HC Deb 08 May 2002 vol 385 cc206-27

Question proposed, That the clause stand part of the Bill.

7.15 pm
Mr. Flight

Clause 28 effectively abandons the 1977 Rooker-Wise amendment in relation to the indexation of personal allowances for 2003–04.

The freeze in both the national insurance primary threshold and personal allowances will raise £700 million in 2003–04 and £850 million in 2004–05. May I ask the Paymaster General whether there is any proposal to freeze the amounts for 2004–05 as well? That would raise an extra £1.6 billion in that year.

Our objections are based partly on principle, and partly on the fact that approximately 1 million more people—960,000, I think—will be paying top-rate tax. That is an increase of some 50 per cent., which will hit policemen, nurses and teachers particularly hard and, inevitably, is likely to drive up pay demands in the public sector. Moreover, although the official figures show an increase in the tax take between 1996–97 and 2006–07 of 35.3 to 38.3 per cent., there will be an increase of 5 per cent. if we take into consideration the accounting changes made since 1995.

I think we have made it abundantly clear that, while we accept the need for additional spending on health care, we oppose the raising of tax without a package of reforms that will deliver improved health care and ensure that the extra money is used effectively rather than simply resulting in extra costs. Only about 60 per cent. of the money raised through tax increases will be spent on health; 40 per cent. will go on tax credits, if we allow for the accounting fiddles in that regard.

Mr. Tom Harris (Glasgow, Cathcart)

The hon. Gentleman says he opposes tax increases specifically to fund the health service unless reforms are made, yet his party and its Front Benchers have refused to specify the reforms that they want. Is it not the case that they are simply opposed to extra investment in the NHS, full stop?

Mr. Flight

No, that is not the case. In all sincerity, hon. Members other than me have made the point many times. It involves an issue of principle. While we have a Soviet-style system of delivering health care, while hospitals do not have adequate independence to run their affairs properly and while only some 17 per cent. of expenditure is getting to the front line and there are more administrators than hospital beds—the statistics show clearly that that is the case in Scotland and Wales—merely increasing expenditure will not result in improved delivery.

Mr. Mark Hendrick (Preston)

Will the hon. Gentleman give way?

Mr. Flight

Not for a second. Our proposition is extremely simple: until we have in place a programme of adequate reforms that will do its best to ensure that extra expenditure delivers better health care, expenditure will risk being wasted. We have made the position clear many times—in essence, it is the reason why we are opposed to this little stealth tax of freezing personal allowances. Furthermore, the particular group that the measure hits is one that the Government are ill-advised to hit and, as I implied, the additional revenue that will be raised is likely fairly substantially to be swallowed up by additional pay demands.

Lynne Jones (Birmingham, Selly Oak)

Although I am certainly in favour of the Government increasing taxation so that they can invest more in the health service, I am very unhappy with the clause, which freezes the personal allowance.

I believe that far too many poor people are paying tax. Rather than freezing the personal allowance, the Government should be increasing it in order to take people out of tax. Some 69 per cent. of people on a third of median male earnings are paying tax. That is nonsensical; many people are paying tax and then having to rely not on tax credits, but on existing means-tested benefits.

That arrangement is unnecessarily complex. We need reform of the tax system substantially to raise the personal allowance and to reform tax rates so that they are simple. We need to raise the threshold at which middle income earners pay the higher rate of tax. We also probably need a rate of about 30 per cent. in the middle to compensate for the reduced tax that would result from a substantially higher tax allowance. I also believe that there should be a higher rate of tax than the current 40 per cent. and that such taxation should strike high earners, not moderate ones.

Such reforms are not on offer, but in the meantime, I will not support the clause or the abolition of the changes that took effect following the introduction of the Rooker-Wise amendment.

Mr. Michael Jack (Fylde)

I am pleased to have the opportunity to speak in this interesting debate.

The hon. Member for Birmingham, Selly Oak (Lynne Jones), who I know takes a particular interest in tax matters, made a point that is central to this debate: in justifying the proposal, the Government have not declared any strategy about the number of people who should pay tax. Effectively, the measure has an impact on those who will remain at the basic rate or the lop starting rate—points that I shall develop in a moment.

As the Paymaster General will recall, on page 75 of the Red Book, at paragraph 4.56, the Government have included a passage entitled "Making work pay for all": The Government has introduced a series of reforms to help make work pay at all levels of the labour market, but especially for those on low incomes. In justifying that position, the Government pray in aid their 22p basic rate of income tax. I was delighted to read that that is the lowest rate for 70 years and to see that the Government are moving towards a basic rate of 20p in the pound, which was a Conservative policy. The paragraph also comments on the 10p starting rate.

If the Government are so proud—at paragraph 4.56 of the Red Book—of saying that they want to make work pay for all, why did they choose the method set out in the clause to raise revenue? People whose personal allowance is part of a gate-keeping exercise as to whether work pays will find that work pays less than it would have done if the allowances had been indexed. The policy seems to fly in the face of the Government's chosen course of action of making work pay.

As the hon. Member for Birmingham, Selly Oak indicated in her very perceptive remarks, the clause is about the number of people who are brought into the tax system and have to pay tax. I am intrigued to know why, even though only a small amount may be involved, the Government seem to have no regard to the fact that they are bringing into tax a few more people than would otherwise have been included.

While I considered the implications of the measure, I discovered one or two interesting things on which the Paymaster General might like to comment. Looking back to 1991–92, we find that the number of basic rate taxpayers as a proportion of the labour force was 91 per cent. By 1996–97, that level had fallen to 61 per cent., but under the current Government, it has risen to 74 per cent. We are finding that more basic rate taxpayers are in the tax system than were under the previous Conservative Government. If the number of basic rate taxpayers as a percentage of the labour force is rising, one way of avoiding that process would have been to index the allowances and seek other ways of raising the revenue.

Mr. Hendrick

Are not more people working now than ever before? As there are so few unemployed people now by comparison with 1990 and 1991, is it not probably a desirable consequence that more people are paying tax?

Mr. Jack

If the hon. Gentleman had listened, he would have heard me use a proportionate measure rather than an absolute one. If I had used an absolute measure, his line of argument would have been entirely correct, but I was aware that if I were to fall into that trap, an argument would be advanced to destroy the point that I am making. With respect to his analysis, he is wrong. I welcome the fact that there are more people in the labour force, which always has a beneficial effect on the tax take, but that is why I used a proportionate measure.

It is interesting to consider the number of basic rate taxpayers as a percentage of all taxpayers. That proportion was 94 per cent. in 1991 and 63 per cent. in 1996, and it went back up to 76 per cent. in 2001–02. The Government seem to have ignored that rise in the number of basic rate taxpayers, for whom the indexation of allowances at the margin is very important. They must do rather better than simply announcing the stark fact that the measure will happen, which is what the Red Book says; it effectively states merely that personal allowance rates will remain the same. No doubt the Paymaster General will try to justify the measure on the basis that it will raise an extra £700 million in 2003–04 and an extra £850 million in 2004–05, to help the Government's efforts to raise revenue for the health service.

