is effectively their pension. They will be clobbered by an increased tax rate while very high earners will get a massive tax bonanza. The tabloid headlines may be about the Rolling Stones, but they will be completely unaffected. They will make their own arrangements, thank you very much, but other people will not be able to do that.

Mr. Fallon

Those points were made in Committee.

Mr. Bruce

Those points were indeed ably made in Committee by Opposition Members, but it is important to summarise on Third Reading why we take the view that the Bill is flawed and unbalanced.

The fundamental problem with the Bill is that it is based on an economic policy that is not delivering the Government's stated objectives. We do not have a stable exchange rate, or if we do, it is stable at a very high rate. We have rising interest rates and inflation, and it looks as though unemployment may be on the turn.

The Bill imposes taxation on the hard-pressed business sector that should have been imposed on the consumer sector to take the heat out of the economy and deliver results on inflation.

For all those reasons we, too, will vote against Third Reading.

5.17 pm

Mr. Derek Twigg

For several weeks, we have had to listen to a lot of nonsense from Opposition Members, usually in the guise of insults to individuals about what we were doing or not doing in Committee, to cover their own inadequacies and incompetence in tackling the Bill.

I was on the previous Finance Bill Committee, and the performance of the Opposition was even worse this time, although, to be fair, there were one or two exceptions. The Opposition failed miserably to dent the Bill or the Government or to perform their task of opposition. For those who had to sit through the Committee, it was like Chinese torture, believe me.

The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) played a significant role in Committee. We had a detailed debate about how the Bill would damage those who own pushing machines in the arcades of Littlehampton and Bognor. I did not know what pushing machines were, as pushers usually have a different connotation where I come from. I am not sure whether the machines should pay at a 2p or a 10p rate.

The hon. Member for Bognor Regis and Littlehampton also made an interesting contribution concerning tax relief on private health insurance. He tried to tell us, at about 2 o'clock one morning, that we should prevent people from using hospitals in Littlehampton or Bognor because they ought to take out insurance. He said that all the tourists who go to the area should carry health insurance and not bother using the hospitals. There seems to be a moratorium on visitors to his constituency using hospitals, which seems rather a good way of attracting people in.

We heard an interesting speech from the hon. Member for Guildford (Mr. St. Aubyn), who told us that the average person in his constituency often went to local auctions with a £10,000 table or painting—

Mr. Leslie

Or a carriage clock.

Mr. Twigg

Yes, carriage clocks were also mentioned. That is normal behaviour for the hon. Gentleman's constituents. When we were discussing historic houses, the hon. Gentleman said that he opened his house every weekend to visitors, and that he thought that every other Member should do the same.

Mr. Nick St. Aubyn (Guildford)

It is clear that, although he spent so much time in the Committee, the hon. Gentleman heard hardly a word of what was said to him.

Mr. Twigg

If that is all that the hon. Gentleman wishes to say, I will continue my speech.

Points have been made about foreign earnings. The Opposition were concerned about the Rolling Stones. Indeed, a point of order was raised at the beginning of one of our debates about the damage that the Bill could do to them. They have shown no loyalty to the country, have they? But that is what we have heard from the Opposition.

Sir Robert Smith

The Rolling Stones are a classic example of the fact that the tax man does not hit the high payers. He hits people like my constituents, whose employment as contractors for the oil industry takes them all over the world. They have little other option, if they want to continue to support their families. The tax is applied unfairly to them.

Mr. Twigg

The hon. Gentleman should talk to Conservative Members. I was a member of the Standing Committee, and I remember the reference to the Rolling Stones.

It was often said that we were sitting on our hands and were not speaking, but it was the Opposition's role to speak against the Bill. It was for us to support it. Opposition Members have forgotten what their role is: they are not yet used to being in opposition. What Opposition Front Benchers said in response to questions was usually couched in the form of some insult. It was suggested that some measures did not need to be debated on the Floor of the House. During the passage of the previous Finance Bill, the right hon. Member for Wells (Mr. Heathcoat-Amory) was involved in delegating a fair amount of legislation outside the Chamber. It seems that it was all right for the Conservative party to deal with legislation in that way, but it is not all right for us to do so. The right hon. Gentleman tried to twist the argument. In fact, the Opposition's performance was pretty lamentable. It is difficult to think of any Opposition arguments that made any sense.

This is a tremendous Budget, which has been widely welcomed. The Chancellor has done an excellent job. As we learned from a fax that was sent to a Labour Member by mistake, the new shadow Chancellor had to speak to a Back Bencher to learn about economic policy before he was able to make a speech. How many shadow Chancellors have the Opposition got through so far? I wonder how long the shadow Financial Secretary will be in place. Perhaps he will be the next to move on, or perhaps it will be one of the other Front-Bench spokesmen.

We are not sure who decides the Opposition's economic policy. We do not know whether the Euro-sceptics agree with the Europhiles. Economic policy seems to be all over the place. But this Budget, and this Finance Bill, set the scene for a shift of resources from the better off to the least well off. There have been many other important developments. As was announced yesterday, a massive amount has been injected into the national health service to cut waiting lists, and money has also been provided to reduce class sizes. Lower taxes are being imposed on businesses: the Government are backing small firms to create jobs. Unlike the Opposition, we have thought in terms of long-term stability and investment, rather than boom-and-bust economics. Their approach to past Budgets has been characterised by short-termism. Having been through two recessions—and Black Wednesday—Opposition Members should not lecture us on economic competence. They made an appalling mess of the economy when they were in government, displaying their incompetence in a range of ways. We are having to pick up the pieces and clear up the mess that they made, which is shameful.

As was said earlier, many aspects of the Budget have not yet been mentioned, although they mean a good deal to ordinary people such as my constituents in Halton. They suffered massively from unemployment and poverty as a result of the last Government's policies. There are tax cuts for all employees who pay national insurance contributions; child benefit has been increased by £2.50 a week—£130 a year—which is the largest increase ever; and the Government have provided working families tax credit, child care tax credit and a cut in the business tax rate. The tax cuts for employees who pay national insurance contributions will give them more than £65 a year, and families with children will gain more than £250 a year.

A question was asked about families at Prime Minister's Question Time today: what has the Conservative party ever done for families? Nothing at all. This Budget does much more for them. The poorest 20 per cent. of families with children will gain an average of £500 a year. A family with a full-time worker will now be guaranteed take-home pay of £180 a week, and a couple with two children and an income below £17,000 a year will receive 70 per cent. of the maximum entitlement to child care costs. This Government care about families and will do something for them, unlike the Conservative party. Families earning up to £30,000 a year will benefit from child care tax credits. That is superb.

Mr. Ian Bruce (South Dorset)

On a point of order, Mr. Deputy Speaker. I am not an expert on the Bill, but even I know—and the Financial Secretary confirmed it to me—that none of these measures is included in it. Is it in order for the hon. Gentleman to mention them on Third Reading?

Mr. Deputy Speaker

It is normal to have a reasonably wide debate on the Finance Bill.

Mr. Twigg

Thank you, Mr. Deputy Speaker. Yesterday, you were generous to the right hon. Member for Wells, who, when we were discussing the narrow and specific issue of the retail industry, raised wide-ranging issues of economic policy. I accept your ruling entirely. The Conservatives are now complaining about us. The problem is that they do not like to hear what I am saying: it upsets them, because they realise that they have done nothing, that they are in disarray and that their economic policy is in a mess. They do not like hearing the good news that we have given the people of this country. I am surprised by the Opposition's reaction. It is typical of their reaction to the Finance Bill. I am sure you are glad that you did not have to sit through all the debates, Mr. Deputy Speaker; unfortunately, others did.

What upsets the Conservatives is that they could not cut corporation tax to the level that we achieved. In Committee, they came up with some spurious excuse for the fact that it had taken them 18 years to get the tax down to the level that they managed; but the point is that they did not reduce it to our level. They missed the opportunity, which is their problem.

The guaranteed income provided by working families tax credit is particularly important. It should be put in the proper economic context. [Interruption.]

Mr. Deputy Speaker

Order. I keep hearing hon. Members saying that the hon. Member for Halton (Mr. Twigg) is out of order. No one knows better than I do when someone is out of order, and the hon. Gentleman is not out of order.

Mr. Twigg

Opposition Members think that Labour Members are programmed to say certain things. It may surprise them that an awful lot of us actually agree with what the Government are doing. When I stood for Parliament on the basis of our manifesto, I supported that manifesto—unlike some who asked for help from various business men who are anti-Europe. We will not go into that, however. We are not sure what the Opposition support. Their economic policy is all over the place. Their spokespersons on education and on health say that not enough money is spent and there should be expenditure increases. Their Treasury spokesmen say that we should reduce expenditure, but they have produced initiatives that would cost £6 billion or £7 billion. They cannot say where the money would come from for that, which merely shows the economic incompetence that they displayed over 18 years. [Interruption.]

Perhaps national insurance reform is near enough the Finance Bill for Opposition Members. The burden is being reduced on employers in respect of most workers, who earn up to £440 a week. That is encouraging job creation. The Tories never encouraged job creation; they used to decimate employment. The current structure of national insurance contributions means that they bear particularly heavily on the low-paid, and we are trying to help them. Our policy is about getting people into work and making sure that they stay in it. [Interruption.] The Conservatives are not interested in the low-paid; poverty reached record levels when they were in power. Currently, £1 extra in weekly earnings can attract £1.28 in employee contributions. An extra 1p paid to a worker can add £6.30 to contributions. The system acts as a disincentive to both employers and employees.

Welfare to work is crucial to the Finance Bill. The Conservatives opposed the windfall tax on the utilities, but at the weekend we heard that Yorkshire Water would be paying its directors massive amounts of money. The Conservatives said that the windfall tax would cripple utilities, but they can still afford appalling massive pay increases for their directors.

Mr. Denis MacShane (Rotherham)

As he is a customer of Yorkshire Water, is the hon. Gentleman aware that the company has increased bills by 8 per cent. for those who do not have meters, which is well above inflation?

Mr. Deputy Speaker

Order. The hon. Gentleman is certainly going wide of the Third Reading debate.

Mr. Twigg

My hon. Friend makes an important point about the whole economic system, how the utilities operate within it and the mess left by the Tories. Some of the Tories' chickens are coming home to roost, and we will have to deal with them. We have to pick up the mess. They expect us to do that in a year, but it took them 18 years, two recessions and Black Wednesday to make the mess. I do not want to repeat all that, but the Tories seem to forget it.

In Halton, where the unemployment rates for the young and the long-term unemployed are high—the demise of the chemical industry means that middle-aged men have problems finding jobs—the new deal for both the young and the over-25s will be very important. I have been to several meetings on the new deal for lone parents, and I have been told that the biggest disincentive to work for lone parents is child care. That message has come over clearly every time I have talked to a range of lone parents. Without exception, lone parents welcome the Government's initiative and the extra resources that we are providing.

Important points can be made about the new deal. We are giving help to employers, and introducing special measures for people over 50 and for partners of new dealers. All that is crucial to improving our economic development and economic growth.

Child benefits are another crucial part of our economic strategy. [Interruption.] They are about helping families. Children will gain an average £250 a year from the Budget. In 20 per cent. of the poorest households, children will gain an average £500 a year. Child benefits increases and equivalent increases in income support and other benefits will help all families with children who do not already receive a high rate of benefit. Poverty affects large families worst. [Interruption.]

Mr. Deputy Speaker

Order. Hon. Members, who remain seated, keep saying that the matters raised are not in the Budget. Perhaps I should refer them to "Erskine May" so that they may be clear on what is happening. "Erskine May" says that on Third Reading of the Finance Bill some degree of latitude is frequently permitted", although that is not allowed on Third Reading of other Bills.

Mr. Twigg

Your ruling and advice are, as usual, excellent and on the ball, Mr. Deputy Speaker. You rightly rebuked me yesterday, and you have made the point clear to the Opposition. They do not like to hear good news coming from Labour. They want to go on living in their own little world, away from reality. They are worried about their seats; in that case, they should support us.

Child benefit is important to millions of families in the United Kingdom. The Conservatives are saying that those families are not interested in having another £2.50. [Interruption.] That is what they seem to be saying; they do not want to hear the news of a welcome and popular measure. After the Chancellor made his Budget statement, my local newspaper, the Widnes and Runcorn Weekly News, an influential newspaper read by many people in my constituency, did a vox pop interview with several of my constituents. The only person who did not welcome the Budget was someone who was not from the constituency and who was just passing through. My constituents welcomed in particular our child benefit measures. On petrol duty, they understood what the Government were trying to do about improving the environment. The Budget was welcomed by almost all those interviewed in the street on that day. Those were cold interviews. I did not set them up. I was not even there. Ordinary people stopped in the street welcomed the Chancellor's excellent Budget.

Sometimes, I wonder whether the Conservatives ever talk to their constituents. They tell me that they have had hundreds of letters about measures in the Budget. That may be so, but I must tell them that I had precisely two letters on the Finance Bill. The Conservatives told us that we would be inundated, and claimed that we were sitting on letters and hiding them away. In the real world, that was not so. The hon. Member for Bognor Regis and Littlehampton seemed to be the Member for the whole of Great Britain when he began to read letters from as far away as Yorkshire, Bristol and the south-east.

Mr. Jim Murphy (Eastwood)

Dundee.

Mr. Twigg

I am not sure that he went as far as Scotland.

Mr. Ross Cranston (Dudley, North)

Dudley.

Mr. Twigg

Dudley was mentioned. My hon. Friend figured large in the Standing Committee, where he made some excellent points.

To hear the Opposition, one would think that the people were rising from the streets in revolution, and banging on the gates of Parliament to tell us how disgraceful the Finance Bill was. I seem to have missed that.

Mr. Deputy Speaker

Order. I have been able to help the hon. Gentleman on a number of occasions during his speech, but the Opposition's behaviour has nothing to do with the Third Reading of the Finance Bill.

Mr. Twigg

I appreciate that advice, Mr, Deputy Speaker. I merely wanted to make it clear that our debates in Committee may have given a false idea of the real state of public opinion.

The Budget is about economic stability, low taxes on work, help with child care, lower taxes on business and more money for health and education. It is a people's Budget, which will help to ensure that our country is prosperous, and that our economy is based on sustainable investment which will allow it to grow.

