HC Deb 19 July 2000 vol 354 cc492-508

Amendments made: No. 92, in page 566, line 21, at end insert—

'1992 c. 48. The Finance (No.2) In Schedule 6,
Act 1992. paragraph 3.

No. 93, in page 566, line 29, leave out "that Act" and insert— 'the Taxes Act 1988 and the repeal in Schedule 6 to the Finance (No.2) Act 1992'.

No. 126, in page 571, line 18, at end insert—

'1986 c. 41. The Finance Act 1986. In sections 67(9), 70(9), 95(1) and 97(1), the words "and is resident in the United Kingdom" and "and is so resident".'.

No. 127, in page 571, line 23, column 3, at end insert— 'Section (Stamp duty and stamp duty reserve tax: transfers between depositary receipt systems and clearance systems).'.

No. 128, in page 571, line 27, at end insert— '1A. The repeals in the Finance Act 1986 have effect in Ito cordance with section (Stamp duty and stamp duty reserve tax: transfers between depositary receipt systems and clearance systems)(5) of this Act.'.

No. 129, in page 571, line 28, leave out— 'repeal in section 131 of this Act has effect— (a) so far as it relates' and insert 'repeals of sections 131 and (Stamp duty and stamp duty re serve tax: transfers between depositary receipt systems and clearance systems) of this Act have effect— (a) so far as relating'.

No. 130, in page 571, line 31, leave out "it relates" at id insert— 'relating to stamp duty on instruments other than bearer instruments, in accordance with section 108 of that Act; and (c) so far as relating'.—[Dawn Primarolo.]

Order for Third Reading read.

10 pm

Dawn Primarolo

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

I say that with great pleasure and true feeling on behalf o f a number of hon. Members who served on the Finance Bill Committee.

This Finance Bill continues to deliver Labour's promises and enacts Budget decisions to deliver opportunity and security for the hard-working families of Britain. Working families are seeing the benefit of that. Thanks to sound economic management, we have been able to cut their taxes. We have brought in not only the working families tax credit and the new lop tax rate but now, in clause 31, we have cut the basic rate of income tax to 22p—its lowest level for nearly 70 years.

By April next year, personal tax and benefit changes in this and previous Budgets will mean that, on average, households will be £460 a year better off and that families With children will, on average, be £850 a year better off. The tax burden on a single-earner family on average warnings with two children will be the lowest since 1972. Coupled with low inflation, low interest rates, low mortgage rates and economic growth, that adds up to a substantial increase in living standards, which is what really matters. For a single-earner family on average earnings with two children, living standards will have risen by more than 10 per cent. during this Parliament.

Our measures will help to achieve our goal that.every child should have the best possible start in life. That is why we have set out in the Budget our ambition to halve child poverty by 2010 and to eliminate it altogether by 2020. The measures introduced so far in this Parliament will lift 1.2 million of Britain's children out of poverty and by next year the Government will be spending an extra £7 billion a year on support for children.

The Finance Bill takes a further step to increase support for children with the introduction in April 2001 of the children's tax credit, which is worth up to £442 a year for a family claiming it. Rising living standards and tackling child poverty will be reinforced by further improvements in public services.

The immediate boost for health in the Budget of £2 billion this year is partly funded by the real increases tobacco duties in clauses 12 to 15. The decision of the Conservative party not to vote for the tobacco tax on Budget day is another confirmation that their sums do not add up and that they could not deliver Labour's pledges on health and education, as we saw yesterday.

Businesses and jobs will benefit from our commitment to enterprise in the Bill. We have cut main and small business rates of corporation tax to their lowest levels and to the lowest levels of any industrialised economy. The Finance Bill contains a number of measures to promote enterprise and help business: the cuts in capital gains tax in clause 37; the research and development tax in clauses 68 and 69; and the permanent 40 per cent. capital allowances for small and medium-sized enterprises in clause 70. Those provisions especially help manufacturing business.

The new all-employee share ownership plan in clause 47 and the enterprise management incentives in clause 62 help high-risk companies recruit key personnel. The share option provisions in clause 56 and the corporate venture provisions in clause 63 are also important. These measures have been widely welcomed by business, along with the introduction in the Budget of a three-year 100 per cent. capital allowance for investment in information and communications technology equipment and the extra £100 million for the new £1 billion target umbrella fund for enterprise growth across the regions. That is a huge commitment to business success, from a Government who believe that enterprise and economic prosperity can and must go hand in hand with fairness.

Clause 82 introduces an optional ring-fenced regime for so-called tonnage tax, whereby shipping companies can opt to work out taxable profits on the basis of the tonnage of the ships that they operate. That innovation, which follows Lord Alexander's inquiry, is part of the Government's commitment to encouraging the British shipping industry.

As was said earlier, the Budget introduces changes in the corporation tax rules, such as limiting the use of so-called offshore mixer companies to shelter low-taxed foreign profits from UK tax. The new arrangements cap the relief on dividends at 30 per cent., and ensure that no UK tax benefit can be gained from "mixing" in an offshore holding company.

As was also said earlier, the introduction of offshore mixing with a cap of 45 per cent. will benefit companies greatly. For the first time, the UK will allow onshore mixing in non-abusive circumstances. That answers industries' concerns about international competitiveness. The UK will be in a position similar to that of the US, but the UK rules are less complicated and therefore better for business.

