Permitted Excess of the Fund

Part of New Clause 3 – in the House of Commons at 6:55 pm on 20th July 1987.

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Photo of James Arbuthnot James Arbuthnot , Wanstead and Woodford 6:55 pm, 20th July 1987

It is with some nervousness that I say that I am grateful, Madam Deputy Speaker, for the fact that I have caught your eye. My constituency has not had many Members of Parliament. In fact, since 1924—nearly 30 years before I was born—it has had only two. Hon. Members will understand my difficulty in finishing this maiden speech within the bounds of propriety, or even by the end of the week, when I say that those two were Patrick Jenkin and Sir Winston Churchill. Whoever coined the phrase, "Follow that if you can", had it easy compared with me.

As one would expect, my constituents are exceptionally proud of their former Members of Parliament. However, I should like to speak first about my constituency, which is a residential suburb in the north-east of London, on the borders of Essex and London. My constituents were so proud of their former member, Sir Winston Churchill, that they put up a statue to him on Epping forest land, at Woodford Green. That is one of the more attractive parts of my constituency. One of the less attractive parts, which hon. Members may know rather better than the statue, is the M11, which starts in my constituency. Many hon. Members will probably have spent many an angry minute waiting in a traffic jam, trying to get on to the thing. I am delighted to say that that traffic jam will one day be a thing of the past, when the new link road is built.

A debate on the Third Reading of the Finance Bill is not the time to go in for a travelogue of Wanstead and Woodford. However, it is the time to mention my immediate predecessor, Patrick Jenkin, because among the many offices that he held were those of Financial Secretary to the Treasury and Chief Secretary to the Treasury. They may not be the offices for which he is most remembered, but that is only because he had so many others. For a man who served on the Conservative Front Bench for 20 years —that is nearly the entire time that he was in the House — and who was Secretary of State for three major Departments, that is quite an achievement. Indeed, when he was Secretary of State for each of those three Departments, his achievements were considerable. I know that he is remembered with great affection and respect by hon. Members of all parties. From canvassing during the general election, I can say that that is completely true in his constituency also. He will be an extremely hard constituency Member to follow. I can best describe him by saying that he was a thoroughly worthy successor in every way to Sir Winston Churchill and I cannot think of higher praise than that for anyone.

Sir Winston was elected for what was to become my constituency on 29 October 1924. On 5 November 1924 he was invited to become Chancellor of the Exchequer. I have been waiting by the telephone, but it seems that promotion does not follow so quickly nowadays. It is interesting that, in his first Budget, two of the major proposals were a complete overhaul of the pension system and a reduction in the basic rate of income tax to what would now be 20p in the pound.

I do not wish to speak too much about the pension provisions in the Bill, save to say that I was a little sad that the hon. Member for Sedgefield (Mr. Blair), who made a most attractive speech—I wondered whether he was on the right side of the House—was a little grudging in his enthusiasm for the pensions provisions and for the profit-related pay provisions in the Bill. They will improve the employment prospects and the enterprise culture which the Government have already begun.

I wish to concentrate rather more on a narrow provision in the Bill — clause 96 and schedule 7. For those who are unaware of what they contain, I shall describe them in a moment, but first I must say that, as a barrister specialising in Chancery work and, inside Chancery work, mostly in tax, I am speaking about these provisions with considerable diffidence. I have taken an interest in Finance Bills for several years and I have never failed to be impressed by the depth of knowledge of hon. Members on all sides. Therefore, I am extremely nervous about preaching to an audience who may know rather more about my subject than I do. Having said that, clause 96 and schedule 7 relate to inheritance tax and capital transfer tax.

In the Finance Act 1986 capital transfer tax was abolished and inheritance tax introduced in its place. The effect was to make lifetime gifts between individuals potentially free of tax. I hailed that as an excellent move. The effect of the provisions in this Bill is to extend that relief to gifts into and out of trusts in which an individual has an interest in possession. This, too, is a truly excellent move. But I wish to take this matter a step further because what has happened in this move is symptomatic of what often happens in Finance Bills.

The Government rightly believe that they should reduce the burden of taxation on individuals and companies, and I congratulate my right hon. Friend the Chancellor of the Exchequer on doing that. However, all too often Governments do not go far enough. They are cautious and the following year they must return to finish the job. This has two effects. The first is that it complicates the tax system. We have one of the most complicated tax systems that I have ever discovered. The law, particularly tax law, is the possession of the common man and it should be understandable by him, but it is not. It is incomprehensible. When a Government take two bites at the cherry, they make the law more complicated. I have a vision of a tax system which is simply worded and administered and which everyone can understand. I hope that that vision will materialise before too long.

The second effect of two bites at a cherry is that the law is changed too often. It is not the Government's job to change the law too frequently because the effect of that on individuals and companies is to cause them the immense extra cost of paying people like me to find out what the new law is because the law is never the same. Perhaps I should declare an interest, although I am speaking against this, but I do not believe that one should pay people like me too much to find out what any law is.

My right hon. Friend the Chancellor of the Exchequer has a praiseworthy habit of abolishing a tax every year. I had hoped that because there were two Finance Bills this year he would manage to abolish two, but I suppose one should not he greedy. I am sure that my right hon. Friend will have a chance and the inclination to reform our ramshackle tax system, particularly three areas of it. First, the taxation of women, which is an insulting and archaic antique; secondly, capital gains tax legislation, which is absurdly complicated; and, thirdly, the way in which the tax system relates to the benefit system, or rather, the way in which it does not. When my right hon. Friend has a chance to look at those areas, I have one plea, which is to go the whole hog the first time.