5.38 pm

Mr. Salmond

The hon. Member for Halton (Mr. Twigg) should know that complaining about politicians talking to anti-European business people might be interpreted as a grave sign of disloyalty to the Chancellor. In the environment created by new Labour, he should be careful about the allegations that he makes.

I was moved to speak by what I can only describe as the triviality of the Financial Secretary's response to serious questions on the economy. When she was a Labour Back Bencher, she used to ask the then Administration, and her Front-Bench colleagues, serious questions about the direction of our economic policy. To respond to questions about the Finance Bill on its Third Reading—which are basically about whether, as amended, it is capable of dealing with our economic circumstances—by engaging in a yah-boo discussion on whether the Liberal Democrat spokesman was present at a meeting of the Committee or who said what to whom in Committee is inadequate.

This afternoon, there was a private notice question on the extent of redundancies in the Borders in Scotland. The question mirrored announcements the length and breadth of the country as the industrial economy bleeds as a result of the exchange rate and the Government's total reliance on monetary policy as a means of demand management. The hon. Member for Halton seemed to think that there was a huge contrast between this Budget and economic policy over the past 20 years. I have been in the House long enough to have seen two previous occasions when the Government relied solely on monetary policy as the means of economic management. The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) described a Tory Chancellor as a one-club golfer. We are in the same circumstances with the same reliance on the same policy instruments, and it will have the same result for the industrial economy.

The Government's mantra is that this will bring about economic stability. I suppose that an industrial desert could be described as stability, but is there no recognition among Labour Members of the importance of manufacturing, of the competitive position and of the seriousness of the announcements that are made daily about job after job in every area and sector of the economy? [Interruption.] If the hon. Member for Eastwood (Mr. Murphy) is so incapable of defending the Government's economic policy that he has to engage in economics of the actualité with youngsters on the "Trial By Night" programme, he should think carefully before appearing in debates in the House.

The bleeding of the industrial economy, the competitive position of United Kingdom manufacturing, the inability to use any policy instrument beyond monetary policy to control the economy, and the impact that that has in constituencies the length and breadth of the country are serious matters.

Mr. Burnett

The hon. Gentleman raises an important point. Does he agree that, if taxes had been imposed on consumption a year or so ago, we would not have the problems that he is adumbrating to the House? I, too, have had a factory closure in my constituency. At lunchtime today, 49 jobs were lost at Inch's cider factory in Winkleigh.

Mr. Salmond

In the imbalance between taxes on consumption and between taxes on investment lies one of the key weaknesses in the Finance Bill. That imbalance, as well as the uncertainty over the Government's exchange rate policy and their approach to the single currency, contributes to the high level of sterling and the inability of key sectors of our economy to deal with the consequences of the exchange rate position.

The previous Conservative Government used to argue that the jobs that were being lost, the sectors that were disappearing and the companies that were being downsized were the weaker sections of the economy and that the UK economy would be leaner and fitter after the process was complete. It was the same as arguing that we could improve the average health of the population by getting rid of everyone who could not run a four-minute mile. That would certainly improve average health, but the resultant population would be small. The argument is now repeated by Labour Members, who say that the diminution of the industrial economy will result in a leaner, fitter, more competitive manufacturing sector. However, the key economies, which have grown their manufacturing base, have not taken the attitude that they can dispose of entire industries and companies; they have used critical growth path to build up their competitive position to compete on world markets.

The central charge against the Finance Bill and the Financial Secretary is that they are incapable of addressing the different positions of key sectors of the economy: the consumption and service sector side and the manufacturing and export sector side. Is there any measure in the Bill that accepts that there is a manufacturing recession while the consumer part of the economy is still moving ahead? What are the Government going to do about it?

There is also the charge that the Government, like their Conservative predecessors, are unable to lift their vision beyond the south of England economy and consider how the regional economies in England and the Scottish, Welsh and Northern Irish economies are performing. It is ludicrous to argue that Scotland needs to restrain demand because of inflationary pressures in the Scottish economy. Where are the inflationary pressures that the interest rate medicine in Scotland is designed to combat? As a modest start, it would help if the Monetary Policy Committee of the Bank of England included in its membership some people with direct experience of the sectors and regions of England and the nations of Scotland and Wales, to give some awareness that there is an economy that is suffering beyond Potters Bar.

Mr. Douglas Alexander (Paisley, South)

Will the hon. Gentleman give way?

Mr. Salmond

I shall not give way, and I shall tell the hon. Gentleman exactly why. There is more than a suspicion among Opposition Members that Labour Members are anxious not to move on to the next debate on student loans. I make no comment about House of Commons tactics, because I have used them myself, but the hon. Gentleman will forgive me if I do not assist him in delaying an embarrassing debate on student finance which many Labour Members do not want. [Interruption.]

Mr. Deputy Speaker

Order. The hon. Gentleman should be allowed to make his contribution without interruption.

Mr. Salmond

The serious points raised have been totally unanswered by the Government. They are blind to the economic circumstances faced in the Renfrew-Paisley economy and in many other areas across Scotland. There is no recognition that there is a serious economic problem which mimics the economic disasters provoked by the Conservative Government over the past 20 years.

Mr. Alexander

rose—

Mr. Salmond

This may be the new Labour party, but, for the manufacturing economy, it is the same old policy measures and the same old results: redundancies, downsizing and the diminution of the manufacturing base.

5.46 pm

Mr. Leslie

I am grateful for the opportunity to speak on Third Reading. It is a pity that I have to say this, but it is a shame that the hon. Member for Banff and Buchan (Mr. Salmond), in his criticisms of Government policy and in seeking to bait the Government, was afraid to listen to the voice of the Government and to give way.

Mr. Alexander

Will my hon. Friend give way?

Mr. Leslie

I happily give way to my hon. Friend.

Mr. Alexander

Does my hon. Friend agree that the reason why the hon. Member for Banff and Buchan (Mr. Salmond) was frightened to give way might have been that, although he talked much about the service sector in Scotland, he did not mention the Scottish National party researcher who has recently recommended a boycott of a service sector company in the Edinburgh financial community?

Mr. Leslie

That is illuminating. Perhaps we will hear more about the SNP. As a Yorkshire Member, I would not wish to tread on the toes of the hon. Member for Banff and Buchan, especially when he is not listening. The House looks forward to a contribution from my hon. Friend later.

The Finance Bill is a strong step forward on public sector finances and the economy. It ensures that provision is made for public services, that resources will be available to ensure they are of a standard befitting the 21st century, and that we can move forward into a climate in which Government and state services are high quality, accessible to many people, and provided at the most efficient and effective rate, giving good value to taxpayers.

Mr. Derek Twigg

I was taken by my hon. Friend's excellent comments on the public service ethic and his support for public service. In addition to this excellent Budget, does not the Chancellor's recent fiscal statement add extra strength and put down a marker to show how committed the Labour party is to public services?

Mr. Leslie

My hon. Friend is correct. I shall deal with "the code for fiscal stability" later in my remarks. It is important for us to set in context the fiscal situation that the country now faces. I am pleased to see that the nation's finances are now getting into a healthy state.

We are all familiar with the ridiculous profligacy of the previous Conservative Administration who, year after year, consumed taxpayers' resources. The leviathan of state swallowed up money in welfare budgets and social security payments unnecessarily, when we should have been using taxpayers' money to invest in infrastructure and job creation mechanisms to get people off benefit and into work. That would have reduced consumption of public sector resources, and enabled us to move on to other more productive public services.

Mr. Alexander

Can my hon. Friend give the House any explanation of why the previous Government were able to waste such huge levels of resources rather than investing in success?

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I hope that the hon. Gentleman will not respond to his hon. Friend's invitation, which would take us well beyond the scope of this Third Reading debate.

Mr. Leslie

I am grateful, Mr. Deputy Speaker. I do not wish to stray from the matters before the House today.

It is important that, when we look at the context of the provisions in the many clauses of the Bill and the revenue effect that they have on the Exchequer, we should consider why it is necessary for the Government to start to change the direction of this great oil tanker of state and move away from the old consuming tactics of the previous Administration. Each unemployed person cost £9,000 in benefit and revenue lost to the Exchequer. If we can reduce the number of people unemployed and claiming benefit, and simultaneously reduce social security budgets, we can use the money for more productive elements, such as education and the health service. We can then make provision for better services over the long term.

The fiscal state of the nation is becoming very healthy, thanks to measures in the Budget and the prudent and careful measures drafted and proposed by my right hon. Friend the Chancellor. I am especially glad that provisions in the Budget help to shift from consumption to investment and, more important, to capital infrastructure investment. For example, I should like to see some of the capital infrastructure moneys raised spent on an important scheme in my constituency. The Bingley relief road is an excellent scheme, and it would be very helpful. The new priority of shifting from consumption to investment will, I hope, one of these days mean that resources come the way of my constituency to improve the economy in that way.

We are making sure that we use the nation's finances for capital purposes as a priority. That is what is called the golden rule of borrowing. We do not borrow to consume, but use the nation's resources to invest in more productive things—obtaining assets for the nation and making sure that items of infrastructure can be used for industry and create economic prosperity in the longer term. That is the right course of action. My right hon. Friend the Chancellor has set the ship of state on the right course, and I am pleased to support him.

The Budget and the Finance Bill contain many measures that modernise the tax and benefits system and begin to make work pay. I am pleased to see a number of fiscal policy measures put in place that give people the incentive and motivation to work and eliminate the poverty trap. It no longer makes sense for people to sit at home and claim benefit when there are opportunities for them to work and contribute to society. The Finance Bill plays a strong part in making those proposals a reality.

The Bill also helps to set the framework for economic stability throughout the country, ending the boom and bust years of Conservative administration. It is interesting to note the robust opposition to the Finance Bill put up this afternoon by the Conservatives. They seem to have given way and caved in so soon in the Third Reading debate. It is important to emphasise that boom and bust was not sustainable. It was the wrong policy for the Conservative Government to pursue. It is right for my right hon. Friend the Chancellor to put in place measures to plan for the longer term. We no longer have an economy based on short-term greed and profiteering, which can sometimes arise in companies that do not always take the longer-term interests of the country into account.

When we discussed monetary policy and inflation earlier, we heard about the difficult impact that boardroom excesses of companies such as Yorkshire Water would have on inflation. The company paid a 30 per cent. increase to its directors and a 69 per cent. increase to Kevin Bond, the chief executive. That was an outrageous example to set the nation. I hope that Yorkshire Water will reconsider that payment, given the outrage across all walks of life and the boardrooms of this country. Boardrooms have to recognise that they have a responsibility to play their part in prudent economic policy and control of inflation.

Mr. Derek Twigg

There are many tax changes in the Bill. They are designed to encourage people into work and give them an incentive to work. How does my hon. Friend think that that fits with the point that he has just made about pay? Pay is important in ensuring that the measures in the Bill work to regenerate the economy.

Mr. Leslie

My hon. Friend is right. The Tories sought to remove the Finance Bill from the wider context of the other policy measures that the Government are taking, but those policies are an important component, and a crucial piece of the jigsaw in the Government's overall strategy. By ensuring that work pays by means of, for example, the national minimum wage and other such policies, and that the tax system reflects that strategy, the Government are pursuing the right policy.

Many of the provisions in the Bill relate to the national debt and public sector borrowing. On Report, the Opposition tabled amendments about the definition of national debt. It is important that we examine the state of the country's finances now and in the past, and consider where we would like to take them. The Conservative party left the country with a national debt of hundreds of billions of pounds. That is costing the taxpayer, year on year, £25 billion in interest payments alone. That money could and should be used on vital public services that people like, and on investment.

Mr. Jim Murphy

Has my hon. Friend noticed that the hon. Member for Banff and Buchan (Mr. Salmond), the leader of the Scottish National party, who spoke directly before my hon. Friend, has chosen to leave the Chamber?

Mr. Deputy Speaker

Order. I am having some difficulty understanding how that relates to the narrow discussion of the Third Reading of the Finance Bill.

Mr. Murphy

My hon. Friend and my hon. Friend the Member for Paisley, South (Mr. Alexander) said that they would allude directly to the comments of the hon. Member for Banff and Buchan. He refused to give way to my hon. Friend the Member for Paisley, South, and he has since left.

Mr. Deputy Speaker

Order. That is nothing to do with the content of the debate. If there is any matter that is out of order, I hope that the Chair will be equal to it.

Mr. Leslie

I am grateful for that guidance, Mr. Deputy Speaker. I hope later to deal with the points made by the absent Member for Banff and Buchan, and perhaps other hon. Members will do so.

I was talking about the national debt, and the £25 billion of interest charges that the taxpayers have to raise year on year just to stand still. That is a great weight and burden hanging around the neck of the public. That £25 billion could have been put to good use if the Conservative Government had not run up such debt by borrowing to finance their policies. They should have followed the policies that are in the Bill, and ought to have abided by a code for fiscal stability by which borrowing is used only to finance investment. From now on, the nation must practise good housekeeping: we must not borrow unnecessarily.

The Bill contains interesting clauses on income tax. I was a member of the Committee that examined the Bill and sat through many hours of Conservative comments and speeches. However, the Opposition did not table many amendments. Conspicuous by its absence was any mention by Conservatives that Labour has kept its promises on income tax, and has not increased the basic rate or the top rate. When people talk about Labour breaking its promises, we must remind them that that is nonsense. Many years ago, Conservatives raised the spectre of a Labour tax bombshell, but people can see from the Bill that a Labour Government can be trusted with the nation's finances. The Government have delivered on the crucial income tax component of Labour's manifesto.

I am glad to say that the Bill provides for a scheme that will greatly benefit the poorest countries in the third world. The scheme is called millennium gift aid. According to the Library, many hundreds of millions of extra aid will be channelled to the third world. In co-operation with the Organisation for Economic Co-operation and Development, and, I think, the United Nations, a list of those countries has been prepared. We must make sure that we use not only monetary donations but donations in kind by the public and businesses to help those who are less fortunate than ourselves.

Mr. MacShane

In that context, does my hon. Friend agree that the country felt proud of a Chancellor who took the lead on the international financial stage? Does he also agree that that is in complete contrast to the mean and continuing cuts in overseas aid by the Conservative Government? The Chancellor's song resonated around the world, and at long last Britain could be proud.