The Bill also helps us to meet our international commitments to the environment. Following last year's Budget, it is an important part of the largest package of environmental tax measures to be introduced in the UK. Clause 30 introduces the climate change levy. Clauses 20 to 23 reform vehicle excise duty for cars. Clause 59 fundamentally reforms the company car taxation regime, providing an incentive for low carbon dioxide emissions and removing the perverse incentive for people to clock up business miles to achieve more generous thresholds. Clauses 137 and 138 increase the landfill tax rate, and clarify liability.

The changes in the affordable warmth programme in clause 79, and the reduced rate of VAT on the installation of energy-saving materials and grant-funded installation of heating systems in clause 132, will help to ensure that pensioners feel the benefit of warmer homes and cheaper fuel bills, as well as the £150 winter allowance. That programme implements the Government's commitment to combat fuel poverty by supporting the installation of energy-efficient heating systems and insulation in up to 1 million low-income homes.

The Bill also does a great deal for charities and charitable giving. It helps communities to become more democratic, more open and more socially inclusive. Clauses 38 to 46 give effect to our radical package of measures to boost donations to charities, and to improve the operation of the tax system for charities. Clause 39 abolishes the minimum limit on tax relief for donations. Clause 138 boosts payroll giving with the three-year 10 per cent. Government supplement, and abolishes the maximum limit on donations. Clause 40 cuts red tape in regard to corporate donations, and clause 43 introduces new income tax relief on gifts of shares and securities. The Bill frees charities from the need to set up subsidiaries for small trading and fundraising ventures, and broadens the VAT zero rate for the sale or hire of donated goods. It is a good package, which has been widely welcomed by charities.

Along with the new children's fund which we announced yesterday—it will have a £450 million budget over three years—these measures point to how we can help our country to make the most of one of our greatest strengths: the readiness of our people to give so much of their time and money to voluntary and community activity, for the benefit of all.

The Bill demonstrates that the Government are working hard for a purpose—to build a Britain that is strong, modern and fair. At last, economic prosperity and fairness are no longer seen as opponents; instead, they are seen as partners in the process of building Britain for the future.

The Bill also demonstrates that, with a Labour Government, there is more enterprise, more opportunity, more fairness and more investment in Britain. Britain is better off with a Labour Government, and I commend the Bill to the House.

10.10 pm
Mr. David Heathcoat-Amory (Wells)

This is not quite the worst Finance Bill that the Government have produced in the past three years, but it comes very close to it. It is certainly easily the longest Finance Bill. It is now a two-volume monster which has grown during our proceedings to 572 pages—most of which raise taxes in one form or another, and all of which make the British tax and benefits system a great deal more complicated.

Contrary to what the Paymaster General has just said, this is a tax-raising and tax-increasing Finance Bill. It comes as the last in a series of tax-raising Budgets. Taken together, this Government's Finance Bills have increased taxes on the hard-working families of Britain by £670 per year each. That is not just damaging to individuals, but involves piling taxes on to the business sector, which in itself undermines the competitive advantage that the previous Government built up during our period in office. The country and the Government will pay dearly for the mistake of eroding those advantages that our firms enjoy in international markets—in which, until fairly recently, they were comparatively lightly taxed and lightly regulated.

The Government's instinct is to tax, to regulate and to intervene. They believe that their decisions are superior to those made by free people and free companies operating in a free market.

This two-volume Bill contains its full quota of stealth taxes. Stamp duty on more expensive properties has quadrupled since the previous general election. The Chancellor is fond of pretending that that increase is borne entirely by the private householder but, in fact, the great majority of stamp duty is paid by businesses. The Government's refusal even to contemplate removing stamp duty from share transactions is again threatening to cause an erosion of business—indeed, a migration of business from this jurisdiction to the continent.

There is another stealth tax that has not been introduced yet, but has been announced. Indeed, we spent many hours debating it in Committee. It is the energy tax, or climate change levy, which the Government now seek to put into law in the Bill and which will come into effect in Apr it 2001. I declare an interest in that I have registrable interests in companies that will pay that tax. I am in fairly good company, however, because every single business of whatever size and in every part of the United Kingdom will pay that energy tax. It will be particularly damaging for the manufacturing sector, and most especially for those companies struggling to earn a living and make a return in international markets.

Mr. Timms

At an earlier stage in our consideration of the Bill, the right hon. Gentleman told the House that the companies in which he has an interest will—like the majority of United Kingdom companies—be better o because of the climate change levy package. Will he confirm that that is the case in the instance of the companies that he is involved in?

Mr. Heathcoat-Amory

No; not for the first time, was misled by the Government. They told me that the sectors in which my companies operate would in fact be better off. On further investigation, however, I am assure' by the management that we—along with most other businesses in the United Kingdom—will be substantially worse off.

What is particularly unfortunate is that the tax, although in the Bill and supposedly in its final form, is still undergoing an evolution. We are told by outside interests and the CBI, for instance, that certain companies will be eligible for rebates of up to 80 per cent., but that man other companies in the intensive energy sector will not The reason for that is truly bizarre. In order to qualify for the rebate, a company has to be part of a polluting industry. It has to be regulated by the integrated pollution prevention and control directive. So a company such as' British Oxygen, which separates air—a highly energy-intensive, but non-polluting operation—will not qualify for the rebates and will have to pay the full tax. British Oxygen operates in an intensely competitive environment and such firms will increasingly invest overseas and not here. At the same time, the Government talk about the need to improve productivity and promote competitiveness. They are good at lecturing other people about such things, but what they do undermines the very competitiveness that they urge on others.

