[Relevant documents: oral and written evidence taken by the Treasury Committee on 21 and 22 March, HC 482-i and -ii, on the 2005 Budget.]

Order for Second Reading read

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

This is a somewhat shortened version of the Finance Bill. Owing to the Dissolution of Parliament, it now contains some 106 clauses, compared with the original 172 presented to the House. However, my right hon. Friend the Chancellor outlined in the Budget statement what we will be doing to maintain British stability and growth in the face of a future of intense global competition and the Bill continues to reflect our determination to meet those challenges and to maintain stability, promote fairness and maximise the opportunities for our nation both now and in the future.

For a tax system to be effective, everyone must pay their fair share of taxes and receive the credits that they are entitled to and that is why the Government have already published proposals to prevent the avoidance of tax on capital gains by people using options to sell or buy assets at uncommercial prices and to close a loophole in the controlled foreign company—or CFC—rules that are designed to prevent UK multinationals from diverting profits to low-tax regimes.

We have set out legislation to close arrangements that seek to avoid or reduce income tax and national insurance contributions on remuneration by using employment-related securities. As outlined in the pre-Budget report, we have published proposals to remove annuities and other annual payments from the types of payment treated as charges on income.

The Government are also committed to closing a number of marketed avoidance schemes that involve financial products that have been disclosed under the rules introduced in the Finance Act 2004, and as announced in the Budget, to legislating to counter the exploitation by companies of differences within and between tax codes to get a UK tax advantage.

The Government believe that these measures and others that were included in the original Finance Bill presented to the House are essential for an effective, principled, targeted and fair tax system. It is therefore our full intention to introduce a second Finance Bill after the election—should it be the wish of the British people—in which the measures not included in this revised version will be brought back. We will, of course, aim to ensure that the statutory dates for these measures will continue to apply, as announced in the Budget.

The Chief Secretary has just referred to people receiving the tax credits to which they are entitled. What assurances can he give that every effort will be made to resolving the mounting tide of problems faced by people with payable tax credits and overpayments, particularly during the course of the election campaign when Members of Parliament will clearly not be in the position that they were to argue the case for their constituents? In my case, it is a rising tide of human misery that does not appear to be being solved.

The right hon. Gentleman is, uncharacteristically, indulging in pre-election hyperbole and has gone over the top. He knows that my right hon. Friend the Paymaster General takes any concerns about the tax credit system and its efficient working very seriously. I assure him that the measures are in place that will continue to ensure that the Inland Revenue and those responsible for this issue respond efficiently and effectively in the way that they normally do.

Will the Chief Secretary give way?

I am fond of the hon. Gentleman, but I want to make some headway. I will then, of course, give way. I am sure that he has something interesting to say.

In the meantime, the Bill introduces anti-avoidance measures in clauses 85 and 87 to 91 that seek to prevent avoidance when there are contrived claims of artificially high double tax relief—claims that are made against United Kingdom profits in order to minimise tax liability in the UK.

Alongside that, clauses 59 to 79 will introduce anti-avoidance legislation for film relief. The targeted aim of these measures is to remove opportunities for abusing film tax reliefs and to put matters beyond doubt for the industry in future. That should be seen against the important role that Britain's creative industries now play, comprising 8 per cent. of our national income. To reflect that, clause 58 will temporarily extend existing relief for limited budget films. It provides for the existing relief to continue to apply for films on which principal photography commences before 1 April 2006, so long as they are completed on or before 31 December 2006.

Will the Chief Secretary give way?

I must first give way to the hon. Member for Aylesbury.

Or even for Buckingham.

Given the importance of clause 21(8) on research institution spin-out companies, can the right hon. Gentleman explain why that very important provision is not subject to the affirmative procedure of the House?

I am glad that Mr. Bercow raises that point. If he restrains his characteristic exuberance, he will hear me come to that provision in the fullness of time.

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If I can make a little headway, I will of course give to the hon. Gentleman. I am sure that he also has interesting points to make.

These measures reflect the Government's ongoing determination to ensure that our tax system is fair and competitive. Just last September, the World Bank ranked the UK first in Europe and seventh of the top 20 countries to conduct business in. In January 2004, the Organisation for Economic Co-operation and Development ranked our economic and administrative regulations as being among the lowest in the OECD. I therefore hope that Members on both sides of this House will surely recognise the need to introduce measures now that enable Britain to maintain that position within the global economy.

Faced with an accelerating pace of technological change and a rapid expansion of global competition, our economic future should not be founded upon low-skill, low-tech enterprise. It depends, instead, on establishing British leadership in skills, science and the knowledge economy, as the hon. Member for Buckingham recognises. After all, developing countries are on course to produce half the world's manufacturing exports and we need to ensure that ours is an added-value economy.

Britain now has one of the most open competition policies in the world and we are the most effective and active advocate of free trade. Today, the enterprise challenge is to enhance the flexibility needed for a successful economy and tackle the regulatory concerns that all industrial economies face while securing the standards required in a successful society.

The Chief Secretary talks about the enterprise challenge. Is he aware of the rising tide of concern among those in the film industry that this is the third Finance Bill in three years that changes the way in which the industry is regulated? They believe that that creates serious disadvantages in locating films in this country. Why did the Government not get it right first time?

The hon. Gentleman makes an interesting point. Indeed, we miss his contributions from the Opposition Front Bench to our debates on the economy. I hope that those who currently occupy that Bench will reflect on the contribution that he might make to a future Opposition Front-Bench team.

I know that the hon. Gentleman takes an interest in the film industry and I would have expected him to recognise the way in which we have listened to the industry and sought to work with it in identifying effectively and in a focused way the undoubted abuse of the system that was taking place and in responding to it. I hope that there is support on both sides of the House for the British film industry. I well remember when I was shadow Economic Secretary, sitting on the Opposition Benches—[Interruption.] I did enjoy those days. Both sides of the House then made common cause on recognising that the film industry needed the support that we are endeavouring to give it. However, we have to be vigilant against the sort of abuse that was undoubtedly taking place.

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I will make more headway before I consider giving way to Opposition Members who have points to make.

Enhancing flexibility, tackling regulation and ensuring competitiveness inform the detail of this Bill and I will now turn to those matters. Clauses 10 to 13 mean that, this year, rates of capital gains tax and corporation tax will remain frozen, maintaining the 0 per cent. starting rate of corporation tax for small companies. Clause 144 brings the time-limited stamp duty relief in disadvantaged areas to an end as the new, better targeted local enterprise growth initiative drives forward local business-led regeneration, providing local authorities with the resources and flexibility to target the long-term issues that will promote enterprise in the most deprived areas.

Clauses 20 to 22 will help counteract a tax uncertainty that has proved to be a stumbling block—here, I turn to the point made by the hon. Member for Buckingham—in forming university spin-out companies. This will provide rules that will apply to researchers who acquire shares in spin-out companies created with research institutions to develop intellectual property. The rules ignore the effect on a researcher's shares of the transfer of intellectual property into that company. They will also remove the consequent up-front tax and national insurance contribution charge.

On a point of clarification, did the Chief Secretary refer to clause 144? My copy of the Bill stops at clause 106.

I do not recall mentioning that clause, but if I did, it was certainly in error. The clause that I referred to brings the time-limited stamp duty relief in disadvantaged areas to an end as the new better targeted local enterprise growth initiative drives forward local business-led regeneration.

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I will make more headway before I give way again.

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I will give way in a moment, because I am sure that the right hon. Gentleman has something interesting to say.

The Bill also sets out key steps to ensuring that our country is prepared for the challenges of the future. For example, it is important that young people—first-time buyers—can have access to the housing market. I know that all of us are concerned about that in one way or another. Therefore, the clauses that double the zero-rate threshold for stamp duty land tax—from £60,000 to £120,000—will be particularly welcome. That means that a purchaser of a residential property who completes a purchase on or after 17 March 2005 will not pay stamp duty land tax if the purchase price is £120,000 or less.

Will the Chief Secretary tell us his estimate of the overall effect on the yield of the measures on stamp duty in the Bill?

We have had this discussion in the past. The hon. Gentleman knows that, as a result of the amendments that we have made, there is an increase in the yield. That is clear in the Red Book and we have never made any pretence otherwise, but we have focused and targeted the relief better. We have ensured that we are assisting first-time buyers. Doubling the threshold means that some 50 per cent. of first-time buyers will not pay stamp duty, and that must be welcomed by all.

Will the Chief Secretary confirm for absolute clarity that, contrary to the impression that the Chancellor of the Exchequer gave in his Budget speech, the benefit of raising the threshold from £60,000 to £120,000 is more than paid for by withdrawing the relief that had the purpose of encouraging non-residential development in deprived areas? That is the effect of the package of measures on stamp duty land tax that the Government have introduced.

We have focused relief where it can do the most good. I should have thought that everyone would welcome that. I do not recognise the presentation of the Budget that the right hon. Gentleman describes. The combined effect of the Budget measures is that revenues from residential property transactions are forecast to fall by £220 million and revenues from commercial property transactions are forecast to rise by £580 million. We have always made that absolutely clear. It has always been clear in the Red Book for all to see. It was always crystal clear in the extensive debates and discussions that my right hon. Friends the Chancellor and the Paymaster General, my hon. Friends the Financial Secretary and the Economic Secretary and I held with Opposition Members in the immediate aftermath of the Budget.

I always enjoy the contributions of Mr. Dorrell because he has extensive knowledge and experience of government. However, it is rich for him to now play the innocent—the shocked maiden—in such a way about the presentation of these matters. I do not think that he can expect us to take his complaints seriously.

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I am going to make more progress before once again giving way to Conservative Members.

But my hon. Friend Mr. Prisk knows about this.

I am sure that Mr. Prisk does know about the matter, so it is a pity that he will not be sharing his knowledge with the House from the Front Bench, if he knows so much about it. Several of us who watch such things closely certainly have the view that he deserves to be there.

Several hon. Members:

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With the indulgence of the House, I wish to proceed before I give way again. The Finance Bill—

Will the Chief Secretary give way?

Order. The Chief Secretary has said that he is not giving way at the moment—perhaps he will later.

Thank you, Mr. Speaker.

The Bill sets out the key steps necessary to ensure that our country is prepared for the challenges of the future. For example, it is important for us to use the Bill to build on the progress that we have made on home ownership, which has been not only referred to extensively by ourselves, but recognised by others. As I have said, it will exempt an additional 300,000 buyers each year and more than 50 per cent. of first-time buyers. In regional terms, it will exempt approximately 70 per cent. of buyers in the north and throughout Wales, Scotland and Northern Ireland, and more than 50 per cent. of buyers in the midlands.

Clause 98 focuses on the inheritance tax threshold for each of the next three tax years, with increases above indexation. It sets out the inheritance tax threshold at £275,000 for 2005–06, £285,000 for 2006–07 and £300,000 for 2007- 08. It also ensures that 95 per cent. of estates remain tax free, which is something that we must all bear in mind.

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I shall now give way to the hon. Member for Hertford and Stortford.

I am grateful to the Chief Secretary for finally giving way. He mentioned 95 per cent. of estates, but may I return to stamp duty? In the light of his impending house move, will he confirm that in the borough of Brent only 4 per cent. of first-time buyers will benefit from the measures, so 96 per cent. will not?

I do not have the figures for Brent, but I fancy that they will be available to my hon. Friend the Financial Secretary by the end of the debate. I am sure that he will provide a characteristically robust response to the hon. Gentleman's point.

Will the Chief Secretary give way?

No, not at the moment. I intend to make a little more headway before giving way to the hon. Gentleman.

It is important that we protect and support our older citizens, which is why clause 9 is specifically designed to help to reduce pensioner poverty. It will increase age-related personal allowances for those aged over 65 in line with earnings and ensure that more than half of pensioners do not have to pay income tax. In practice, that will mean that for those aged 65 to 74, the allowance will be increased to £7,090. The allowance for those aged 75 and over will be increased to £7,220.

In the Finance Act 2004 we legislated for a radical simplification of the tax rules for pensions. From April 2006, the numerous existing regimes, each with its own set of rules, will be replaced by a single, universal regime for tax-privileged pensions savings. It is important to remember that clause 101 introduces a package of supplementary measures to refine the 2004 Act. The measures will provide additional flexibility for schemes and individuals and allow a smoother transition from the current regime to the new one.

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I shall give way first to the hon. Member for Buckingham and then, of course, to the Opposition Front-Bench spokesman.

It is always a pleasure to listen to the Chief Secretary's mellifluous tones—this might be the last time on which we have the opportunity to do so. However, although this might be his last appearance before the House, I would still like to be reassured that he is master of his subject. Given that he glossed rather superficially and inappropriately over clauses 20 to 22, and thus broke his promise to deal with my specific inquiry, will he now tell me why clause 21(8), on research institution spin-out companies, is not subject to the affirmative procedure of the House? That is a straightforward question and I want a straightforward answer.

Why not write to my hon. Friend?

I do not need much temptation to go into detail, but I understood that my brief for this afternoon was to resist temptation. I find the blandishments of the hon. Member for Buckingham absolutely irresistible. What concerns me is why he would favour the affirmative resolution procedure—[Interruption.] Let me finish my point. What concerns me is why he prefers the affirmative resolution procedure to the procedure that we have adopted, which enables us to have this debate. It meets the concerns and the substantive points made to us by academia and those engaged in spin-outs. If he sees a particular advantage in the affirmative resolution procedure, I am sure that the House would be glad to hear what it is.

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I shall give way in a moment.

It seems to us that the proposed changes, on which we have extensively canvassed the sector, have been widely welcomed. We received more than 45 responses to the consultation following publication of the technical notes and the partial regulatory impact assessment at the pre-Budget report stage. UNICO, which the hon. Gentleman knows is the University Companies Association, says that feedback to the draft legislation, which we published as long ago as February this year, has been

"Overall, very positive" and people have found

"very little to complain about."

I fancy it did not take into account the seemingly infinite capacity of the hon. Gentleman to complain. [Hon. Members: "Oh!"] Oh yes, no more Mr. Nice Guy. I was only too happy to approach the debate in a non-partisan way and to be brief, but my patience has been tested.

I congratulate the Chief Secretary on his appointment as British high commissioner in South Africa. He will do a fantastic job in that role, and I wish him well. Frankly, though, that was a ponderous and meandering response to a straightforward question. If he had just said that he did not know the difference between negative and affirmative procedure, the House would have been greatly obliged. The affirmative procedure maximises ministerial accountability to Parliament and the negative procedure minimises it. It could hardly be clearer.