There are, however, other ways in which the Paymaster General could raise substantially more, especially in relation to her responsibility for the indirect tax system. She could do so if she got to grips with the billions of pounds that seem to be disappearing out of the VAT system, as witness the recent report by the National Audit Office. The Government will no doubt respond that they have invested more resources at our ports to deal with smuggling, and that the Bill contains measures to tighten up on VAT, just as previous Finance Bills have done. But even with all that tightening up, it is calculated that over £7 billion is going missing. The question I would like to know the answer to is: what will the investment return be if the Government put in yet more resources? If they will get £7 billion, they can afford to spend £1 billion or £2 billion.

7.30 pm

When we were in power, we were challenged about our spend to save initiative, but the principle remains. As the Paymaster General will know, over the years the application of more qualified senior inspectors at the Inland Revenue to some of the more difficult and complex areas of tax, particularly those involving large companies, has yielded considerable amounts of extra tax-well within the scope of this measure. If the Government are going to break faith with the low paid by not indexing their allowances, they have to explain to them why a relatively modest investment in extra facilities to bring in indirect taxes could not surpass by a large measure the amount of money that this proposal seeks to save. If the Government wish to remain true to their cause of making work pay, they have to do quite a lot of explaining of why they are asking the Committee to agree with a proposal that goes fundamentally against that chosen course of action.

Chris Grayling

The measure completely confuses me. I cannot for the life of me understand why a Labour Government are pursuing a policy that will clearly damage people on low incomes.

Let me tell the Paymaster General a story about a lady who came to my constituency surgery a couple of weeks ago. She was very confused about her tax affairs. She said, "I do not understand. I seem to be paying tax and I do not have much of a pension. I received bereavement allowance, which I have now lost, and I am paying £200 a year in tax. I have a low income, and £200 a year is lot of money to me."

We looked through that lady's papers. I am not a qualified tax expert but at first glance it looked as if her tax affairs were correct. Her income was just high enough to pay £200 year in taxation. However, I appreciated why she felt frustrated trying to make do on a low income in an environment where many other costs, such as council tax, are rising sharply. Gas prices have recently jumped upwards. I could understand why she felt under pressure financially.

Why on earth, then, have the Government introduced a measure that will put that lady's tax bill up? Freezing the personal allowance will mean that she will pay tax this year or next year that she would not otherwise have to pay.

Roger Casale

I wonder whether the hon. Gentleman has left out part of the story. Perhaps he would tell the Committee whether, when the pensioner came to see him, he informed her about the pension tax credit, which raises the income of people on modest incomes. I hope that he took the opportunity to point out that valuable benefit to her.

Chris Grayling

That may well be so. Indeed, for that lady's sake, I hope that she does manage to get back some of the money that she is paying in extra taxes; but she will have to get to grips with an extremely complex application process of forms and difficult bureaucracy in order to get back some of the money that the Government are taking away.

Dawn Primarolo

rose—

Chris Grayling

Perhaps the Paymaster General can tell me the logic of taking money away and giving it back again.

Dawn Primarolo

To help the hon. Gentleman out, we are discussing clause 28, which freezes the allowances. Clause 29 increases the personal allowances for pensioners. Pensioners are not included in clause 28.

Chris Grayling

Perhaps the Paymaster General can clarify the matter. My understanding is that the significantly increased amount is for those aged 75 and over. However, even if she is correct, let us look at the gamut of people on low incomes: a student nurse starting her first job, someone earning £4 or £5 an hour in McDonald's, a new graduate in their first job earning a relatively low salary, or someone who has left school and is following an apprenticeship. Freezing the personal allowance this year will increase the tax burden on those people, which should never happen. It is a tax on the low paid and on low incomes. As my right hon. Friend the Member for Fylde (Mr. Jack) has said, it will do nothing to help to get people into work; it will create a disincentive to work. It will create a burden on those who can least afford it.

Mr. Hendrick

On the concern about the low paid, why did the hon. Gentleman's party oppose the minimum wage and say that it would cost 1 million jobs, when in fact we have created I million jobs?

Chris Grayling

I remind the hon. Gentleman that during the years we were in government, year by year, Conservative Chancellors made a virtue of increasing the personal allowance, often above the level of indexation that was required, and of taking people out of taxation. As my right hon. Friend the Member for Fylde has pointed out, that tide is being reversed. More and more people are being caught by basic rate tax than were before.

Mr. Jack

Does my hon. Friend accept that, with their work in the field of family credit, the previous Conservative Government showed their regard for those who were in work but on low wages, and it is a tribute to that that the credit has now formed the basis of the various working families and successor tax credits that the Government have adopted?

Chris Grayling

I thank my right hon. Friend for those comments. He highlights a fair example of good Conservative practice being adopted by a Labour Government, but none of that explains why this Government have chosen to target a tax change on the lowest earners in society—on people with genuinely low incomes who have difficulty making ends meet. It makes no sense.

Mr. Flight

May I make the point that a father on pay of about £13,000 will pay some £2,500 in tax and get back some £2,700 in child tax credit? What on earth is the point of that?

Chris Grayling

My hon. Friend raises an important point. Too much of what the Budget does involves taking with one hand, giving back with another and creating bureaucracy in the middle, which must ultimately cost money and reduce the amount available for spending on other services, or increase the amount that people have to contribute in taxation.

This measure represents an unwelcome extra burden on the low paid. It is a second tax burden on public servants and other people who are not in particularly highly paid jobs and who will pay extra as a result of the national insurance increases. As a result of the Budget, a student teacher on £14,000 or £15,000 a year, a student nurse on the same salary, a new policeman and a new doctor will face an additional tax burden of many hundreds of pounds a year. This measure will simply increase the burden on them. It will erode a part of our tax system, the indexation process, that has been there for a generation.

Mr. Jack

Does my hon. Friend find it odd that the present hon. Member for Preston (Mr. Hendrick) is opposing the actions of the previous hon. Member for Preston, the co-proposer of the Rooker-Wise amendment?

Chris Grayling

I thank my right hon. Friend for that interesting piece of history. It is certainly food for thought for the hon. Gentleman.

I commend the honesty and commitment of the hon. Member for Birmingham, Selly Oak (Lynne Jones), who has rightly pointed out that this is an attack on people who should not be placed in that position. Her concerns are shared by Conservative Members. On this issue, I will certainly join her in the Lobby.

Mr. Tom Harris

I did not intend to take part so early in the debate, but there is nothing like Conservative crocodile tears to stir me to righteous indignation. The hon. Member for Epsom and Ewell (Chris Grayling) said that the clause represents a break with the low paid. I have no idea whether he was on the Government Benches before 1997, but it does not sit well with any Conservative Member to uphold the rights of the low paid, when the Conservative party not only opposed the national minimum wage but opposed the 10p starting rate that this Government introduced in 1997. I believe that it still opposes the working families tax credit, which is aimed specifically at some of the poorest in our society. It opposed the minimum income guarantee for pensioners, and it will doubtless oppose the pension credit.

Mr. Jack

I wonder whether the hon. Gentleman might help me to understand the logic of his argument. Why does he prefer to help the low paid through the 10p starting rate, rather than using such resources to increase personal allowances? Under the latter method, such people would not have to pay tax at all.

Mr. Harris

I am happy to discuss that later.

Mr. David Laws (Yeovil)

Will the hon. Gentleman give way?