The tax may also fall foul of the European Commission on grounds of state aid. Companies that are negotiating in good faith to try to obtain rebates are uncertain about whether the whole thing may be torpedoed by the European Commission. The companies have been told that they have to wait until the end of the year before they receive any assurances, and perhaps—even at this late hour—the Government could provide certain assurances. Above all, it is an unnecessary tax. We believe in meeting our Kyoto obligations, just as the previous Government met the Rio convention obligations, but there are many other ways to maintain the downward trend in carbon dioxide emissions, such as voluntary agreements, emissions trading and increased use of gas burning for electricity generation.

The House will recall that IR35 was announced last year, not—typically—by the Chancellor or a Minister at the Dispatch Box, but in the 35th press release put out on Budget day by the Inland Revenue. It amounts to an attack on people who provide services through companies, especially in the high-tech sector that the Government say that they wish to encourage. The Government are obsessed by tax avoidance, but their approach in this case is hitting legitimate businesses that set up companies to help the companies that they serve. They are not avoiding tax and, what is more, they provide the very flexibility in the labour market that the Government say is an asset. The Government criticise other European Union countries for their lack of labour market flexibility, but domestically the Government are piling on more regulation and bringing out more tax measures that undermine that national asset about which they boast.

I turn to the saga of double taxation relief, which has been ably tackled by, among others, my hon. Friend the Member for West Dorset (Mr. Letwin). He spotted early on that the proposal was a tremendous own goal. The Government seem to recognise that we need to be a magnet for overseas investment and business, but in their attack on double taxation relief they are eroding that possibility. Companies based here do not have an advantage, because they are effectively on the same taxation basis as their counterparts in the United States and on the continent. By removing the existing double taxation provisions, the Government will put companies based here at an actual disadvantage compared with those based overseas.

After much bluster, the Government conducted a series of inelegant retreats during consideration of the Bill. First, they postponed the measures until next year. Then they tabled some highly complicated amendments to their own provisions which have gone a long way to reversing the damage and preventing the folly.

However, the damage had been done with the business sector. Last year and the year before, businesses consulted in good faith with the Inland Revenue about how to tackle issues of tax avoidance. The Government ignored that consultation, and brought forward their own clumsy provisions. They ignored the warning signals when they were published.

The Government and the Chief Secretary to the Treasury owe a particular apology to Peter Wyman, a senior partner in PricewaterhouseCoopers, who was the first to point out that the Government had got the matter wrong. Instead, he was insulted by the Chief Secretary, who told the House that the Treasury was entirely right and that the accountancy world had got the matter wrong.

It is now clear that Mr. Wyman was right—and not about that matter alone. One of the first of what has turned out to be a series of leaks from officials at the centre of government came from Andrew Fraser, head of the Invest in Britain Bureau. A memo from him to the Secretary of State for Trade and Industry found its way into the popular prints. It stated: We can do better to avoid shooting ourselves in the foot … at a time of real pressures on manufacturing it must make sense to (a) to be careful about the impact of new initiatives—especially from the Treasury and (b) extremely sensitive over their presentation. Mr. Fraser was referring to three measures—the climate change levy, the imposition of national insurance contributions on share options and the changes to double taxation relief. All of them in their various ways are damaging, and a Government servant told a Minister the truth about that.

In addition, the Bill does nothing to reverse the decline in savings in the economy. The problem is getting worse. When the Conservative Government left office in 1997, the savings ratio—the proportion of national income being saved rather than spent—was 11 per cent. That has fallen in every year since the election—to 7, 5.75, and 5.5 per cent, respectively. In the last quarter, it fell to 3.8 per cent. Yet the Government say that they want to promote self-reliance and long-term savings. They say one thing, but do another.

Finally, I turn to indirect taxes. We debated yesterday at some length the Government's pick-and-choose attitude to indexation and uprating. They uprated pensions by 1.1 per cent., and fuel duty and other indirect taxes by 3.4 per cent. In Committee, we debated the fact that the tax on tobacco has risen relentlessly in every Budget. Those rises represent failures in the Government's health, crime and fiscal policies. The yield from tobacco duty fell last year, so it is just as well that we were not relying on that for national health service funding. Moreover, there has been an explosion in smuggling.

All that was set out in a report that the Government commissioned from Mr. Martin Taylor. Where is that report? It is secret. We are not allowed to see it, even though we paid for it, because Mr. Taylor made the rather obvious observation that it is no good being tough on the crime of smuggling without being tough on the cause of that crime—the large and growing duty differential between Britain and the continent. That is getting worse, and it increases smuggling and encourages criminality. It encourages drink-related crimes, which the Government now say that they are worried about: when drink from smuggled sources is sold in uncontrolled outlets, it increases the danger of criminal behaviour following excessive alcohol consumption.

Mr. Christopher Leslie (Shipley)

Are we hearing a guarantee that the Conservatives will cut tobacco duty?

Mr. Heathcoat-Amory

The hon. Gentleman sounds rather worried, so I invite him to join us in the Lobby to express his concern. The Opposition have voted against those increases in every Finance Bill since the general election. I remind him that, even when we had a Budget deficit, in our last two Budgets we froze duty on alcohol and cut it on spirits precisely because of the problems that I have described. The Labour party entered office and reversed that policy; they increased duty on all those products and made smuggling and racketeering worse. If the hon. Gentleman cares to follow up his concern with a little action, he will have an opportunity to do so shortly.

The abiding impression we have of the Bill is that it is another tax-raising measure; furthermore, it is a measure of almost stupefying complexity. In its excellent publication "Towards a Better Tax System", the Institute of Chartered Accountants in England and Wales gave the Bill marks out of 100 based on the institute's 10 principles of good taxation. The final score was 30. I am tempted to give the same score but, on reflection, I have decided that that would be over-generous. The Bill will continue to annoy and baffle taxpayers for many years after it has become law. We shall vote against it.