Mr. Leslie

My hon. Friend is right: it was refreshing to read the Chancellor's comments in the Mauritius mandate. Through the millennium gift aid strategy and by other means, he took great steps to reduce the debt burden in third-world countries. I was pleased to note the Chancellor's generosity in the Bill. When we have the opportunity, we should shout about such achievements.

The Bill contains provisions for savings and investment. The Government are implementing strong policies to encourage saving and to make sure that we continue to provide generous tax relief to TESSAs and PEPs. That will be continued in a broader savings vehicle, the individual savings account, which will contain a wider variety of products.

Mr. Love

Does my hon. Friend agree that it was outrageous that, before Labour came to power, more than half our people had no savings, and that the previous Government did nothing to change that?

Mr. Leslie

That important point needs to be underlined. Encouragement for people to make pension provision has been lamentable. The Conservatives did nothing about that, and the spectre of unfunded pension liability grew year by year. They made no provision for people who had not been encouraged to save.

Thankfully, the Government's policies go a long way towards making savings more accessible, through a wider range of vehicles, and also more understandable. For example, there are welcome plans to make ISAs available in supermarkets and at other public interfaces. Ordinary people, not just those who can understand the fine print of TESSAs and PEPs, unit trusts and open-ended investment companies, will be able to save. It is a pity that there are not more OEICs.

Mr. Derek Twigg

My hon. Friend deals with an important part of the Bill. We have been accused of making U-turns. Does he agree that we engaged in extensive consultation on savings and listened to people, and that the Opposition criticised us for doing so?

Mr. Leslie

That is correct—you're damned if you do and damned if you don't. Many people are cynical about politics, and that arises from the fact that 18 years of so-called consultations were completely hollow. The previous Government made up their mind before they consulted. They went through the motions and engaged in a mechanistic process every other day. It is refreshing that this Government listen to responses, reflect on them and incorporate them in their policies. The principles of ISAs have been carried through, and the detail reflects the views of those who responded to consultation. The Bill goes a long way towards making ISAs a reality.

There has been discussion of inheritance tax and historic buildings. In Committee, Conservative Members sought in their old traditional way to defend the rights and privileges of the wealthy elite. They tabled amendments to preserve a loophole in the law that gave such people unnecessary benefits and denied the wider public access to objets d'art.

The hon. Member for Guildford (Mr. St. Aubyn), who is not in his place, spoke about his contribution to the nation's history. He asked hon. Members to consider what a great philanthropic soul he was. He said that he opened his house, and that letting people "traipse" through the drawing room showed that "one was egalitarian".

Mr. Deputy Speaker

Order. The hon. Gentleman is drifting.

Mr. Leslie

I may be drifting, but the point I was seeking to make was the lack of reality forthcoming from the Opposition during the debate on the Bill in Standing Committee.

Sir Robert Smith

While the hon. Gentleman is on that issue of the Bill, does he recognise that, while there might be concerns to tighten loopholes, any legislation must be careful not to be retrospective? If someone has entered into an agreement with the state to do something in return for a tax concession, to revisit it could be considered retrospective. The matter must be carefully considered, case by case and on its merits. We must ensure that abuses do not arise, but we must recognise that there are genuine individuals who have a contract with the state, which should not be abused.

Mr. Leslie

rose—

Dr. Palmer

Will my hon. Friend give way on that point?

Mr. Leslie

May I pursue the line of argument?

This is not a private business agreement. This is the Government making decisions in the best interests of the overall economy. It is perfectly within the remit of the public sector and the Government to look at the varied effects of taxation, making sure that the best, most efficient and most effective deal can be got for the taxpayer. Clearly, throughout the passage of the Bill, the Liberal Democrats, making pledge after pledge and spending commitment after spending commitment, never understood that they needed to raise some money to subsidise their giveaway bonanza.

Dr. Palmer

Does not my hon. Friend agree that the Opposition are stretching the concept of retrospective taxation when they talk in those terms, because, on that basis, one could say that any Member of Parliament should be able to object if the taxation rate on the salary that we had been led to expect were to be different after a year or two? Surely that would be unreasonable. Any financial arrangement that one may make with one's employer is on the understanding that external events, such as inflation under a Conservative Government, higher taxation under the Conservative Government or other events in government or outside, could affect it.

Mr. Deputy Speaker

Order. The hon. Gentleman is abusing the terms of the Third Reading debate, wide though they may be. As he has only just come into the Chamber, perhaps he should take the temperature first. Mr. Christopher Leslie.

Mr. Leslie

Thank you, Mr. Deputy Speaker. The comments of my hon. Friend the Member for Broxtowe (Dr. Palmer) speak for themselves, and strongly bat down the ridiculous comments of the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith).

Sir Robert Smith

Will the hon. Gentleman give way?

Mr. Leslie

Well, just this once.

Sir Robert Smith

The hon. Member for Broxtowe (Dr. Palmer) talked about events in the future, whereas I was talking about revisiting agreements that had already been entered into, where the state should tread carefully on the precedent that it sets on how it will behave in future. Agreements depend on both sides honouring them.

Mr. Leslie

rose—

Mr. Deputy Speaker

Order. Perhaps the hon. Gentleman will revisit the Bill.

Mr. Leslie

The Bill did indeed tread carefully, as the hon. Member for West Aberdeenshire and Kincardine suggests we should, in relation to this measure. It trod a steady course in ensuring that provisions were fair and equitable, in the spirit of the Government standing up for the many, not the few.

Mr. Love

I echo that sentiment. When the intervention took place, my hon. Friend was talking about conditional access agreements. Does he agree that those had fallen into disrepute, to such an extent that the signatories to the agreements did not need to make access available to the public? Therefore, any talk of retrospection is an argument against honourable change.

Mr. Leslie

Absolutely—an honourable change indeed. In fact, a Channel 4 programme, "The Mark Thomas Comedy Product", highlighted the abuse practised by some people exploiting this loophole in the law. The Bill has now tidied up the loophole. It is good to see yet again the Government responding to the concerns of a variety of people, including comedians.

I want to look at other clauses of the Bill, in particular other tax—

Mr. Barry Gardiner (Brent, North)

Before my hon. Friend moves on from that point, we had an important discussion during the Committee stage of the Bill, and I want to pick up the challenge that the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) has issued on retrospection. Clearly it is one thing for parties to a contract unilaterally to change that contract. It is another thing for the Government of the day to say that they will give certain reliefs to people who engage in certain behaviour, but it is, of course, always open to Government to say that that relief, or relief in that form, will no longer be available—

Mr. Deputy Speaker

Order. This is not an intervention on the speech by the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith). It is the hon. Member for Shipley (Mr. Leslie) who is speaking at present. That is far too long. Mr. Christopher Leslie.

Mr. Leslie

Thank you, Mr. Deputy Speaker. I think that the point made by my hon. Friend the Member for Brent, North (Mr. Gardiner) was enlightening and useful for me. I should be interested to hear his contribution later in the evening.

We have referred to the hon. Member for Guildford and his drawing rooms, and perhaps Fallon and his salons, but the clause that closes the loophole for heritage buildings, and other abuses on historic objets d'art throughout the country that enjoy tax relief, is an important measure that will be met with wide public acclaim—almost delight.

The foreign earnings deduction is one of the tax loopholes closed by the Bill. Throughout the Standing Committee, the Opposition made much play of the fact that somehow that is a great injustice. I cannot see how the deduction is fair for the good taxpayers of this country—the taxpayers who work day in, day out, paying their income tax and national insurance through pay-as-you-earn and other facilities. Why should they pay their taxes in full when so many people have the opportunity to exploit that deduction, by means of which they pay no tax in this country, and often no tax in the country where they work?

I cannot understand why the Opposition feel that this is a great rallying cry with which to go into the next election. We have a loophole whereby the super-rich have been exploiting the previous Government's wholly inadequate financial regulations by not paying any tax in this country. They remain residents, and are happy to call themselves British citizens, but they do not contribute to this country's public services. That is the important thing.

I do not mind paying my taxes. I can see the connection when I pay my tax, with the money going into the health service, schools, transport networks, and many other beneficial public services such as housing and social services. People need to recognise that it is not fair for those people to earn sometimes many millions of pounds yet pay no tax, so that the burden lies on the shoulders of the rest of us who live and work in this country.

Mr. Love

Does my hon. Friend agree that all the concern expressed by Opposition Members during discussion of this issue about charity workers and others whom they would consider to be badly paid employees working abroad, does not square well with the excess £80,000 limit? As that can be doubled over two tax years, people living in this country can earn more than £160,000 tax free.

Mr. Leslie

Indeed. I have made a point about the revenue that we can gain by closing the loophole—£300 million will be raised by closing that loophole alone. I ask hon. Members to reflect on the uses to which that sum might be put in their constituencies, and the public service benefit that could be gained by removing the exploitation made possible by that loophole.

Mr. Derek Twigg

My hon. Friend has so far made an excellent speech. The specific point that he was making was on the overseas foreign earnings deduction. Had the Opposition's amendments on the matter been passed without any explanation about where the revenue would be raised, would they not have created a black hole in the Finance Bill?

Mr. Leslie

That has been the central focus of my work on the Finance Bill. Although Opposition Members may have thought that Government Members were not speaking to the Bill as much as we should have done, I was taking very careful notes on every one of the amendments that they tabled, to determine the possible effect on the Exchequer's revenue if they got their way in the Bill. I shall deal with that point a little later in my speech.

Mr. Deputy Speaker

Order. I should tell the hon. Gentleman that he may discuss only what is in the Bill, not what might have been in it.

Mr. Leslie

I am very grateful for that guidance, Mr. Deputy Speaker, and shall ensure that I bear it very much in mind throughout my speech.

Mr. Jim Murphy

I have been listening with some interest to my hon. Friend. I wonder whether, in Committee, much consideration was given to some prominent individuals in the United Kingdom, such as Baron Vestey, who in one year paid only £10 on profits of £2.3 million? It is a very uncomfortable situation for a Baron in another place to be able to act in such a manner. May I encourage my hon. Friend to investigate—if not today, then in future consideration of financial regulations—that very issue?

Mr. Leslie

The issue is very important. Closing such loopholes and ending exploitation of tax regulations by the rich and their accountants—who manage to examine the small print in all financial regulations—has been a success of the Government's approach to the issue. It is a pity that the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) is not in the Chamber. My hon. Friend the Member for Croydon, Central (Mr. Davies) was very successful in comparing the accountancy profession with the bean-counting trade. Although I would never want to draw such a comparison, perhaps my hon. Friend will do so again later in this debate.

Although it is small, clause 116 demonstrates the Government's open-government attitude—which has itself ensured that, even in the hallowed halls of the Treasury and the Inland Revenue, Labour has been making provisions to fling open the doors, clear out the cobwebs and open up those institutions to the wider public, so that there can be better information about taxes and revenue.

Mr. Derek Twigg

It is the people's Treasury.

Mr. Leslie

Yes.

Clause 116 provides for people to claim tax relief from the Inland Revenue by telephone. Taxpayers across the country—including me—who are sometimes confused by their tax affairs, will now be able to pick up a telephone, speak to a friendly tax officer, explain their predicament, and, I hope, receive a very simple and common-sense solution. The facility will be available very shortly to most of the public.

A pilot study—which the Bill provides should begin in Scotland—of telephone claims will be conducted for the Inland Revenue.

Ms Helen Southworth (Warrington, South)

Does my hon. Friend agree that enabling claims to be made by telephone is one of the many measures that the Government are considering and starting to implement to reduce the burden on industry and business, and that reducing that burden is very important to industry and business? Does it not also once again demonstrate that the Government are not only listening but taking action?

Mr. Leslie

That is right. One thing that businesses in my constituency complain about most to me is the endless number of hours they have to spend writing letters and filling forms, simply to run their business. Although we heard much from the previous Government about deregulation and cutting bureaucracy and red tape, they never did much about it. In a small but significant way, this Government are showing in clause 116 how we can cut red tape, and that, instead of having to write a letter, it is possible to pick up a telephone, call the Inland Revenue and begin to make a claim.

One reason for locating the pilot study call centres in Scotland is that the Scots have a friendly, trustworthy accent. Across the country, focus groups and opinion polls on developing call centres have shown that the Yorkshire accent is also considered to be a very trustworthy, prudent and commendable one. I suggest to Ministers that, if they want to extend the pilot study to other areas, they should perhaps consider locating one call centre in Yorkshire—perhaps in my own constituency of Shipley, where we have many Inland Revenue employees and very large Inland Revenue offices. A centre would be more than welcome, and I am sure that it would be a very successful venture.

The Finance Bill contained many other measures—not all of which I seek to speak to, of course. However, the provisions on landfill tax have to be mentioned. The tax was introduced by the previous Government, yet it has required some of this Government's attention. Recently, under the ten-minute rule, I introduced the Drinks Container (Redemption) Bill, which would reduce landfill across the country. I hope that that Bill is successful. However, I am pleased to see that the Finance Bill makes provision to ensure that landfill is not an easy option.

I have several quarries in my constituency—such as Manywells—that have been used for landfill, and have caused great concern to local residents. Currently, a planning application to establish another quarry in my constituency—at Buck Park quarry, in Denholme—is pending. Residents in Denholme—where I recently attended a residents' meeting—are very concerned that the site will be approved for landfill, simply because, as a nation, we throw away too much refuse and do not recycle as much as possible.

We should be encouraging people—actually providing them with incentives—to recycle, while simultaneously moving waste management strategy from use of landfill sites towards a better solution. I am pleased that the Bill makes such positive provisions to deal with landfill.

Mr. Love

Does my hon. Friend agree that, for the environmental reasons he has outlined, there is increasing resistance among our rural communities—which are represented mainly by Opposition Members—to increased use of landfill? Does he also agree that the landfill tax is one signal that the Government can use to try to deal with the problem?

Mr. Leslie

My hon. Friend is quite right. However, not many Opposition Members represent rural communities; Labour Members represent most of them. We are the ones who will have to consider those issues.

I conclude by contrasting the strategy chosen by Ministers in piloting the Finance Bill through the House with the amendments tabled and proposals made by the Opposition, and with the effects that those amendments and proposals would have on the nation's finances if they were ever to be implemented in future Finance Bills. I hope that they do not, which is why we need to give the Bill a Third Reading.

The Conservative party tabled many amendments, which involved a total of £5.9 billion—

Mr. Deputy Speaker

Order. I have already told the hon. Gentleman what he can and cannot do, but he may just have forgotten.