Mr. Harris

If the hon. Gentleman does not mind, I shall continue for a while.

In a perfect world, we could raise thresholds yearly by inflation plus 10 per cent., but the fact that underpins this Budget is that the national health service was consistently underfunded for 18 years by the Conservative Government. We have taken a principled decision to raise tax in order to put into the NHS the extra money that is needed. Had the previous Conservative Government decided to freeze the thresholds, the consequences would have been far more serious. In an economy with inflation running at 10 or 15 per cent., such action would have constituted a far greater setback to the lowest paid, and to everybody else. Not only did the previous Conservative Government oppose the national minimum wage; they abolished wages councils as well.

The hon. Member for Epsom and Ewell spoke touchingly and with tears in his eyes about nurses being devastated by the freezing of allowances. He also said that, under the clause, any hope of a career for school leavers will disappear over the horizon. However, it is precisely nurses who will benefit from the Budget's general package. Thanks to this Government's handling of the economy, school leavers have been given hope of finding a job. They can find a job even in the health service.

Chris Grayling

The hon. Gentleman may not be aware of the practical consequences of tax increases for public servants in my area. It is proving increasingly difficult to recruit new teachers and health service workers, and one disincentive is the cost of living in the south-east. The more cost burdens that are added—be they increased council tax, higher national insurance contributions or adverse changes to personal allowances—the less incentive such people have to remain in public services. That is the real consequence of higher taxes.

Mr. Harris

I agree with what the hon. Gentleman says about living in the south-east, but I should point out that it is far cheaper to live there today than it was 10 years ago, simply because interest rates are a third of what they were under the previous Conservative Government. The morale of health service workers is better today than it was at any point under the Conservatives, and it is likely to improve greatly in the next 10 years, as investment in the NHS comes through.

Adam Price (East Carmarthen and Dinefwr)

The hon. Gentleman is making a brave attempt at defending the indefensible, but will he address the central point that was made by the hon. Member for Birmingham, Selly Oak (Lynne Jones)? Freezing the allowance is an extremely regressive form of taxation that will disproportionately hit the poorest paid in our society.

Mr. Harris

I disagree. I have already mentioned several Government initiatives that will ensure that the lowest paid in our society have the best protection, even under the new regime that the clause will introduce.

In accusing the Government of attacking the lowest paid, the hon. Member for Epsom and Ewell mentioned one of his constituents. I should tell him that, before the national minimum wage was introduced, some people were being paid £1.40 an hour. To such people, it makes no difference whether thresholds have been frozen since time immemorial. They were being paid so little that work could not possibly pay. Thanks to the measures introduced by this Government, the lowest paid will continue to reap the benefits of a redistributive Budget, which are far more significant than anything that the Conservative party could have offered when in government.

Mr. Hoban

Is the hon. Gentleman aware of the view of Andrew Dilnot, director of the Institute for Fiscal Studies, that the most effective way to relieve poverty is to lift people out of the tax bracket by increasing personal allowances, rather than mucking about by introducing measures such as a 10p rate?

7.45 pm
Mr. Harris

The short answer is no, but the longer answer is that the IFS has also said that, even according to the lowest estimate, through positive economic and financial policy this Government have taken more children out of poverty than have any other Government.

Mr. Flight

Why does the hon. Gentleman describe the Budget as redistributive, given that the Prime Minister said on "Breakfast With Frost" that it is not?

Mr. Harris

The hon. Gentleman may be surprised to learn that I am not a spokesman for the Prime Minister. I am not an economist, but I can call a spade a spade, and I can tell that this Budget, like all its predecessors since 1997, is redistributive. That is why I support it, and why I will vote for the clause.

Mr. Hendrick

Does my hon. Friend agree that, in opposing the Government's proposed increases, and by talking about a Soviet-style system, the Opposition give the game away? They do not believe in state support for the health service, and the real reform agenda that they do not mention is a privatisation programme that dare not speak its name.

Mr. Harris

The Conservatives cannot challenge my hon. Friend's comments, because they have refused to explain their plans for the NHS. That makes me extremely suspicious—

The Temporary Chairman

Order. I ask the hon. Gentleman to come back to the clause.

Mr. Harris

Thank you, Mr. Benton.

The clause is necessary. It will not harm the lowest paid in our society, and certainly not as much as it could have under previous policies. I am delighted to commend it to the Committee, and I shall cut my losses there.

Mr. Hoban

It is a pleasure to follow the hon. Member for Glasgow, Cathcart (Mr. Harris). It enables me to address some of his comments about how the money will be spent—an issue to which I shall return in a moment.

It is right to note that the number of higher rate taxpayers has increased by 50 per cent. since this Government took office, and like my hon. Friend the Member for Epsom and Ewell (Chris Grayling) I have spoken to constituents who are concerned about that. One constituent who wrote to me recently was horrified to discover that her husband had just breached the 40 per cent. threshold. She felt that his was not the sort of job that one would expect to incur tax at a 40 per cent. rate. Her point was that incomes that are low in the context of the area that I represent are getting caught in the 40 per cent. tax bracket. Of course, the freezing of personal allowances next year will exacerbate the problem. People who get reasonably small pay increases may well cross from the basic rate tax bracket to the higher one, and from the 10p starting rate to the higher rate.

The drift of people towards higher tax rates is a consequence of the freezing of the personal allowance—a point that all hon. Members should take on board. It impacts on incentives to work. It impacts on whether people can leave low-paid jobs to improve themselves and meet their aspirations for themselves and their families.

We need to be careful when we explain to those constituents who will slip into the higher rate tax bans exactly why personal allowances will be frozen in 2003–04. The hon. Member for Glasgow, Cathcart said that the money will go to save the NHS. I remember that in last week's debate on the national insurance paving motion he said that the money would be allocated to saving the NHS. If he had read the Red Book, he might have discovered that in fact the surplus on the Budget will increase over the 2003–04 financial year, as a consequence of the actions taken by the Government in the Budget. That is shown in table 2.4 and I am glad to see that the hon. Gentleman has his copy in front of him.

Table 2.4 states that the surplus on the previous Budget was £4 billion. In the current Budget, that surplus will increase to £7 billion-an increase of £3 billion. The cost to taxpayers of the freezing of personal allowances in 2003–04 will be £0.7 billion, so we will penalise the low paid and all those who will slip into a higher rate tax bracket simply to expand the Government's surplus. The money will be spent not on saving the NHS but on increasing the surplus that will be available for the Chancellor to release in later years. There is no apparent reason why personal allowances should be frozen for that financial year and it is difficult, therefore, for the hon. Gentleman to claim that it is being done to save the NHS. That argument is not reasonable.

The Chancellor will hit the very people—the low paid—he has set out to help in so many of his Budgets, simply to increase the surplus. If personal allowances are frozen, lower paid people who receive pay increases may start to pay the starting rate of tax or the basic rate of tax. It is a retrograde step. No party has a monopoly on compassion and Labour Members should consider the impact of an unnecessary tax increase of £0.7 billion on the very people they seek to help.