10.27 pm
Mr. Edward Davey

One hundred and fifty-seven clauses, 40 schedules and 572 pages later, the House should consider striking medals for veterans of the Committee on the Finance Bill. With its complexity and length, the Bill does this country's tax system no good. We are left with the question of whether we should support the Bill's Third Reading, and I suggest that the House applies two tests to find the answer. The first is a cost-benefit analysis of the contents—the Bill contains some good measures, but, as I shall demonstrate, many bad ones as well—and the second is the wider role of the Finance Bill and what it adds or subtracts from the management of the public finances.

As I said, the Bill contains some good measures, albeit small ones: for example, the change to amusement machine licence duty, which is a small measure, but one that will be welcomed in British Legion and nonprofit-making clubs throughout the country, and a measure which my hon. Friend the Member for Twickenham (Dr. Cable) pressed to be included in last year's Finance Bill. Air passenger duty exemptions are likewise welcome to those living in the Scottish highlands and islands. As I told the Financial Secretary in Committee, I hope that the exemption will be extended, for example, to cover the special case of the Scilly Isles, and to ensure that passengers benefit when they arrive at airports in the highlands and islands. Gift aid is also a welcome measure.

A large measure that we support is the climate change levy, although we have had some concerns, which we have expressed in a forthright manner. My hon. Friend the Member for Hazel Grove (Mr. Stunell) moved amendments and spoke on various issues relating to the levy in an effort to improve it. Unfortunately, the Government did not listen, but we decided ultimately to support the schedule's inclusion in the Bill because we believe that, on balance, it is better to have the measure in the Bill than not to have it—it is certainly better than the status quo left by the previous Government.

Those are the good things in the Bill, but, I am sorry to say, there are quite a few negatives.

Ms Rosie Winterton (Doncaster, Central)

Will the hon. Gentleman give way?

Mr. Davey

I will not give way. [Interruption.] Perhaps I will give way later.

Fuel duty increases have raised costs for motorists, but have not been offset, as we have advocated, by substantial reductions in vehicle excise duty. The Government have also failed to sort out the employers' national insurance contributions impost on share options. The most significant negative point, however, is IR35, with which we disagree profoundly. The abuse on which the Government have tried to clamp down is far more narrow than Ministers have made it out to be. Measures to clamp down on tax avoidance could have been more narrowly targeted and far more effective. The way in which the Government have chosen to act means that many small companies in the information technology sector will be seriously hit.

What has concerned us most is that the Government have at no stage admitted that market forces require many small firms—in the IT industry, the oil industry and the engineering consultancy sector—to form limited personal service companies. At no time were the Government prepared— [Interruption.]

Mr. Deputy Speaker (Mr. Michael Lord)

Order. Far too many private conversations are going on. I cannot hear the hon. Gentleman.

Mr. Davey

Thank you, Mr. Deputy Speaker.

At no time on Second Reading or in Committee have Ministers acknowledged the fundamental objection to IR35. Many companies are forced into the arrangements that they make by market pressures and by the larger companies. The Government seem unaware of that in spite of all our arguments.

The wider role of the Finance Bill also raises some serious concerns. The Government have said many times that they have not sufficiently increased expenditure on our public services over the first two or three years of this Parliament because they were trying to get the public finances under control. There are three ways in which to do that—increasing taxes, restraining public expenditure and taking benefits from the growth dividend. Over the past few years, tax rises have been introduced and there has been significant growth. Those measures, coupled with tax rises introduced by the Conservative Government, have ensured that the public finances are extremely healthy. No objective observer could say otherwise.

That is why there was no need for the Government to curb public expenditure in their first three years. There have been problems in the health service and a loss of police officers, and our schools have been starved of the funds that they need. The real reason why the Government imposed that public expenditure restraint was that they were trying to build up an election war chest. That was one of the major political reasons for their decision, and that is a great shame given the need in our public services.

A second political reason was that the Government felt the need to convince the City that they could be trusted on public finances. That is their legacy, through no fault of the people who use the public services. They have played politics with our country's public services.

The Government are offering tax cuts in the Bill. There is a penny cut in the basic rate of income tax in clause 31. But that is being done ahead of the huge and very welcome investments in public transport announced in the comprehensive spending review yesterday. Why is income tax being put ahead of investment? The Chancellor talked about deficit reduction. That was necessary, and he is right to point out the mismanagement of the economy by the Conservative Government. Frankly, however, deficit reduction is becoming almost a fetish for the Chancellor. Why must pensioners wait for an increase in the basic state pension when the Chancellor is using a lot of money to reduce the deficit? He has his priorities wrong.

Ms Rosie Winterton

Is the hon. Gentleman saying that we are taxing the country too little?

Mr. Davey

The Liberal Democrats have often argued that targeted tax increases are necessary for public service investment. The House cannot say that that is a secret.

There is one argument for supporting the Finance Bill and the overall management of the public finances, which is that the Conservatives' proposals are even more ludicrous. They have been saying that the Government's spending proposals are reckless and that spending is getting out of control. Unfortunately, nothing could be further from the truth, and when they look at the facts, the Conservatives will be unable to continue making that point.

In this financial year, total managed public expenditure, as a proportion of GDP, is at a level that has not been seen since 1963–64, so it starts at a low base. At the end of the comprehensive spending review period, 2003–04, it will reach 40.5 per cent. of GDP. In only three years of the Conservatives 18 years in Government was public expenditure as a proportion of national income lower than that. If the Conservatives claim that public spending is out of control, they must acknowledge that it was out of control for 15 of their 18 years.