If my memory serves me well, the hon. Gentleman and I have had this debate in relation to other clauses in the course of other Finance Bills discussed Upstairs. Those Conservative right hon. Members present who have had to do what my right hon. and hon. Friends have had to do in Committee know very well that it is to assist the ministerial conduct of business that one prefers the negative to the affirmative. In due course, 20 or 25 years hence, it is possible that the hon. Gentleman might discover why Ministers tend to prefer the negative to the affirmative.

Will the Chief Secretary confirm that he once appreciated the force of the argument that my hon. Friend Mr. Bercow advances, not least when the right hon. Gentleman advanced exactly that argument from the Opposition Benches? Does he recall the precise Damascene moment when he was converted to the view always taken by the Treasury Bench?

It was in May 1997. Hands up; it's a fair cop, guv. We all know the reason for that, and there is widespread acceptance on both sides of the House that that is the best way to proceed in the circumstances.

We want to build on the steps taken in successive Finance Bills, which is why clause 101 introduces a package of supplementary measures to refine the 2004 legislation. The measures will provide additional flexibility for schemes and individuals, and smooth the transition from the current regime to the new regime. Moreover, the Pensions Act 2004 legislated for the pension protection fund, which comes into being today. Clauses ensure that the PPF has the same tax privileges as the pension schemes that it protects, but to make our tax system fairer, we must also ensure that it applies equally to all. That is why these clauses are designed to introduce changes to income tax, corporation tax and capital gains tax rules relating to alternative finance arrangements that do not involve either payment or receipt of interest, including those that are designed to be Sharia compliant.

While the Chief Secretary is on the subject of pensioner poverty and measures to deal with pensioners, will he explain why the Government have decided to give a £200 relief for council tax to pensioners for one year only? Will he also explain why the fact that it was for one year only was dropped from the Chancellor's Budget speech?

I do not want to engage in retrospective analysis of the Budget presentation. We made the position clear at the time. [Interruption.] I and all my colleagues made it clear that we were trying to respond to the concerns of pensioners. We introduced the Lyons review to enable us to arrive at a position in which the issues are seen within the context of local government finance overall and the undoubted need for reform, which we have recognised in relation to council tax.

I do not want to get drawn down that road, but if the hon. Gentleman tempts me, I will. We all know that the council tax arose out of the poll tax debacle. We all know that the origins of the poll tax lay with the Conservative party and in particular—I know this because I was in the House at the time—with the contribution to local government finance made by the Leader of the Opposition. We do not want to return to those days because we know what it would mean for local government finance and pensioners, as it would increase pensioner poverty.

Will the Minister give way?

No, I am afraid not. I want to make headway because I have a responsibility to the House to get through today's business so that we give the Bill the proper scrutiny that it deserves.

When two people enter a civil partnership, they make a responsible commitment to each other. Our policy is that civil partners should be entitled to the same legal rights and responsibilities as spouses. This means that our tax system should, where possible, adapt to reflect the changes in society that brought civil partnerships into being. Last December, the Civil Partnership Act 2004 received Royal Assent. It provides a new legal framework that enables recognition of same-sex relationships through the new status of civil partnership. Same-sex couples across the UK will be able to form a civil partnership. That is reflected in the relevant clause, as it provides powers to ensure that civil partners are treated the same as married couples, both for tax purposes and to ensure that tax legislation is compatible with the Human Rights Act 1998.

Will the Minister remind the House of the reason for excluding from those tax benefits or tax reliefs couples who may have lived together for 30 or 40 years, such as siblings, a child and an elderly parent or, for that matter, a very close householder and housekeeper?

We had a full discussion on that when the House was coming to a view on civil partnerships. I know and respect the hon. Gentleman's views on the issue, although I do not share them. I believe that the House came to the right conclusion on how to reflect societal change in the Civil Partnerships Act and the provisions of the Finance Bill.

The immense contribution made by our armed forces, who serve our country so well in peace and in war, is reflected in the clause that will ensure that lump sum awards paid to servicemen and women injured in the line of duty are tax free, whether paid to a serving member of the armed forces or to a person who has left the service. The provision amends the Income Tax (Earnings and Pensions) Act 2003 to ensure that benefits payable under the Armed Forces (Pensions and Compensation) Act 2004 are treated in the same way for tax as the equivalent benefits payable under the armed forces pension scheme. The new lump sum in-service injury awards will be exempted by the clause—a measure that I know has the support, which it warrants, of all hon. Members.

The measures and others like them help to modernise the tax system. They will enable a fairer society to emerge and reflect the new challenges arising from that changing society. Britain also faces new and evolving environmental challenges, in respect of which we have an obligation to future generations. We have therefore provided for the standard rate of landfill tax to increase as part of a principled national policy to reduce the volumes of waste sent to landfill and to encourage more environmentally friendly alternatives. Building on the changes to vehicle excise duty made in 2003 that reflect vehicle carbon emissions, the Bill provides for an increase in VED rates only for the two highest carbon dioxide bands; the four least-polluting carbon dioxide bands will remain frozen.

The Budget lays down measures that will enable our country to respond to and meet the challenges of our changing society in the global economy. The Finance Bill enacts measures to which the House has already agreed in principle. I commend it to the House.

We all enjoyed listening to the would-be high commissioner in what I suppose is his last appearance in the Commons. I am sorry that more of his hon. Friends did not turn up to listen to him, but we Opposition Members enjoyed his speech. In the past few weeks, the right hon. Gentleman has been showered with tributes every time that he has appeared at the Dispatch Box—he has had more farewells than Frank Sinatra, which is appropriate, given that the Cabinet he is leaving is the biggest rat pack of them all. Like any good swan-song, his speech was somewhat theatrical and overblown—true to form for the right hon. Gentleman—but during his 18 years in Parliament no one has ever accused him of being a shrinking violet. I have certainly enjoyed shadowing him in recent months. He has always been courteous and I wish him well in the future—when I suspect he will join many other Labour MPs in the swelling ranks of the economically inactive.

It is a shame that we do not have more time to examine what remains after the extensive deletions on which we insisted of a complex piece of financial legislation. Four hours is wholly inadequate to debate, scrutinise and pass 106 clauses. In 1992, when the Conservative Government called an election immediately after the Budget, the Finance Bill presented to the House was a mere 11 clauses long, those 11 being the essential and wholly uncontroversial revenue-raising clauses that are required each year. Four hours was provided to debate those 11 clauses; even so, the then shadow Chief Secretary, now Secretary of State for Environment, Food and Rural Affairs, proclaimed that it was a constitutional outrage, saying that

"Four hours for all the stages of a Finance Bill from start to finish . . . is a most extraordinary precedent . . . due not to accident or misfortune but to the sheer incompetence and mismanagement of the Government".

Given that he attended that debate and, judging by the Hansard report, got very over-excited during the proceedings, the putative high commissioner must remember the comment made by the present Chancellor's chief lieutenant, Mr. Brown, that allowing four hours for a Finance Bill was

"a fundamentally undemocratic way to proceed . . . That shows a complete contempt for the democratic process."—[Hansard, 13 March 1992; Vol. 205, c. 1141–52.]

Thirteen years later, we have before us a Labour Finance Bill of 106 clauses, not 11, which is also to be rushed through in four hours. Times have changed and so have the cherished principles of the Labour party.

Although more debate would have been welcomed today, it is fair to say that there is not much in the Bill to which we object. It contains the clauses that set out the various tax and duty rates that are required to maintain the flow of revenue to the Exchequer. We, of course, will reduce that revenue flow by £4 billion when we present our Budget and Finance Bill in two months' time. The Bill also contains more complex provisions that, although they deserve fuller scrutiny, are broadly welcome: they have been consulted on and we felt that it would be wrong to remove them from the Bill.

The point is not whether we in the House object to any of the clauses, but that they will not be exposed to scrutiny and proper deliberation by those outside the House, who may well have views—indeed, some have sent us representations on certain clauses. The travesty of taking more than 100 clauses in four hours means that many items will pass on to the statute book without having been subjected to the proper deliberative scrutiny that they should have and would have received in a Committee.

My hon. Friend is absolutely right. My approach to the washing-up negotiations with the Chief Secretary was to concentrate on removing those clauses on which there had been no consultation with outside bodies and ensuring that those that remained were those on which there had been at least some consultation. I readily accept that that is no substitute for adequate parliamentary scrutiny, going through the Bill in proper detail and at length in Committee—

So why are we allowing it?

Because the negotiations took part as part of the washing-up process covering every piece of legislation that we will discuss today and in the next couple of days. We have let certain provisions through, and I shall explain why.

We have let through the new regime for trusts for vulnerable people, which has been consulted on, which all the disability charities broadly welcome and which we support. We have agreed to the alternative finance arrangements to ensure that people whose religious beliefs forbid them from receiving or paying interest—such as those who adhere to Sharia law—are not discriminated against by the tax system. We think that is fair.

The Chief Secretary unfairly implied that my hon. Friend Mr. Prisk had been dismissed from the Front Bench; in fact, he is an Opposition Whip but he is using his experience to speak in today's debate from the Back Benches. My hon. Friend said that the clauses on film tax relief continue the sorry tale of the Government's increasingly convoluted attempts to give tax breaks to film production without creating huge tax loopholes—a tale of how not to write tax law. As I am sure my hon. Friend Mr. Fallon agrees, we should consider those clauses in much greater detail, but in the past two days we have received strong representations from the film industry expressing its wish that the relief be extended past July, when it is due to run out. The industry felt that the confusion and chaos caused by the changes that the Government have made in the past couple of years would be increased if the measures were not included in the Bill. Having listened to the representations made by the film industry and by MPs representing film production companies, we are prepared to allow the clauses to pass to enable the extension of the tax relief beyond July.

Can my hon. Friend give me an assurance that when he introduces his first Finance Bill and takes part in the first Conservative Budget after 5 May he will carry out a proper evaluation of the help that has been given to the film industry? Because of the difficulties encountered by the Government it is genuinely difficult to see the wood for the trees, and I would be grateful for an assurance that those reliefs have benefited the British film industry.

My right hon. Friend is right to be sceptical. It is our view, and indeed it is the view of the industry, which has undertaken a review of these issues, that we should move from a tax relief on production to one on the distribution of British films. As I said, the film industry was particularly concerned about the uncertainty caused by the expiry of the relief in July, and made strong representations. Some of my hon. Friends have made strong representations to me on behalf of the film production companies in their constituencies—obviously the film business did a good job—and we are prepared to accept the relevant provisions.

The new schedule on the taxation of pensions includes some sensible provisions, many of which are amendments that I tabled in Committee to the previous Finance Bill. They were rejected then by the Government, but I am glad that with the passage of time and a bit of wisdom the Treasury has accepted that I made a great deal of sense. Last June was therefore not entirely wasted. The Chief Secretary mentioned the clause that ensures that homosexual civil partners are treated the same as married couples for tax purposes. Personally, I support civil partnerships for gay people, and I support the clause. That may help to increase my score of 57 per cent. on Stonewall's score chart of MPs' record on gay equality issues, about which my hon. Friend Mr. Francois is always teasing me. We very much welcome clause 19, which is a sensible provision on the payment of armed forces pensions.

Those clauses are broadly welcome, but doubtless they could have been improved by proper parliamentary scrutiny. On balance, however, we should allow them to pass into law. However, we could not allow to pass into law without any examination the dozens of clauses and hundreds of pages of complex tax legislation, which the Government said were necessary to counter tax avoidance and which appeared in the initial Finance Bill that was published just a couple of weeks ago. We agree with the Government about the need to tackle tax avoidance and we agree on principle with the many measures that they have introduced to close tax loopholes. However, the detail of such measures requires the closest possible examination, to ensure that we do not inadvertently damage the competitiveness of UK industry and further increase burdens on business. Indeed, many anti-tax avoidance measures are retrospective, as they would come into force on the day on which they were announced. There would therefore be no revenue implications if we considered them after the election in a Conservative Finance Bill or, in the unlikely event that Labour wins, a Labour one.

The initial Finance Bill that was published a couple of weeks ago included novel and questionable clauses on tax arbitrage that the CBI and many others fear could seriously reduce the appeal of Britain as a place in which to do business and attract inward investment. Given that inward investment has already fallen under the Government, we should pay heed to such warnings and subject the clauses on tax arbitrage to rigorous scrutiny. Indeed, many people in the industry who approached us, including the Institute of Chartered Accountants, thought that they would be ruled illegal. Given the problems that the Treasury has had at the European Court, I would expect it to look at those provisions more closely. It was never going to be possible to rush through the tax arbitrage clauses in a pre-election period, and it was wrong of the Government even to suggest that they were going to do so. The Chief Secretary described those clauses to me as the flagship of the Finance Bill. Unfortunately for him, like the Mary Rose, his flagship has been sunk, and we must wait to see what happens when it is raised.

Similarly, the Association of British Insurers voiced "very considerable concern" on behalf of the insurance industry about the Inland Revenue's plans to give itself powers to alter the key areas of taxation of life insurance by regulation instead of primary legislation—something in which my hon. Friend Mr. Bercow takes a particular interest. I am glad to assure him and others that we have put a stop to those provisions and to schedule 13 of the old Bill, which was causing considerable alarm in financial circles. The Government's initial aim to ram through all those complex tax changes without any scrutiny or consultation rightly caused indignation and outrage in the financial services and business community. The Institute of Chartered Accountants wrote to the Paymaster General on 31 March to say that

"we are strongly of the view that if the provisions in the Finance Bill are not subject to appropriate Parliamentary scrutiny then this will be to the detriment of UK business and will undermine confidence and trust in the Parliamentary process".

We agree. Thanks to our actions, the most controversial and complex provisions will now be subject to appropriate parliamentary scrutiny before they are introduced, and trust and confidence in the parliamentary process has been sustained.

Returning to the Finance (No. 2) Bill before us today—as opposed to the provisions that we have pushed out over the past couple of days—it includes welcome moves on tax, which the Chancellor trumpeted on Budget day, including finally raising the stamp duty and inheritance tax thresholds to take account of the growth of house prices over the past decade, although the Chief Secretary is unaware that that will have little impact in his own constituency. The Chancellor did not mention in his Budget speech—and the Chief Secretary did not mention it today—that the small tax cuts about which he boasted at the Dispatch Box are more than cancelled out by the stealthy tax increases buried in the detail of the Red Book, or, in the Chief Secretary's case, given his answers today, perhaps we should call it the unread book.

Unless I misheard the Chief Secretary, he suggested that there was a £500 million change in disadvantaged areas. Is my hon. Friend aware that the correct figure is a £340 million differential? Is he as concerned as I am that the Chief Secretary is not even aware of how much additional revenue he plans to take?

