The three speeches/headings immediately before

1. 1 earlier: John Redwood

   I am sure that the hon. Gentleman does. He is a better politician than he is leading us to believe with that rather childish intervention.

   The Government's idea was crude and simple—"Let's put this down for a future year. We don't actually think it's going to raise very much revenue." Perhaps they did not believe it would raise any at all. They saw it as a win-win situation for Labour. If the Conservatives voted it down, Labour would spend the next year going around the country saying, "The only thing the Tories care about is rich people and their marginal tax rate." If the Tories voted for it, Labour would go around the country saying to people who might otherwise vote Tory, "Look, the Tories are useless. They don't even stand up for your kind of proposals, and they aren't really the party of enterprise after all."

   We do not intend to play that game, which has turned out to be a lose-lose for Labour. It has pitted an important part of the business community against the Labour Government, because the business community is not impressed by their reneging on the clear promise that I remember them making at the last general election that they would make no changes to the overall rates of income tax at any level.

   The change has also pitted Labour MP against Labour MP. We know that the Blairite faction is extremely unhappy with it. The Blairites thought that the fact that the previous Prime Minister had accepted the Conservative settlement on tax prior to 1997 was a very important part of winning over floating voters in middle Britain whom Labour needed to win over to form a Government again. They believe that it is disruptive and a clear tearing-up of that element of the new Labour settlement that the Government have now decided to go from 40p in the pound to 50p. Indeed, at the margin it is rather higher than that if we take into account the changes to allowances, pensions, national insurance and so forth. Far from being a trap for the Conservatives, it has been another factor in the growing civil war between Blairites and the supporters of the Prime Minister.

   There will be those on the left for whom the change does not go far enough. They think that this crisis is a good opportunity to increase the rate to 60p, 70p or 80p—the rates they were used to in previous periods of government. However, there are others on the Labour Benches who understand that in a globalised and footloose world economy—whether we like it or not, we have to live with it—it is all too easy for people with money, talent, capital or high incomes to say, "I won't base my activity here any more, I'll base it somewhere else—I'll go to Dublin, the Bahamas or Asia," because the Governments in those jurisdictions really want talented people and new businesses. There are jurisdictions that wish to give a home to businesses that might otherwise have been located in London or Britain. That is the danger that we now face.

   In other respects, the Government claim to believe that putting a tax up means having less of something. For example, they are busily increasing the tax on gas-guzzling cars because they want fewer of them. They are also increasing the tax on drink, because they want people to drink less. Probably only the ministerial drinks cupboard will be well stocked at the new duty rates, because public spending is still in free flow, whereas other people are expected to rein back, which we are told is good for their health. The Government believe that increasing duty on tobacco means that people will smoke less and that fewer cigarettes will be sold.

2. 2 earlier: Jeremy Browne

   The right hon. Gentleman said that this was a "tax trap". I do not understand this concept of a trap. The Government come up with tax policies and the principal Opposition party has to decide whether it believes in those policies. If this is a trap, every single tax policy put forward by the Government is a trap. Surely, to follow the logic of his argument, this is a straightforward opportunity to vote on a point of principle. If he believes that the rise is such a disincentive for people to become wealthier, be entrepreneurial and work harder, surely this is an opportunity to vote against the Government. I do not understand why it is a trap.

3. 3 earlier: John Redwood

   That is absolutely right. The Treasury Committee has come to a very sensible view and asked the right questions. Private forecasters are now saying that such a tax increase could actually reduce the amount of revenue by driving some rich people out of the country altogether, and making others work less hard or put less money at risk.