There is no way that we could support the Conservatives' approach to the management of public finances. The problem, however, with the management in the Finance Bill is that the Government's proposals are too modest and do not put public services first. We shall vote against Third Reading because the Bill puts a tax cut before public service investment and includes an outrageous measure in IR35.

10.36 pm
Mr. Jack

At the conclusion of consideration of the longest Finance Bill in history, I would like to put on record my appreciation of the way in which my Front-Bench colleagues have solidly and resolutely attacked and unmasked the Government's tax-raising agenda. They have done it despite all the difficulties that any Opposition face in dealing with highly technical and complex matters, and they have done it with great skill and exposed the truth of the Bill.

It is a pity that when we tried to use modern equipment such as laptop computers in the Standing Committee to assist us in our job of probing the Government, and suggested having the notes on clauses in a modern electronic form, the somewhat arcane rules about what one may or may not bring into a Standing Committee meant that I got my knuckles rapped because I was out of order in bringing in a laptop. I hope that the Chairmen's Panel will consider that matter in due course because we ought now to be allowed to use modern aids further to enhance the ability of the Opposition—and, indeed, right hon. and hon. Members on both sides of the House—to have access to the complex information needed to consider the Bill.

I want to put on record my appreciation of the Inland Revenue for drafting excellent notes on clauses, which helped us to understand the Bill. I wish that the same clarity of explanatory information about the Bill had been available to the Chancellor of the Exchequer yesterday, when I challenged him on the tax burden that results from these measures. In this House, he denied that this country's tax burden is rising. For the record, I point out that in the financial year that ended in April, total Government receipts, excluding the windfall tax, came to 39.6 per cent. of GDP; in the current financial year, that proportion rises to 39.7 per cent., and by the end of the Parliament, it will have reached 39.9 per cent. I wish that the Government had the honesty to admit what their own figures say and what will result from the Bill.

The Bill contains a number of measures on energy saving. As my right hon. and hon. Friends have said, they are too complex and will not work. I make this prediction: the climate change levy will, if the Government continue, be turned into a nice little earner. They say that it is fiscally neutral because of the national insurance rebate, but that claim will go out of the window, as it has with the landfill tax. The Government's increase in that tax did not result in a corresponding decrease in national insurance payments.

The Bill has worsened Britain's international competitiveness, as clauses 103 and 104 bear testament. The Government have taken little note of the impact of that aspect of the measure on their tax policies.

I conclude—[HON. MEMBERS: "Hear, hear."]—on one important point. I am glad to hear the cheers of Labour Members. My right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) and the hon. Member for Kingston and Surbiton (Mr. Davey) pointed out the length and complexity of the Bill.

Even if Treasury Ministers do nothing else in response to what the Opposition have said, they should expand, with immediate effect, the remit of the tax law rewrite project to begin the much needed task of mapping out how we simplify, shorten and improve the operation of our tax system. Every company would welcome that and every citizen certainly deserves it. If the Government want to do something for tax—other than raising it—they should make its operation simpler.

10.40 pm
Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

I want to make only two points—[HON. MEMBERS: "More, more."] I am tempted to filibuster so that my hon. Friend the Member for Banff and Buchan (Mr. Salmond) will have to begin his Adjournment debate in the early hours of the morning. However, I shall continue.

I suspect that the Government will not take on board my first point. As I pointed out in yesterday's debate on fuel duty, the Government have continued on a course set out by the previous Conservative Government that is detrimental to many people, especially those in rural constituencies such as mine. I regret that the House did not discuss the amendment proposed by my hon. Friends and myself, which suggested that the latest increase in fuel duty, introduced in the Budget, should be suspended until there had been a report on its effect on the Scottish economy and that of the UK.

There is no doubt that fuel duty is one of the major issues affecting the rural economy and the economy at large. The Rural Affairs Committee of the Scottish Parliament, of which I have the honour to be a member, recently held six or seven hearings throughout rural Scotland—from the far north to the far south—to consider employment prospects. Despite the efforts of the Countryside Alliance to claim that the main issue affecting employment prospects was fox hunting, at all those hearings the foremost issue was fuel tax. The Government make much of targeting benefits on the poorest of society, so it is a matter of deep regret that, at the same time, they are imposing a tax that hits the poorest people in rural society.

I hope that the Government will take on board my second point. It relates to the effects of the climate change levy on medium-sized hydro-electric stations in the north of Scotland. When we debated amendment no. 98 yesterday, the Financial Secretary responded to my speech by noting the concern about a band of hydro-electric schemes … in the 10 to 25 MW capacity range, that, at some point in the future … may want to carry out refurbishment, and that may well be a point that needs to be considered at that stage.—[Official Report, 18 July 2000; Vol. 354, c. 331.] I point out to the hon. Gentleman that many such schemes were constructed in the late 1940s and the early 1950s. They have a lifespan of about 50 years, so investment decisions to refurbish them must be taken now. If the Financial Secretary is to reconsider the climate change levy on such stations, it must be done within the next year or so. When he responds to the debate, will he give some consideration to the genuine concerns of the hydro-electric industry in the north of Scotland?

10.44 pm
Mr. Timms

In this year's Budget and with yesterday's spending review, my right hon. Friend the Chancellor set out the next steps on the road to a modern and decent Britain, where security and opportunity are open to everybody.