Mr. Leslie

No, I had not forgotten, but I accept your guidance, Mr. Deputy Speaker.

I was trying to contrast the Government's strategy as outlined in the Bill, which is to secure this country's financial and fiscal base and to make sure that sufficient revenues are raised and that fiscal tightening—

Mr. Deputy Speaker

Order. Perhaps I can help the hon. Gentleman further. On Second Reading it is possible to talk about what is not in the Bill as well as what is in it; on Third Reading it is permissible to talk only about what is in the Bill.

Mr. Leslie

Indeed. What is in the Bill is the strategy to secure the fiscal situation, a strategy that would not have been adopted by the Conservatives or the Liberal Democrats. The Liberal Democrat party proposed amendments that would have cost £17.5 billion, and the Conservative party's proposals totalled £5.9 billion. Both parties left a black hole in their budgets. We do not know where they thought they were going to get the money from, and how they were going to pay for their commitments. I hope that my hon. Friends will tackle that important matter.

6.30 pm

Mr. Edward Davey (Kingston and Surbiton)

I am sure that members of the public sitting in the Gallery will be astonished by this debate, as they may not be used to the filibustering tactics sometimes in evidence in the House. The hon. Member for Shipley (Mr. Leslie) was clearly filibustering, although the occupant of the Chair did give some rulings about what is and what is not in order in a Third Reading debate. You, Mr. Deputy Speaker, have shown significant flexibility and tolerance to the hon. Members who have spoken so far.

I shall refer specifically to an issue that was not debated fully in Committee—partly, I understand, because of a misunderstanding between the Whips at a late hour. It could not be debated on Report, because the relevant amendment to which I would have liked to speak—amendment No. 43—could not be selected. It is a key issue that the Bill does not cover properly. It relates to the proposals on insurance premium tax.

The Bill contains some measures—

Mr. Deputy Speaker

Order. Amendment No. 43 was outside the scope of the Bill, which is why it was not selected. I have to tell the hon. Gentleman, just as I told the hon. Member for Shipley (Mr. Leslie), that he must now talk principally about what is in the Bill. There is some latitude, but that is where the focus must be.

Mr. Davey

Thank you, Mr. Deputy Speaker. That is why I want to raise the issue on Third Reading. The Bill tries to deal with what are called selective rates for insurance premium tax, but it does not do so properly. It is important that the House should recognise that, because the Bill's failings in this respect mean that the House should not give it a Third Reading.

The matter was brought to the attention of the House by the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) on 27 January. His points were not answered properly in that Adjournment debate, although he made them succinctly and they could have been dealt with more effectively.

For some time now, there has been disquiet about the effects of the higher rate of insurance premium tax introduced by the previous Government in the Finance Act 1997.

Mrs. Liddell

On a point of order, Mr. Deputy Speaker. The hon. Gentleman is speaking about insurance premium tax. This afternoon, an amendment relating to IPT, which had been tabled by his colleagues, appeared on the amendment paper, yet at no point did they seek to move or speak to it. Is it appropriate for the hon. Gentleman to debate the matter now when he did not do so then?

Mr. Deputy Speaker

That is not a point of order for the Chair. I have already given a ruling to the hon. Member for Kingston and Surbiton (Mr. Davey), and I shall be listening carefully to see that he sticks to it.

Mr. Davey

Thank you, Mr. Deputy Speaker.

The higher rate was introduced to tackle alleged avoidance of value added tax in the form of "value shifting" on a few goods and services relating to the travel, domestic appliance and motor vehicle industries. Many people feel that the case for this particular anti-avoidance legislation, which is referred to in the Bill, was never properly made, and that at the very least the previous Government were taking a sledgehammer to crack a nut. As the Financial Secretary herself asked on 6 February 1997: Why have the Government taken a broad-brush approach that is likely to catch innocent commercial interests?"—[Official Report, Standing Committee B, 6 February 1997; c. 177.] Whether or not there was avoidance in the form of value shifting that needed to be tackled, there is no doubt about the damaging effect of the selective higher rate of insurance premium tax introduced by the previous Government. By distorting competition between direct insurers and retail companies that also provide insurance, it has hit several sectors very badly, not only hurting commercial concerns but reducing good consumer protection practices. Indeed, the Government admitted as much in the Budget, but with respect to the travel industry alone.

In clause 144 the Government have chosen to level up the rate of insurance premium tax for all travel insurance, recognising the distortion to trade that the selective rate had caused. My contention is that the Government should have considered the other sectors affected by this selective tax—the domestic appliance and motor vehicle sectors—using the same rationale that convinced the Financial Secretary to review the impact on the travel industry, as she has done in clause 144. I believe that European Union law may soon force the Government to address the problem, whether they like it or not.

Dawn Primarolo

If this issue is so important to Liberal Democrat Members, why were they not here this afternoon to move the relevant amendment?

Mr. Davey

As I have already explained, I was disappointed to learn that amendment No. 43 was out of order. That is why I am now raising the wider issues involved.

The recent victory of Lunn Poly against the original introduction of the selective premium tax is especially germane to my point. The European Court found that the higher rate of IPT was incompatible with Community law to the extent that it constituted state aid under article 92(1) of the relevant EC treaty, and that the United Kingdom Government had not notified the Commission of that as they were supposed to.

As the Financial Secretary told the Standing Committee, Customs and Excise is appealing against that decision. It asserts that it has no implications outside the travel industry, but many people outside the House do not share that opinion. Indeed, hon. Members may be interested to hear that the European Commission itself is not sure of the legality of the remaining selective rates. In answer to a question from the Liberal Democrat Member of the European Parliament, Graham Watson, Commissioner Monti said on 8 June: the Commission has been in contact with the British authorities and is still assessing the compatibility of a selective IPT with Article 92". Although the Minister may not wish to comment in detail on the matter because it is sub judice, I hope that she will at least admit to the House that the European dimension is a factor that will have to be considered in any review of the remaining selective rates, in addition to issues of fair competition. It is to those issues that I now turn, as they are especially germane to the Bill.

When the Financial Secretary replied to the debate initiated by the hon. Member for Galloway and Upper Nithsdale on 27 January, she did not reply to a large number of the substantive points that he made about the effect of the tax on the electrical retail industry and the motor retail industry. She was expansive in respect of the travel industry, and we can perhaps now see why, but I should like to draw her attention and that of the House back to the other affected sectors.

The first is the electrical retail sector. There is a great deal of evidence to suggest that the value shifting that Customs and Excise suspects has been taking place in the sector has not been happening, and that the tax is therefore not necessary. Some of the evidence was cited by the Financial Secretary herself in a debate on the Finance Act 1997. Other evidence was put forward by the hon. Member for Galloway and Upper Nithsdale in his debate: he quoted the report of the Monopolies and Mergers Commission on the supply of domestic electrical goods, which is directly relevant, as it argues that, far from reducing the price of electrical retail goods, companies have been keeping prices artificially high.

The Government cannot have it both ways. Either prices are being kept low to avoid tax, with value being shifted on to related insurance policies to avoid VAT, or prices are being kept high, as the President of the Board of Trade seems to accept.

The Government collectively seem confused on the issue, but the result of that confusion as regards insurance premium tax is serious damage to United Kingdom companies in terms of lost business and lost jobs. Last year, the Financial Secretary herself cited the examples of Thorn and Granada, which, between them, have lost an estimated £20 million and around 800 jobs across the country.

Ironically, the compliance costs to the sector have been exceedingly high. High-street television rental companies were forced to write to all customers explaining the change and to produce new contracts for customers wishing to renew. That exercise cost around £1 million, and the firms lost business. As a result, many electrical products are now sold without insurance cover. That diminishes the protection to the consumer, who may or may not go to a direct insurer. Of course, direct insurers are keen to step into the breach and are marketing themselves strongly to gain the business. However, many consumers will not have the same protection as before.

The Association of British Insurers has issued a general information sheet encouraging customers to buy insurance from direct insurers, as opposed to one-stop shopping. It poses the following question: So how can I avoid paying the higher rate of IPT? The response makes clear the intentions of the industry: By not buying your insurance from the same place you buy your domestic appliance". What greater evidence does Customs and Excise need of how the higher rates of insurance premium tax are distorting the market? What right does Customs and Excise have to do that? I hope that the Minister will examine the way in which officials looked at the case of the high-street electrical sector, as she was prepared to do for the travel industry. It has been unfair and almost vendetta-like.

Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

Does the hon. Gentleman agree that many people outside the House who listened to Labour in opposition might have expected more from this year's Finance Bill? Unfortunately, it is yet another example of Labour saying one thing in opposition and doing something else in government.

Mr. Davey

I am grateful to the hon. Gentleman for that intervention. He makes a telling point. However, the Government deserve some credit, as they have made some progress on the travel industry. We should not be churlish, as we welcome that. Unfortunately, however, they have missed two major sectors, and that is causing great problems.

The second sector that the Government have failed to address is the motor vehicle retail sector, to which similar arguments about the problems of unfair competition and reduced consumer protection apply as a result of the failings of the Bill. I want to highlight consumer protection, as that aspect is particularly worrying.

As a result of its insurance policies attracting the higher rate of tax, as much as 50 per cent. of the motor vehicle retail industry has switched from issuing insurance policies to issuing warranties with its cars. The significance for consumer protection of that trend can best be appreciated if we examine the distinction between an insurance policy and a warranty. In essence, a warranty is an undertaking by the seller as to the condition of the property, and an undertaking that future deterioration of that condition will not arise. On the other hand, an insurance contract indemnifies the insured against loss or liability if and when such deterioration occurs. So the cover is different. A warranty is less attractive because it is not usually provided by a third party. If the seller goes broke, the warranty becomes useless. The consumer is protected only in so far as his or her supplier does not go bankrupt.

Dawn Primarolo

I am perplexed by the hon. Gentleman's concern about this subject. Will he say when he raised it in Committee and where were the relevant amendments? Third Reading is not the appropriate time to raise the issue. I do not remember his mentioning it in Committee, and no amendment is mentioned in Hansard. Nor was the hon. Gentleman here to move his amendment earlier today.

Mr. Davey

The Financial Secretary may recall that the clause in question was debated very late at night when the Whips failed to make a proper agreement, so the argument remains germane and it is important that it is heard.

Dawn Primarolo

Is the hon. Gentleman saying that the issue is extremely important to his party except when he needs sleep or cannot get here in time for a debate?

Mr. Davey

The Minister does not seem to want us to raise the matter, and that is unfortunate. She was happy to raise it when she was in opposition, but now that her party is in government she does not want to hear about it. The hypocrisy is on her side for not addressing the issues now that she is in power.

The move away from insurance policies to warranties by many motor vehicle retailers—driven by this selective rate of tax—is seriously reducing consumer protection in this country. If the Minister is concerned about the state of the country's finances, she ought to listen. The Exchequer may lose even more money than it did from any previous tax avoidance—if such avoidance was occurring—because of the shift to warranties which fall outside the tax base. How ludicrous it is to have an anti-avoidance measure that reduces the revenue to the Treasury and exposes the ordinary citizen to greater risk.

So what is the solution? I believe that levelling down to 4 per cent. is the best solution, mainly because I do not believe that there should be any selectivity in principle.

Mrs. Liddell

Will the hon. Gentleman give way?

Mr. Davey

I have given way several times and I am now coming to the end of my speech.

Mrs. Liddell

rose—

Mr. Davey

I am not giving way—[Interruption.]

Mr. Deputy Speaker

Order. We cannot have barracking from the Government Benches. The hon. Gentleman is entitled to be heard.

Mr. Davey

I believe that levelling down would be the best approach and that, in practice, such a reduction, by ending the switch to warranties, would net more revenue for the Exchequer, for the reasons that I have outlined.

I hope that the Financial Secretary will address the points that I have raised. She seems to think that it was somehow illegitimate to raise them, but they are extremely important because they affect jobs and businesses outside the House. Whether the Government like it or not, they must address the issues, and I hope that they will have the courtesy to do so tonight.

6.47 pm

Mr. MacShane

It is a pleasure to speak in tonight's Third Reading debate. For four years, I served on the Standing Committee considering the Finance Bill. In my view, it is the most interesting Standing Committee on which to serve because taxation represents the contract between the citizen and the state: it defines the relationship between the two and reaches into every corner of our existence. I regret that I have had to serve elsewhere for the last year, but no doubt one day my right hon. Friend the Prime Minister will release me from those duties, unpaid and unimportant as they are, so that I can return to my first love—tax and the Standing Committee.

I pay tribute first to my right hon. Friend the Chancellor, who has shown himself to be a fiscal Clausewitz. Clausewitz was the man who advised Napoleon at Austerlitz and then told him not to go to Moscow, but the French do not always take good German advice. Clausewitz believed in the concentration of forces. The Budget is the first in many years to focus hard on the key problems of the economy.

I should like to pay tribute to two personal friends—my hon. Friends the Financial Secretary and the Economic Secretary. Remarkably, having take a 450-page Bill through late-night sittings—we have heard from the hon. Member for Kingston and Surbiton (Mr. Davey) that the Liberal Democrats are the Horlicks party; once it gets late, off they go to bed—my two hon. Friends, unlike many of their fellow Ministers, appear, at the end of their dreadfully busy first year, to be younger than ever. That shows that Tory replacement therapy works. I look forward to many years of service from them on the Front Bench, and to their getting younger year by year.

The hon. Member for Kingston and Surbiton spoke eloquently and in some detail. He was not present in Committee to vote against the clause to which he was referring, and was not here earlier to move his amendment. No doubt he was taking his Horlicks somewhere else. He is wrong on his narrow point about insurance premium tax. It used to be said before the last election that the Conservatives were the party of garage owners—I think that they were described as the garagiste tendency. The hon. Gentleman is speaking up for the garage owners of Britain because they cannot make a little extra on selling insurance. He should also explain whether he is now representing Dixons, because he was doing valiant battle for electrical retailers. That is all the more interesting, given that Sir Stanley Kalms, the boss of Dixons, is leading some ludicrous anti-European crusade. There we have the Liberal Democrats—all things to all men.

Mr. Davey

The hon. Gentleman clearly was not listening to a word I was saying. I was speaking up for the ordinary consumer, who will lose out because of selective higher rates of insurance premium tax. The hon. Gentleman should be worried about that, because I am talking about his constituents.