My hon. Friend is absolutely right. I think that he is referring to table 1.2 on page 12 of the Red Book, which shows that the initial impact of ending stamp duty land tax relief in disadvantaged areas will cost £340 million. As I said, in the Chief Secretary's case, it appears to be the unread book.

As always with the Government, it is not what they say that is real story but what they do. In the Budget, what the Chancellor

"gave with one hand he took away with the other".

Those are not my words, but the words of the much respected independent Institute for Fiscal Studies. As my right hon. Friend Mr. Dorrell reminded us, raising the stamp duty threshold from £60,000 to £120,000 in clause 95—a long overdue but none the less welcome measure—is more than cancelled out by clause 96, which removes stamp duty land tax relief for disadvantaged areas. The Chief Secretary has not given us a good explanation of why he is ending that much trumpeted relief for disadvantaged areas. He said that he would replace it with another scheme, but it is worth only £300 million over three years, which is considerably less than the £340 million in the first year—and I think that the figure will rise—that is taken away by the ending of that relief for disadvantaged areas.

The Chancellor said, as though it were a mere technicality, that he was

"aligning the timing of oil companies' corporation tax payments more closely with petroleum revenue tax."—[Hansard, 16 March 2005; Vol. 432, c. 264.]

Who would have guessed that what he really meant was a £1.1 billion windfall tax on the oil industry? The oil industry, I suspect, has learned to live with that tax, but pensioners will be dismayed to discover, as my hon. Friend Mr. Tyrie reminded us, that the £200 payment that the Chancellor flourished as an answer to his soaring council taxes is a one-off. Page 12 of the Red Book makes that clear, even if the Chancellor and the Chief Secretary have not done so.

Unlike every other measure in the Budget, the £200 payout to pensioners is for this election year only, whereas the hikes in council tax will go on year after year if Labour is re-elected. What a cynical pre-election manoeuvre from a Government who have lost any sense of fair play. What a contrast to the sustained year on year on year council tax discount that we are offering, which will be worth up to £500 for millions of pensioners. What a classic example from this vote now, pay later Budget.

There is a secret tax-and-spend agenda in this election. It just happens to be the Labour party's: a secret agenda to try to conceal from voters the massive tax rises that Labour needs to pay for its spending plans. Even after 66 tax increases on hard-working families, the Government have managed to create a black hole in the public finances. The Chancellor admitted as much when he was forced to concede that the current deficit is £5 billion higher than he forecast last year, and that he will borrow £168 billion over the next five years—more in each year than he forecast even 12 months ago.

It is not just our view that there is a black hole. It is the view of almost every single independent organisation and economic commentator. They are clearly thinking what we are thinking. The International Monetary Fund is thinking what we are thinking when it says that Britain's national accounts have

"deteriorated sharply over the last five years"— in other words, from the moment that the Labour Government ceased to follow the previous Conservative Government's spending plans. The Institute for Fiscal Studies is thinking what we are thinking when it says that taxes will have to go up £11 billion a year after the election to pay for Labour's spending.

The question for Labour in the election, and for the Chief Secretary, either now or as we encounter each other in the television studios over the next couple of weeks, as we will no doubt do, unless he is already off to his posting and being measured up for his high commissioner's outfit—the ostrich feathers and all that—is not whether taxes will go up, but which taxes Labour will increase in future Finance Bills. Will it be capital gains tax on homes, or council taxes, pushing bills towards the £2,000 mark, or national insurance—Labour's tax of choice? To raise the £11 billion in taxes that the IFS says the Government need, national insurance will have to go up 3p in the pound. That is £1,000 more a year in taxes for a typical hard-working couple.

Before the last election, as my right hon. and learned Friend the Leader of the Opposition reminded us earlier today, the Prime Minister said that reasonable people should not suppose that Labour would raise national insurance, then in the first Budget after the election he put it up. What does the Chief Secretary think reasonable people should suppose before this election about Labour's plans for national insurance? I am not sure whether he will have an opportunity later in the debate to answer the question, so perhaps the Financial Secretary will do so instead.

Taxes will go up if Labour is elected. That is the simple truth at the heart of the election—a truth that, as far as Labour is concerned, dare not speak its name. What will those taxes pay for? More waste, more bureaucracy, more bureaucrats—in other words, more of what we have seen for the past eight years. The Financial Secretary knows that all the money has been wasted, because he famously told us so. He said that

"we're going to have an election. . . when people will say 'we've paid a lot of taxes but what has really been achieved with all that money?' . . . Too often a lot of money has been spent. But very little seems to have been achieved".

What sound words from the Financial Secretary. He is right. A lot of money has been spent, but very little seems to have been achieved. After 66 tax rises and eight years of talk, average hospital waiting times are higher, cancelled operations are up, and more people die of hospital superbugs than die on Britain's roads every year. After 66 tax rises and eight years of talk, one in three 11-year-olds leaves school unable to write properly, and school truancy has risen by a third. After 66 tax rises and eight years of talk, crime has risen, violent crime has almost doubled and the detection rate has fallen.

Even on the economy, which the Chancellor of the Exchequer says he wants to put at the heart of the election campaign, after eight years of boasts and 66 tax rises, we have fallen from fourth to 11th in the world competitiveness league, our trade has gone from a surplus to a record deficit, a million manufacturing jobs have been lost, productivity growth is down by a third, as is the savings ratio, and now we discover that average take-home incomes for families have fallen for the first time in almost 15 years. Labour has taxed, wasted and failed, and hard-working families have paid the price.

So it will fall to the next Conservative Government to sort out the mess in the public finances and to deliver the lower taxes, cleaner hospitals, school discipline, controlled immigration and more police that the people of this country want to see. It will fall to the next Conservative Government to put public spending on an affordable path that avoids Labour's tax rises and delivers tax reductions for hard-working families. We will begin that task in our first Budget and our first Finance Bill in just two months' time.

Much in the Finance Bill is uncontroversial. When the revenue clauses were put to the House a few weeks ago, I do not recall that there was more than one Division, and that was on a Scottish nationalist motion for which only four Members voted, so on the revenue provisions there has not been a great deal of controversy. As I understand it, the implication of the Bill is to tighten the economy by the grand total of 0.02 per cent. in terms of fiscal policy, so we are not talking about great changes in economic policy.

What remains for debate is the way in which the Government have treated some complex provisions. In the Budget debate we had a useful exchange about the stamp duty provisions, which brought out the fact that what sounded like an attractive idea—the idea of giving stamp duty relief on commercial property in disadvantaged areas—turned out not to have been thought through. I am disappointed that the Government have not produced a reasoned research paper of any kind to explain how we got to that point, what the consequences were, who benefited, and what will happen as a result of the local enterprise initiative, which I suspect will encounter the same problems as the previous tax relief. There has been a lack of reasoning and a lack of understanding about a rather complex policy.

We had argued for lifting the threshold for stamp duty and had calculated that it would be possible to lift it to £150,000, giving the scrapping of the disadvantaged area relief. In view of the revenue that the Government have saved through that measure, it is disappointing that they were not able to lift the threshold further. For most of us in the south of England, the provision is useless, but none the less welcome to the limited extent to which it is proceeding.

The spokesman for the Liberals has just created a black hole in a prospective Liberal Budget, not that there ever would be such a thing. He suggested that the money that the Government are raising on stamp duty should go back into stamp duty relief. Could he explain how he would fill that hole?

The commitment to increase the threshold for stamp duty to £150,000 will be in our manifesto. I have already said that publicly. There will be no black hole because it is fully costed. The manifesto with full costings will be published in 10 days, and will explain precisely how the cost is covered. We will not be proceeding with the Government's alternative local enterprise proposals. Our plans have all been fully costed, in contrast with the James initiative, on which I have commented frequently and about which doubts are shared by many of the hon. Gentleman's colleagues, although we will not go into the sad history of the past couple of weeks.

Before we leave the subject of stamp duty, can we be clear what Liberal Democrat policy is? It is to further transfer stamp duty relief from the inner urban areas to the more affluent areas, especially in the south. Will the hon. Gentleman be promulgating that loudly in places such as Sheffield and Newcastle?

I was completely up front in the weeks running up to the Budget, arguing that the disadvantaged area tax relief provision for commercial property should be dispensed with, because the main beneficiaries were not small shops in Sheffield, but large commercial property developers in Canary Wharf and such areas. That is why we argued for getting rid of it and we believe that is the correct thing to do. We remain committed to lifting the stamp duty threshold for domestic properties further to £150,000 a year. That is fully costed and will be fully explained in the manifesto when we present it shortly.

On the specific Budget provisions, I agree with Mr. Osborne that what has been taken out is appropriate and what remains is sensible and something that we can all support. On the major change, the anti-avoidance measures, we need a great deal more time for reflection. We are all committed to such measures where they are effective, but they are at the core of the Government's budgetary arithmetic, as the Chief Secretary knows. They propose to raise £3 billion over three years, so the ability to make the measures stick is central to the Budget's credibility. For the reasons that have partly been given, it is right that we be given further time for reflection.

On the international provisions, the so-called double no tax agreements, the point has been made, not just by people who currently benefit from these measures in multinational companies but by accountants who deal with them, that by dealing with such matters in too clumsy a way there might be some short-term gain in revenue, but some long-term loss. Equally, I understand that there is an enormous degree of complex argument around the 15 or 20 anti-avoidance measures concerned with financial derivatives, with which the Government propose to deal, and the danger of tackling those in the wrong way or in a clumsy way would simply be to raise the cost of capital for companies, not necessarily to save revenue for the Government. So a great deal of thought is required on the various measures, and I welcome the opportunity to pursue them further in that proper way.

Our main criticism of the Finance Bill was not so much for what was in it as for what was not in it, and we hope that whoever forms the Government in a few weeks' time will address these issues. The first is the transparency of the budget process. It is already very clear, because of the uncertainties surrounding the £3 billion revenue from anti-avoidance measures, that we would have to take on trust much of what the Inland Revenue says about projected revenue. There is also much room for controversy about projected growth rates, and that is one reason why we have argued strongly that there has to be a proper system of independent audits of the Budget's assumptions to give to fiscal policy the same kind of integrity that exists in monetary policy. That is not a doorstep campaigning issue, but I hope that the Government are listening to the arguments and that if they are returned they will address the problem—that we have a proper degree of independence in the appraisal of fiscal policy that a body such as the National Audit Office, properly supported by economic advice, would be able to give.

The Chief Secretary acknowledged the second omission when he said that the Government are responsive to the need for reform of local taxation. I do not know what that is coded language for and how radical the reform will be when we get it, but as he knows we are committed to scrapping the council tax altogether, and the sticking plaster solution of £200 in one year is clearly not satisfactory, although I am not sure that the Conservative's £500 is satisfactory either. I happen to live in a constituency that for the last three years has had a Conservative-controlled council that has raised council tax by £500 per household over that period, so my constituents will derive no benefit from that. In addition, there are many households where one occupant is a pensioner and one is not that would not qualify for the discount, and there are many low-income families without pensioners who would not qualify for that discount either. Therefore, that provision is itself inadequate. It may be sustained, but it is not adequate and it does not deal with many of the injustices that lie at the heart of the council tax. It does not create a system based on ability to pay. If the Chief Secretary is as good as his word and we have fundamental reform if the Government are re-elected, I hope that they will consider income-based systems of taxation, as the Liberal Democrats have suggested.

The third omission relates to pensions. Mr. Jack made the point earlier that over the next few weeks many people will be struggling with all the complexities of pension credit and other forms of means-tested benefit without the help that we are sometimes able to give them. That illustrates the much wider point that trying to deal with pensioner poverty in this way excludes many pensioners, it creates high rates of marginal withdrawal or marginal rates of tax for pensioners and is a fundamentally unsatisfactory system. We know that the Government are considering, through the Turner commission, a much wider-ranging reform. We hope that they eventually come out, as we have, with the concept of a citizen's pension payable to at least older pensioners without extensive means-testing and without the complexity and the high marginal rates that currently apply.

Again in a spirit of consensus, it is clear that the three parties among us that are competing at the election, whatever the sound and fury, are agreed on a series of propositions. The first concerns taxation. The simple brutal fact of the matter is, as the Institute for Fiscal Studies, which the hon. Member for Tatton called in aid several times, has pointed out, that all three parties would increase taxation after the next election, and that there would be a minimum £24 billion a year increase under the Conservatives as a result of fiscal drag throughout the next public spending review period. That is common ground.

I am sure that the hon. Gentleman would not want to mislead the House, still less the voters. Is it not true that the Institute for Fiscal Studies has looked at the Government's plans and concluded that there is a structural deficit, and has looked at the plans published by the Conservative Front Bench and said that the arithmetic adds up?

It has said that the arithmetic adds up in a purely mechanical sense. Perhaps it should be more widely known that the IFS has said that it has no competence to judge the credibility of the cuts that were proposed by the James report, and it specifically disclaimed any competence in evaluating those proposals. Yet the whole Conservative taxation and spending programme hinges on that. It has not been independently evaluated. Certainly when the Liberal Democrats have considered it on a purely technical level, probably at least £8 billion-worth of those cuts make no sense whatever.

It is obviously true that any Government who implemented changes in the spending plans would have to accept responsibility for those changes, but the hon. Gentleman was suggesting that a Conservative Government based on those plans would have to increase rates of taxation, which is simply not correct.

I did not use the phrase "rates of taxation". What I said was that taxation in aggregate, the amount raised in taxation, the share of taxation in the national economy, would rise under the Conservatives' proposals. If they were honest and open about that and acknowledged that there would be a rising burden of taxation under their proposals, under Labour's proposals and ours, at least we would start with a sensible common base for debate. Equally, we will all have to accept, on each of our three sets of proposals, that there will have to be a high degree of fiscal discipline in respect of public spending. That is the common basis on which this debate should proceed.

I am happy to support the Bill and I wish the Chief Secretary well in his next job. He will be greatly missed in the House.

I begin by declaring an interest as a director and shareholder of a manufacturing business. Like many others, I would like to echo the closing remarks of Dr. Cable in wishing the Chief Secretary success in his new career. We will follow his developing life with interest and we shall miss his bonhomie.

We are discussing a reasonably heavily truncated finance Bill today in the circumstances of the run-up to a general election, but as my hon. Friend Mr. Osborne reminded us, the degree of change that has been introduced by the Government in the originally published Bill is nowhere near the degree of change that was agreed to in the run-up to the 1992 election. I remember some of that because I became Financial Secretary immediately after the 1992 election and had to pick up a substantial amount of legislation that had been drafted ahead of the election and dropped in the finance Bill in the run-up to the 1992 general election. I congratulate my hon. Friend on securing the Government's agreement to drop some of the most complex aspects of the original legislation, but my hon. Friend Mr. Fallon was correct to remind the House of the difference between the Finance (No. 2) Bill that we are discussing now and the Finance Bill that was put through ahead of the 1992 general election. It is regrettable, although I am sure that my hon. Friend the Member for Tatton secured the best deal possible, that the Government were not willing to delay the legislation that is included in the Bill in order to ensure that it was subject to proper parliamentary scrutiny after the general election.