The Bill and the spending review maintain the commitment to stability and prudence, ensuring that we remain on track to meet our fiscal rules and to deliver the steady growth we need. That is why we can make progress and look forward after 18 long years of catastrophic underinvestment in public services under the Tories

In the Budget, we announced sustained increases in resources for improving our public services. As the spending review shows, we are putting in sustained investment to improve standards and deliver modern, responsive services—in health, education, transport, and law and order. What is the Tory response? Some £16 billion worth of cuts.

The Government's aim is for every child to have the best possible start in life. That was clear from what was announced yesterday. That is why we set out in the Budget and in this Bill our ambition to halve child poverty by 2010 and end it altogether by 2020.

We are continuing to ensure fairness for pensioners. This package targets help at the least well off pensioners, while boosting the incomes of those who have managed to put a little aside and do not currently qualify for help.

We are making huge progress towards full employment. The number of people in jobs is at a record level, up by 1 million since the election. Long-term unemployment is at its lowest for 20 years, and the Bill contains a series of measures to improve things further still. There are action teams to help match people in areas where pockets of high unemployment remain close to vacancies nearby. We are rolling out nationally the new deal for the 50-plus. Employment zones are providing tailored support to around 50,000 long-term unemployed individuals in 15 areas of high unemployment. There is also the cut in the basic rate of income tax. All those measures are promoting employment and moving us further towards full employment.

The platform of stability that we have built is essential for businesses as well. We now have the lowest rates of small business corporation taxes ever—the lowest in the industrialised world. Since 1997, small companies have received an average corporation tax cut of nearly 25 per cent.

We have made further progress on protecting the environment. We have introduced the vehicle excise duty discounts for small-engined cars, the incentive for ultra-low sulphur petrol and a whole range of other important measures.

When growth made a fleeting appearance under the previous Government, their response was reckless and irresponsible. They blew the proceeds of North sea oil and privatisation on current spending instead of investment. We are making sure that that catastrophic mismanagement will not be repeated. We are locking the stability in.

Our prudence over the past three years has been for one purpose and one purpose only—to build a Britain that is decent as well as modern, where, acknowledging that we all depend on each other, we provide opportunity and security for all. The Bill takes us a giant step closer to that goal, and I commend it to the House

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

The House divided: Ayes 310, Noes 170.