Mr. MacShane

The ordinary consumer—or those who shop in Dixons—would be better served by a boss of Dixons who cut his prices rather than spending all his money on a crusade against Europe. We have had enough from the Davey lamp for the time being. There is very little illumination from that source.

I should like to focus briefly on how the Budget has affected my constituents. Rotherham is a great manufacturing centre. It still has Europe's biggest and most productive engineering steel plant. New firms are being created there. During the years in which I had the honour to serve the people of Rotherham before the last election, I often heard their demand for stability in the economy. We talk about the Tory 18 years or 19 years or whatever it was, but even before then my constituents suffered on an endless rollercoaster of inflation rates, interest rates and, of particular importance to my constituency, exchange rates.

The former Chancellor popped in for a brief chat—I see that his would-be successor, the right hon. Member for Wokingham (Mr. Redwood) has just appeared on the Front Bench. It is good to see him taking some time off from his new outside earnings. The Benches behind him are empty, because the Conservatives have given up on opposition. I thought that the constitutional duty of the Opposition was to oppose.

Mr. Deputy Speaker

Order. The hon. Gentleman is indulging in a great deal of embroidery. He should come back to the Third Reading of the Finance Bill.

Mr. MacShane

I do not want to plunge into the outside earnings of the Conservative party, Mr. Deputy Speaker.

Steel exporters had problems because between May 1990 and May 1997, the exchange rate of sterling against the deutschmark changed no fewer than 87 times. No exporter or manufacturer buying goods from the continent could live with that endless change. I know that the cliché "boom and bust" irritates the Conservatives, but I am happy to repeat it, because an awful lot of mud has to be thrown against a wall—even the empty wall opposite me—before it begins to stick. My right hon. Friend the Chancellor is searching for stability. I hope that he keeps to that aim.

There were disappointments for me in the Budget. I am a great believer in employee share ownership. I took a delegation to see my right hon. Friend and had an interesting meeting on the subject. There was nothing in the Budget on that, but I hope that the Government may come back to it. We must spread the fruits of people's work not just in wages, but in their share in the company for which they work.

The search for stability is an obsession of the Treasury Front Bench. I admire that. It contrasts with the flippant ups and downs of Budgets that I scrutinised as an Opposition member of Standing Committees considering previous Finance Bills. The Budgets of the previous Chancellor were like a Christmas tree—I think that that was the metaphor of the hon. Member for Gordon (Mr. Bruce)—decorated with all sorts of funny baubles in an attempt to attract votes here, there and everywhere. The British people saw through that meretricious dishonesty and kicked him out. Since then, the Opposition have had considerable difficulty in deciding on their strategy. They have removed one shadow Chancellor, but we are still waiting for some impact from his successor.

Mr. Deputy Speaker

Order. I am still waiting for the hon. Gentleman to come back to the Third Reading of the Finance Bill.

Mr. MacShane

I am particularly impressed by the Bill's step-by-step approach. Making work pay affects my constituents more than any other issue. Achieving that at the marginal rates of tax that we inherited from the Conservative party proved all but impossible. The Chancellor's two Budgets have shifted the burden of taxation, so that work is subject to less tax, and unearned income and capital takes a fairer share. The working families tax credit is a move towards lifting the burden of taxation from the lower-paid. In 1950, a married worker with two children had to earn 107 per cent. of average industrial earnings—about £20,000 in today's money—before he paid any tax; and we wonder why the Attlee Government were so popular. Until the end of the 1960s, the state took 30 or 35 per cent. of gross domestic product in tax. My right hon. Friend the Chancellor is taking us back to the golden years of stability, employment, growth and investment.

Ms Sally Keeble (Northampton, North)

Will my hon. Friend give way?

Mr. MacShane

My hon. Friend must be quick; I want to sit down.

Ms Keeble

My hon. Friend has raised the point about making work pay. Does he agree that the £10 extra that the combined effects of the Finance Bill put into every average family's pocket in my constituency as a result of changes in tax structures will be extremely welcome, and is in complete contrast to the figures that Conservative Members have bandied about?

Mr. MacShane

The Conservative party was the party of the rich. Labour is the party of middle England and working England, Scotland, Wales and Northern Ireland—people who seek to earn an honest living and to amass savings that guarantee their future.

The step-by-step approach is sometimes so silent that one does not detect it happening. My right hon. Friend the Chancellor is a sort of stealth bomber, coming quietly over the horizon, taking as much money as is necessary, but not too much, and dropping his bombs on the irrelevant Opposition. I wish him well. I know that the Budget was welcomed by the business community, working families and the poor of my constituency.

Mr. Gardiner

Will my hon. Friend give way?

Mr. MacShane

If I may, I should like to finish. [Interruption.] Well, I could carry on. I wish the Finance Bill a handsome and solid majority on Third Reading.

7 pm

Mr. Malcolm Chisholm (Edinburgh, North and Leith)

As someone who served on several Committees that examined Finance Bills in the previous Parliament, it gives me great pleasure and pride to speak about this Bill, which is in such marked contrast to the Bills that we opposed over those years—contrary to the view given by the hon. Member for Banff and Buchan (Mr. Salmond), who has unfortunately fled the Chamber and the truth. Hon. Members who do not represent Scottish constituencies will not know that the Scottish National party's calculated core message is that Labour is the same as the Tories. That is arrant and demonstrable rubbish in the context of this Bill and, indeed, of other policies.

The primary objectives of the Government's economic policy, as seen in the Budget and the Finance Bill, are to raise the economy's sustainable rate of growth and to fight against poverty and social exclusion. They are the exact opposite to the objectives of the previous Government, who increased inequality over 18 years, and for many of those years, used unemployment as a deliberate instrument of policy.

Throughout proceedings on the Bill, we have heard opportunistic carping on particular aspects of Government policy from both the SNP and the official Opposition. Some of those aspects are the unavoidable short-term results of correct long-term policies. We have never heard from either party any coherent alternative economic strategy. Throughout the economic debates this week, the Conservative party has also attempted to rewrite or, rather, airbrush history to try to persuade people that everything that happened before 1 May 1997 is irrelevant. That is economic illiteracy.

The context of the Finance Bill is the inheritance of the previous Government. The salient features of that inheritance were a lack of stability and economic credibility and a serious structural Budget deficit, which the previous Government failed to address, in spite of 22 tax rises in their last Parliament. On top of that, we inherited problems of inflationary bottlenecks due to underinvestment and chronic shortages in human capital. There was a major productivity gap between ourselves and our main competitors. We inherited, too, the well-known fact that one in five families were without anyone in work. Those are the problems that the Finance Bill and the two Budgets have begun to address. Clearly, such problems cannot be turned around in a day, a month or a even a year.

The Government are concerned to do three things: deliver macro-economic stability, tackle supply-side barriers to growth and promote economic and employment opportunities for all. I know that some of my colleagues who are impatient for more rapid change find the objective of macro-economic stability rather boring. It is very easy for the SNP and others to say that it is a Tory objective. It is also difficult to communicate some of the complex economic policies to the public at large. It must therefore be made clear time and again that delivering macro-economic stability is a means to an end. It is a necessary precondition for all the other objectives of growth and employment.

There are many reasons for achieving macro-economic stability. One of great importance is that, without it, there is the threat of a return to boom and bust and, therefore, a disincentive for employers and others to invest. Investment is very much at the heart of what this Government are all about. That is why pension fund arrangements were changed in the first Budget last summer. We heard opportunistic carping about that, too—certainly from the Conservative party. The policy's clear purpose was to increase investment in the economy.

Many other policies in the Finance Bill are directed towards the same end. We have a new rate of corporation tax, there have been changes to the capital gains tax regime and we have seen innovations such as the university challenge fund. Those are very important supply-side measures to deal with underinvestment. The Finance Bill also contains measures on training. The flagship welfare-to-work policy was introduced in the first Budget.

We must tell people that these are the objectives of Government policy; that this is what we are trying to achieve. By delivering macro-economic stability and tackling supply-side barriers to growth, we shall be able to raise growth. All that is a necessary precondition to our social objectives, on which we have already made significant progress. Most important, the working families tax credit, with its radical, innovative child care element, which we used to talk about endlessly in opposition and are beginning to deliver in government, clearly opens up employment opportunities and the rewards of employment to a much wider range of people.

Other policies in the Bill include changes in national insurance contributions, which act as an important incentive to employers to take on employees who earn up to £440 a week. There is a range of measures to make economic and employment opportunities more widely available. That is at the heart of the Government's strategy for tackling poverty and social exclusion in our society. When people say, as they sometimes do, "Why do you put emphasis on stability? Why don't you just get ahead and do something about poverty, unemployment and social exclusion?" it is important to explain that they are two sides of the same coin. That should be the core message that we try to get across.

Stability is not just about monetary policy—although that has been very important, and was dealt with in the separate Bank of England Bill. The purpose of that Bill should be explained, too. One of the reasons why the previous Government lacked any credibility was that they used interest rate policy politically. That was one of the problems that we inherited. They refused to put up interest rates before the election for political reasons, so inflation was heading for 4 per cent. and above. We had to address that problem; that is why interest rates have had to go up. The hon. Member for Banff and Buchan said that we were doing the same as the Tories. We are not; they tried to tackle inflation, but did not succeed. Their phoney monetary indicators in the early 1980s were not successful in dealing with inflation. We shall be successful. That is one side of the coin. It is, perhaps, more exciting to talk about the other side of the coin—the work opportunities and the attack on poverty—but without the precondition of stability, we shall not achieve those aims.

The same is true of fiscal policy, and I welcome the code for fiscal stability in the Finance Bill. As the Chancellor's public expenditure statement in June made clear, that fiscal framework does not mean that we are unable to deliver significant increases in public expenditure. I understand those who want a big bang approach to public expenditure—perhaps Liberal Democrats come into that category—but there is no point in having a big bang approach that cannot be sustained. Within the rules set out by the Chancellor, which were in our manifesto, we are able to achieve a real growth rate of 2.75 per cent. If that is sustained for the next five years, it will be an achievement that has not been managed since the 1960s.

The Government are also putting great emphasis on capital investment as part of the general drive for increased investment, which I referred to earlier, and we welcome that.

Clearly, the Government have the task of explaining their economic approach. It is very easy for the Opposition to caricature economic policy and dwell on short-term consequences, but this Government's economic objectives are absolutely contrary to those of the previous Government, and the results will also be contrary.

Mr. Nicholas Soames (Mid-Sussex)

On a point of order, Mr. Deputy Speaker. Do you agree that we are witnessing a sustained and concerted filibuster on the Bill, and are not such practices to be deplored by the Chair?

Mr. Deputy Speaker

Order. The Chair is aware only of speeches that are in order or not in order. The speeches that I have heard have been in order, except where I have chosen to correct hon. Members. It has been known for debates on the Third Reading of the Finance Bill to continue for several hours.

7.11 pm

Mr. Alexander

The broad themes of the Finance Bill, as well as the detail, emerged in Committee. In particular, as my hon. Friend the Member for Edinburgh, North and Leith (Mr. Chisholm) said, the Government have made it categorically clear that, unlike the previous Government, they are determined to encourage work. That aim has undoubtedly been welcomed by my constituents.

For many years, my constituency has had a rate of unemployment higher than the national average, which is why welfare to work is not a slogan in Paisley, South, but a vital programme for many of my constituents. As the Chancellor made clear in his Budget statement, the welfare-to-work programme is now to be extended to provide wider employment opportunities particularly to groups such as the long-term sick and disabled. That matter is close to the heart of my constituents. Indeed, my predecessor, Gordon McMaster, was acknowledged on both sides of the House as a tireless campaigner on behalf of disabled citizens. Only two weeks ago, in Paisley town hall, I attended an awards ceremony for disabled people who have now found employment and gained greatly from that experience.

In the previous Budget, £195 million was provided for voluntary advice and practical help to disabled citizens to move back into work. Pilots will begin this autumn, with a view to the programme being nationwide by April 2000.

That approach reflects the Government's coherent strategy—that there is no contradiction between social justice and economic efficiency—which underpinned the detailed measures in the Budget. For years, under the previous Government, we were told that the price of a modern, dynamic economy was a divided society, but the individualism that characterised Thatcherite economics has been found wanting on major challenges such as tackling unemployment, which I mentioned, social exclusion and the environment.

The understanding underpinning the Finance Bill is that the ingredients of a good society in a modern global economy are also the ingredients of a successful economy. The Budget made it clear that the foundation stone is encouraging and rewarding work. The working families tax credit announced in the Budget will help lower and middle-income Britain, particularly families with children, to keep more of what they earn. No family with earnings of less than £220 a week will now pay any income tax at all. Any family with a full-time worker is now guaranteed take-home pay of at least £180 a week. When people ask what the difference is between Labour and the Conservatives, they need look no further than that measure to see the difference that a Labour Government are making.

In keeping with the Government's recognition that good economics also makes for a good society, the Budget also addressed the needs of families in a modern economy. Child poverty has scarred this country for many years, as the work of organisations such as the Child Poverty Action Group has made clear. My hon. Friend the Member for Edinburgh, North and Leith mentioned that one family in five is raising children in poverty. That figure is all too well known after 18 years of Conservative government. That is why the announcement that child benefit for the eldest child is to be raised by £2.50 a week or £130 a year from April 1999 was particularly welcomed in constituencies such as my own. In addition, the new child care tax credit, which forms part of the working families tax credit announced in the Budget statement, will be welcomed by families throughout the country.

A fortnight ago, I had the privilege of opening a new class at Auchenlodment nursery school in my constituency, when parent after parent told me about the importance of child care. What is fundamentally different about the Government's approach, as made clear in the Budget and the Finance Bill, is that child care is not some add-on to economic policy, but central to their economic strategy.

The hon. Member for Banff and Buchan (Mr. Salmond), who was in the Chamber earlier, talked about the importance of the service sector of the economy and to that extent—perhaps only to that extent—I agree. Yet I would argue that if the hon. Gentleman is keen to assist the service sector of the British economy, he should support the child care measures announced in the Budget, as women in particular will benefit from them and, of course, the service sector provides employment for huge numbers of women.