The real issue with this Finance Bill is not the measures in it, but those that are not in it, but would be necessary if the Government's plans were in truth to add up. I am interested not in what is in the Finance (No.2) Bill that we are discussing today, but in what would be in the Finance (No.3) Bill that a re-elected Labour Government would have to introduce.

All our constituents know, and every Member of this House knows, that we have been here before. In 2001, ahead of that year's general election, we and our constituents were told by the Prime Minister and the Chancellor that there would be no need for tax increases if a Labour Government were re-elected. At the first occasion after that election the Chancellor came to this place and proposed in the 2002 Budget an £8 billion tax increase—an increase in the national insurance contributions paid by both employers and employees. The argument advanced at the time was that all of that was necessary because the money was all going into national health service expenditure. That always was a dishonest argument—it was just as dishonest today, when the Prime Minister used it at the Dispatch Box during Prime Minister's questions, as it was on the day it was first used in the 2002 Budget.

We all know that the total tax yield that comes out of the tax system goes into the Consolidated Fund and that it is then for the Government to decide priorities on the use of that money. All the Chancellor was seeking to do by labelling that £8 billion tax increase in 2002 as money for the NHS was to sweeten the pill of the extra burden that the Labour Government were imposing on voters.

I am hesitant to interrupt my right hon. Friend's excellent flow, but I want to remind him of what happened after the 1997 election. We were not advised that our pensions were going to be raided, but a £5 billion annual raid was executed then. Does he agree that there is a record of not one election, but two, in which this Government have taxed without warning?

My hon. Friend is entirely right; there was an unheralded tax increase after the 1997 election and another after the 2001 election. Of course, we all now know the effect that was achieved, and I want to focus on the tax increase following the 2001 election, because the Institute for Fiscal Studies published last week an analysis of the effect of that increase on disposable incomes.

It is helpful to us in the run-up to this general election for voters to be reminded of the effect of the tax increase that the Government introduced immediately after the previous general election in order to make the books balance in the early years of this Parliament. Last week, the Institute for Fiscal Studies published a report on the movement of disposable incomes during recent years. It reported that, for the first time since the early 1990s, real disposable incomes fell in 2003–04 compared with 2002–03. Why did they fall? They fell because of the £8 billion tax increase that the Chancellor introduced after the previous general election, having promised beforehand that an increase would not be necessary.

It is not just a matter of the total taxation that the Government have imposed, which has had the effect of cutting real disposable incomes in the last year for which figures are available, which is 2003–04. It is also important to examine the distributional effect of the tax policies that have been pursued by this Government, not just in this Parliament, but throughout the period since 1997, as my hon. Friend Mr. Prisk rightly says.

The Chancellor is very fond of saying that he has not increased rates of income tax. That is a dishonest argument for two reasons. First, it draws a polite veil over the fact that he has increased the rates of national insurance contributions. Most of our constituents and, I suspect, most of us, do not notice the difference in our pay packets between increases in income tax and increases in national insurance contributions. The truth is that marginal tax rates have increased, as one sees if one considers tax and national insurance together. Beyond that, the combined effect of freezing both the personal allowance in 2002 and the higher rate bands, in addition to rising income levels, is that 7.5 million income tax payers are paying at a higher rate than they would have done if the whole system had been fully indexed to earnings in 1997.

So when the Chancellor of the Exchequer talks about tax rates not having gone up, he is wrong on two counts: first, national insurance contributions; and secondly, the unplanned and unfair effect of holding down the allowances and bands in the tax system and not indexing them to earnings. We should do well to remember and to remind our voters of this statistic: the Labour Government since 1997 has meant that 7.5 million—very nearly one third—of all income tax payers are paying at a higher marginal rate than they would have done if the system had been fully indexed to earnings since 1997.

The Institute for Fiscal Studies and an analysis of the tax record of this Government in office have demonstrated that the effect of a Labour Government is to raise the tax burden on income tax payers. The IFS is relevant to this debate not just because of its analysis of the effect of a Labour Government on the tax burden in the past, but because, as we have already mentioned in this debate, it is offering a warning of what a re-elected Labour Government would mean again.

I said in an intervention on the hon. Member for Twickenham that the IFS had examined the Government's published plans and those of my right hon. and hon. Friends on the Conservative Front Bench, and concluded that the Government's plans include what in the jargon is called a structural deficit—that is to say, a black hole or a need to raise taxes in the next Parliament in exactly the same way as they were raised in this Parliament because the Government have not been able to control the growth of Government expenditure.

I wonder whether the right hon. Gentleman saw the point made by Goldman Sachs last month, which was that there is no black hole.

I have seen a wide range of published material on this subject. If the Financial Secretary will allow me to make this point, it is entirely fair to say that the overwhelming majority of published opinions from the IFS and all the other independent commentariat employed in the City, and the overwhelming weight of that judgment, is that there is a structural deficit in the Government's plans. It is not difficult to see why they reached that conclusion. It is because the Government's published plans report a rising share of national income accounted for by Government expenditure and, as the hon. Member for Twickenham pointed out, a rising share of national income accounted for by tax yield, without any plausible explanation of how the money will be produced. I have seen no analysis of the figures for tax yield that supports the Government's view that they can secure the specified level of tax income out of the economy without having to change the tax rates.

The Financial Secretary mentioned Goldman Sachs. He did not mention the Institute for Fiscal Studies, Ernst and Young, the Organisation for Economic Co-operation and Development, the International Monetary Fund, the CBI, the British Chambers of Commerce, the Centre for Economics and Business Research, Numerica, Lehman Brothers, HSBC, Barclays Capital, Gerrard, PricewaterhouseCoopers, Deloitte and Touche or Lombard Street Research.

I am grateful to my hon. Friend. I regret to say that I have not committed that list to memory, but perhaps it might now be obvious to the House why I did not attempt to do so. My memory is failing me and I do not have that ability.

Almost nobody who has examined the Government's financial plans believes that the Government can deliver on tax and revenue through the next Parliament without resorting to precisely the same expedient that they used in 2002—a post-election tax increase. When the Chancellor says that he wants to put the economy at the centre of the election campaign, I say, "Hooray!" Conservative Members must argue to the electorate that the meaning of a re-elected Labour Government is entirely clear—it is clear in the figures and evidence and, if one does not want to look into a crystal ball, it is clear in the Red Book. A Labour Government means a further substantial tax increase.

Labour has delivered tax increases. In recent times, it has also delivered falling living standards, because government has grown faster than the individual's capacity to pay for it. This year, the IFS published two studies, one considering the Government's future plans and the other examining the Government's record in office, which demonstrate that when Labour raised taxes in 2001 and, as my hon. Friend the Member for Hertford and Stortford rightly pointed out, in 1997, it had the effect of cutting living standards. The IFS said that we must expect a re-elected Labour Government to do the same again. The choice for voters in this election could not be clearer, and I cannot wait to explain it to them.

I shall speak briefly, simply to register a complaint. If discussing 11 clauses in 1992 was a constitutional outrage, what is discussing 106 clauses and 203 pages of legislation in four hours?

I do not doubt that my hon. Friend the shadow Chief Secretary was faced by an unenviable choice—he did not have the whip hand in those negotiations—but it is extremely unsatisfactory that more than 100 clauses, and more than 200 pages of financial legislation, will pass into law without their being properly scrutinised. If those clauses are not scrutinised in Committee, they will not be scrutinised in the other place.

As my hon. Friend Mr. Osborne said, some of those clauses may be welcome and others, which have been subject to consultation, may raise no serious dispute. However, the purpose of the Standing Committee on the Finance Bill is to go through those clauses in detail—the process is familiar to all of us who have served on a Standing Committee on the Finance Bill—and to consider representations that emerge after the final text has been published. Such representations do not always come from bodies that the Revenue or the Treasury have consulted directly. The Chartered Institute of Taxation, for example, has already made representations about a number of the clauses, and the Law Society has sent me, and I am sure other hon. Members, a catalogue of suggested improvements. Such amendments will not even be considered, and we will pass ill-considered and badly judged legislation into law.

If the clauses have already been partially consulted on, there is no rush. I am sure that my hon. Friend the Member for Tatton would be happier to reconsider those clauses and include them in his own finance Bill, which I look forward to his presenting to the House in the summer months. Even in the unlikely event—a catastrophe—of this awful Government being re-elected, it would be perfectly possible for them to seek to re-enact the clauses in just two or three months' time. Even those clauses that the Government claim are necessary to tackle tax avoidance would not lose from being delayed by a matter of weeks, if not a couple of months.

My hon. Friend and other hon. Members know that rushing through legislation is part of this Government's pattern of behaviour. Two Budgets ago, the Chief Secretary himself told us that the Government intended to spend two years correcting stamp duty land tax legislation. Does my hon. Friend share my concern that the Government legislate first and think second?

Having served on the Front Bench in a Standing Committee on the Finance Bill, I believe that the Government legislate far too rapidly on tax. I would like to return to some of the schemes and reliefs to measure their effects—perhaps that is a role that the Treasury Committee should perform—which is a role that no one seems to perform. We simply have the Government's word for it that a particular tax relief is either not working as originally alleged or is being seriously abused and must be stopped at midnight. We need a more considered way to audit tax changes—I am not discussing the re-write process or anything like that—two, three or five years after their implementation, so that all hon. Members can measure their effects.

Given today's situation, however, we must take the wording of the clauses on trust. We are setting a bad precedent by passing so much legislation on to the statute book without proper scrutiny. If it was a constitutional outrage in 1992 to consider 11 clauses in four hours, the outrage is far greater today. In the end, hon. Members and other bodies outside this House will regret what we are doing this afternoon.

I suppose that I can count myself as a Finance Bill veteran. I start by reminding the House of my declaration of business interests, which is properly recorded in the Register of Members' Interests.

In today's debate, my hon. Friend Mr. Osborne, to whom I listened with interest, quickly sped past the question of life assurance taxation. I had hoped that I might hear from him that an incoming Conservative Government would examine that area. I, for one, am disappointed that this truncated Finance Bill contains no measures to re-examine how the internal rates of return and taxation are calculated on life assurance products and to try to improve the rates of return for such financial devices. Those rates of return are particularly important to, for example, pensioners and those on endowment mortgages, who have seen substantial drops in the performance of those products, which are part of their long-term financial security.

One of the many missing themes from this Finance Bill is a lack of attention to detail on long-term savings. One of the interesting features of the current financial press are articles pointing out the slow uptake of ISAs at the end of the financial year, one reason for which is that the Chancellor has slowly but surely stripped out many of the initial starting benefits of ISAs.

If the Chief Secretary decides to go to South Africa, I wish him well. He may decide to go South Africa anyway when he is in opposition, because he will have plenty of time on his hands.

ISAs and other financial products have not closed the savings gap in this country, and savings have fallen substantially under this Chancellor. Although it is entirely correct to examine tax and revenue issues, which I shall discuss in a few moments, savings are important in terms of capital accumulation in this country. Under this Government, savings have fallen, and this Finance Bill contains no measures whatsoever to address that important point.

I want to examine a number of measures in the order in which they appear in the Bill. One of the first measures to which we are invited to agree is the

"Consolidation of current rates of hydrocarbon oil duties".

The Chancellor has had to postpone his revaluation of those rates in the light of turbulent conditions in the oil market. But there is a more important conclusion that comes from the question of oil pricing and upon which the Government should be reflecting. The Prime Minister has made it clear that matters connected with climate change are one of his top priorities, and they lie at the heart of the G8 priorities. As a result of the markets, there has been a substantial increase in the cost of hydrocarbon fuel, but no proportionate decline in the use of motor-powered vehicles. The market price increases, notwithstanding the revalorisation that the Chancellor still has up his sleeve, represent an important challenge to the Government's environment agenda, because they will have to look for other measures to try to reduce the output of greenhouse and other associated gases from motor vehicles if their targets for climate change are to be met. When I asked a question at the last Treasury questions, the Economic Secretary responded by talking about improvements in air quality, which I accept have occurred, but did not wish openly to acknowledge the fact that greenhouse gas emissions from the transport sector have been rising substantially. Government measures have been inadequate in dealing with those issues.

In the same context, I draw the House's attention to the table that goes with clause 7, which deals with the Government's proposals on vehicle excise duty. Ministers have trumpeted the success of the proposals to lower the level of vehicle excise duty for cars with low CO ₂ emissions. Picking up on the point made by my hon. Friend Mr. Fallon, the Government have provided no analysis whatsoever of the real-world sales effect of those proposals in terms of the differentials in vehicle excise duty. I am surprised that a Government who have rightly put climate change at the top of their agenda have been so unimaginative and lacking in boldness in terms of looking again at whether their proposed structure for vehicle excise duty rates is the right one to achieve a greater and quicker uptake of vehicles with low CO ₂ emissions. Why, for example, is not there a nil rate band for hydrogen-powered cars? Prototypes of those have been tried in the United States; where is the encouragement to bring them into the United Kingdom? Where is the substantial discount for petrol and diesel equivalents for mixed electric and hydrocarbon-powered vehicles? The Bill lacks boldness. If the Government do not address that, they will continue to underperform against their own targets in relation to the Kyoto priorities. I say that as the Chair of the Select Committee on Environment, Food and Rural Affairs, which recently produced a report on the Government's performance in that respect. There is some suggestion that even meeting the Kyoto targets could be in doubt.

Let me move on to air transport. The Bill contains nothing to deal with emissions from aircraft. There is one thing that the Government could have done in relation to aircraft, motor vehicles and any other sources of emissions. As the Chief Secretary and the Financial Secretary are aware, the Government have at their disposal the use of capital allowances, and if they had wanted to accelerate still further the pace of the introduction of more environmentally-friendly systems, they could have introduced an enhanced rate of capital write-down. As you will know, Mr. Deputy Speaker, from your experience of Stansted in your constituency, there is a need to introduce the most modern aircraft as quickly as possible. They pollute less with noise and are more efficient in terms of fuel, yet the Government are silent on providing any mechanism to enhance the write-down rate for aircraft to encourage the uptake of more modern air vehicles. The same principle could be applied right across industry to try to add some carrots to the sticks on which the Government's environmental policy relies.