Roger Casale

The hon. Gentleman said that he was trying to explain the measure to one of his constituents, but he should explain to the Committee how he can speak on behalf of low paid people who will, he says, be adversely affected, and at the same time speak for a party that did nothing in government to help poor and vulnerable people. In fact, the Conservatives pushed millions of people and families into poverty. In opposition, his party has opposed every measure that the Government have taken to redress that wrong.

Mr. Hoban

I am staggered, because to my recollection the Conservatives did not oppose measures such as the Tax Credits Bill. In government, we took steps—as my right hon. Friend the Member for Fylde (Mr. Jack) outlined earlier—to alleviate poverty. We are now considering the record of this Government and the impact that this measure will have on the lower paid.

The freezing of tax allowances will also have an impact on the people whom the Budget did not help. Many childless couples and single people will have lost out through the 1 per cent. increase in NI contributions, and many of them are on relatively low incomes. The uprating of the personal allowances would have mitigated some of the impact of that tax increase. Those people will not benefit from the tax credits that the Government have introduced and they will be hit twice—by the increase in NI contributions and by the freezing of personal allowances. The Government are making a double dip into the pockets of childless couples and single people. Given that this tax increase is not necessary to fund public spending increases in 2003–04 and in subsequent years, the Government should take this opportunity to protect the interests of those who will suffer from this measure. The Government should recognise that there is more than one way to help those who are most in need.

Mr. Laws

I considered not taking part in the debate, but so enlivening has it been that I cannot resist the opportunity. We have heard several contrasting contributions from Conservative Members. We started with the hon. Member for Epsom and Ewell (Chris Grayling), who expressed his concern about the effect of the change on people on very low pay, and then we ended with the hon. Member for Fareham (Mr. Hoban), who expressed his concerns about higher rate taxpayers.

Mr. Hoban

I wish to correct the impression that the hon. Gentleman is giving to the Committee and to casual readers of the daily—

Roger Casale

The Daily Mail.

Mr. Hoban

No, but I nearly said the Daily Record, which is a completely different newspaper. I meant to say the daily Hansard report. I did not speak only about higher rate taxpayers. In fact, I devoted much of my remarks to the impact on lower rate taxpayers.

Mr. Laws

Those who read the hon. Gentleman's comments in Hansard tomorrow will see the slightly different emphasis that he placed on the matter compared with the hon. Member for Epsom and Ewell. We do not need to look to the future to judge the Conservatives' priorities, because we have their record in government over a long time when they placed the reduction of the basic rate of income tax and, to some extent—they will be pleased to hear me say this—the upper rate of income tax as a priority over raising the personal income tax threshold or introducing a lower rate of tax such as the lop rate. That is on the record in their Budgets and in the memoirs of Lord Lawson, who specifically deals with that issue and states his preference for reducing the basic rate of tax—a less progressive measure—as opposed to increasing the personal tax allowance.

Mr. Flight

Is it a good thing that another 1 million people, or 50 per cent. more, have been brought into the higher tax band? That band will now include people such as teachers and doctors.

Mr. Laws

I am delighted that the hon. Gentleman has raised that point, because he will know that raising the personal tax allowance, as opposed to cutting the basic rate of tax or introducing a lop tax rate, has been the policy of my party. I sought to contrast the present views of the Conservatives on freezing the tax threshold with the views that they held in office. Perhaps the hon. Gentleman will tell us—if the Conservatives have a tax strategy at the moment—whether they would still focus on reducing the basic rate of tax or on the more progressive measure of increasing the personal tax allowance.

Chris Grayling

The hon. Gentleman is devoting most of his remarks to the history of the Conservative party in government. I remind him that the Conservatives maintained indexation and, indeed, on several occasions increased the thresholds by more than the rate of inflation. Today we are talking about a Labour Government who have abandoned indexation and I suggest that he devotes his remarks to that topic.

8 pm

Mr. Laws

I am grateful to the hon. Gentleman, but I did not want to mention the occasions when the Conservative Government froze the level of the personal income tax allowance—something that he has criticised this evening. I do not want to be drawn even further into the quandary that is Conservative policy on taxation and the health service, so—lest hon. Members feel that I am not being equitable in my criticisms—I shall move on to discuss the Government's position with regard to the personal income tax allowance.

The Government should take no pride at all from freezing the personal income tax allowance. As has been stated, that is a less progressive reform of the tax system than the 10p rate that the Government introduced. The hon. Member for Glasgow, Cathcart (Mr. Harris) said earlier that many people are on such low incomes that they do not pay a significant amount of income tax and that therefore they have been influenced more by the minimum wage and tax credits. That is true, but the Government's reforms of the personal tax system—in the past few years they have reduced the basic rate and introduced a 10p rate—contrast with the proposal to freeze the personal allowance, which is clearly regressive rather than progressive. Why has the change been introduced in this Budget? It has not been introduced primarily to bolster the Government's surpluses, as the Government are projecting significant borrowing on their Budget accounts, on the old Conservative basis. I believe that the Government chose to freeze personal income tax allowances because they had made a commitment in two general election campaigns not to change the basic rate of tax. As a consequence, they had to find other ways to increase the tax burden.

As I have said, the freeze on personal income tax allowance is regressive, and the rise in employers' national insurance contributions will hit jobs. The changes are also unfair, as the Government have also increased employee national insurance contributions. That is a tax on jobs from which many wealthy people are exempt as, although they could afford to pay more tax, they may not be in work.

For all those reasons, my party opposes freezing the personal tax allowance.

Mr. Mark Field

Mr. Gale, you have missed an enthralling debate on this matter over the past three quarters of an hour. However, I shall not detain the Committee for long.

Most of the important points on this matter have been made by those of my hon. Friends who have contributed to the debate. The hon. Member for Birmingham, Selly Oak (Lynne Jones) also made a helpful contribution. The hon. Member for Glasgow, Cathcart (Mr. Harris) is not present at the moment, but his contribution was also helpful, albeit rather more inadvertently.

Many people are worried that the proposal is too complicated. As has been noted by hon. Members of all parties, some people earning relatively small sums of money will find that they have to pay extra tax. I accept the point made by the hon. Member for Preston (Mr. Hendrick) that the tax credits scheme comes into play in this regard. People earning modest sums—say between £12,000 and £14,000 a year—will end up paying a large proportion—£2,000 or more—in tax, but they will get more than that amount in tax credits.

It is nonsensical to have so complicated a system. We need to be more honest in our approach to taxation, and the Chancellor's plans for tax credits are based on the fact that they do not count as public expenditure because of how they are implemented. That also muddies the waters of public spending.

I agree too with the hon. Member for Yeovil (Mr. Laws), who said that the complication introduced into the system over the past two or three Budgets results from the Government's pledge not to increase the headline rates of income tax at the basic and higher rates. However, although the strict letter of that pledge has been kept, one consequence of not increasing the allowances even to take account of inflation—they are not going to be indexed in any way—is that, in effect, tax rates will be increased.

As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) pointed out, one effect of the Government's tax policy over the past five years is that the number of people paying the highest rate of 40 per cent. has risen from about 2 million to about 3 million. To that extent, the spirit of the 1997 pledge not to increase taxes has been broken, if not the letter.

Mr. Hoban

My hon. Friend represents a London constituency. As salaries rise to keep pace with living costs, will not more and more people in London fall into the 40 per cent. band?

