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Clause 3 has dominated debate on the Finance Bill. The policy changes that it contains have unravelled, and they have unravelled for the same reason that the Government are unravelling; they are incoherent, inconsistent and driven by short-term political expediency rather than a long-term strategy. The problems that the clause has created are the Prime Minister's problems. He announced these measures in his last Budget, measures that he knew—even when taken together with all the other measures that he announced—would have the effect of making 5.3 million low-earning households worse off. So why did he do it? Various theories have been advanced, the most generous—and, I have to say, the least probable—of which is that he did not appreciate the effect the measure would have on the poorest.
I bow to no one in my enthusiasm for identifying flaws in the Prime Minister but stupidity and innumeracy are not two that even I would suggest. Was it, as I have previously suggested, a move designed to establish his credentials ahead of a Labour leadership election and a honeymoon general election as the successor to Blair, able to reach out to middle England? Or, as my right hon. and learned Friend Mr. Howard suggested in the debate last Monday, was this entire elaborate strategy—announced in the way it was, with the abolition of the 10p rate concealed in the Budget small print and the reduction in the basic rate trumpeted in the final paragraph—nothing more than a tactical manoeuvre to try to wrong-foot the Leader of the Opposition in his reply? Whatever the motive, it was a cynical and short-term one, abandoning a long-term Labour party objective and a 1997 manifesto commitment.
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