The Bill moves on to invite us to confirm the rates of income tax. Following the interesting observations of my right hon. Friend Mr. Dorrell, I want to pose a question to Ministers: can they give an unequivocal guarantee that the 10 per cent. starting rate for tax that is confirmed in the Bill would, if Labour were re-elected, remain for the duration of the next Parliament? I would be interested to know whether that structural configuration of the tax rates remains part of Treasury thinking.

My right hon. Friend the Member for Charnwood rightly drew the House's attention to the work undertaken by the Institute for Fiscal Studies. He could have focused on another factor that affected the institute's findings—the rise in council tax. That is the ultimate stealth tax, which the Government do not overtly increase except by starving local authorities of the necessary resources to meet the mounting costs of the responsibilities that the Government keep putting on them.

When Mr. Straw was a Treasury Front Bencher in opposition, he and subsequent Opposition spokesmen used to ask the Government of the day this awkward question: what is the impact on incomes by decile of all tax changes, both direct and indirect? That was sometimes an embarrassing question to have to answer when we were in government because the news was not always good. It is interesting that when that difficult-to-answer question was first posed to the incoming Labour Government, they refused to answer it, saying that the assumptions did not make for a meaningful answer. The latest findings by the IFS have brought that particular pigeon home to roost, because they provide us with the answer that

"average . . . household incomes after tax and benefit payments fell by 0.2 per cent. in real terms between 2002/03 and 2003/04".

That was, it says,

"the first decline in any single year since the early 1990s."

What a record for the Government to take into the general election. They are able to boast that since the 1990s—the period when they were always criticising the Conservative Government for their economic performance—they have managed to create the first fall in average household incomes.

My right hon. Friend, who is, as always, giving an excellent exposition, mentioned the stealthy nature of the council tax increases. He may not have had the opportunity to consider page 250 of the Red Book, where the third column shows that the council tax revenue that the Government are already planning to draw out from the hard-working families of this country will be 11 per cent. more next year than this year—£20.9 billion. Does he share my concern that they are already planning how to take even more money from people?

I am grateful to my hon. Friend for pointing that out. A 75 per cent. increase in council tax over the lifetime of this Government is testament to their addiction to taxing in this particular way.

The IFS continues with its analysis and makes this telling point:

"The income of the household in the middle of the income distribution—the median—rose by just under £2 a week in 2003/04 to £336 a week. This 0.5 per cent. increase was much smaller than those seen in previous years under this government."

So they are now not only clobbering the average, but hitting the middle. The IFS goes on to say:

"The drop in average take-home income . . . in part reflects measures announced in Budget 2002, Mr Brown's biggest tax-raising budget to date."

It then goes on list the points that my right hon. Friend the Member for Charnwood made.

I just want to make sure that the House did not miss an important point that the right hon. Gentleman slipped past. Even according to the IFS survey, median take-home pay has increased.

Indeed. We can trade statistical minutiae to make our debating points, but the Financial Secretary might also care to interrupt me to explain about Christmas trading on the high street and the subsequent warnings that many retailers have given, showing the squeeze on retail spending. Why is that happening? It is because people have not got the money to spend. The situation can be expressed in very simple terms. The pinch has come and people now understand what a tax-and-spend Labour Government mean to the pocket. It is painful and they do not like it, and at the ballot box they will have the opportunity to express an irrevocable opinion on this Government.

This Government have spent much of their time trying to encourage initiative, but the IFS has observed that the measures in this Finance Bill and preceding Finance Bills have contributed to a

"drop in income from self-employment."

So much for Labour's attempts to boost the entrepreneurial economy.

I hesitate to interrupt my right hon. Friend for a second time, but as someone who used to be self-employed, I have grown despairing of this Government's attitude. Did my right hon. Friend notice that when the Chancellor of the Duchy of Lancaster—rather than of the Exchequer—was interviewed about this very point, he tried to suggest that the self-employed were somehow irrelevant to the figures and could be swept to one side? Is that not wrong?

Not only is it wrong; it also shows blind ignorance of the national insurance class 2 and class 4 payments that self-employed people make. I am surprised that a former Chief Secretary to the Treasury should make such a glaring error, which perhaps underscores a lack of real understanding of what is going on in the economy. That should make people seriously question the credibility of Labour policies as they affect businesses in this country.

Table C5 of the Red Book should be required reading for anybody who wants to see the unexpurgated version of Labour's tax proposals. In the current financial year, current receipts account for 39.3 per cent. of gross domestic product. This Government project that that figure will have risen to 40.6 per cent. by the time that the next Parliament comes to an end, so by their own admission the tax burden is rising. The point is illustrated in visual form in chart C3 of the Red Book, which, interestingly, shows that tax as a percentage of GDP fell in 1994–95. But like a ski-jump in reverse, it has risen and continued to rise under this Government.

I have remarked on many occasions about my disappointment with the Government's level of fiscal encouragement for biofuels. I draw Ministers' attention to a parliamentary answer to me from the Department for Environment, Food and Rural Affairs, which confirmed the dearth of a UK biofuels industry. So far as I can see, the only plant currently manufacturing biodiesel—it uses animal fats as a feedstock, rather than oilseed rape—opened this February in Motherwell. The rest of the plants are under construction and have projected modest production levels. The exception is a UK bioethanol plant, for which a planning decision is pending.

If the Government can give a 40p duty discount for liquefied petroleum gas, they should look again at the duty derogation on biofuels and make a real effort to get the industry moving. If they really want to meet their inclusion targets under the European directive and help us to meet our greenhouse gas emission targets, they must, by definition, have UK-manufactured biofuels. The lack of such biofuels is a notable omission.

Clause 86 deals with double taxation relief. The Chartered Institute of Taxation is concerned about this clause, and I hope that the Financial Secretary is on "receive" mode as I point out to him the following observation on the construct of the clause, which the CIOT made in the briefing helpfully sent to Members before the debate started:

"What this potentially means is that legislation could have a far wider impact than is suggested by the guidance"— the notes on clauses to the original Finance Bill—

"imposing significant restrictions on the foreign tax credit relief available to most UK companies owning foreign subsidiaries and investments."

I hope that Ministers will deal with that point in the wind-ups, because it is clear that the CIOT feels that in effect, this clause could adversely impact on every company in this country with overseas interests.

I conclude with a brief comment on a tax that I wish had gone up by more, and with some observations on inheritance tax. The increase in landfill tax for which clause 99 provides is not sufficient rapidly to progress the Government's agenda of meeting their European recycling criteria. Although the three-year indexation proposal for inheritance tax is welcome, because of the increase in house prices it will not be welcomed by the many thousands of estates owners. These are people of modest income whose lifestyle is also modest, yet they will be sucked into paying inheritance tax. It amazes me that a socialist Government can allow a tax that people of means can avoid paying some or all of by buying the professional advice that they need, but which those of modest means, or none, end up paying. Is it not about time that the Treasury re-examined the entire structure of inheritance tax? This industry of avoidance is complex and expensive. It benefits only those who can afford the advice, and it does not help those who are innocently caught up in the house price spiral.

For all the Treasury's pontificating about the number of estates that escape inheritance tax, the number paying it has increased. In 1998–99, 6,295 estates in the £300,000 bracket paid inheritance tax, but according to the figures for 2001–02, which were updated in July 2004, the number doing so had risen to 9,661. The tide is running and the wave is getting bigger. It is time for this Government to address some of the iniquities caused by inheritance tax.

We shall have the opportunity during this general election to debate all these matters, but there is no doubt that people are learning exactly what a tax-and-spend Government are all about.

I remind the House of my interest as declared in the register.

There are a number of things that need to be said about this Finance Bill, but the overwhelmingly most immediate and important needs to be said strongly and several times, and I therefore make no apology for following on from the excellent speech on this subject by my hon. Friend Mr. Fallon. The point is that we simply should not be legislating in this fashion in this House—indeed, it is a complete disgrace—and least of all should we be doing so in respect of a Finance Bill, which goes to the heart of the relationship between the legislature and the people whom we represent. We are talking about the process through which we take away their money and property. Of course, it was around the issues of how that could be achieved fairly that Parliament emerged from the constitutional conflicts of the 17th century.

We are now being asked to take a view on a Bill of 106 clauses, yet they have been available for scrutiny for only a few hours. They have been abstracted from another Bill that was printed last week. A few hours is far too short a time to examine the difference between the earlier Bill and the Bill that is now before us. How can we take a view of the merits of the Bill on that basis? Serious scrutiny cannot take place and the tragedy is that no one expects Parliament to do a serious job. That is the extremely sad position that we have reached in this country.

All that is part of the erosion of Parliament's role—not just in the matter of Finance Bills, but more generally—as a result of the bad habits that the Executive have picked up steadily over the years. I admit that there were traces of it during the period of the previous Conservative Administration, but it has become infinitely worse over the last eight years. Parliament just provides a rubber stamp—it has become part of the ceremonial and decorative part of the constitution. Decisions are taken in No. 10 or Whitehall and it is assumed that Parliament will do what it is told within whatever time scale the Executive are gracious enough to grant. Whether it is convenient for the Executive branch to allow us four hours, two and a half hours or two and a half minutes does not really matter. Our role in legislation is no longer taken seriously—[Interruption.] I am not exaggerating at all. That is precisely the situation in which we find ourselves this afternoon.

It has been a convention for generations that, if a general election is called and a Finance Bill is pending after a Budget, Parliament allows the Executive branch some emergency powers required to keep the revenue of the state flowing during that period. That is the convention and, as recently as 1992, when the position arose under a Conservative Administration, the Conservative Government lived up to that principle and brought before Parliament only the minimal Bill necessary to ensure that the Government could go on functioning during the subsequent month or so before a proper Finance Bill could be introduced in the next Parliament. That principle has now been discarded and thrown in the waste paper basket.

The Government have introduced a Bill containing many complex and technical provisions and some new ones. As my hon. Friend the Member for Sevenoaks said, in a way, it does not really matter whether those provisions have been consulted on with the relevant professional bodies. I am glad, of course, that the Government consult in a formalised way but, unfortunately, they tend to consult only on matters that they feel it is convenient for them to consult on. The consultation system is good, but it is in no way a substitute for proper parliamentary scrutiny.

In that light, what we are doing here this afternoon is not that serious. I would not like to describe a parliamentary procedure as a farce, but we are moving down that road. We have not had the time to do the necessary homework and, on this occasion, we have not been physically able to consult all those affected by the Finance Bill or all those who have views on it. That is simply unacceptable.

I am sure that it will soon change, but at the moment, Conservative Members are a small minority in the House. The Government have an overriding majority and believe that they can get away with anything. That is an unhealthy position from which the democratic process in this country has suffered for too long. I would like to appeal to the democratic consciences of Labour Members. I know that many of them do have consciences about these matters and the fact that they are in a position of enormous power with such a great majority should make them very reticent about abusing that power. That, however, is what they have been doing in many contexts and they are certainly doing it this afternoon.

Labour Members should reflect on how far the process will go. What would happen if there were another Labour Government or, God forbid, a Labour Government for another eight years? Where would we find ourselves eight years further down the line when we know that we have already moved from a position where a Government tentatively introduce a minimalist Finance Bill to ensure the continued flow of Government expenditure to one in which the Government feel that they can get away with bringing 106 clauses before the House with four hours to debate them? If we extrapolate from that process, where will we find ourselves eight years later? We might be debating an entire Finance Bill in 10 minutes with no warning at all. In other words, our parliamentary procedures would have become a complete travesty. That is why I invite Government Members to reflect on these matters much more seriously than they have so far.

That is far and away the most important point that I want to make about the Bill, but I have attempted to examine this new Bill as conscientiously as I can in such a limited amount of time and I have noticed some problematic aspects. I have noted the tendency—it started under Conservative Governments but has got steadily worse under the present Government—to use the negative procedure and legislate by order or statutory instrument. More and more taxes find themselves on the statute book on that basis. The Government are giving themselves a blank cheque and we all know how thoroughly inadequate statutory instrument procedure is for examining legislative proposals. We all know that hon. Members turn up for such Committees without any preparation, often not even understanding what issues are at stake. They have no opportunity to amend the orders, so why should they make the effort to understand them? There is little that they can do, which is demoralising and demotivating in itself.

I shall use one particular example to bring the matter home. Let us examine clause 102, which deals with the Pension Protection Fund. It states:

"The Treasury may by regulations make provision for and in connection with the application of the relevant taxes in relation to—" and it then refers to various pension protection funds. The relevant taxes are subsequently defined in subsection (3) as income tax, capital gains tax, corporation tax, inheritance tax, value added tax and stamp duty land tax—virtually every major tax. Thus the funds will be taxed by the Government in a way that we cannot predict and whenever they want to do it. They will simply write their own tax laws, which is wholly unsatisfactory.

The Committee considering Finance Bills always faces that difficulty and it is getting progressively worse every year. What is more, the Government are not in the least ashamed to proceed in that manner. Instead of producing a minimalist, emergency Bill to deal with the electoral period, the Government have introduced this 106-clause Finance Bill.

I have to say that clause 102, which I have already cited, is a less-than-honest provision. It starts in the way that I have already described and continues with a number of subsections. Being conscientious, I felt that I should read them. When I did, I found that the subsequent subsections in no way constrict the right given to the Government to make whatever tax laws they want for these funds by regulation. They merely state that the power "includes" this or that. For example, subsection (2) states:

"The provision that may be made by regulations includes provision imposing any of the relevant taxes".

Subsection (4) states:

"The regulations may, in particular, include", and subsection (5) states:

"The exemptions and reliefs that may be given by the regulations include".

Subsection (6) states:

"The regulations may make provision in relation to any time after 5th April".

Clearly, what might seem at first glance to be defining subsections are, in fact, tautologous and unnecessary. They say what the regulations may include, but the provisions are unnecessary because the Government's power to write whatever tax laws they want for these particular funds is already granted in subsection (1).

I draw two conclusions from that. First, the Bill contains a lot of unnecessary verbiage. Finance Bills are always much too long and complex, but there was no need to encumber this Bill with such unnecessary wording. Secondly, there is no intention to make the Bill clear or transparent so that taxpayers can know what the rules are. I can assume only that 90 per cent. of the clause to which I have referred is intended to be obfuscatory. Civil servants and parliamentary draftsman have spent hours and days producing what is completely unnecessary rubbish. The powers granted to the Government require only the first sentence of the clause.

That is another but more minor illustration of the direction that tax law is taking in this country. It is a very bad tendency.

Of course, we know that this Bill is designed to hide the nasty truth of what will happen if there is a new Labour Government. My hon. Friend Mr. Osborne and all the independent commentators have made it clear that the Government's fiscal policy is out of control and that there is a structural deficit. The Government will have to increase tax revenues and the only question is how they go about it.