Mr. Field

My hon. Friend is right. I do not want to indulge in special pleading, but that is a problem facing all hon. Members with London constituencies. The electorate of the hon. Member for Wimbledon (Roger Casale) is probably even more middle class than mine in Cities of London and Westminster. Hon. Members with seats in London and the south-east increasingly find that people in those constituencies on incomes that are comparatively modest find themselves in the upper tax rate band.

That is a real problem. My hon. Friend the Member for Epsom and Ewell (Chris Grayling) spoke earlier about how it affects people working in the public services. Nowadays, it is very difficult to attract people into the public services—or even into relatively low-paid jobs in private hospitals or private schools, or in shops—without paying some sort of London weighting. That could be the public sector London weighting, or a private sector weighting. All too often, people facing the very high costs of housing and of living in London and the south-east find themselves heading inadvertently for the upper tax rate.

I am sorry that the hon. Member for Glasgow, Cathcart is not present, as I thought that his comments about the NHS—about which he talked at great length—were a little rich. To a large extent, health matters as they affect his constituents are out of his hands, given the role of the Scottish Parliament. The pro rata tax expenditure on health in Scotland and Wales is much greater than it is in England, and it is ironic that there should be so little satisfaction about that. This is supposed to be a Budget for the NHS, but the Government must give close consideration to the question of how effectively the money may be spent.

Mr. Hoban

I should hate my hon. Friend to sit down without saying more about tax credits and low pay. Every low-paid person will be affected by the tax increases that will flow from the freezing of personal allowances. However, does my hon. Friend agree that an unusual aspect of the proposal is that not everyone will benefit from the system of tax credits? The take-up rate for tax credits is something like two thirds of all those who are eligible. Many people will therefore lose out as a result of the provisions in the Bill. Does my hon. Friend agree that they will not catch up through the tax credit system, as it is quite complicated?

Mr. Field

My hon. Friend makes an interesting point, and I shall be interested in what the Minister has to say in response. My hon. Friend is a former chartered accountant, and therefore a greater expert than I on these matters. I am afraid that I am one of those hon. Members who used to belong to the legal fraternity, but my hon. Friend can crunch the figures.

Mr. Boateng

The hon. Gentleman does not have to apologise.

Mr. Field

The Financial Secretary is another former member of the legal profession. I served only as a solicitor, but I understand that the right hon. Gentleman was a barrister.

Mr. Hoban

He was a distinguished barrister.

Mr. Field

He was a distinguished barrister, so perhaps I should refer to the Financial Secretary as the right hon. and learned Member for Brent, South—but perhaps not.

Roger Casale

I am grateful that the hon. Member for Cities of London and Westminster (Mr. Field) has not tried to build his remarks on the crocodile tears of a Conservative defence of the low paid. The hon. Gentleman is basing his argument on the complexity of the tax system, and he has raised some interesting points. He is opposed to freezing the thresholds, but what would he propose instead? If he were to develop his argument further, I am sure that we would find him proposing something even more complex than what is contained in the Bill.

Mr. Field

That is a fair comment, and I thank the hon. Gentleman for complimenting me on touching on the question of complexity. I feel strongly that there should be indexation. The system has become increasingly complicated but, as my hon. Friend the Member for Fareham (Mr. Hoban) pointed out, roughly one third of those who qualify for tax credits do not claim them. There is a real risk that a significant number of people who pay tax by PAYE—they often do not realise just how much they are paying, as the money is taken straight out of their pay packets—will not claim the tax credits for which they qualify. I hope that the Minister will say something about that.

One thing that the Government can do is increase advertising to ensure that people are aware of the benefits to which they are entitled. Many elderly people, in particular, are unaware of the credits as they may not have been part of the work force for some time. None the less, this seems to be an idiotic system. If we had a blank sheet of paper before us, we surely would not design an income tax system in which millions of people on low incomes pay tax and can then claim even more than that in various credits.

Dawn Primarolo

I have been a little startled at some of the assertions made by Conservative Members, but it has nevertheless been extremely refreshing to hear how deeply concerned some of them are about the plight of those on low incomes, families trapped in poverty and the crucial issue of ensuring that people are aware of their entitlements and rights. However, I was particularly startled by the speech of the hon. Member for Cities of London and Westminster (Mr. Field) when I recall that social security legislation under the Conservative party, when in government, meant that there was no obligation on the Department of Social Security to notify people of their rights. Instead, they had to guess them. Therefore, it will be of enormous benefit if all Members of all the political parties in the House can agree that eradicating child poverty from our society is a principle to which every Member is committed, even if we disagree on the methods of doing so.

Whenever I have challenged Conservative Members, outside the Chamber, to make such a commitment, they have declined to do so.

Mr. Mark Field

Will the Minister give way?

Dawn Primarolo

I am more than happy to give way if the hon. Gentleman will put on record his pledge to see the scourge of child poverty eradicated from our society, even though his party doubled the number of children living in poverty.

Mr. Field

Everyone on both sides of the Committee is in favour of eradicating child poverty, but one difficulty with child poverty is definitional. In the past—certainly prior to 1 May 1997—I recall that Labour Members were keen to ensure that statistics were bandied around when child poverty was seen as a relative value. Obviously, with many families becoming more affluent, relative values are almost meaningless. If there is an absolute rather than a relative value, I will be only too happy to join the Minister in her crusade to end child poverty.

Dawn Primarolo

I will not go down that road, Mr. Gale, because I am sure that you would rule me out of order, except to say that what the hon. Gentleman says is a load of rubbish. He does not want to acknowledge the rising level of incomes in our society and the fairer distribution and share of the growing wealth that has taken place since the Government were first elected.

I have no problem in discussing elsewhere with the hon. Gentleman definitions of poverty. When parents cannot afford to buy their children a new pair of shoes because they do not have enough money, that is a pretty good indication. However, I welcome the hon. Gentleman's unequivocal pledge that he is prepared to join a campaign to eradicate child poverty, and I hope that his colleagues will join him.

Mr. Jack

Will the Minister give way?

Dawn Primarolo

I hope that the right hon. Member for Fylde (Mr. Jack) is about to make the same commitment.

Mr. Jack

I wanted to pick the hon. Lady up on her point about the distributional effects of the Government's tax policies. As an exercise in the clarity and transparency of the Government's policies and to enable us to understand some of the things to which she has referred, will she commit to answering again the question first tabled in 1981 by the then hon. Member for Blackburn (Mr. Straw), now Secretary of State for Foreign and Commonwealth Affairs, on tax—direct and indirect—so that we might gauge the effect of the measures through the deciles of income that used to be at the centre of that question, or will she explain once and for all why she will not answer it?

8.15 pm
Dawn Primarolo

As the right hon. Gentleman knows, because this has been debated in the House many times, the distribution of indirect tax is imprecise and difficult to measure. Are we to assume that every household smokes or consumes a certain amount of beer, whether from a small brewery or not?

Mr. Laws

Will the Paymaster General give way?

Dawn Primarolo

I will be happy to give way to the hon. Gentleman, but I should like to finish one point before giving way on the next.

