Orders of the Day — Finance (No. 2) Bill

Part of the debate – in the House of Commons at 5:45 pm on 24th April 2006.

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Photo of John Redwood John Redwood Conservative, Wokingham 5:45 pm, 24th April 2006

I have declared in the Register of Members' Interests that I am a non-executive director in the service and manufacturing sectors, and a trustee of a pension fund.

This Budget is proposed by a Government who tell us that they are now enamoured of the idea of deregulation. Three cheers for that. We are grossly over-regulated throughout this country and economy, and it will be welcome indeed if the Government move on from fine words and good speeches to action. Unfortunately, we see a Finance Bill running to 475 pages, with 181 clauses and 26 schedules. Deregulation seems not to have figured prominently in its drafting. I hope that right hon. and hon. Members who are involved in the Committee stage may get to grips with some of the complexity and strike a blow for freedom and simplicity.

I shall give a little flavour of the Bill. If it is enacted in this form, pity the poor people who will try to make sense of their own pension provision. We see in paragraph 6 of schedule 21, in suggested new section 185B, what they have to do if they have thought about direct property investment for their pension fund. It tells us:

"For the purposes of section 185A(3) and (4) the amount of the deemed profits from the interest in the property for the tax year is—

DMV 10 x DTP DY where—

DMV is the deemed market value of the interest in the property for the year (see section 185C)"— a very helpful tip, I should have thought. It goes on:

"DTP is the number of days in the year for which the property is scheme-held taxable property, and

DY is the number of days in the year.

(3) In this Part"— in case one was muddled—

"'scheme-held taxable property' means property which is taxable property an interest in which is held by the pension scheme."

Things are far more difficult if one dares to take on a leasehold property—but the time and patience of the House probably do not permit me to go into the details. It is surely time the Government did better than this. They should take pity on people who are trying to save for their retirement in very difficult circumstances and give them something that they can understand. Is it reasonable to expect a free people to have to wade through that degree of complication, and can we expect them to do so without having to spend a lot of their hard-earned money on accountancy and legal advice to make any kind of sense of it?

I fear that the Government are in denial on the issue of productivity. Their own figures suggest that if one defines the cycle in a certain way and claims that the public sector figures are all wrong, productivity is doing a bit better than it was in the previous economic cycle. No reputable outside commentator or independent analyst believes that that is true. The latest figures show that in the past couple of years productivity performance has slowed down, not risen. Figures also showed—until the Government stopped compiling them—that the main problem with productivity stalling rests in the public sector: the area where the Government have most control and influence, and where they have been most generous.

The Government should be extremely alarmed about the decline in productivity in sizeable parts of the public sector and the slowing of the rate of growth in productivity across the public sector as a whole, on the old definition and the old figures. I am sure that they would love to come up with magic numbers that included a new quality variable that somehow miraculously implied that productivity had been going up after all. However, no one looking at the current crisis in the health service, with sackings, redundancies, huge deficits and great problems, can believe that productivity is advancing rapidly in that service. If it were, it would be a miracle.