Moreover, the Government have a record of promising before elections that they will not increase taxes and then of breaking those promises. At Prime Minister's questions, it was notable that the Prime Minister avoided responding to that accusation and tried to talk about something else. He knows that the accusation is all too true.

There is great concern in the country about the Government's secret tax-raising plans. I hope that we will be able to draw them out on these matters during the election campaign. That is very important and it is better to get an untrue declaration or statement from the Government than nothing at all.

In the interests of an honest election campaign, we should ensure that we ask the right questions. For example, the newspapers have reported considerable concern that the Government have a secret plan to extend capital gains tax to owner-occupied property. That would be a devastating blow to millions of home owners and an economically stupid mistake. It would place an enormous cost on labour mobility, which is an essential part of a successful economy. The labour force is our most important resource and it must be used efficiently. People must be able to move from one part of the country to another to take up new jobs or promotions. They will not do so if that incurs a tax penalty and the economy will suffer enormously.

Another suggestion is that the Government will increase national insurance contributions. We all know that they long ago abandoned the idea that national insurance was anything other than a tax. The Chancellor has increased contributions, contradicting undertakings given before the last election, but without making a corresponding change in benefits. The Government have abandoned the idea that the national insurance fund has any authentic status. They like to work by stealth and dislike being straightforward. They have never said openly that national insurance is a tax and that the fund is merely a fiction, a bogus concept that does not really exist, but it would have been more honest of them to do so.

The Government will try to bamboozle people by raising national insurance contributions and pretend that that is different from increasing income tax. In fact, the only difference is that higher national insurance contributions have no corresponding reliefs. Raising national insurance contributions would be an enormous mistake. The Government think that they got away with it last time and there is no doubt that they will be tempted down that road again if they are returned to power.

It is very important that we expose the Government's record on this matter during the election campaign. We must also make clear the great risks that the country will face if there is a Labour Government after 5 May.

I turn now to pensions. Several Opposition Members have mentioned the enormous damage that has been done to our pensions industry and I spoke on that subject in the Budget debate a few weeks ago. It may be a cliché to say that our pensions system was the envy of the world but, with the exception of the Netherlands, where the system is very similar, all our EU partners used to envy it.

Ironically, in their first few years in office, the Government used to tell our EU partners that they should set up a funded pension system like ours. Until 1997, the system was successful, but that is no longer true. Not one defined benefit pension scheme has been created since this Government came to power. About one third of such schemes have been closed down in that time and another third have been closed to new entrants. That devastating attack on the security of retired people and on the prospects for succeeding generations is due entirely to this Government's policy.

I do not accept that what happened was the inevitable result of rising life expectancy or of the 1998 stock market fall. There have been much more serious crashes in the past 50 years, including the devastating collapse in 1974 and 1975 and the small falls in the early 1980s and early 1990s. Moreover, the increase in life expectancy has been steady—[Interruption.]

I see that the Chief Secretary is leaving the Chamber. I thought for a moment that he was going to defend himself against my complaints, but like the Prime Minister earlier he has no defence. I suppose he is leaving out of shame at the exposure of the record of the Government that he has represented. Whether he goes to South Africa or not, he will have a more comfortable time than has been his experience in trying to defend the Government's fiscal record.

The damage done to our pensions system has caused people to worry that the Government will come back for a second bite, like a shark that bites off a person's leg having previously bitten off his arm.

My hon. Friend sounds as though he has experienced that.

My hon. Friend makes an intervention from a sedentary position that was worth making standing up. I should be happy to give way to him.

indicated dissent.

Not unnaturally, there is great concern that, if we are unlucky enough to have another Labour Government, the Treasury might be planning to tax the so far tax-free lump sum. Another worry is that there is a plan to reduce the level of tax relief for pension contributions up to the new global limit, moving away from an individual's marginal rate of tax to the standard rate of 22 per cent.

Either of those moves would be devastating to the incentive to save and to contribute to a pension scheme and would automatically and immediately result in a further reduction in our already extremely low savings ratio. That would be in conflict with what the Government say about their apparent attachment to improving the savings ratio and increasing the provision people make for their retirement. I fear that the Government will find themselves in a contradictory situation with fiscal policy collapsing. They have been overspending and the only ways to avoid increasing taxes if they return to power would be to revise the spending plans that they are selling to the electorate substantially downwards or to abandon the golden rule, and they would then not be committed to the principle that enshrines considerable fiscal stability and prudence. The Chancellor talks as though the growth of the economy will bail him out, but his projection is that economic growth will be permanently above the trend rate or that the average rate of economic growth over time will be greater than the maximum rate of growth. That does not make sense.

The Government will have to do something desperate unless they agree to adopt our suggestions for some sensible policy changes in the new deal and in asylum and immigration. The next Conservative Government will make some policy changes and save money on administration. The Labour Government's record is appalling. They cannot go a day without setting up a new quango or more bureaucracy. Every time they introduce a new initiative, we hear about a new quango—the latest one will cost £26 million or so to set up. That must stop.

There are greater prospects for administrative savings than were identified in the Gershon review and many were identified in the James report. We have a well-thought-through and reasonable programme for policy changes and administrative savings that will lead to our being able to have £12 billion more available in the second financial year of the next Government than this Government would have on their projections. That will enable us to cut spending by £8 billion and reduce taxes by £4 billion, which will be a modest but significant step in the right direction. It will be the turnaround that this country badly needs.

I thought that Finance Bills might be behind me but the calibre of the speeches today has moved me to make a short contribution. I suspect that this will be the valedictory contribution from the Chief Secretary to the Treasury and I would be upset if I were unable to make at least a short contribution. Before I discuss the details of the Bill before us and of the Bill that should have been before us I want to add my personal congratulations to him, although his appointment is dependent on other matters. He has made unique, sometimes theatrical and often charming contributions to our debates in Committee and in the Chamber. I wish him well.

My right hon. and hon. Friends rightly highlighted one of the most important points of our deliberations—the quality of the scrutiny that the House can undertake. I am still a relatively new Member, having been elected four years ago, and I still believe that it is important to allow for debate and preparation of our thoughts. We have been given just four hours to consider 106 clauses, 11 schedules and, as my hon. Friend Mr. Fallon rightly highlighted, 203 pages of primary legislation. That is unacceptable. Time for debate is crucial to allow us not, as Ministers may suggest, needlessly to drag the matter out but to probe the what-if questions. That is the point of parliamentary debate. The essence of parliamentary discussion is to identify what Ministers and their advisers may not have anticipated and to use that process to ensure that at the end of our deliberations the legislation is better than when it came before us. That is important.

A second aspect of the quality of scrutiny is preparation time. I hoped to have the opportunity last night to consider the Bill in detail and to compare it with the main Bill, but that was not open to me. I inquired at the Vote Office but the Bill was not available. The Prime Minister's decision to go to the country a year before he needs to has made it necessary to have this debate today. Hon. Members will be restricted in their ability to contribute to the debate in a thoughtful and considered way so one of our functions—to listen to outside experts and to draw on that expertise to better inform the legislation—has been removed.

In the few hours available to them some of my right hon. and hon. Friends have been able to inquire into the concerns of experts in the tax, accountancy and legal professions, but the chances of amending the Bill or debating the benefits of amendments have been negated because we do not have that opportunity. I have contributed to the consideration of two Finance Bills during the past two years and that outside expertise enabled sensible and often non-partisan discussions to improve the legislation. I am disappointed with the Government and that will reflect on them as the legislation is passed later today.

Having put those concerns on the record, I want to turn to more specific matters. I suspect that right hon. and hon. Members will be not entirely surprised that I want to talk about stamp duty land tax. There is undoubtedly something to welcome in the change in the threshold from £60,000 to £120,000 and it would be remiss of me not to recognise that as a positive step forward. It was interesting that the Chief Secretary was unable to identify or confirm the number of households in his constituency that would benefit, although he said that the Financial Secretary would do that for him. In my constituency, which is not a million miles away from the leafy suburbs of Brent, the reality is that less than 3 per cent. of first-time buyers could benefit from the change. That means that the hopes of 97 per cent. for some positive change from the Government have been dashed.

When one considers the total revenue that the Government plan to receive in the coming year, one discovers the reality of the situation. It is not, as one might have gathered from listening to the Chancellor, a benevolent reduction in the tax burden: quite the contrary. If one looks at the Red Book—the Government's own figures—it shows that they anticipate a 9 per cent. increase in the total stamp duty land tax revenue. It would rise from £8.9 billion to £9.7 billion. That 9 per cent. rise is a significant increase in the tax burden.

Experts in the house-buying market do not anticipate that house prices will rise by more than 4 or 5 per cent. in the coming year, so where does that 9 per cent. additional total revenue come from? It may be argued that it will come from the changes in disadvantaged area relief, although those are relatively small figures. What worries me, and it relates to an excellent point made by my hon. Friend the Member for Sevenoaks, is that we have no genuinely independent audit on which we can base our assessment as to whether the total burden of individual taxes is correctly estimated. We see a figure in the Red Book and we have to assume that it is correct. It may be correct, but the problem is that we have no means by which to judge that. I hope that the Financial Secretary will address that concern.

Although the Chancellor has taken a minuscule step forward in increasing the threshold to £120,000, he has missed a great opportunity and I shall explain why that is so. The tax is regressive and unfair. It is not, as in income tax, based on the margins of income; rather, it has what is known as a slab effect. Thus, under the Government's proposals, if one bought a home for £119,999, there would be no stamp duty land tax to pay—not a penny. However, pay a pound more for that house and the tax will be £1,200. That is because the tax rate applies to the whole price, not just the margin. The effect is repeated at the £250,000 threshold. At £249,999, the tax is 1 per cent., but at £250,000 the tax bill trebles, rising from £2,490 to a massive £7,500—a trebling of the tax bill for a £1 price change.

What is wrong with that? First, it is unfair. Secondly, and I hope that the Financial Secretary will address this point as I understand that it is his direct ministerial responsibility, it distorts the house price market. If someone knows that at £250,000 there will be a trebling of their tax bill, it cannot be beyond the wit of the civil service to realise that they will attempt to avoid the price of the house or flat rising to £250,000. I would not necessarily condone or agree with individuals who took such decisions, but they will occur.

The Government's answer was to put in a whole raft of bureaucratic and complex administrative procedures to try to clamp down on the problem, whereas they should have had the temerity and courage to reform the tax and remove the anomaly at source, thereby removing the need for any form of avoidance activity. On numerous occasions, the Opposition have pressed that point on the Government but, sadly, they have been deaf to reason.

The problem is repeated not just at £250,000, but also at £500,000. The Government's tax policies are encouraging tax avoidance. In previous debates with Treasury Ministers, I have tried to understand with them exactly why the paperwork was growing. After all, under the old stamp duty, which had been in existence for 300 years, we could manage with just one piece of paper. Only a one-page form was required, yet under the apparent modernisation of stamp duty what do we have? Twelve pages of forms to fill in, with 43 pages of notes that try to explain them. What nonsense. Why are the Government so firmly set against reforming the tax and so determined to go down that bureaucratic route? It seems anomalous and I am afraid that most first-time buyers will decide that the Government are not interested in the problem and do not care. The Government simply want their 9 per cent. revenue increase and that is all that matters to them.

I want to consider briefly the commercial aspects of stamp duty land tax and the removal of the relief for disadvantaged areas. I recall that we were told when debating the issue with Treasury Ministers that this crucial relief would bring hope and joy to the many urban deprived areas and that it was something that the Chancellor felt passionately about—so he got rid of it, and he did so because he needed somehow to find the money to pay for the tiny increase from £60,000 to £120,000. Of course, he discovered that there was £340 million tucked down the back of the sofa, and he thought that he could use that without anyone noticing. Sadly, for him, they noticed.

I shall correct the figures that the Chief Secretary identified. He said that there was a £90 million difference between the £340 million that the disadvantaged area tax relief changes bring into the Treasury and the £250 million that will go out because of the domestic change. However, another £20 million is tucked away in the Red Book in relation to dealing with tax avoidance. I hope that he will be able to clarify the total figure—I believe that it is about £105 million—by which the Chancellor is ahead.

rose—

I am happy for the Chief Secretary to correct his figures.

Let me deal with this. I well remember our debate upstairs on stamp duty land tax. It was a good debate, and there was honest disagreement among hon. Members on both sides of the Committee about the desirability of those measures. We took the view that it was important to introduce the reform. We took the view that a potential could be realised given the contribution to regeneration of the assistance provided by the measures that we proposed. As I said during my speech and as has been said in the debates on the Budget generally, we have reached the view that we can better focus the relief, and that is what we have done.

On the figures, I appreciate the care that the hon. Gentleman takes with such matters. Table C8 of the Red Book shows that stamp duty receipts are projected to increase by about £0.8 billion as result of the forecast effect of the Budget measures from 2004–05 to 2005–06. That includes receipts from residential, commercial and, indeed, share transactions. Hon. Members who were upstairs in Committee at the time—it was a couple of years ago—will remember that we also discussed share transactions.

The Treasury's best estimate is that there will be a £220 million reduction in receipts from residential property and a £580 million increase from commercial property, including the £340 million to which the hon. Gentleman refers in the Red Book that will arise from the measures that we have taken in the Budget and the Bill. Those estimates are approximate.

The hon. Gentleman will know, too—indeed, as I said in my contribution and as he correctly identifies—that those figures are also based on the full package of Budget measures and the forecast effects. I simply say that for the purposes of clarity. He is quite right to point out—in no way do I intend to resile from it—that those sums come from the full package of measures. I hope that that clarifies the situation.

I am grateful to the Chief Secretary for that clarification. He said £220 million; I think that he meant £250 million. That is certainly what is stated in the Red Book for the stamp duty land tax. I am referring to table 1.2, and without wishing to be too pedantic—although I already have a significant reputation for it on this tax—I think that the figure for the domestic change is £250 million.

indicated assent.

That is super. Given the £90 million balance between the two sums and the additional £20 million that relates to tax avoidance, the Chancellor is obviously ahead by about £110 million in revenues because of the various changes. That is an important point to get on to the record.

To return to the principle of the disadvantage tax relief on commercial sites, my instinct and personal preference would be to have fewer little tinkering reliefs. If we had clearer, simpler, lower taxes, we would all be better off. I suspect that we can have that philosophical debate on another occasion. I am not personally wedded to the longevity of that relief. However, given the way that the Chancellor tinkers with such things every year, my concern, as ever, is that companies are put off engaging in the changes in their activity that the Government seek to encourage simply because they do not believe that the reliefs will be around next year, so why should they bother to go through the paperwork and so on? That is a very important point to make in terms of the way in which taxation has been dealt with under this Government.