In advancing the 10p tax rate, reducing the basic rate of tax and designing our tax measures, whether they be tax credits or changes to the tax system, to ensure that maximum benefit goes to those on the lowest incomes, the Government have substantially increased those incomes. When I have given way to the hon. Gentleman, I will give some examples of how significantly incomes have been increased.

Mr. Laws

On the non-continuance of the previous series of figures on the tax burden, although I heard the Paymaster General's criticisms of the previous methodology of deriving the tax burden, does she recall using precisely the same figures, to great effect, in opposition?

Dawn Primarolo

I admit that I remember being in opposition, but it has no glowing attraction. I much prefer being in government and taking decisions. I will give the hon. Gentleman some figures to consider.

A single person aged 25 or over, working 35 hours a week on the national minimum wage—which was opposed by both the Conservative and Liberal Democrat parties—will be £21.55 a week better off as a result of the working families tax credit. A single-earner family on half male mean earnings, with two children, will be £3,490 better off since 1997.

Lynne Jones

Will the Minister give way?

Dawn Primarolo

If my hon. Friend will wait a moment, I will give way to her.

These are hardly the actions of a Government who do not care about those on low incomes. As I have said, we must contrast our record with that of the Conservative party when in government.

I know that I should return to the clause before you reprimand me, Mr. Gale, I will give way to my hon. Friend and then return directly to the clause.

Lynne Jones

The question is whether those who cannot afford to buy shoes for their children, to use the Minister's example, should be paying tax at all.

Dawn Primarolo

If my hon. Friend will bear with me, I will come to indexation, the Rooker-Wise amendment and the true cost to families in each tax bracket.

Clause 28 freezes the personal allowances for those under 65. Along with the freeze on the national insurance threshold, that will raise £700 million for the Exchequer next year and £850 million the year after, helping to fund the increase in investment in the national health service. It spreads the burden of contributions wider than simply being placed on earners. As I have said, clause 29 will extend the age-related personal allowances for those aged 65 or over beyond indexation.

Conservative Members oppose the clause. They made great play of ignoring the Rooker-Wise principles. I took the precaution of reading the debate that took place in 1978. It is a very important debate, and I hold both hon. Members who moved the amendment, especially the late Audrey Wise, in great respect as regards their intentions in doing so. In the debate, Audrey Wise made it clear that a Government who were freezing the allowances would have to come to this House to explain why automatic indexation was not taking place. That is exactly what we are doing in relation to this year. We are not talking about indexation having gone for ever, but about what happens as result of this Budget.

As the hon. Member for Yeovil (Mr. Laws) pointed out, Conservative Members showed no hesitation and expressed no worries about the poor when they froze personal allowances in 1993–94, nor when they did it again in 1994–95. They were not freezing allowances, as are this Government, to use the money to spend on investment in public services—quite the reverse. Hon. Members may recall that I reminded the right hon. Member for Charn wood (Mr. Dorrell) that his Government's Budget in 1994 cut £10 billion from public expenditure. The Conservatives were paying the cost of economic failure. The breathtaking argument advanced by the hon. Member for Fareham (Mr. Hoban) was that we should not be raising any more tax because the economy was looking quite good—we should just borrow more if we wanted to invest. That would be a return to exactly the policies that got the last Conservative Government into such a dreadful mess.

Conservative Members said that they were concerned that the increase meant that higher rate taxpayers would pay more.

Mr. Jack

The Paymaster General rightly drew our attention to the fact that a decision had to be taken about the suspension of the Rooker-Wise amendment, and said that the Committee would require an explanation. So far, she has announced that a sum of money is being raised and told us what it will be used for, but she has said neither why that particular mechanism—the freezing of the allowance—was the chosen vehicle for raising the money, nor what others were rejected.

Dawn Primarolo

If the right hon. Gentleman will be patient, I am coming to that. I am trying to deal with questions in sequence rather than making my comments, then answering all the questions at the end out of sequence.

The Chancellor made it clear that he believed, based on the Beveridge principles, that all members of the community should make a contribution to increases in spending in the public sector. I shall give the figures so that hon. Members know exactly what we are talking about before their imaginations run riot. The changes resulting from freezing the allowances will be equivalent to 28p for the starting rate taxpayer, 49p a week for the basic rate taxpayer and 80p a week for the higher rate taxpayer. Surely, Conservative Members do not expect us to believe that 80p a week will force millions of people into the upper rate tax bracket. Of course, that is not so, as they know full well. Freezing personal allowances—I absolutely acknowledge that that is the impact—spreads the burden of the contribution widely, as the Chancellor wanted to do in line with the Beveridge principles. Those on the lowest incomes will be greatly assisted by the interaction between the family tax credit and the working tax credit, to the point where there will be no extra charge to them.

Great play was made of the higher rate of income. The higher rate threshold is –34,515 in 2002–03. That hardly qualifies as a low income. The Government have considered where to raise the money for investment in first-class public services. We are increasing non-health spending by 2.5 per cent. in real terms in 2004–05 and 2005–06. We want to place the national health service on a sustainable long-term financial footing, as do all members of our community. We are increasing the UK's health spending by 7.4 per cent. a year in real terms over the next five years, and by more than £40 billion between 2002–03 and 2007–08. My constituents and people I meet on the doorstep tell me that they are prepared to invest that money in their health service. They do not say, "Our incomes are lower, so we don't want to make a contribution."

My hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) asked about people on low incomes. I remind her that 50 per cent. of families with children are better off in terms of actual income and will be better off as a result of the improved quality of the health service when the investment is made. Single people aged 25 or over working 35 hours a week on a minimum wage are better off and will have access to improved public services. Because of the tax and benefit reforms that we have made since 1997, the poorest fifth of families will on average be £2,400 a week better off—[Interruption.] I am sorry. They would love me to say that, but I think that the Chancellor would have something to say about it. They will be £2,400 a year better off as a result of our changes, better public services and higher investment. If we said to those people, "You are not to contribute even a small amount to your health service, even though you have vastly improved your financial position as a result of this Government's investment in your future", they would find that bizarre, as they would find it bizarre to hear hon. Members suggesting that they are not prepared to pay.

Mr. Edward Davey

Of the number of people on low incomes who are being brought into the income tax net as a result of the freezing of personal income tax allowances, what proportion will gain from the Government's tax credit policies and what proportion will not benefit at all?

Dawn Primarolo

I shall be very careful in giving the answer, because I do not want to mislead the Committee on that matter, and I will check carefully whether I have answered the hon. Gentleman correctly.

The working tax credit, the child tax credit and the pension credit, linked to the minimum income guarantee for pensioners, the £200 a year allowance for heating and the changes that we have made to indexation for over-65s—[Interruption.] The hon. Gentleman knows that people on low income do not represent just one group. Presumably, he is expecting me to deal with the income of each and every group where there may be people on low incomes. The combination of all the measures I mentioned ensures that the very lowest incomes continue to increase the most. The hon. Gentleman can confirm that by studying the distributional impact charts in the Red Book and by talking to his hon. Friend the Member for Yeovil, who is a member of the Select Committee on the Treasury, one of whose recommendations dealt with the matter.

