Second Reading

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

We have come through a very difficult time in the world economy. It has required difficult choices and Governments around the world intervening in unprecedented ways to rescue the financial system, and initiatives to support the economy, businesses and families. But we made the right calls, as the latest survey from the British Chambers of Commerce and the sharp upwards revision of the OECD's UK growth forecast have underlined this morning. The damage to families and businesses has been much less than if we had let the recession run its course, and much less than the actual damage when that approach was applied in the 1980s and 1990s.

We are committed to all the tax measures that my right hon. Friend the Chancellor set out in the Budget, but we have published a much shorter Finance Bill than usual and it is focused on the key Budget measures. Some two thirds of the measures in the Bill have been aired for comment and consultation already. We are proceeding today on the basis of consent, and to be helpful to Opposition Members, I will not be moving the landline duty in clause 23 and schedule 2; clause 58 requiring financial securities from employers at serious risk of pay-as-you-earn or national insurance contributions not being paid; or clause 65 and schedule 21 on furnished holiday lettings. Those will all be in the second Finance Bill at the start of the new Parliament.

I have also tabled amendments to clause 9 that will limit the increase in cider duty to 2 per cent. above inflation, with effect from 30 June this year. That change will come at a cost to the Exchequer, and leave cider taxation out of step with other drinks. So again we will legislate after the election to confirm the existing new rate.

Before he sits down, will the Minister please supply the House with the figures showing what difference those measures will make to the revenue forecast for the immediate year?

I can give the right hon. Gentleman some of those figures, and we can perhaps return to individual figures when we consider the amendments that I have tabled. The total gain to the Exchequer from the higher rate of cider duty in a full year would be £15 million. The landline duty will start in the course of this financial year, but in a full year it is estimated to raise, from memory, £175 million, to be used in ways that he will know about. I am not sure whether there is a score against clause 58, but there is a score against clause 65 and schedule 21, which deal with furnished holiday lettings. Again from memory, if the provision was left unamended, the impact for the Exchequer in a full year would be in the order of £30 million.

The Minister has just said, in answer to my right hon. Friend Mr. Redwood, that there "would be"-in fact, he said "will be"-a certain amount, but does he not accept that he is making an enormous assumption? Not only is his Finance (No. 2) Bill, which would carry those proposals forward, not a Bill, but we are discussing the Finance Bill that is now before the House. He is stretching the bounds of imagination a bit, in assuming that the second Bill will come into effect in the way that he was suggesting.

I do not think that I am, although I may have slightly misled the hon. Gentleman: the figures that I have just quoted are given on the assumption that the Bill-with the amendments that I have outlined-is enacted and nothing further happens. I have said that if we are re-elected, we will change that, and then the numbers that I have just given will not apply.

To secure recovery, the Bill builds on the success of the measures that we have introduced so far. Our stamp duty holiday on all transactions under £175,000 gave support for the housing market when it needed it most, helping 260,000 home buyers. However, many first-time buyers still struggle, so clause 6 increases the stamp duty threshold for first-time buyers from £125,000 to £250,000. Nine out of 10 first-time buyers will now pay no stamp duty at all. To fund that change, clause 7 announces an increase in stamp duty to 5 per cent. for residential property over £l million. Some 850,000 companies will benefit from the deferral of the rise in small companies rate. Clause 3 maintains corporation tax for small companies at 21 per cent. for 2010-11. As my right hon. Friend the Chancellor announced in the Budget, we are staging the fuel duty rise over the coming year. Under clause 12, it is up by a penny this month, which is less than inflation. Clause 13 provides for a further 1p rise in October, with the remainder in January.

The Bill helps to underpin strong and sustainable growth. Clause 5 doubles the annual investment allowance to £100,000 for expenditure incurred from this month. Some 99 per cent. of businesses will now be able to deduct all qualifying purchases of plant and machinery from their taxable profits, so we are encouraging investment and helping to support profits. Clause 4 doubles the limit for entrepreneur's relief for capital gains tax, extending the 10 per cent. rate from £l million to the first £2 million of gains over a lifetime. Among other benefits, serial entrepreneurs and business angels will retain more of their gains in order to fund new investments and support further growth. Those are important measures, providing support for small and growing businesses. To help pay for them, the 50 per cent. levy on the excessive bonuses of bankers provided for in clause 22, which was announced in the pre-Budget report and quite widely supported in the House, has raised £2 billion-more than twice what was forecast. Clause 2 maintains corporation tax at 28 per cent.-the lowest rate in the G7-maintaining the UK's position as one of the best places to do business in the world.