I always hear from Labour Members how they are not willing to lecture us, but I remember the occasion when they were happy to regale us—indeed, they lectured us—with the fact that they passionately believe in consultation before making changes. Where was the consultation on this? It was done overnight. The Minister may refer to confidentiality and the fact that the Government must not allow anyone to take advantage, but a point of fairness is involved. The large property companies have lawyers and advisers who are able to move quickly. I appreciate that the concept of a lawyer moving quickly is perhaps a strange one, but that is what lawyers have been able to do on this occasion. Given that the provision is about disadvantaged areas, my worry is that small companies—the small fry, the family businesses and the enterprises that were considering the proposal—do not have such resources immediately available to them. They are not able to adjust their arrangements accordingly. The way in which the reliefs are offered, taken away and adjusted, tinkered and meddled with is significantly to the disadvantage of small firms. In principle, it is bad taxation policy.

That leads me on to several other thoughts about smaller enterprises and how the Bill and its larger brother might affect them. The first relates to clause 13 on the charmingly termed "non-corporate distribution rate for small companies". I am told by the Bill that it will remain at 19 per cent. That phrase is far from being as innocent as it appears. It masks a history in which a tax was once promoted by the Paymaster General. Sadly, she is not with us today, but she told us that small businesses should consider the change that the Government were making to try to reduce their tax burden to 0 per cent. It was a gift horse that small businesses should not look in mouth. I forget the exact words, but the point was the same. However, two years later, when the Government discovered that the number of corporates being created was far in excess of what they anticipated and that the poor, old Chancellor was losing money faster than he expected, they needed to change it. Businesses that were previously encouraged to take up the provision—such was the Government's benevolence—were suddenly told that it was wicked and shameful behaviour. It was a form of tax avoidance on which they needed to clamp down. None the less, it was the same policy.

This constant attempt to rotate policies—to try something and, if it does not work, to adjust it—seriously damages small businesses. Sadly, and all too often, the Government do not understand the distinction between a "firm" and a "company", but they have encouraged many firms to become incorporated because that is how the firms thought that they were meant to arrange their affairs. They do that to keep their tax bills at a reasonable level, but they are then told that that is wicked and nasty. They are nasty tax avoiders who must be clamped down on.

Such behaviour by the Government makes most entrepreneurs say, "Forget it. I'll give up setting up my next business to create the next set of jobs and the next tranche of wealth and I'll go and enjoy my villa in Portugal. I wasn't planning to go there now, but I will do so because I'm fed up with the way that the Government treat things." That is one aspect of the way in which the Government deal with small businesses.

The last aspect of the Bill to which I wish to refer is an omission as much as anything else. I refer to the way in which the self-employed—not companies—are dealt with. Earlier, I mentioned the Chancellor of the Duchy of Lancaster. When trying to explain away the awkward figures on the fall in certain incomes, he said that they were irrelevant because they had been skewed by the self-employed, who were less relevant to the central question.

The Chancellor of the Duchy of Lancaster said that the incomes of the self-employed were entirely global, and I appreciate that he was self-employed for only a short time when he was able to spend more time with his family. For those of us who were self-employed for 10 or 11 years and who actually understand the principles behind the figures, the idea that the majority of the self-employed are globetrotting entrepreneurs who are on and off jets each and every hour is complete bunkum. That demonstrates both his economic ignorance and, frankly, the Government's unwillingness to understand the smallest of our entrepreneurs—the self-employed.

I am disappointed that the Paymaster General is not in the Chamber because the classic example of that attitude is, of course, the infamous IR35. When the measure was introduced, we were told that it would deal with wicked practice and tax avoidance that should not take place. We were told that £400 million would come back to the UK Government that was rightly theirs. Here we are, two or three years later in 2005. When we make inquiries of the Inland Revenue to find out how many cases have been brought, we are told that the number is 200 or more. We then inquire how many of the cases have succeeded and how much of that £400 million revenue has actually come pouring through the doors of the Treasury. I am told that roughly two of the 200 cases have been successful, so 198 have failed.

The frustrating aspect of the situation is that all the other self-employed souls who had to try to change their arrangements to comply with the legislation have suffered cost and a waste of their time only to find that the measure does not work. It has not brought in the revenue that we were told that it would and it has created a bureaucratic nightmare for the law-abiding majority who have tried to comply with it. The situation shows that, as is so often the case with the Government, they are all talk and no action.

I have worries about this Bill and the Bill that we should have considered, but I have hopes for the Bill that I know we will consider under a Conservative Government in just a few weeks. The Bill is ill considered and has been poorly drafted in a rush with little care, consideration or consultation, but that is typical of the Government. It is frankly incomplete.

Before my hon. Friend concludes what has been a good speech, may I take him back briefly to stamp duty land tax, on which he is not a pedant, but most certainly an expert? Did he notice the article that appeared in The Independent on the morning immediately after the Budget, which mocked the Chancellor for effectively presenting the measure to reduce the relief for disadvantaged areas as a productivity measure? The article said that even this Chancellor of the Exchequer could not argue that that tax increase was actually a productivity measure. Does my hon. Friend have any sympathy with that sentiment?

I have come to learn that the Chancellor and indeed the Prime Minister can argue anything that they wish. They can certainly have a conviction, but it might be a different conviction today from what it was yesterday. I agree with my hon. Friend that the article is another sign that people are beginning to see through the smoke and mirrors of the current Chancellor. When he gets to the awkward figures, he has a lovely way of rushing through them. When he gets to the tricky parts, one notices that there is a subtext in the clause that one must read an hour later with a wet towel around one's head in a dark room. I am afraid that I must describe his presentation, especially when he speaks in front of his party, as the incomprehensible lecturing the innumerate, and that is all too often the nature of his Budgets.

The Bill has been poorly drafted and ill considered, although not for want of our trying. It was very generous of the Government to leave the open green acres in front of us where their 400-odd Members could have been sitting—sadly they must have something else to do, although I cannot imagine what. We have tried our best to draw out some of the details of the Bill, so we look forward to the full and frank explanation that I know the Financial Secretary will wish to give us.

I refer the House to my entry in the Register of Members' Interests.

Last time there was an attempt to rush through a Finance Bill in one day, which was in 1992—I have had more time to look at that than I have at the Bill itself because it has been produced at such short notice—proceedings were interrupted by a fire.

I remember it well.

I vaguely remember that a Labour Member—it might even have been the Chief Secretary—accused the Conservatives of having started the fire. There has been no such disaster in the House yet, but there has been a huge power cut just south of the river. Disasters seem to accompany attempts to rush through Finance Bills, but so far, so good. We have not had any trouble yet.

I associate myself with the good wishes that have been expressed for the Chief Secretary's proposed career move to South Africa. I hope all goes well, if it goes at all. I note that not a single Labour Back Bencher has felt the need or the urge to say anything about the Bill. I find that pretty extraordinary.

Perhaps I can help my hon. Friend by offering a possible explanation. It has been suggested to me that either Labour Back Benchers do not like the Budget or they are desperate to hold on to their seats. Which does he think is true?

Those are two interesting options, and we can all make up our own minds.

Despite the fact that no Labour Back Bencher has been present, we have not been short of interesting contributions by Opposition Members. We had an interesting speech by my right hon. Friend Mr. Dorrell, who mentioned the Institute for Fiscal Studies study. He made the relevant point that for the first time since the early 1990s, real disposable incomes have fallen. That is because of the increases in taxation pushed through by the Chancellor since 2001, despite promises not to do so.

My right hon. Friend also correctly alluded to the distributional effects of freezing personal allowances, also mentioned by the IFS. As a result, 7.5 million more taxpayers are paying tax at a higher marginal rate than they would have done had allowances been indexed. That is a crucial point. Of course, the tax burden is going up and up, and it will carry on doing so. Labour used to try to conceal that in the Red Book. Now, the graph just shows the upward trend, which can be found on page 255.

My hon. Friend Mr. Fallon made an important point about how Finance Bills are inadequately scrutinised. I completely agree. He is a member of the Treasury Committee. This is not the appropriate time to expand on this, but the Select Committee should play a much larger role in the scrutiny of Finance Bills. We should come to this place and debate what needs to be done on the basis of detailed scrutiny produced by the Committee before we go through the Bill clause by clause. We have moved in the opposite direction today, and there has been virtually no time to prepare for adequate scrutiny.

My right hon. Friend Mr. Jack also made some very important points, in a typically engaging and lucid speech. He mentioned ISAs and the extent to which the Government have eroded the attractiveness of the incentive to save throughout the tax system. Of course, that is only one of the causes of the fall in the savings ratio. There are a number of others. Financial scandals have not helped, especially Equitable Life. The Government have done their best to sweep that under the carpet and to avoid paying compensation for it.

Another cause of the fall in the savings ratio is the fall in the stock market, but that is not separate from the fiscal concerns, because of course one of the causes of the stock market falls was the Government's £5 billion raid on pension funds. When £5 billion is taken from pension funds, what is the effect on share prices? Answer: all things being equal, share prices fall. Therefore the origin of the market fall, often described as a separate cause of the fall in the ratio, lies partly with the Chancellor of the Exchequer.

My right hon. Friend also commented on the fact that the Government have not produced an estimate of the effects on carbon emissions of changing the structure of VED rates. He also talked about biofuels, on which he is an expert—indeed, he is the leading expert on that subject in the House of Commons, a result of his time as a Treasury Minister and a Select Committee Chairman.

My right hon. Friend described the effect on taxpayers of successive Budgets in a pertinent phrase, "the pinch has come on the mass of taxpayers". He is quite right. That pinch has taken some time to come on, for reasons that he and others have explored. The savings ratio has roughly halved, although that is a net figure. The other side of that ratio is the increase in borrowing—people increased their borrowing to maintain their spending, which delayed the onset of the pinch. Now, they are finally beginning to think about how to pay back that borrowing, so the pinch really is coming on. The two points that my right hon. Friend made at the beginning and the end of his speech are therefore closely connected. He also made some excellent points about inheritance tax. I shall not repeat them, but they were important and powerful points.

My hon. Friend Mr. Davies made a characteristically erudite and forceful speech in which he drew attention to the shoddy nature of some of the Finance Bills that we have been expected to consider. When I picked up the Bill this morning, it was described to me by the man who passed it to me from the Table Office, not as the Finance Bill or even as the revised Finance Bill, but as the draft Finance Bill. I replied that as I had to try to speak to it this afternoon, I wanted the final version. It is pretty disgraceful that we have to scrutinise legislation in such a fashion. My hon. Friend made several other trenchant points, not least about the damage done to the pensions industry in recent years and the reasons why final salary schemes have got into difficulties. One of the main reasons is, of course, Government policy.

My hon. Friend Mr. Prisk correctly pointed out that we saw the revised Bill only this morning. He also alluded to the importance of listening to experts before we attempt to scrutinise a Bill in detail. A key part of the Finance Bill process is that we are able to draw on the considered views of others. Presumably, they too have been passed this bundle of papers on a Treasury tag and been told that it is a draft Bill. They are now expected to get their points across in the brief period available to us before the debate ends—indeed, they have been trying to do so.

Next, my hon. Friend talked about stamp duty, and when he talks about stamp duty, I listen. He knows a great deal about the subject. He correctly pointed out that the Government only want their money—the extra revenue—and are not really interested in making stamp duty work better or more effectively. As he said, every time the Government reform stamp duty, the paperwork burden seems to increase. That will almost certainly be the result of the latest proposed changes.

The House and the country have grown accustomed to the way in which these things happen. The Chancellor announces a Budget, then a Finance Bill is introduced, which we discuss in the Chamber. We start with bluff and bluster. There is a firework display from the Chancellor on Budget day that no one can understand, but everyone thinks it sounds okay. We are thrown dozens of statistics in a wholly indigestible form, then we are expected to try to work out what is going on from a Red Book—I have the two most recent Red Books with me today—that increasingly owes more to party propaganda than to an explanation of economic developments in the country. Despite the Chancellor's best efforts to cover his tracks, in most years, although the Budget receives a good reception for a few days, it soon becomes a one-week wonder. The paint starts to peel off as people have an opportunity to study the detailed press releases. As soon as the Finance Bill is published and they have a chance to look at it carefully, they realise that a bit more paint deserves to come off.

This year's Budget was not a one-week wonder, and not even a one-day wonder. It can best be described as a one-hour wonder, because it took only minutes to flip through the Red Book and discover, for example, that the £200 allowance for the over-65s to compensate them for a huge increase in council tax over the past eight years will be implemented for one year only. When the Chief Secretary was challenged on that very point in an interview on, I believe, Budget day, he said, "Well, all our measures are only for one year." [Interruption.] I do not have the transcript with me, but if he would like to deny that that was the purport of his remarks, I am happy to give him the opportunity to do so. He does not seem to want to do so. He effectively said, "Don't trust us to implement any of the later years stuff in the Red Book. It's all for one year only. Don't worry, it's not just the £200 that you can rely on us to implement for one year but everything." Perhaps he did not say so—he is welcome to deny it at the Dispatch Box.

When that £200 was announced in the Budget speech, I was watching members of the Government carefully. The Secretary of State for Work and Pensions formed his fingers into the shape of a gun, which he pointed at the Conservatives, as if to fire a bullet. It made a good image for television for an hour or so—as I said, the Budget was a one-hour wonder—but by the evening the more alert broadcasters had removed it from their clips, because they realised that the £200 was available for one year only. A good number of pensioners in my constituency have already written to me, and like pensioners across the country, they have twigged that the £200 is for one year only. In the coming campaign, I shall make sure that every pensioner knows about that Labour measure. I will tell them that Labour has offered them £200, but that if the party is re-elected, they will lose it next year. It is a spectacular own goal from Labour. To put it another way, the Work and Pensions Secretary would have done much better to point that pistol at his own head.

Nothing better illustrates what has been wrong with Labour over most of the past decade than that measure, which is designed to create a specific impression, and is public relations spin over substance. We have heard the same story on stamp relief—relief for disadvantaged areas will be ended while at the same time in the Budget speech there was a pretence that some extra relief will be given. There has also been a hidden raid on oil companies, and a good deal more.

In a few weeks' time, we will present a Budget that can be trusted. We will publish a Red Book that can be understood, and we will ensure that the Office for National Statistics, made fully independent by an incoming Conservative Government, publishes figures on which we can all rely for the first time in almost a decade. We will use forecasts that have been put together independently of the Government, under the supervision of the Comptroller and Auditor General of the National Audit Office. I have argued for over a decade that we should move in that direction, and I am pleased that in a few weeks we shall have the opportunity to do so.