Another theme of the Finance Bill to which I shall address my remarks is the measures to promote enterprise. The Bill makes a further 1 per cent. cut in corporation tax to 30 per cent.—the lowest rate ever achieved in the United Kingdom. In the era of the global economy, such a measure sends a clear signal that the Labour Government want to secure investment and ensure that Britain is the home for dynamic, profitable companies. In the global economy, with increasing specialisation and diversity, new jobs will come from a large number of small companies, not a small number of large companies. That is why the Budget announced a comprehensive package of measures to create a more dynamic small business sector in the UK economy, including the 1 per cent. cut of the small business rate of tax to 20 per cent. from April 1999.

Another element of the Finance Bill—a distinctively Labour element—has been fairness in taxation and spending. As a country in the modern global economy, the more we learn, the more we shall ultimately be able to earn. We cannot hope to succeed economically if we do not succeed educationally. That is why I welcome the Chancellor's announcement that an extra £250 million in 1998–99 will be committed to schools and skills.

To explain further the measures in the Budget, I point out that 80 per cent. of Britain's work force 10 years from now are already in the work force today. That is why, if we are serious about increasing workplace productivity in the United Kingdom economy, we must also direct our efforts towards raising skill levels of those already in work. I therefore particularly welcome the Chancellor's announcement of £10 million for the university for industry.

The final theme of the Finance Bill that I wish to touch on is stability. The need for stability has been mentioned in the debate and, given our country's economic record of boom and bust, it almost goes without saying. As the Bill makes clear, the key to modern economic success is to find the appropriate balance between stability and dynamism. Stability is essential for high levels of investment and employment.

The fiscal policy adopted by the Government adheres not only to the golden rule that over the economic cycle the Government will borrow only to invest, but to the rule that public debt will be held at a stable and prudent level over the economic cycle. The Finance Bill advances dynamism and stability, which is good economics, but it also advances measures on child care, child benefit and the working families tax credit, which is good politics and makes for a good society. The Bill ultimately nails the lie that the price of economic success is a divided society. That is why I commend it to the House.

7.18 pm

Dr. Palmer

We often criticise Ministers for departmentalitis and for focusing exclusively on their own area, but we, too, are somewhat guilty of that tonight. Typically, debates attract specialists in the subject, so today we have more finance nerds in the Chamber than would be seen in a month of Sundays anywhere else. It is said that the average man thinks about sex every 20 minutes during the day, but the population at large would be alarmed to learn that our little sub-population contains people who think more often than that about the public sector borrowing requirement.

Mr. Leslie

Steady on.

Dr. Palmer

I exempt my hon. Friend from my remark.

I should like to consider three aspects of how the Finance Bill affects different parts of the Government's agenda. First, there is the working families tax credit, which was announced in the Budget and which is foreshadowed in some of the measures in the Bill. We are introducing the working families tax credit, which may be the most sweeping act of redistribution in any Budget for the past 50 years and is certainly an impressive step forward in helping the working poor, partly for reasons of justice and partly to encourage a return to work—to nail the lie that it is more profitable to stay on benefits than to work. Together with the minimum wage, which we also introduced, it means that we can say definitively to ordinary people who are out of work that it pays to retrain, it pays to work with the advisers in the new deal and it pays to get back to work.

We have to recognise that there are people outside whom that message will not readily reach, because their daily lives are so desperate that they have no time to listen. They think that the working families tax credit is just one more obscure piece of politicians' jargon that bears little relationship to them. During the election, I canvassed a council estate where there is a high proportion of single parents. I met more people there who were not planning to vote at all than I met anywhere else in Broxtowe. They were not planning to vote, not because they were indifferent to politics, nor because they disliked all the parties, but because their daily lives were so desperate that they did not have time to consider the issues that we were putting before them. In the same way, I predict that we shall have difficulty showing those groups in society how the measures in the Budget and the Bill will transform their lives.

We have heard some unseemly gloating from Opposition Members about the fact that, in the initial reaction to the new deal, not everybody has taken up the offer with the alacrity for which we had hoped. One Opposition spokesman said, very cheerfully, that when they got the offer, many single parents threw it in the bin, as if that was good news of resistance to a tyrannical Government; but it is a tragedy when that sort of thing happens. My point is that the changes that we are making in the Finance Bill and foreshadowing to appear in next year's Finance Bill need to be followed up with publicity and information campaigns that reach people whom we do not normally reach—people who are indifferent to politics and who have given up the hope that the world of politics has any relevance to their world, or that anyone will come to their rescue. The Labour Government are determined to reach them and, through our efforts, we can make sure that such people benefit from the changes that we are making.

Secondly, I should like to talk about the foreshadowed change to vehicle excise duty. Curiously enough, it is unique to Britain that all cars—from the Mercedes Benz to the Ka—are taxed at exactly the same rate, regardless of how much petrol they use, or how efficiently they process petrol, or whether they use petrol at all. Environmental groups all welcome as a first step the action that we have taken. I commend to the House the Parliamentary Office of Science and Technology technical report No. 116, which analyses the VED proposal in some detail and draws attention to the fact that the different ways in which the change could be introduced would have extremely varied impacts on the environment.

Broadly summarised, POST says that if we do that in the optimal way for reducing fuel consumption, then administrative burden will be considerably heavier, because most of the information at the car registration centre—the Driver and Vehicle Licensing Agency—is not currently geared to that sort of information. Ideally, each car would be examined for its emissions at the time of its MOT test and taxed accordingly; but MOT centres are not geared to communicate their results to the central vehicle registration centre at the DVLA, so considerable investment in technology would be needed to achieve that. One step back would be to tax according to car type, as tested at the time when the type was introduced. The vehicle emissions from a Vauxhall Astra 1997 would differ greatly from those of a 1993 Astra—if there was such a beast. Therefore, one could reward manufacturers that wanted to invest in fuel-efficient technology by changing the rate of tax according to that standard. The drawback of that method is that some manufacturers would produce a car that was extremely efficient on day one, but deteriorated rapidly. We want to support manufacturers that build energy-efficient motors to last and drivers who use their cars in a way that maintains that high level of energy efficiency.

I would argue that we should opt for those versions of the approach to vehicle excise duty that, in the longer term, can be used to phase in the measurement of individual vehicle emissions. Information technology is at the stage where, in five years' time, it will seem a trivial task for testing centres to communicate such information to the centre. I do not believe that, when introducing such an important principle for the first time, we should do so in a way that skimps on the essential objective of the change, which is to improve the efficiency of engines, to reduce emissions and, ultimately, to achieve the goals that we have set out to achieve in 2010.

Thirdly, I wish to highlight the generosity of the conditions for contributing to overseas development charities, which is a matter that has attracted relatively little comment—indeed, I know of overseas development activists who are still not totally aware of it. Although it has traditionally been said that overseas development is not an issue that the average member of the public finds fascinating, or attractive, or even welcome, that is certainly not what I have found in Broxtowe. Before the election, we published 15 policy papers on different issues—employment, health, education and so on—but it was the papers on the two more exotic subjects of overseas development and animal welfare that stimulated by far the greatest demand, with several hundred people requesting information on those subjects.

People have come to believe that politics in Britain has become a little bit too efficient and too oriented to the maximum level of marginal advantage at every level of the economy—that government and politics in Britain are in danger of losing their soul. When they look at the three aspects to which I have referred—the reinforcement of help to the working poor to make work worth while and to show that group in society that we care about them and that we are the first Government in 20 years to care about them; and our demonstration that we mean what we say about our environmental commitments and about our support for the developing world—the cynicism and disappointment that we have seen among many of our constituents can be countered and they will once again be able to faith in the political process. I hope that the House will pass the Finance Bill. It is a worthy Bill, and I am proud to be associated with it.

7.29 pm

Mr. Ross Cranston (Dudley, North)

A number of my hon. Friends refuted the intervention by the hon. Member for Banff and Buchan (Mr. Salmond), who has wandered in and out of the Chamber at various times this afternoon and this evening, but has not stayed around to hear our responses. He asked what the Finance Bill does for manufacturing, which is important to my constituency. Historically, the black country has been a great manufacturing area and manufacturing is an important part of the economy, although I acknowledge that it accounts now for only about one fifth of national income.

The Bill contains important measures to encourage manufacturing, industry and enterprise. First, it will reduce the rates of corporation tax. Secondly, it contains important provisions on capital allowances. Thirdly, it will change the company tax regime, which was an important feature of this Government's first Finance Bill—this Bill will continue to put that change in place.

Opposition Members raised all sorts of difficulties with the changes that we have made. Some of them still cannot accept the fact that we have put in place a corporation tax regime that will be more conducive to investment. Too often in the past people, institutions, pension funds and insurance companies tried to maximise the return on dividend income, to the detriment of investment in enterprises. Labour's two Finance Bills will put in place a corporation tax system that will encourage investment.

The move from the old to the modern system, which, incidentally, is a feature of such countries as the United States, creates certain transitional problems, but the Government have tried to deal with them, for example, through the phasing-in provisions to benefit charities. I raised certain problems concerning pensioner non-taxpayers, who will lose their tax credits under the Bill, with my hon. Friend the Paymaster General, who took that matter to heart. He and my right hon. Friend the Chancellor will deal with that in the coming months. The important point, which seems to be lost on the Opposition, is that the new corporation tax regime will be more conducive to an enterprise economy.

The fourth feature that the hon. Member for Banff and Buchan did not seem to take into account was the change in capital gains tax—the taper relief. Opposition Members raised a great deal of dust about the transitional problems that might arise due to the changes, but the taper relief system will encourage long-term investment holdings. The system works by reducing the proportion of capital gain that is liable to tax according to how long the asset is held. Different tapers will apply to business and non-business assets.

Members of the official Opposition—[HON. MEMBERS: "They are not here."] Yes, as my hon. Friends remind me, there are not many Conservative Members in the Chamber at present. They did not acknowledge that the taper relief system would have any effect on investment. Unfortunately, they do not seem to know their own economic history. They do not seem to realise that when they introduced major changes in the 1980s, these had a significant impact on investment. The changes in 1984 resulted in a surge in investment, which fell off in 1986 when the changes were reversed.

A study by Stephen Bond of Nuffield college reached the conclusion, based on that experience, that a tax system can affect investment. In considering the changes after 1986, Bond concluded that a tax system that leaves the cost of capital permanently higher by one to two percentage points is likely to depress the level of company investment by up to 5 per cent. Conversely, the changes in this Bill ought significantly to affect investment in time.

Mr. Derek Twigg

My hon. Friend makes an excellent point. Labour Members have often been accused of not understanding business and investment, but is it not the case that the Government want to encourage long-term investment and sustainable help for business? If we had accepted the Opposition's arguments, the Bill would have done nothing to help business. Their arguments were about short-termism and other matters, but had nothing to do with helping business.

Mr. Cranston

I could not agree more with my hon. Friend. The Opposition focused on some specific points and did not seem to see the big picture.

In a recent summary of some 10 studies that assessed the impact of corporation tax and capital gains tax on investment, Mr. Jack Mintz states The overall conclusion one derives from recent studies is that taxes affect investment decisions". Conservative Members did not seem to acknowledge that important point. The changes in the Bill will have a beneficial effect on investment and manufacturing, particularly in the long term.

Fairness is another feature of the Bill. My hon. Friends have mentioned the important inducement to altruism contained in the provisions on millennium relief. Another feature worthy of mention is the way in which we have closed provisions that were conducive to tax avoidance. In Committee, Conservative Members seemed to be in a world of large capital gains.

Mr. James Plaskitt (Warwick and Leamington)

And even larger houses.

Mr. Cranston

Yes, as my hon. Friend reminds me, it was a world of great wealth—

Mr. Plaskitt

Auctions.

Mr. Cranston

Of auctions and large investments, and that is not the world of the average voter, who is more concerned with measures in the Bill aimed at introducing a fairer regime, which will benefit the average person.

No Conservative Member mentioned the important provisions on transfer pricing as regards the activities of transnational companies and there was little mention of the provisions to deal with inheritance tax and closing some of the avoidance mechanisms there. We heard some squealing about the bed-and-breakfast provisions, as if those were a natural feature of any tax regime. In fact, they were an important avenue for tax avoidance.

Mr. Love

Does my hon. Friend share my astonishment at the cynicism shown by Conservative members of the Standing Committee, who continually chided the Government for abandoning the poor, despite the fact that the Conservative Government created the greatest inequality since figures began? Does he agree that the Bill will help to heal society and to reduce the divisions that the Conservatives created?

Mr. Cranston

I agree. The figures demonstrate that inequality grew more in this country than in any other Organisation for Economic Co-operation and Development country, apart from New Zealand, which was a scandal.

In Committee, we heard a great deal from Conservative Members about the legislative process; they said that the Government did not listen. The Government do listen. There was extensive consultation about the changes in capital gains tax, for example, as a result of which the taper relief system was developed. Similarly, the Government listened to representations about individual savings accounts. There were no U-turns, as we said from the outset that we would consult people—something the Conservative Government never did—about what regime would encourage more saving.

Mr. Patrick Hall (Bedford)

On the Government's willingness to listen, I wonder whether my hon. Friend heard, earlier today, the hon. Member for Sevenoaks (Mr. Fallon) describe a Government amendment, which was tabled as a result of listening to people and which will improve the Bill, as a climbdown? Does not that show that the Conservative party's attitude to government is completely different from the Labour party's?

Mr. Cranston

That is very good point. The Labour Government are responsible; they consult people and work with business. The Conservative Government did not do that—Conservative Members do not know what consultation is, which is why they cannot understand this Government.

Also on legislative form, I want to deal with the canard that we have heard from the Opposition about retrospectivity. People have all sorts of expectations, but, historically, those expectations have often been disappointed because of taxation changes. When the rate of personal taxation increases, as it has in the past, I am disappointed. That is not retrospectivity, but Conservative Members do not understand that concept—they have misdirected their fire on that, as they have on so many other matters.

We also heard a great deal from Conservative Members about the regulation-making powers in the Bill. As my hon. Friend the Paymaster General said in Committee, the Bill contains no more regulation-making provisions than were in the last two Finance Bills under the Conservative Government. Such provisions are a typical feature of legislation—that may be unfortunate, and it may be more desirable if everything were provided for in primary legislation, but, as Conservative Members have reminded us, the Bill already runs to 450 pages—[Interruption.]

Mr. Deputy Speaker (Mr. Michael Lord)

Order. Conversations are breaking out all over the Chamber. Hon. Members must listen to the hon. Gentleman who is addressing the House.