8.30 pm

The right hon. Member for Fylde made many interventions; the final one was to point out that we should do more about avoidance. That is rich coming from a party that tells us that we are introducing too much complexity and red tape to the tax system, while telling us that people who should pay tax are not doing so, even though when the Conservatives were in government they did nothing about that problem. If the right hon. Gentleman examines the Finance Bill, he will see that closing avoidance loopholes will raise £740 million next year and more than £1 billion in the following year, ensuring that those who try to avoid tax are encouraged to pay it.

Mr. Jack

The hon. Lady should consider her words carefully. She said that the previous Conservative Government did nothing about avoidance. She might remember that the last Finance Bill before the general election in 1997 included a range of measures that built on previous initiatives on the issue. We can debate their effectiveness in another place at another time, but the Conservative Government took action on many aspects of avoidance and the hon. Lady knows it.

Dawn Primarolo

The right hon. Gentleman referred specifically to VAT. I do not mind debating the record of his Government or scrutinising it, but I do not recall that they ever made an assessment of the problems of VAT fraud. I certainly remember that they got their forecasts wrong; there was one year when £6 billion of VAT receipts disappeared and could not be accounted for—[Interruption.] The right hon. Gentleman specifically raised VAT avoidance and I stand by what I have said. I do not recollect that his Government undertook the assessment that we have made, nor did they publish either figures or strategies as we have done under the able stewardship of my right hon. Friend the Financial Secretary.

For all the reasons that I have given—investment in public services, ensuring a fair contribution, an understanding of the decision to freeze allowances this year for the under-65s—I commend the clause to the Committee.

Question put, That the clause stand part of the Bill—

The Committee divided: Ayes 257, Noes 187.