It is high time that we ended the disgraceful gerrymandering of the statistics that has taken place. The fiddling on the private finance initiative, the attempt to reclassify working family tax credits and much else in the accounts was a scandal, and we ought to bring it to an end. When the tax revenues were pouring in, it did not matter so much, because the Government felt sure that they were well within their fiscal rules. Now the shoe is beginning to pinch. Now it looks as though every little bit is vital to enable the Government to meet their fiscal rules. That is where the Government will come under pressure in the next few weeks.

At the heart of the Finance Bill is the issue of trust. Why should the electorate trust the Chancellor and the Prime Minister when they tell us that there will be no further tax rises after the election, should they win it? There are two overwhelming reasons why the electorate will not trust them. The first is that we have been there before. We have heard it all before. Before the 1997 election the Prime Minister said that he had no plans to raise taxes at all. What happened immediately afterwards? Tax rises for everybody. Then there was the 2001 pledge. The Prime Minister said words to the effect that it would be reasonable to conclude that national insurance contributions would not go up. What happened after the election? They went up. That is the first reason why the public will not trust what the Government are saying about the economy.

The second reason has already been discussed extensively. The Financial Secretary did his best to handle the situation by plucking Goldman Sachs out of the hat, up against about 20 commentators, including the International Monetary Fund, which is extremely cautious about the statements that it produces. I know how the IMF operates, and I know that it checks its statements with the country's Finance Ministry before putting them out, and invites the Finance Ministry to challenge the detailed methodology that lies behind its calculations. Even the IMF concluded that there is a black hole in the accounts, which will have to be filled somehow. The Government's history shows that if they get the chance, they will fill it through higher taxation.

The Government have consistently overestimated corporate tax revenues. The Institute for Fiscal Studies asked the right question the morning after the Budget when it said:

"The key question confronting whoever is Chancellor after the election remains the same . . . is it plausible to expect the current budget balance to improve by 2.2 per cent. of national income . . . by 2009–10? . . .is it prudent to expect revenues to go up by £27 billion over the same 5-year period without fresh tax raising announcements?"

That was the correct and crucial question. As I pointed out in the Budget debate, the IFS answered its own question. It said:

"We think that to achieve these forecasts requires the Chancellor to raise taxes . . . by £11 billion a year."

The Opposition are not in the forecasting business, and we do not intend to get into it, but we are listening to outside forecasters. They tell us there is a structural deficit—a black hole in the accounts. The choice for the electorate is clear. If people vote Labour, the black hole will be filled by higher taxes, but there is much more at stake than merely a tax rise.

The Bill, even though I have not had a chance to read it properly—I do not think that any Opposition Member has, because we have had it for only a few hours—illustrates the bigger problem. Successive Finance Bills have ended up reducing wealth creation—complicated, difficult to understand, loading enforcement costs on a range of wealth creators in the country. I cannot do better than to end with the words of the Prime Minister's former chief economic adviser on exactly that point. [Interruption.] Someone shouts "Who?" across the Floor of the House, as if by doing so they can somehow expunge this fellow from history—a sort of latter-day painting-out of Trotsky from the photograph of those who did all the hard and dirty work in Nos. 10 and 11 these past days. I am referring to the former chief economic adviser to the Prime Minister, who said:

"Britain's economic arteries are slowly being furred up by a higher and more complicated tax system, excessive regulation and . . . endless micro-management."

I could not have put it better myself.

We have had an interesting debate and I am pleased to be able to respond to a number of the points that have been made.

The key to this year's Budget is the remarkable stability that we have seen in the British economy since 1997. In the 18 years from 1979 to 1997, the UK had the least stable economy in the G7, with the single exception of Canada. Since 1997, the UK has had the most stable economy in the G7, bar none. That has been a remarkable transformation, benefiting every aspect of Britain's economy and of our society.

National debt is down. Since 1997, no G7 country has had lower debts and deficits than we have had. Inflation since 1997 has been half on average what it was before. Interest rates and mortgage rates have been halved. Disposable income has grown faster than it did under the previous Government. Unemployment is the lowest that it has been for a generation and there are 2 million more people in work. Every week, another 125,000 men and women find new jobs, and an additional 50,000 new vacancies are advertised.

We have had 50 consecutive quarters of growth in the economy for the first time since quarterly records began.

How many of those were under a Conservative Government?

There was a period of growth under the previous Government. What is remarkable, however, and what was never achieved under any Conservative Government, was the securing of 50 consecutive quarters of growth. It is the transformation from the short booms and then the busts that characterised the previous Government to this long period of stability and steady growth that has been so remarkable and so important and valuable to our economy and society.

The economy grew by over 3 per cent. last year for the second year running, hitting, incidentally, precisely the forecast that my right hon. Friend the Chancellor had made and for which he was attacked by Opposition Members for being far too optimistic. We have had some discussion today about forecasts and projections. My right hon. Friend was entirely vindicated over that issue and will be over the other matters that we have discussed as well.

The hon. Gentleman draws attention to the Chancellor's record in forecasting growth in the economy, and he is right to say that the Chancellor's record in forecasting the growth of GDP is not bad. Would he like to address his attention to the Chancellor's record in forecasting the public sector deficit, which is under his direct control, and would he remind the House that in every year of the last five, the Chancellor has projected that that will turn down, and none of those five forecasts has been correct?

I am grateful to the right hon. Gentleman for rightly paying tribute to my right hon. Friend for the accuracy of his forecasts on growth. We have not heard much about that today from Opposition Members and one understands why, but it is important and right to put that on the record.

As to the other issues that the right hon. Gentleman raises, as he knows, my right hon. Friend the Chancellor set out in 1997 the fiscal rules, including the golden rule and the sustainable investment rule, and we have kept to them. We have set out the figures in the Red Book showing that we will keep to those rules on the basis of cautious assumptions. That is the basis on which the economy has been managed and on which this new stability has so successfully been built. It is the basis on which we need to continue to go forward and maintain this new, transformed record of stability and growth in the economy.

The Financial Secretary has shifted the terms of the argument. He was inviting the House to applaud the Chancellor's forecasting record. When one looks at the Chancellor's record in forecasting the public sector deficit, one sees that he has got it catastrophically wrong, with the result that we are landed with more debt and more interest costs going forward than he planned or promised in his last Budget before the previous general election.

The national debt is down and we have the lowest debt in the whole G7. There has been an extraordinary record of success under this Government and Chancellor. It is essential for the future that we lock in that record of stability that has been so important and valuable. The new confidence that has come from that stability has been of immense importance. We have 300,000 more business in the UK than in 1997, and every week there are 4,000 more. There has been a 50 per cent. increase in net household wealth and 1.5 million more people own their homes. Those are just some of the gains from the transformation that has occurred in the British economy since 1997. We and the country know that our first priority must be to hold on to that prize of stability, and not to put it at risk by policy lurches or by £35 billion-worth of reductions in public spending commitments. Stability has been a massive prize for Britain, and the Bill helps to ensure that it will be maintained and locked in for the future.

Let me take the Financial Secretary back to the point made by my right hon. Friend Mr. Dorrell. The Financial Secretary has not answered the central question as to what factors in the forecasting performance of the Chancellor have led to the fact that, since the 2001–02 financial year, the deficit has grown by about two and a half times in real terms compared with the original forecast figures. At a time when the economy has been growing at such a rate, we should be accumulating balances, not increasing deficits. He talks about the structural soundness of the economy, so will he explain why the economy is not doing what it should do?

The right hon. Gentleman is focusing on the difference between two very large numbers. The fact is that we have the lowest debt in the whole G7 and a remarkably successful record. The IMF has been referred to, and it has repeated that point recently. We must now ensure that we maintain that record of stability, which has been so valuable to us.

The Bill builds on Britain's new-found economic stability. It helps to prepare us for the challenges of the future, supports innovation and investment in new technologies and helps to ensure that the tax system is fair and that everybody pays their share. It safeguards the environment, recognising our responsibility for long-term stewardship of the earth's resources. I am pleased that that topic was raised.

The Financial Secretary quoted the IMF with approval. Does he therefore accept its judgment that the national accounts have "deteriorated sharply" in the past five years?

The key to the success that we have seen in managing the economy over the eight years since 1997 is stability and the fact that we have published and kept to the fiscal rules, the golden rule and sustainable investment rule. We have published the figures in the Red Book showing how we will do that in the future, in this cycle and the next, on the basis of cautious assumptions. Our record is enviable—it is 1 million times better than that of the previous Government, and the hon. Gentleman should pay tribute to it.

rose—

I will not give way for a little while, because I must make some progress. I have been extremely generous to Conservative Members.

The Bill provides much-needed help to children, pensioners and home buyers. The increase in the child element of the child tax credit means that the effective income tax rate for a family with two children earning £25,000 a year will be just 6 per cent. At £30,000 it will be 10 per cent., so it is a family tax cut that targets the hardworking low and middle-income families who will benefit from it most.

The Bill includes important changes to remove the tax impediments to Sharia-compliant Islamic finance products. Last year's Bill fixed a problem with the way in which stamp duty affected Sharia-compliant mortgages. This year, the Bill extends the benefits of that change and alters the rules for income tax, corporation tax and capital gains tax to remove impediments to Sharia-compliant saving and loan products. It is important that everyone in our society has access to financial services that meet their needs, so that everyone can be included and benefit fully from the strength of our economy.

The measures in the Bill to simplify pensions taxation will provide more flexibility and choice as people plan for retirement. They will help employers and pension providers, and they have received very wide support from pensions providers, employers, and individual pension savers. The assurance that people will receive a meaningful proportion of their pension saving in the event of their employer becoming insolvent provides an important boost to confidence in pension saving.

I want to respond to a number of points raised in the debate. Mr. Osborne helpfully explained to the House why the Opposition accepted the clauses in the Bill. He also mentioned representations on behalf of companies in the film industry. He spent a good deal of his time objecting to things that are not in the Bill, however, and I look forward to debating those matters with him after the election.

Dr. Cable made several points with which I agree, but I did not agree with a number of his other points. He discussed his party's plans for local income tax. Under Liberal Democrat plans, a couple on average earnings with a combined income of £41,000 would see their income tax increase by £1,170, which, on average, would make them more than £260 worse off compared with council tax. Once people realise that if two people are working in a household, that household will have pay its local income tax twice, the apparent attractions of that proposal rapidly disappear.

The hon. Member for Twickenham mentioned the pension credit. The Financial Services Authority has stated that pension credit means that

"for most people, most of the time, it will pay to have saved."

The pension credit has been extremely effective in addressing pensioner poverty, which was a big problem in 1997.

The Financial Secretary has just said that there will be some benefit in saving for most people, most of the time. What about the rest of the people?

It is certainly worth while for the great majority of people to save for their retirements. At the time of the 1997 election, large numbers of people had an income of £69 a week. From this month, all of those people are entitled to an income of at least £109 a week, which is a massive change for the better. We have focused on addressing pensioner poverty in an extremely effective way through the pension credit.

On the specific point raised by Mr. Tyrie, the pension credit gives credit for savings. It removes the problem of large numbers of people being on 100 per cent. withdrawal rates, which was a result of how income support arrangements worked under the previous Government, and many more than 1 million people were affected by those 100 per cent. withdrawal rates.

I should like to spend time responding to many of the points that have been made, but I must be a little briefer than I would have been because of the interventions that I have taken. I need to comment particularly on the comments of Mr. Dorrell, who talked about the way in which tax thresholds have changed. Listening to him, an innocent observer would have believed that under his stewardship—as he told us, he was Financial Secretary after 1992— thresholds went up in line with earnings. Helpfully, I have been able to dig out what actually happened to the higher rate threshold in the period that he discussed. It is true that in 1991–92—the period leading up to the 1992 election—the threshold was over-indexed; one cannot deny that that occurred. However, in 1992–93, when the right hon. Gentleman was Financial Secretary, the threshold was not only not increased in line with earnings, but not increased at all—and, blow me down, it was exactly the same the following year and the year after that. It was frozen for three years in a row.

I compared the record over the period of this Government from 1997 to 2005, during which time 7.5 million people have seen their marginal rate of tax increase. For the period from 1979 to 1997, will the Financial Secretary confirm that the Conservative Government cut marginal rates of tax for all income tax payers during those 18 years?

The right hon. Gentleman is shifting the goalposts somewhat. He chided me about uprating thresholds, which we have done consistently; under his stewardship, those thresholds were frozen. Incidentally, the hon. Member for Chichester accused us of freezing the threshold, but we have not—we have consistently uprated it in line with inflation. Under the stewardship of the right hon. Member for Charnwood, the thresholds were completely unchanged for three years in a row; in this Budget, we increased them.

Will the Minister give way?

No, I will not.

I want to come on to the other issue that the right hon. Member for Charnwood raised. Of course, it is true that nowadays people are earning more. More than twice the number of people are earning more than £30,000, more than £50,000 and more than £100,000 than in 1997. It is absolutely right that as people's real income rises so does the average tax that they pay. That is the basis of a fair, progressive income tax system, and that is the system that we have ensured that we have in place.

Mr. Jack made an interesting speech. I can tell him that we certainly are going to achieve our Kyoto targets. On vehicle emissions, we have a good record compared with other European Union members. For example, box 7.3 in the Red Book provides information about how the changes to company car tax have affected CO ₂ emissions; that work will need to continue.

The right hon. Gentleman talked about biofuels, which is a subject of great interest to him. We have been very supportive of the growth in biofuels sales—that is why we introduced the 20p per litre level for biodiesel in 1992. I think that he will be aware, although he did not mention it, of the work that is going on in relation to a renewable transport fuels obligation. Good progress has been made on the feasibility study, and we are continuing discussions with industry on a possible enhanced capital allowance for the cleanest processing plants. That directly addresses the point that he made.

We have had an interesting debate, throughout which one point of consistent unanimity was the warm praise and generous tributes accorded to my right hon. Friend the Chief Secretary. It is clear from what everyone has said that the whole House wishes my right hon. Friend well in the future. To those tributes to him that have already been expressed, I add my own.

The Bill before the House builds on the stability that has been achieved in the past eight years, takes that stability forward and addresses the priorities of fairness and sustainable growth. I commend it to the House and I commend the values that underpin it to the people.

Question put and agreed to.

Bill accordingly read a Second time.

Motion made, and Question put forthwith, pursuant to Bills">Standing Order No. 63 (Committal of Bills),

That the Bill be committed to a Committee of the whole House.—[Mr. Heppell.]

Question agreed to.

Bill immediately considered in Committee.