Division No. 280] [10.47 pm
Adams, Mrs Irene (Paisley N) Bradley, Keith (Withington)
Ainger, Nick Bradley, Peter (The Wrekin)
Ainsworth. Robert (Cov'try NE) Bradshaw, Ben
Alexander, Douglas Brown, Russell (Dumfries)
Allen, Graham Buck, Ms Karen
Anderson, Donald (Swansea E) Burgon, Colin
Anderson, Janet (Rossendale) Butler, Mrs Christine
Armstrong, Rt Hon Ms Hilary Caborn, Rt Hon Richard
Ashton, Joe Campbell, Mrs Anne (C'bridge)
Atkins, Charlotte Campbell-Savours, Dale
Austin, John Cann, Jamie
Banks, Tony Caplin, Ivor
Barnes, Harry Casale, Roger
Bayley, Hugh Caton, Martin
Beard, Nigel Cawsey, Ian
Begg, Miss Anne Chapman, Ben (Wirral S)
Bell, Stuart (Middlesbrough) Chaytor, David
Benn, Hilary (Leeds C) Chisholm, Malcolm
Benton, Joe Clapham, Michael
Bermingham, Gerald Clark, Rt Hon Dr David (S Shields)
Berry, Roger Clarke, Charles (Norwich S)
Best, Harold Clarke, Eric (Midlothian)
Betts, Clive Clarke, Rt Hon Tom (Coatbridge)
Blackman, Liz Clelland, David
Blears, Ms Hazel Clwyd, Ann
Blizzard, Bob Coaker, Vernon
Boateng, Rt Hon Paul Coffey, Ms Ann
Borrow, David Cohen, Harry
Coleman, Iain Hoon, Rt Hon Geoffrey
Colman, Tony Hope, Phil
Connarty, Michael Hopkins, Kelvin
Corbett, Robin Howarth, Alan (Newport E)
Corbyn, Jeremy Howells, Dr Kim
Corston, Jean Hoyle, Lindsay
Cousins, Jim Hughes, Ms Beverley (Stretford)
Cox, Tom Hughes, Kevin (Doncaster N)
Cranston, Ross Humble, Mrs Joan
Crausby, David Hurst, Alan
Cryer, Mrs Ann (Keighley) Hutton, John
Cryer, John (Hornchurch) Iddon, Dr Brian
Cummings, John Illsley, Eric
Cunningham, Jim (Cov'try S) Jackson, Helen (Hillsborough)
Curtis-Thomas, Mrs Claire Jamieson, David
Darling, Rt Hon Alistair
Darvill, Keith Jenkins, Brian
Davey, Valerie (Bristol W) Johnson, Miss Melanie(Welwyn HatHeld)
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C) Jones, Rt Hon Barry (Alyn)
Davis, Rt Hon Terry (B'ham Hodge H) Jones, Helen (Warrington N)
Jones, Ms Jenny (Wolverh'ton SW)
Dawson, Hilton
Dean, Mrs Janet Jones, Dr Lynne (Selly Oak)
Denham, John Jones, Martyn (Clwyd S)
Dismore, Andrew Jowell, Rt Hon Ms Tessa
Dobbin, Jim Keeble, Ms Sally
Dobson, Rt Hon Frank Keen, Alan (Feltham & Heston)
Doran, Frank Keen, Ann (Brentford & Isleworth)
Dowd, Jim Kemp, Fraser
Dunwoody, Mrs Gwyneth Khabra, Piara S
Eagle, Angela (Wallasey) Kidney, David
Eagle, Maria (L'pool Garston) Kilfoyle, Peter
Edwards, Huw King, Andy (Rugby & Kenilworth)
Efford, Clive Kumar, Dr Ashok
Ellman, Mrs Louise Ladyman, Dr Stephen
Ennis, Jeff Lawrence, Mrs Jackie
Fisher, Mark Laxton, Bob
Fitzpatrick, Jim Lepper, David
Fitzsimons, Mrs Lorna Leslie, Christopher
Flint, Caroline Levitt, Tom
Flynn, Paul Lewis, Ivan (Bury S)
Follett, Barbara Lewis, Terry (Worsley)
Fyfe, Maria Liddell, Rt Hon Mrs Helen
Gardiner, Barry Linton, Martin
George, Bruce (Walsall S) Lloyd, Tony (Manchester C)
Gibson, Dr Ian Love, Andrew
Gilroy, Mrs Linda McAllion, John
Godsiff, Roger McAvoy, Thomas
Goggins, Paul McCabe, Steve
Golding, Mrs Llin McCartney, Rt Hon Ian (Makerfield)
Gordon, Mrs Eileen
Griffiths, Jane (Reading E) McDonagh, Siobhain
Griffiths, Nigel (Edinburgh S) Macdonald, Calum
Griffiths, Win (Bridgend) McDonnell, John
Grocott, Bruce McFall, John
Grogan, John McGuire, Mrs Anne
Gunnell, John McIsaac, Shona
Hall, Mike (Weaver Vale) McKenna, Mrs Rosemary
Hall, Patrick (Bedford) Mackinlay, Andrew
Hamilton, Fabian (Leeds NE) McNamara, Kevin
Hanson, David
Harman, Rt Hon Ms Harriet McNulty, Tony
Healey, John MacShane, Denis
Henderson, Doug (Newcastle N) Mactaggart, Fiona
Henderson, Ivan (Harwich) McWalter, Tony
Hepburn, Stephen McWilliam, John
Heppell, John Mahon, Mrs Alice
Hesford, Stephen Marsden, Gordon (Blackpool S)
Hewitt, Ms Patricia Marshall, David (Shettleston)
Hill, Keith Marshall, Jim (Leicester S)
Hinchliffe, David Marshall-Andrews, Robert
Hodge, Ms Margaret Martlew, Eric
Hoey, Kate Meacher, Rt Hon Michael
Home Robertson, John Meale, Alan
Hood, Jimmy Merron, Gillian
Michael, Rt Hon Alun Smith, Miss Geraldine (Morecambe & Lunesdale)
Michie, Bill (Shef'ld Heeley)
Miller, Andrew Smith, Jacqui (Redditch)
Mitchell, Austin Smith, John (Glamorgan)
Moffatt, Laura Smith, Llew (Blaenau Gwent)
Morgan, Ms Julie (Cardiff N) Snape, Peter
Morley, Elliot Soley, Clive
Morris, Rt Hon Ms Estelle (B'ham Yardley) Southworth, Ms Helen
Spellar, John
Mountford, Kali Squire, Ms Rachel
Mullin, Chris Starkey, Dr Phyllis
Murphy, Jim (Eastwood) Steinberg, Gerry
Naysmith, Dr Doug Stevenson, George
O'Brien, Bill (Normanton) Stewart, David (Inverness E)
O'Brien, Mike (N Warks) Stewart, Ian (Eccles)
O'Hara, Eddie Stinchcombe, Paul
Olner, Bill Stoate, Dr Howard
O'Neill, Martin Strang, Rt Hon Dr Gavin
Organ, Mrs Diana Stringer, Graham
Osborne, Ms Sandra Stuart, Ms Gisela
Pearson, Ian Taylor, Rt Hon Mrs Ann (Dewsbury)
Pendry, Tom
