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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 5:51 pm on 20th April 2004.

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Photo of Michael Jack Michael Jack Conservative, Fylde 5:51 pm, 20th April 2004

I begin by reminding the House of my declaration in the Register of Members' Interests, and in particular of my position as a non-executive director of a retail tile company.

Some time before 2 o'clock on Sunday afternoon, I ran past the Paymaster General's office. Despite the pain and suffering and the need for mind to triumph over matter, I sent up a silent incantation that the 26 miles did not include too many for the Chancellor of the Exchequer and Customs and Excise. I am grateful to the Paymaster General for her clarification of what the Chief Secretary said in response to those who raised the issue of VAT and the London marathon.

I have read some of the comments in the newspapers, and although the Treasury statement makes it clear that charitable donations are not liable to VAT, the relationship between VAT and the golden bond is still cloudy, particularly on the narrow point of charities asking those who secure places in the marathon by the golden bond route to raise a fixed sum of money. Those charities are trying to cover an overhead for securing a place in the race, and it is important that they are not burdened by an unanticipated bill.

I ran for the National Osteoporosis Society, which hopes to raise about £60,000. All hon. Members hope that all the money raised not only for the National Osteoporosis Society but the other excellent charities for which people gave an enormous amount of time and energy on Sunday goes to the intended good causes. It would be helpful if a clear and definitive guide were published, because the same problem is likely to arise on the great north run, where secured places are also a feature of fund raising. The matter must be clarified because it is confusing.

I pay tribute to the Paymaster General. Over the past year, she has listened to representations on a number of tax issues, for which I am personally grateful. I am also pleased that Treasury Front Benchers continue to support the tax law rewrite exercise with vigour and enthusiasm, and I concur with the Paymaster General that it is nice to see that some parts of the Finance Bill are more legible than previously—at least somebody is listening. I am however disappointed that this year's Bill, like last year's, does not suggest that the Government want to go further than rewriting tax law in plainer language and a better form, and study how they can genuinely simplify and improve our tax system's operation. I will have more to say about that when I consider clause 290.

I very much welcome hon. Members' remarks about transparency in the operation of the economy. The time has come when Ministers should publish annually in the Red Book—I must say to my hon. Friend Mr. Davies that I still call it that, notwithstanding the fact that the colour of its cover has changed—a cash flow for the British economy. If the Treasury is willing to put on record the model by which it works out the economic modelling of the United Kingdom, it should be able to put on record the assumptions by which tax revenues are worked out, to enable us to see with greater clarity how the cash flow of the economy is working. As even Ministers recognise, by the time we reach the end of the figures in the Red Book, the proportion of gross domestic product that is raised by tax will have increased.

My right hon. and hon. Friends on the Front Bench have tabled a reasoned amendment with which I have much sympathy, because it points to the lack of improvement in UK productivity and relates that to the problems that it causes to competitiveness. As I think Liberal Front Benchers would agree, the Chancellor has over the years introduced many micro-management measures, but we have had no feedback on what they have achieved individually. Given the degree to which the economy is managed through the tax system, we should demand a proper impact analysis of any measure that is introduced. It is no use introducing measures with great claims that they will improve the running of the economy if the overall facts on productivity, and therefore competitiveness, do not line up in that direction.

For those of us who have stamina for legislation, 309 clauses, 42 schedules and 574 pages beckon, and I look forward to our forthcoming debates. One part of the Bill deals with hydrocarbon duties and reduces the preferential rates of duty that red diesel has enjoyed. For those of us with an interest in agricultural and rural matters—I think that Mr. MacDonald will sympathise with me—that is not welcome, given that agriculture is only now pulling out of one of the worst phases of its cyclical downturn. Incomes are rising, but not to a very high level. It is not a particularly clever time to make such a move, as farmers must face it against a background of ferocious price competition from their principal customers, the supermarkets. The Government have again been somewhat mean-minded in the help that they give to biodiesel.

I am sorry that the Economic Secretary is not in his place to reflect on the fact that over the past 12 months no move has been made towards trying to start an indigenous biodiesel industry, based on UK-grown oilseed rape, with processing in this country. Investment has been made in the plant in Motherwell, which will produce an additional 4.5 million litres of that fuel, but it will use cooking oils and fats as its initial feedstock. If the Government are genuinely interested in the agenda of sustainability, improved environment and reduced carbon dioxide emissions, they must make their mind up on the matter. If they give a 40p duty derogation for liquefied petroleum gas because they rate heartily the air improvements that result from that road fuel, they should at least increase beyond the amount in the Bill the duty derogation for biodiesel. Let us forget for a moment the Treasury's worries that that would in some way sponsor a massive rush of imports. If we do not follow the biodiesel route of our own volition, the product will be imported.

There is a cost-free way of including biodiesel in our fuel source and giving the local industry a chance to generate. In the context of the Energy Bill, we should support efforts to require a target for blending biodiesel and normal hydrocarbon fuels so that the resulting price was whatever it happened to be. More Treasury money would not therefore be required to enable us to have a proper biodiesel industry. If nothing else, the Treasury could, with a 2 per cent. target, adopt the same techniques as for the renewables obligation in electricity and blend the tax position. Although that would result in a small increase in price, especially of diesel fuel, it would get our home-grown biodiesel off the ground.

Clause 118, which is entitled "'Film-related losses' and 'non-taxable consideration'", leads me to the subject of tax avoidance, which I wish to examine in some detail. The Government had a love-in with the film industry, rushed to the barricades to help it in every way, but were caught out. Clause 118 is a classic illustration of that. A measure was devised to try to help the film industry but was exploited, and a loophole was created that now has to be filled.