Mr. Cranston

Thank you, Mr. Deputy Speaker.

In creating regulation-making powers, we have been consulting. The draft regulations are available for several months, so that the business community and professional bodies that will be affected by them can give their comments.

The Bill fosters enterprise; it introduces stability; it facilitates altruism in the way that I suggested; and it puts in place important measures to ensure fairness.

7.44 pm

Mrs. Louise Ellman (Liverpool, Riverside)

No one should be surprised at the token and transitory presence of Conservative Members during our discussion of this vital Bill. They must find it extremely distressing, I am convinced, to see the beginning of the end of the work that they did over 18 years and to see the damage that they inflicted on so many members of our society being reversed.

The Bill, indeed, starts to reverse major parts of the previous Government's policy. Eighteen years of Tory rule produced greater inequality than at any time since the second world war. The poorest 20 to 30 per cent. of the population failed to benefit from economic growth, and the poorest payed the highest marginal rates of tax. Moreover, unemployment—in terms of the number of households suffering unemployment—doubled so that one in five households had someone out of work. I represent the most deprived constituency in the most deprived city in the country, so, day after day, I see the evidence of what happened. I note that all but three Conservative Members find the debate too painful to listen to.

The Bill will enact a Budget to start a new era. It will give more help to most members of our society, and it will give the most help to those who are the worst off. The poorest 20 per cent. of households with children will gain an average of £500 per year—that will assist 3.8 million children. That is in great contrast to Conservative Budgets, which inflicted the greatest hardships on the poorest and gave the greatest benefit to the best off. The Bill reduces the high marginal rates of tax on those in the lower income groups, which makes a significant start in ensuring equity.

The Budget helps all families. It provides for the highest ever increase in child benefit—again, that is in stark contrast to what happened under the Conservative Government, who significantly reduced the value of child benefit. The Budget also extends the new deal, to give new hope of employment to younger people and older people alike. The official Opposition are still opposed to that measure.

The Bill will direct most help to those who need it most. In doing so, it will develop and stimulate the economy as a whole. That is why I welcome the Budget's provision for significant capital investment, which will be implemented in such a way as to improve services for the community and to create relevant and important jobs. For example, the £250 million extra investment in education—making a total of £2.5 billion extra investment in education—will improve services and buildings and provide further essential jobs. The £500 million extra investment in the national health service—making a total of more than £2 billion extra—will improve services and employment.

The £500 million extra for public transport will help us to secure better infrastructure to improve our environment; it will also develop the economy and produce more jobs.

Mr. Patrick Hall

My hon. Friend mentioned extra money for education and health. Does she agree that it is ironic that the Opposition parties have criticised the Government for not spending enough extra on education and health when the Government have spent far more than the Conservatives or Liberal Democrats would have spent, according to their printed and announced programmes?

Mrs. Ellman

Indeed. The Budget marks a decisive change. We are investing in the economy and in jobs.

In addition to significant capital investment, the Budget makes special efforts to help small and medium enterprises: the backbone of our economy. The Budget encourages that important sector by raising capital allowances and reducing taxes on those enterprises. Its encouragement for more innovative technologies promises more jobs, to the benefit of the whole economy.

The Budget should be considered in the context of the Government's general policies. It is directed towards producing more social and economic fairness. The Government are intervening to ensure that its benefits are felt where they are most needed, which is why we are going ahead with regional development agencies that will bring together the public, private and voluntary sectors to invest in regional economies. I note that the official Opposition are opposed to regional development agencies, as they are opposed to anything constructive.

The Budget promotes our efforts to deal with social exclusion, which is another inheritance of the 18 years of Tory rule. It also promotes communications. It took a Labour Government to rescue the shambles of the channel tunnel rail link deal left by the Tories. That will be important to the regions and the whole country.

Mr. Derek Twigg

My hon. Friend will know that my constituency is only a few miles from hers. She hit on the important point that the Budget and the Government's general policies are designed to benefit not only the south-east but the whole country. We want the communication links to be in place and the economy of the whole country to be vibrant.

Mrs. Ellman

My hon. Friend makes an important point. It is essential that the Budget should deal effectively with the macro-economic situation, but for that to be effective we also need mechanisms to deal with regional and local issues, to ensure that the benefits are enjoyed where they are most needed. I applaud the Government for all that they have done on macro, micro and regional levels.

The Budget is the beginning of the creation of a new era. It is highly regrettable that the official Opposition cannot even bear to hear about it.

Mr. Love

Does my hon. Friend note the fact that Her Majesty's official Opposition moved none of the amendments that they tabled today? The foreign earnings deduction amendments took a whole day in Committee, but no one from the official Opposition was here to move them today.

Mrs. Ellman

My hon. Friend demonstrates effectively the official Opposition's ineffectiveness and irresponsibility. Their record speaks for itself. They created a divided society and record unemployment and showed a callous disregard for justice. The Budget is the beginning of a new era and I commend it to the House. I look forward to the Government developing policies that will bring social and economic justice to the country as a whole.

Mr. Patrick Hall

On a point of order, Mr. Deputy Speaker. I am inspired by the hon. Member for Mid-Sussex (Mr. Soames) to seek your guidance on whether the absence of contributions from the official Opposition demonstrates a sustained abdication of responsibility.

Mr. Deputy Speaker

Order. That is not a matter for the Chair.

7.55 pm

Mrs. Liddell

Several of my hon. Friends have drawn attention to the vast emptiness on the Opposition Benches. It would be useful if the House were aware of the fact that the official Opposition asked for two days to discuss the Finance Bill on the Floor of the House. As a Government who are committed to proper accountability and scrutiny, we were happy to arrange for those two days, but chaos has reigned on the Opposition Benches from day one.

I thought that the high point—or perhaps the low point—had come when the right hon. Member for Wells (Mr. Heathcoat-Amory) had to be got out of his bed in the middle of the night and brought into the House to adjudicate in a fight between his Front-Bench and Back-Bench colleagues. The Whips had totally abdicated responsibility and had to send for the right hon. Gentleman to haud the jaikets, as we say in the west of Scotland. I am glad that he had the chance to change out of his jammies before coming to the House.

We have had a good debate, and I commend my hon. Friends for some studied speeches that obviously took great preparation. We take the job of government extremely seriously. We regard the tasks of government and of representing our constituents as a privilege, which is why we have worked so hard on Third Reading. I am grateful to my hon. Friends on the Back Benches for the assistance that they have given to Ministers.

I pay especial tribute to my hon. Friend the Financial Secretary, who has had the heaviest burden. This has been a lengthy and detailed Bill. Not all the work takes place in the House, because much preparation has to be done in advance.

The debate has been remarkable in that we have had the rare privilege of a visit from the hon. Member for Banff and Buchan (Mr. Salmond). It is always a pleasure to see him at his work. I am sorry that he did not manage to stay in the Chamber terribly long, but he addressed us from his Olympian heights and I will respond to him with pleasure.

Mr. Salmond

rose—

Mrs. Liddell

I have to consider whether I should give way to the hon. Gentleman, because, with characteristic arrogance, he refused to take interventions from my hon. Friends this evening. However, I will of course take his intervention, because it is so rare a pleasure to see him at his work.

Mr. Salmond

That must be the longest preamble to giving way that I have ever heard. [HON. MEMBERS: "Get on with it."] Well, if the concession is so long, the intervention can be long as well.

The Economic Secretary is building a case on the presence or absence of hon. Members in the Chamber. Where, then, are the Chancellor and the Prime Minister?

Mrs. Liddell

Running the country.

The hon. Gentleman made a number of points— [Interruption.] I wish my hon. Friends would stop making me laugh. [Interruption.]

Mr. Deputy Speaker

Order. Perhaps we can now return to the contents of the Finance Bill.

Mrs. Liddell

I am happy to do so, Mr. Deputy Speaker.

We have observed some interesting gyrations on the part of the Opposition Front Bench. I am not just talking about the fact that no Opposition Front Bencher managed to stay in the Chamber throughout the debate; during the Bill's passage, we have seen a radical reversal of the Opposition's views on capital gains tax. Moreover, as my hon. Friends have pointed out, the Opposition have tabled amendments whose cost would total around £7 billion, and have given no explanation of where they would find the money to finance them. Which taxes would they increase? Which public expenditure would they cut? As my right hon. Friend the Chief Secretary said the other night, the Conservatives are beginning to beat the Liberals Democrats in terms of imprudent economics.

There has been a challenge to a number of our measures—important measures, aimed at making the tax system fairer. For example, Opposition Members tabled an amendment seeking to exempt from tax people working overseas and earning salaries of at least £87,000 a year. I recognise that that may not be a great deal of money for those with extensive outside interests, but, believe me, it is a lot of money from my constituents' point of view.

There was an entirely spurious attempt to focus debate on the number and scope of regulation-making powers, rather than on the important measures in the Bill. Throughout our consideration of the Bill, spurious arguments have been advanced, often on behalf of "special interest" groups. That, I think, is a measure of how ineffective the Opposition were in the task of opposing: they ran out of steam before we could even complete Third Reading.

I contend that one reason for the exodus from the Chamber this evening is the fact that the scale of revulsion in the country at the economic policies that the Conservatives pursued in opposition is beginning to dawn on them. The last time I saw the Opposition Benches so empty, Conservative Members were off looking for another leader. Perhaps that is what is happening now. [Interruption.] As my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) has just pointed out, perhaps they are off looking for work. A number of Conservatives had to do that after 1 May last year.

Let me now deal with what was said by the hon. Member for Banff and Buchan. The other day, his party's Treasury spokesman was interviewed on BBC Radio Scotland. When asked about his party's economic policies, he said that industry would have to hope for the best. That is the "fingers crossed" school of economics: the emblem of the Scottish National party should be a lucky bunch of white heather.

In one of the interventions to which we have become so used during our debates on the Bill—an intervention of great erudition—my hon. Friend the Member for Dudley, North (Mr. Cranston) took the hon. Gentleman's arguments on manufacturing apart—but, predictably, the hon. Gentleman was not present to hear him. Nor, having referred to the importance of the service industries in Scotland, was he present to hear my hon. Friend the Member for Paisley, South (Mr. Alexander) draw attention to the attack on those industries—especially the financial services industry—that had been launched by the Scottish National party in the past fortnight. Fortunately, Labour Members do not go in for that kind of behaviour.

My hon. Friend the Member for Paisley, South made a good point about the money that the Government have set aside for the university for industry. May I also remind the House of the £50 million that has been made available in the Budget for the university challenge fund? My hon. Friend's constituency contains the university of Paisley, which is known for its ability to convert research ideas into development projects that make a considerable amount of money for the Scottish economy. I am sure that he and his constituents will benefit greatly from that.

We heard some interesting contributions from the Liberal Democrats. The Liberal Democrats were a constant source of entertainment to us in Committee. In Committee, we had an opportunity to congratulate the hon. Member for Gordon (Mr. Bruce) on his wedding and his honeymoon, but I am not sure that the hon. Member for Kingston and Surbiton (Mr. Davey) had the same excuse for not being present. Tonight he raised the issue of insurance premium tax, although earlier he had had the opportunity to speak to an amendment on the subject but was not present to do so. In Committee, he failed to vote against a measure that he has described as reprehensible. He has also sought, at this late stage, to introduce a measure that would undermine an important anti-avoidance provision in the Bill. Labour Members do not find that acceptable. The insurance premium tax rate is designed to ensure that there is neither the incentive nor the scope for VAT avoidance.

It is unfortunate that the hon. Gentleman and his hon. Friends did not get their act together sufficiently to allow debate on these matters. It would have been illuminating for people outside to see the extent to which the Liberal Democrats are not prepared to pursue anti-avoidance measures. Like many of their proposals, the proposal of which the hon. Gentleman spoke tonight would have cost the country a good deal of money—more than £400 million. It is a case of spend, spend, spend—and at no point are we given any indication of how the Liberal Democrats would put the economy on to the stable basis that is required for long-term good. [Interruption.]

The hon. and learned Member for Orkney and Shetland (Mr. Wallace) who has not taken enough interest in the Bill to participate in the debate—we are becoming accustomed to such behaviour from Liberal Democrat Members—refers, from a sedentary position, to closures and redundancies in the economy. The hon. Gentleman would be better placed to make such remarks if he were prepared to engage in coherent economic argument about how we can improve our economy. The Bill is another step towards ensuring that the country moves into a climate of economic stability that will provide sustainable growth, and allow businesses and households to plan for the future.

We have had 18 years of boom and bust. We have had 18 years of economic incompetence. Anyone who wants to see the scale of that incompetence need only read the Hansard reports of debates on past Finance Bills, which will reveal some of the weakest and most spurious arguments ever advanced in the House.

The Budget that we have introduced is a Budget for fairness. At last we have a Government who are committed to fairness for all. As a consequence of this Budget, the least advantaged members of society will be given extra assistance. Those who seek to create wealth will find themselves in a climate that will allow them, not just to develop their own businesses, but to bring about an atmosphere that will enable our economy to thrive.

This is a Budget from a Government who look forward rather than back. I repeat that it is a Budget for the many, not the few. That is the sea change that has been created; that is the difference between this Government and the Government who went before.

I am proud of what was done by my hon. Friends in Committee, and am grateful for the support that they have given the Financial Secretary, the Paymaster General and me. I am also grateful to all who the Member for Halton (Mr. Twigg) have taken the message of this Budget to men and women the Member for Halton (Mr. Twigg) throughout the country. Earlier, my hon. Friend the Member for Halton (Mr. Twigg) said that people had stopped him in the street to congratulate the Government on the Budget. That happened to me, too. [Interruption.] The cackles of the Opposition prove that their arrogance is undiminished. Their lack of understanding of the ordinary people of the United Kingdom has not advanced at all. Tonight sees the completion of an important stage in the Government's programme. I commend the Bill to the House with great pride.

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

The House divided: Ayes 308, Noes 171.