Pickthall, Colin Taylor, Ms Dari (Stockton S)
Plaskitt, James Taylor, David (NW Leics)
Pollard, Kerry Thomas, Gareth R (Harrow W)
Pond, Chris Timms, Stephen
Pope, Greg Tipping, Paddy
Pound, Stephen Todd, Mark
Powell, Sir Raymond Trickett, Jon
Prentice, Gordon (Pendle) Truswell, Paul
Prescott, Rt Hon John Turner, Dennis (Wolverh'ton SE)
Primarolo, Dawn Turner, Dr George (NW Norfolk)
Prosser, Gwyn Turner, Neil (Wigan)
Purchase, Ken Twigg, Derek (Halton)
Quin, Rt Hon Ms Joyce Tynan, Bill
Quinn, Lawrie Vis, Dr Rudi
Radice, Rt Hon Giles Walley, Ms Joan
Rammell, Bill Ward, Ms Claire
Rapson, Syd Wareing, Robert N
Reid, Rt Hon Dr John (Hamilton N) Watts, David
Rooker, Rt Hon Jeff White, Brian
Rooney, Terry Whitehead, Dr Alan
Ross, Ernie (Dundee W) Wicks, Malcolm
Roy, Frank Williams, Rt Hon Alan (Swansea W)
Ruane, Chris
Ruddock, Joan Williams, Alan W (E Carmarthen)
Russell, Ms Christine (Chester) Winnick, David
Ryan, Ms Joan Winterton, Ms Rosie (Doncaster C)
Salter, Martin Woodward, Shaun
Sarwar, Mohammad Worthington, Tony
Savidge, Malcolm Wray, James
Sedgemore, Brian Wright, Anthony D (Gt Yarmouth)
Shipley, Ms Debra Wright, Tony (Cannock)
Short, Rt Hon Clare Wyatt, Derek
Simpson, Alan (Nottingham S)
Skinner, Dennis Tellers for the Ayes:
Smith, Rt Hon Andrew (Oxford E) Mr. Gerry Sutcliffe and
Smith, Angela (Basildon) Mr. Don Touhig.
Ainsworth, Peter (E Surrey) Brand, Dr Peter
Amess, David Brazier, Julian
Ancram, Fit Hon Michael Breed, Colin
Arbuthnot, Rt Hon James Browning, Mrs Angela
Atkinson, Peter (Hexham) Bruce, Ian (S Dorset)
Baker, Norman Bruce, Malcolm (Gordon)
Baldry, Tony Burnett, John
Ballard, Jackie Burns, Simon
Beggs, Roy Burstow, Paul
Beith, Rt Hon A J Butterfill, John
Bell, Martin (Tatton) Campbell, Rt Hon Menzies (NE Fife)
Bercow, John
Body, Sir Richard Cash, William
Boswell, Tim Chapman, Sir Sydney (Chipping Barnet)
Bottomley, Peter (Worthing W)
Bottomley, Rt Hon Mrs Virginia Chidgey, David
Chope, Christopher Hughes, Simon (Southwark N)
Clappison, James Jack, Rt Hon Michael
Collins, Tim Jackson, Robert (Wantage)
Cormack, Sir Patrick Jenkin, Bernard
Cotter, Brian Johnson Smith,
Cran, James Rt Hon Sir Geoffrey
Davey, Edward (Kingston) Keetch, Paul
Davies, Quentin (Grantham) Key, Robert
Davis, Rt Hon David (Haltemprice) Kirkbride, Miss Julie
Day, Stephen Kirkwood, Archy
Donaldson, Jeffrey Lait, Mrs Jacqui
Dorrell, Rt Hon Stephen Lansley, Andrew
Evans, Nigel Leigh, Edward
Ewing, Mrs Margaret Letwin, Oliver
Fabricant, Michael Lewis, Dr Julian (New Forest E)
Fallon, Michael Lidington, David
Fearn, Ronnie Lilley, Rt Hon Peter
Right, Howard Livsey, Richard
Forth, Rt Hon Eric Lloyd, Rt Hon Sir Peter (Fareham)
Foster, Don (Bath) Loughton, Tim
Fowler, Rt Hon Sir Norman Luff, Peter
Fox, Dr Liam Lyell, Rt Hon Sir Nicholas
Garnier, Edward MacGregor, Rt Hon John
George, Andrew (St Ives) McIntosh, Miss Anne
Gibb, Nick MacKay, Rt Hon Andrew
Gidley, Sandra Maclean, Rt Hon David
Gill, Christopher McLoughlin, Patrick
Gillan, Mrs Cheryl Madel, Sir David
Gorman, Mrs Teresa Malins, Humfrey
Gorrie, Donald Maples, John
Greenway, John Maude, Rt Hon Francis
Grieve, Dominic Mawhinney, Rt Hon Sir Brian
Gummer, Rt Hon John May, Mrs Theresa
Hamilton, Rt Hon Sir Archie Michie, Mrs Ray (Argyll & Bute)
Hammond, Philip Moore, Michael
Hancock, Mike Morgan, Alasdair (Galloway)
Harvey, Nick Moss, Malcolm
Hawkins, Nick Norman, Archie
Heald, Oliver Oaten, Mark
Heathcoat-Amory, Rt Hon David O'Brien, Stephen (Eddisbury)
Hogg, Rt Hon Douglas Öpik, Lembit
Horam, John Ottaway, Richard
Howard, Rt Hon Michael Paice, James
Howarth, Gerald (Aldershot) Paterson, Owen
Portillo, Rt Hon Michael Taylor, Ian (Esher & Walton)
Prior, David Taylor, John M (Solihull)
Rendel, David Taylor, Sir Teddy
Robathan, Andrew Thomas, Simon (Ceredigion)
Robertson, Laurence Tonge, Dr Jenny
Roe, Mrs Marion (Broxbourne) Townend, John
Ross, William (E Lond'y) Tredinnick, David
Rowe, Andrew (Faversham) Trend, Michael
Ruffley, David Tyler, Paul
Russell, Bob (Colchester) Tyrie, Andrew
St Aubyn, Nick Viggers, Peter
Salmond, Alex Waterson, Nigel
Sanders, Adrian Webb, Steve
Sayeed, Jonathan Welsh, Andrew
Shephard, Rt Hon Mrs Gillian Whitney, Sir Raymond
Shepherd, Richard Whittingdale, John
Simpson, Keith (Mid-Norfolk) Widdecombe, Rt Hon Miss Ann
Wilkinson, John
Smith, Sir Robert (W Ab'd'ns) Willetts, David
Soames, Nicholas Willis, Phil
Spelman, Mrs Caroline Wilshire, David
Spicer, Sir Michael Winterton, Mrs Ann (Congleton)
Spring, Richard Winterton, Nicholas (Macclesfield)
Stanley, Rt Hon Sir John Yeo, Tim
Streeter, Gary Young, Rt Hon Sir George
Stunell, Andrew
Swayne, Desmond Tellers for the Noes:
Syms, Robert Mr. John Randall and
Tapsell, Sir Peter Mr. Geoffrey Clifton-Brown.

Question accordingly agreed to. Bill read the Third time, and passed.