The Bill provides the key tax measures to halve the deficit over four years. Clause 1 provides for the new 50 per cent. additional rate. Clauses 24, 49, 50 and 71 provide for the restriction of tax relief on pensions for those earning over £130,000 a year, as well as for further anti-forestalling. In drawing up the clauses on pensions, we have balanced certainty-and giving people time to prepare for the changes-with the need for additional consultation. Further work is still needed on what is done for individuals in special circumstances, on contributions for members of defined benefits schemes, and on obligations on scheme administrators. Whenever we can, we will publish draft regulations and primary legislation early to give people a chance to comment. In particular, we will discuss further with pension providers how schemes would pay the recovery charge on behalf of the individual, so that the details can be in place in good time for 2012-13.

Can the Minister explain why the one-off cost of implementation for the Government's pension changes has trebled in the space of two months?

The hon. Gentleman will be aware that we have been in discussions with the industry, and that there has been extensive consultation on these measures. The estimate to which he refers has been revised as a result. Ensuring the widest possible consultation and discussion is the right way to proceed in order to ease any difficulty that might otherwise arise from implementing these changes.

But can the Minister explain how he got it wrong by a factor of three? The amount has increased from £300 million to nearly £1 billion.

I do not have the figures in front of me but, as I said, we have been consulting people, as we should, and talking to them in a very open way. The Exchequer Secretary to the Treasury has been leading this work, and that has resulted in changes to the estimate.

The reforms to income tax and pensions will affect only the top 2 per cent. of earners. They have benefited the most from strong growth in recent years, and we think that it is right that those with the broadest shoulders should carry the greatest burden in funding the recovery.

On the question of national insurance, will the Minister be kind enough to explain to us where the relevant measures are? They might be in the Bill and I have simply not seen them. The whole process of dealing with national insurance, which is one of the hottest issues in the election, does not appear to be in the Bill. Is he proposing to table an amendment later in the proceedings today, or will this be dealt with under some other procedure?

No; national insurance cannot be dealt with in a Finance Bill alongside other tax measures. It will require a separate piece of legislation, which we will be introducing later in the year.

Clause 9 confirms the planned increase in alcohol duty of 2 per cent. above inflation. Clause 69 allows us to amend the duty definition of "cider" so that particularly high-strength ciders are taxed at a more appropriate rate. Clause 10 increases tobacco duty by 1 per cent. above inflation. Increases of 2 per cent. above inflation will be made in each of the next two years. Clause 8 freezes the inheritance tax threshold until 2015.

Just in case we do not get on to debate tobacco, will the Minister reassure the House that a proper study has been made of the likely impact of retail prices index plus 2 per cent. increase in tobacco duty on smuggling and counterfeiting? The lessons of the past are that raising tobacco duty too sharply and too quickly can have certain side effects.

The hon. Gentleman raises an important matter. We have indeed reflected carefully on that point, as we do each year. He will perhaps be aware of our significant success in bearing down on tobacco smuggling over the past decade. That has significantly supported the revenue from tobacco taxation, and we are confident that the measures that we are enacting in the Bill will indeed have the scoring set out in the Red Book alongside them.

Clauses 25 to 59 are an important part of the Bill and are part of a big package to tackle tax avoidance, non-compliance and offshore evasion. The package protects around £18 billion worth of yield and will raise a further £1.5 billion in total between now and 2013-over three financial years. The disclosure regime we introduced in 2004 has transformed the battle against avoidance and has protected over £12 billion of revenue since it was introduced six years ago. We have been consulting since the pre-Budget report, in which we set out proposals for strengthening the disclosure arrangements, and clause 57 is the result of that consultation and discussion. It does indeed strengthen and enhance the disclosure regime further still.

Before the right hon. Gentleman moves on, he will remember that there was a debate last week about retrospective legislation in relation to tax avoidance. The amendments and new clauses before us today bring an introducer into play, as well as a promoter of the scheme. At this stage, will he tell us a little more about why he believes bringing an introducer into the legislation would benefit in the fight against evasion and avoidance?

The key benefit of the changes we are making lies in providing to Her Majesty's Revenue and Customs earlier information about the kind of schemes that people are being provided with. We are confident that if we have that information earlier, we will be able to address those schemes more effectively and so bear down on the scale of the problem.

In last year's presidency of the G20, we led the global clampdown on tax havens and offshore evasion. I am pleased that since the G20 summit in London last April, more tax information exchange agreements have been signed around the world than in the whole of the previous decade. Clause 36 sets higher penalties, up to 200 per cent. of the tax due, for those who fail to declare income and gains from jurisdictions that do not exchange information automatically with the UK.

On that last point about the information exchange agreements and the jurisdictions that are not covered by them, how will the right hon. Gentleman ensure that taxpayers who are not represented-for example, a nurse from a West Indian nation that does not have a tax information agreement-are protected, while ensuring that we catch the people who are using these jurisdictions to avoid paying tax?

It is important for everybody to comply with their tax obligations. Anyone who is in doubt about what they might be can, of course, contact HMRC for information-and I am pleased to say that many people do, including people in the sort of circumstances that the hon. Gentleman describes. Encouraging news of which I think he will be aware is that we have indeed recently signed a number of tax information exchange agreements with Caribbean jurisdictions, including Belize and Dominica, and we are keen to sign more.