Division No. 322]	[8.9 pm
AYES
Adams, Mrs Irene (Paisley N)	Cawsey, Ian
Ainger, Nick	Chapman, Ben (Wirral S)
Ainsworth, Robert (Cov'try NE)	Chaytor, David
Alexander, Douglas	Chisholm, Malcolm
Allen, Graham	Church, Ms Judith
Anderson, Donald (Swansea E)	Clapham, Michael
Anderson, Janet (Rossendale)	Clark, Rt Hon Dr David (S Shields)
Armstrong, Ms Hilary	Clark, Dr Lynda (Edinburgh Pentlands)
Ashton, Joe
Atkins. Charlotte	Clark, Paul (Gillingham)
Austin, John	Clarke, Charles (Norwich S)
Banks, Tony	Clarke. Tony (Northampton S)
Battle, John	Clelland, David
Bayley, Hugh	Clwyd, Ann
Beard, Nigel	Coffey, Ms Ann
Beckett, Rt Hon Mrs Margaret	Cohen, Harry
Benn, Rt Hon Tony	Coleman, Iain
Bennett, Andrew F	Colman, Tony
Bermingham, Gerald	Connarty, Michael
Berry, Roger	Cook, Frank (Stockton N)
Betts, Clive	Corbyn, Jeremy
Blackman, Liz	Corston, Ms Jean
Blears, Ms Hazel	Cousins, Jim
Blizzard, Bob	Cranston, Ross
Blunkett, Rt Hon David	Crausby, David
Boateng, Paul	Cummings, John
Borrow, David	Cunningham, Jim (Cov'try S)
Bradley, Keith (Withington)	Dalyell, Tam
Bradley, Peter (The Wrekin)	Darling, Rt Hon Alistair
Brinton, Mrs Helen	Darvill, Keith
Brown, Rt Hon Nick (Newcastle E)	Davey, Valerie (Bristol W)
Brown, Russell (Dumfries)	Davidson, Ian
Browne, Desmond	Davies, Rt Hon Denzil (Llanelli)
Buck, Ms Karen	Davies, Rt Hon Ron (Caerphilly)
Burden, Richard	Davis, Terry (B'ham Hodge H)
Burgon, Colin	Dawson, Hilton
Byers, Stephen	Dean, Mrs Janet
Campbell, Alan (Tynemouth)	Denham, John
Campbell, Mrs Anne (C'bridge)	Dewar, Rt Hon Donald
Canavan, Dennis	Dobbin, Jim
Cann, Jamie	Dobson, Rt Hon Frank

Donohoe, Brian H	Kidney, David
Doran, Frank	Kilfoyle, Peter
Dowd, Jim	King, Andy (Rugby & Kenilworth)
Drew, David	King, Ms Oona (Bethnal Green)
Edwards, Huw	Ladyman, Dr Stephen
Ellman, Mrs Louise	Lawrence, Ms Jackie
Ennis, Jeff	Laxton, Bob
Etherington, Bill	Lepper, David
Field, Rt Hon Frank	Leslie, Christopher
Fisher, Mark	Lewis, Terry (Worsley)
Flint, Caroline	Liddell, Mrs Helen
Flynn, Paul	Linton, Martin
Follett, Barbara	Livingstone, Ken
Foster, Rt Hon Derek	Lloyd, Tony (Manchester C)
Foster, Michael Jabez (Hastings)	Lock, David
Foster, Michael J (Worcester)	Love, Andrew
Galbraith, Sam	McAllion, John
Galloway, George	McAvoy, Thomas
Gardiner, Barry	McCabe, Steve
George, Bruce (Walsall S)	McCafferty, Ms Chris
Gibson, Dr Ian	McCartney, Ian (Makerfield)
Gilroy, Mrs Linda	McDonagh, Siobhain
Godman, Dr Norman A	Macdonald, Calum
Goggins, Paul	McDonnell, John
Golding, Mrs Llin	McGuire, Mrs Anne
Gordon, Mrs Eileen	McIsaac, Shona
Griffiths, Jane (Reading E)	McKenna, Mrs Rosemary
Griffiths, Nigel (Edinburgh S)	Mackinlay, Andrew
Griffiths, Win (Bridgend)	McLeish, Henry
Grocott, Bruce	McNulty, Tony
Grogan, John	MacShane, Denis
Gunnell, John	Mactaggart, Fiona
Hain, Peter	Mahon, Mrs Alice
Hall, Mike (Weaver Vale)	Mallaber, Judy
Hall, Patrick (Bedford)	Mandelson, Peter
Hamilton, Fabian (Leeds NE)	Marsden, Gordon (Blackpool S)
Hanson, David	Marsden, Paul (Shrewsbury)
Harman, Rt Hon Ms Harriet	Marshall, David (Shettleston)
Heal, Mrs Sylvia	Marshall-Andrews, Robert
Henderson, Doug (Newcastle N)	Martlew, Eric
Heppell, John	Meale, Alan
Hewitt, Ms Patricia	Merron, Gillian
Hill, Keith	Michael, Alun
Hinchliffe, David	Milburn, Alan
Hodge, Ms Margaret	Miller, Andrew
Hoey, Kate	Mitchell, Austin
Home Robertson, John	Moffatt, Laura
Hoon, Geoffrey	Moran, Ms Margaret
Hope, Phil	Morgan, Ms Julie (Cardiff N)
Howarth, Alan (Newport E)	Morgan, Rhodri (Cardiff W)
Howarth, George (Knowsley N)	Morris, Ms Estelle (B'ham Yardley)
Hoyle, Lindsay	Morris, Rt Hon John (Aberavon)
Hughes, Ms Beverley (Stretford)	Mowlam, Rt Hon Marjorie
Hughes, Kevin (Doncaster N)	Mudie, George
Humble, Mrs Joan	Mullin, Chris
Hutton, John	Murphy, Jim (Eastwood)
Iddon, Dr Brian	Naysmith, Dr Doug
Illsley, Eric	O'Brien, Bill (Normanton)
Jackson, Ms Glenda (Hampstead)	O'Brien, Mike (N Warks)
Jackson, Helen (Hillsborough)	Olner, Bill
Jamieson, David	O'Neill, Martin
Jenkins, Brian	Organ, Mrs Diana
Johnson, Miss Melanie (Welwyn Hatfield)	Osborne, Ms Sandra
	Palmer, Dr Nick
Jones, Mrs Fiona (Newark)	Pearson, Ian
Jones, Helen (Warrington N)	Pendry, Tom
Jones, Jon Owen (Cardiff C)	Pickthall, Colin
Jones, Dr Lynne (Selly Oak)	Pike, Peter L
Jones, Martyn (Clwyd S)	Plaskitt, James
Jowell, Ms Tessa	Pollard, Kerry
Kaufman, Rt Hon Gerald	Powell, Sir Raymond
Keeble, Ms Sally	Prentice, Ms Bridget (Lewisham E)
Keen, Alan (Feltham & Heston)	Prentice, Gordon (Pendle)
Keen, Ann (Brentford & Isleworth)	Primarolo, Dawn
Kennedy, Jane (Wavertree)	Prosser, Gwyn
Khabra, Piara S	Purchase, Ken

Quin, Ms Joyce	Strang, Rt Hon Dr Gavin
Quinn, Lawrie	Straw, Rt Hon Jack
Radice, Giles	Stringer, Graham
Rammell, Bill	Stuart, Ms Gisela
Rapson, Syd	Sutcliffe, Gerry
Reed, Andrew (Loughborough)	Taylor, Rt Hon Mrs Ann (Dewsbury)
Reid, Dr John (Hamilton N)
Robertson, Rt Hon George (Hamilton S)	Taylor, Ms Dari (Stockton S)
	Taylor, David (NW Leics)
Robinson, Geoffrey (Cov'try NW)	Thomas, Gareth R (Harrow W)
Roche, Mrs Barbara	Timms, Stephen
Rooney, Terry	Tipping, Paddy
Ross, Ernie (Dundee W)	Todd, Mark
Rowlands, Ted	Touhig, Don
Roy, Frank	Trickett, Jon
Ruddock, Ms Joan	Truswell, Paul
Russell, Ms Christine (Chester)	Turner, Dennis (Wolverh'ton SE)
Ryan, Ms Joan	Turner, Dr Desmond (Kemptown)
Salter, Martin	Turner, Dr George (NW Norfolk)
Savidge, Malcolm	Twigg, Derek (Halton)
Sawford, Phil	Vis, Dr Rudi
Sedgemore, Brian	Walley, Ms Joan
Shaw, Jonathan	Ward, Ms Claire
Sheerman, Barry	Wareing, Robert N
Sheldon, Rt Hon Robert	Watts, David
Short, Rt Hon Clare	White, Brian
Simpson, Alan (Nottingham S)	Whitehead, Dr Alan
Singh, Marsha	Wicks, Malcolm
Skinner, Dennis	Williams, Rt Hon Alan (Swansea W)
Smith, Rt Hon Andrew (Oxford E)
Smith, Angela (Basildon)	Williams, Alan W (E Carmarthen)
Smith, Miss Geraldine (Morecambe & Lunesdale)	Wills, Michael
	Wilson, Brian
Smith, Llew (Blaenau Gwent)	Winterton, Ms Rosie (Doncaster C)
Southworth, Ms Helen	Wood, Mike
Spellar, John	Worthington, Tony
Squire, Ms Rachel	Wright, Anthony D (Gt Yarmouth)
Stevenson, George	Wyatt, Derek
Stewart, Ian (Eccles)
Stinchcombe, Paul	Tellers for the Ayes:
Stoate, Dr Howard	Mr. John McFall and
Stott, Roger	Mr. Greg Pope.
NOES
Allan, Richard	Collins, Tim
Amess, David	Cotter, Brian
Ancram, Rt Hon Michael	Cran, James
Arbuthnot, James	Dafis, Cynog
Ashdown, Rt Hon Paddy	Davey, Edward (Kingston)
Atkinson, David (Bour'mth E)	Davis, Rt Hon David (Haltemprice)
Atkinson, Peter (Hexham)	Donaldson, Jeffrey
Baker, Norman	Dorrell, Rt Hon Stephen
Ballard, Jackie	Duncan Smith, Iain
Beggs, Roy	Evans, Nigel
Bercow, John	Ewing, Mrs Margaret
Beresford, Sir Paul	Faber, David
Body, Sir Richard	Fallon, Michael
Boswell, Tim	Fearn, Ronnie
Bottomley, Peter (Worthing W)	Flight, Howard
Brady, Graham	Forth, Rt Hon Eric
Brake, Tom	Foster, Don (Bath)
Brand, Dr Peter	Fox, Dr Liam
Brazier, Julian	Fraser, Christopher
Brooke, Rt Hon Peter	Garnier, Edward
Browning, Mrs Angela	George, Andrew (St Ives)
Bruce, Ian (S Dorset)	Gibb, Nick
Bruce, Malcolm (Gordon)	Gill, Christopher
Burnett, John	Gorman, Mrs Teresa
Burns, Simon	Gorrie, Donald
Burstow, Paul	Gray, James
Campbell, Menzies (NE Fife)	Green, Damian
Chapman, Sir Sydney (Chipping Barnet)	Greenway, John
	Grieve, Dominic
Clappison, James	Hamilton, Rt Hon Sir Archie
Clark, Rt Hon Alan (Kensington)	Hancock, Mike
Clifton-Brown, Geoffrey	Harris, Dr Evan

Harvey, Nick	Paterson, Owen
Hawkins, Nick	Pickles, Eric
Hayes, John	Prior, David
Heald, Oliver	Randall, John
Heath, David (Somerton & Frome)	Redwood, Rt Hon John
Heathcoat-Amory, Rt Hon David	Rendel, David
Hogg, Rt Hon Douglas	Robathan, Andrew
Horam, John	Robertson, Laurence (Tewk'b'ry)
Hughes, Simon (Southwark N)	Roe, Mrs Marion (Broxbourne)
Hunter, Andrew	Ross, William (E Lond'y)
Jack, Rt Hon Michael	Rowe, Andrew (Faversham)
Jackson, Robert (Wantage)	Ruffley, David
Jenkin, Bernard	Russell, Bob (Colchester)
Johnson Smith, Rt Hon Sir Geoffrey	St Aubyn, Nick
	Salmond, Alex
Jones, Ieuan Wyn (Ynys Môn)	Sanders, Adrian
Jones, Nigel (Cheltenham)	Shephard, Rt Hon Mrs Gillian
Keetch, Paul	Shepherd, Richard
Kennedy, Charles (Ross Skye)	Simpson, Keith (Mid-Norfolk)
Key, Robert	Smith, Sir Robert (W Ab'd'ns)
Kirkbride, Miss Julie	Soames, Nicholas
Kirkwood, Archy	Spelman, Mrs Caroline
Laing, Mrs Eleanor	Spicer, Sir Michael
Lait, Mrs Jacqui	Stanley, Rt Hon Sir John
Lansley, Andrew	Streeter, Gary
Leigh, Edward	Stunell, Andrew
Letwin, Oliver	Swayne, Desmond
Lewis, Dr Julian (New Forest E)	Syms, Robert
Lidington, David	Tapsell, Sir Peter
Livsey, Richard	Taylor, John M (Solihull)
Lloyd, Rt Hon Sir Peter (Fareham)	Taylor, Matthew (Truro)
Llwyd, Elfyn	Taylor, Sir Teddy
Loughton, Tim	Thompson, William
Luff, Peter	Tonge, Dr Jenny
MacGregor, Rt Hon John	Townend, John
Mackay Andrew	Trend, Michael
Maclean, Rt Hon David	Tyler, Paul
Maclennan, Rt Hon Robert	Tyrie, Andrew
McLoughlin, Patrick	Wallace, James
Madel, Sir David	Walter, Robert
Malin, Humfrey	Wardle, Charles
Maples, John	Webb, Steve
Maude, Rt Hon Francis	Wells, Bowen
Mawhinney, Rt Hon Sir Brian	Welsh, Andrew
May, Mrs Theresa	Whittingdale, John
Michie, Mrs Ray (Argyll & Bute)	Wilkinson, John
Moore, Michael	Willetts, David
Morgan, Alasdair (Galloway)	Willis, Phil
Moss, Malcolm	Wilshire, David
Nicholls, Patrick	Winterton, Mrs Ann (Congleton)
Norman, Archie	Winterton, Nicholas (Macclesfield)
Oaten, Mark	Woodward, Shaun
Öpik, Lembit	Yeo, Tim
Ottaway, Richard
Page, Richard	Tellers for the Noes:
Paice, James	Mr. Nigel Waterson and
	Mr. Stephen Day.

Question accordingly agreed to.

Bill read the Third time, and passed.