Division No. 228] [8.32 pm
AYES
Ainger, Nick Bailey, Adrian
Ainsworth, Bob (Cov'try NE) Baird, Vera
Anderson, Rt Hon Donald Banks, Tony
(Swansea E) Barnes, Harry
Anderson, Janet (Rossendale) Barron, Kevin
Atherton, Ms Candy Bayley, Hugh
Austin, John Beard, Nigel
Bennett, Andrew
Berry, Roger Foster, Michael Jabez (Hastings)
Best, Harold George, Rt Hon Bruce (Walsall S)
Betts, Clive Gerrard, Neil
Blackman, Liz Gibson, Dr Ian
Blears, Ms Hazel Gilroy, Linda
Blizzard, Bob Godsiff, Roger
Boateng, Rt Hon Paul Griffiths, Jane (Reading E)
Borrow, David Griffiths, Win (Bridgend)
Bradley, Peter (The Wrekin) Grogan, John
Bradshaw, Ben Hall, Patrick (Bedford)
Brennan, Kevin Hamilton, Fabian (Leeds NE)
Brown, Rt Hon Nicholas Harris, Tom (Glasgow Cathcart)
(Newcastle E & Wallsend) Havard, Dai
Brown, Russell (Dumfries) Haley, John
Bryant, Chris Henderson, Doug (Newcastle N)
Burden, Richard Henderson, Ivan (Harwich)
Burgon, Colin Hendrick, Mark
Burnham, Andy Hepburn, Stephen
Cairns, David Heppell, John
Campbell, Alan (Tynemouth) Heyes, David
Casale, Roger Hill, Keith
Challen, Colin Hinchliffe, David
Chaytor, David Hood, Jimmy
Clapham, Michael Hopkins, Kelvin
Clark, Mrs Helen (Peterborough) Howarth, Rt Hon Alan (Newport E)
Clark, Paul (Gillingham) Howarth, George (Knowsley N)
Clarke, Rt Hon Tom (Coatbridge) Hughes, Kevin (Doncaster N)
Clarke, Tony (Northampton S) Hurst, Alan
Clelland, David Hutton, Rt Hon John
Coaker, Vernon Illsely, Eric
Cohen, Harry Jamieson, David
Colman, Tony Jenkins, Brian
Connally, Michael Jones, Helen (Warrington N)
Cook, Frank (Stockton N) Jones, Jon Owen (Cardiff C)
Cook, Rt Hon Robin (Livingston) Jones, Kevan (N Durham)
Corston, Jean Joyce, Eric
Cousins, Jim Kaufman, Rt Hon Gerald
Crausby, David Keen, Alan (Feltham & Heston)
Cruddas, Jon Kelly, Ruth
Cunningham, Rt Hon Dr Jack Khabra, Piara S
(Copeland) Kidney, David
Cunningham, Jim (Cov'try S) Kilfoyle, peter
Cunningham, Tony (Workington) King, Andy (Rugby & Kenilworth)
Curtis-Thomas, Mrs Claire King, Ms Oona (Bethnal Green)
Dalyell, Tam Knight, Jim (S Dorset)
Davey, Valerie (Bristol W) Kumar, Dr Ashok
David, Wayne Ladyman, Dr Stephen
Davidson, Ian Lawrence, Mrs Jackie
Davies, Rt Hon Denzil (Llanelli) Laxton, Bob
Davies, Geraint (Croydon C) Lazarowicz, Mark
Davis, Rt Hon Terry Lepper, David
(B'ham Hodge H) Levitt, Tom
Dawson, Hilton Lewis, Terry (Worsley)
Dean, Mrs Janet Linton, Martin
Dhanda, Parmjit Lloyd, Tony
Dismore, Andrew Love, Andrew
Dobbin, Jim Lucas, Ian
Dobson, Rt Hon Frank Lyons, John
Donohoe, Brian H McAvoy, Thomas
Doran, Frank McCabe, Stephen
Dowd, Jim McDonagh, Siobhain
Drew, David MacDonald, Calum
Dunwoody, Mrs Gwyneth McDonnell, John
Eagle, Angela (Wallasey) MacDougall, John
Eagle, Maria (L'pool Garston) McFall, John
Edwards, Huw Mclasaac, Shona
Efford, Clive McKechin, Ann
Ellman, Mrs Louise McNamara, Kevin
Ennis, Jeff Mactaggart, Fiona
Field, Rt Hon Frank (Birkenhead) McWalter, Tony
Fisher, Mark McWilliam, John
Flint, Caroline Mahon, Mrs Alice
Flynn, Paul Mallaber, Judy
Follett, Barbara Mann, John
Foster, Rt Hon Derek Marsden, Gordon (Blackpool S)
Foster, Michael (Worcester) Marshall, Jim (Leicester S)
Marshall-Andrews, Robert Simon, Siôn
Martlew, Eric Simpson, Alan (Nottingham S)
Meacher, Rt Hon Michael Singh, Marsha
Meale, Alan Skinner, Dennis
Milburn, Rt Hon Alan Smith, Rt Hon Andrew (Oxford E)
Miller, Andrew Smith, Angela (Basildon)
Mitchell, Austin (Gt Grimsby) Smith, Rt Hon Chris (Islington S)
Moffatt, Laura Smith, John (Glamorgan)
Mole, Chris Smith, Llew (Blaenau Gwent)
Moran, Margaret Soley, Clive
Mountford, Kali Southworth, Helen
Mudie, George Stevenson, George
Mullin, Chris Stewart, Ian (Eccles)
Murphy, Denis (Wansbeck) Stinchcombe, Paul
Murphy, Jim (Eastwood) Strang, Rt Hon Dr Gavin
Naysmith, Dr Doug Stringer, Graham
O'Brien, Mike (N Warks) Sutcliffe, Gerry
O'Hara, Edward Tami, Mark
Olner, Bill Taylor, Rt Hon Ann (Dewsbury)
O'Neill, Martin Taylor, David (NW Leics)
Palmer, Dr Nick Taylor, Dr Richard (Wyre F)
Perham, Linda Thomas, Gareth (Clwyd W)
Picking, Anne Tipping, Paddy
Pickthall, Colin Todd, Mark
Pike, Peter Touhig, Don
Plaskitt, James Trickett, Jon
Pope, Greg Truswell, Paul
Pound, Stephen Turner, Dennis (Wolverth'ton SE)
Prentice, Gordon (Pendle) Turner, Neil (Wigan)
Primarolo, Dawn Tynan, Bill
Prosser, Gwyn Vaz,Keith
Purchase, Ken Vis, Dr Rudi
Purnell, James Walley, Ms Joan
Quin, Rt Hon Joyce Watson, Tom
Rapson, Syd Watts, David
Reed, Andy (Loughborough) White, Brian
Robertson, John Williams, Rt Hon Alan
(Glasgow Anniesland) (Swansea W)
Rooney, Terry Wills, Michael
Ross, Ernie Winnick, David
Roy, Frank Worthington, Tony
Ruddock, Joan Wray, James
Russell, Ms Christine (Chester) Wright, Anthony D (Gt Yarmouth)
Salter, Martin Wright, David (Telford)
Savidge, Malcolm Wright, Tony (Cannock)
Sedgemore, Brian Wyatt, Derek
Shaw, Jonathan
Sheerman, Barry Tellers for the Ayes:
Sheridan, Jim Mr. Fraser Kemp and
Shipley, Ms Debra Mr. Ian Pearson.
NOES
Ainsworth, Peter (E Surrey) Bruce, Melcolm
Allan, Richard Burns, Simon
Amess, David Burnside, David
Arbuthnot, Rt Hon James Butterfill, John
Atkinson, David (Bour'mth E) Cable, Dr Vincent
Atkinson, Peter (Hexham) Calton, Mrs Patsy
Baker, Norman Carmichael, Alistair
Baldry, Tony Cash, William
Barker, Gregory Chapman, Sir Sydney
Baron, John (Chipping Barnet)
Barrett, John Chidgey, David
Beggs, Roy Chope, Christopher
Berith, Rt Hon A J Clappison, James
Bercow, John Collins, Tim
Beresford, Sir Paul Conway, Derek
Blunt, Crispin Cormack, Sir Patrick
Boswell, Tim Cotter, Brian
Bottomley, Peter (Worthing W) Cran, James
Bottomley, Rt Hon Virginia Curry, Rt Hon David
Brady, Graham Davey, Edward (Kingston)
Brazier, Julian Davies, Quentin (Grantham)
Breed, Colin Davis, Rt Hon Davis (Haltemprice)
Brooke, Mrs Annette L Djanogly, Jonathan
Browning, Mrs Angela Dodds, Nigel
Donaldson, Jeffrey M Moss, Malcolm
Dorrell, Rt Hon Stephen Murrison, Dr Andrew
Doughty, Sue Norman, Archie
Duncan, Alan (Rutland & Melton) Oaten, Mark
Duncan, Peter (Galloway) O'Brien, Stephen (Eddisbury)
Duncan Smith, Rt Hon lain OÖpik, Lembit
Evans, Nigel Osborne, George (Tatton)
Ewing, Annabelle Ottaway, Richard
Fabricant, Michael Page, Richard
Fallon, Michael Paterson, Owen
Field, Mark (Cities of London) Pickles, Eric
Flight, Howard Price, Adam
Flock, Adrian Prisk, Mark
Forth, Rt Hon Eric Pugh, Dr John
Fox, Dr Liam Randall, John
Francois, Mark Redwood, Rt Hon John
Gibb, Nick Reid, Alan (Argyll & Bute)
Goodman, Paul Rendel, David
Gray, James Robathan, Andrew
Grayling, Chris Robertson, Angus (Moray)
Green, Damian (Ashford) Robertson, Hugh (Faversham)
Green, Matthew (Ludlow) Robertson, Laurence (Tewk'b'ry)
Grieve, Dominic Robinson, Mrs Iris (Strangford)
Gummer, Rt Hon John Robinson, Peter (Belfast E)
Hague, Rt Hon William Rosindell, Andrew
Hammond, Philip Ruffley, David
Hams, Dr Evan (Oxford W) Russell, Bob (Colchester)
Hawkins, Nick Salmond, Alex
Hayes, John Sanders, Adrian
Heald, Oliver Shephard, Rt Hon Mrs Gillian
Heath, David Simmonds, Mark
Heathcoat-Amory, Rt Hon David Smith, Sir Robert (W Ab'd'ns)
Hermon, Lady Smyth, Rev Martin (Belfast S)
Hoban, Mark Spicer, Sir Michael
Hogg, Rt Hon Douglas Spink, Bob
Holmes, Paul Spring, Richard
Horam, John Stanley, Rt Hon Sir John
Howard, Rt Hon Michael Steen, Anthony
Howarth, Gerald (Aldershot) Streeter, Gary
Hughes, Simon (Southwark N) Stunell, Andrew
Hunter, Andrew Swire, Hugo
Jack, Rt Hon Michael Syms, Robert
Jackson, Robert (Wantage) Tapsell, Sir Peter
Keetch, Paul Taylor, John (Solihull)
Key, Robert Taylor, Matthew (Truro)
Kirkbride, Miss Julie Taylor, Sir Teddy
Knight, Rt Hon Greg (E Yorkshire) Thomas, Simon (Ceredigion)
Laing, Mrs Eleanor Thurso, John
Lait, Mrs Jacqui Trend, Michael
Lamb, Norman Turner, Andrew (Isle of Wight)
Lansley, Andrew Tyne, Andrew
Laws, David Walter, Robert
Leigh, Edward Waterson, Nigel
Letwin, Oliver Watkinson, Angela
Lewis, Dr Julian (New Forest E) Weir, Michael
Liddell-Grainger, Ian Whittingdale, John
Lidington, David Widdecombe, Rt Hon Miss Ann
Llwyd, Elfyn Wiggin, Bill
Loughton, Tim Wilkinson, John
Luff, Peter Willetts, David
McIntosh, Miss Anne Williams, Hywel (Caernarfon)
MacKay, Rt Hon Andrew Willis, Phil
Maclean, Rt Hon David Wilshire, David
McLoughlin, Patrick Winterton, Mrs Ann (Congleton)
Maples, John Winterton, Nicholas (Macclesfield)
Marsden, Paul (Shrewsbury) Wishart, Pete
Mates, Michael Young, Rt Hon Sir George
Maude, Rt Hon Francis Younger-Ross, Richard
Mawhinney, Rt Hon Sir Brian
May, Mrs Theresa Tellers for the Noes:
Mitchell, Andrew (Sutton Coldfield) Mrs. Cheryl Gillan and
Moore, Michael Mr. Desmond Swayne.

Question accordingly agreed to.

Clause 28 ordered to stand part of the Bill.

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