In the context of his consideration of Finance Bills over the last year or so, will the Minister explain whether he believes that the legislation is now getting so complicated that it is becoming a burden on the British people? Has he given any serious consideration to the idea of having a flat tax, for example, in order to remove that burden? Having been a member of the Committee considering the Income Taxes Consolidation Bill, I know how complex the legislation is and I just think it has got so out of control that it is a real drain on British business and on people who work in industry.

I do not support the proposal for a flat tax. I know that the shadow Chancellor once dabbled with that idea, but I think he quickly abandoned it-for sensible reasons. The hon. Gentleman made a perfectly fair point about complex legislation. He will know of our strong support for the tax rewrite project, which I believe has been more or less been concluded and which has made a helpful contribution, but he may not be aware that a number of simplification reviews are under way. He may be encouraged to learn that according to the World Bank's assessment of taxes paid around the world, the United Kingdom is-I think I remember rightly-the easiest country in Europe in which to pay tax. Of course it is important for us to maintain those advantages as the tax system develops further in the future.

Our choices throughout this turbulent period have proved to be the right ones-

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I will give way one last time.

I cannot allow the Minister's last observation to go unchallenged. How does he explain the extraordinary decisions first to starve the money markets of funds in 2007 and weaken the banks, and then to publicly demand that the banks raise more capital too late-when they could not do it-and to jeopardise them or bring them down? How can that be described as calling the shots correctly?

I refer the right hon. Gentleman to an experience that he will remember very well-that of the recessions of the 1980s and 1990s. In both those recessions, when the global circumstances were much less difficult than those that we have experienced in the last couple of years, the number of people claiming unemployment benefit rose to 3 million. At present it is a little over 1.6 million: it has fallen over the last few months. During the recession of the 1990s, business failures were running at about twice the rate at which they have been running during the current recession. At its peak, the number of home repossessions was 75,000 during the 1990s recession. At the beginning of last year, the Council of Mortgage Lenders predicted that it would be 75,000 again, but I believe it was 43,000.

I think it is clear that the approaches we have adopted to the problems encountered around the world have been the right ones, and have greatly limited the damage that would otherwise have been suffered. Indeed, much less damage has been suffered than was the case in the 1980s and 1990s. The Finance Bill keeps us firmly on the right track, and I commend it to the House.

"Four hours for all the stages of the 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".-[ Hansard, 13 March 1992; Vol. 205, c. 1140-41.]

Those are not my words but those of Mr. Brown, spoken from the Opposition Benches about the passage of the Finance Bill in 1992. He considered four hours to be an unacceptable period in which to debate 11 clauses, and perhaps he was right. It is far from ideal. But now that the right hon. Gentleman has risen to the rank of Chief Whip, and is principally responsible for the incompetence and mismanagement of the Government's business programme, he thinks that three hours is enough time in which to debate 70-odd clauses.

In view of the shortness of the debate, it is probably just as well that the Government broke with precedent and arranged for the Financial Secretary to the Treasury rather than the Chief Secretary to the Treasury to open it. Given his performance last week, it is unlikely that the Chief Secretary would have made it to the Chamber for the end of the debate, let alone the start. I also note that Dr. Cable has maintained his fine record for not taking part in discussion of the detail of the Finance Bill. Although he has been nominated for delegated legislation Committees and been selected to serve on Committees dealing with many Treasury Bills, he never seems to arrive on time.

Will the hon. Gentleman give way?

I will happily give way to the hon. Friend of the hon. Member for Twickenham.

Let me return the hon. Gentleman to his complaint about the amount of time allotted to the Bill. When the House had a chance to vote on the issue, his party whipped its members through the Lobby to endorse the allotted time and force it on the House.

The point is that even four hours would not have been enough to cover 72 clauses-yet back in 1992, those who are now in government complained that that was not enough time in which to debate 11 clauses.

I have made my point about the lack of time. The people who look at Finance Bill proceedings-the outside interest groups-are concerned that this Bill is being rushed through and that insufficient time is being given to consider it. I do not know what Sir Robert Smith thinks a reasonable period would be. I do not believe that he has served on a Finance Bill Committee, although perhaps he will have that pleasure in the next Parliament, should he be returned. I can tell him that many days of detailed scrutiny are required, and even if every hour between now and Prorogation tomorrow evening had been available to us, I do not think that we would have made as much progress through the Bill as people would have wanted us to do.

The danger is that the Bill will receive poor scrutiny. The Institute of Chartered Accountants in England and Wales said of the 2005 Finance Bill:

"Huge swathes of complicated and often poorly drafted legislation have been passed into law 'at a stroke' with little or no debate and certainly no time for proper consideration and consultation. It calls into question whether parliament is fulfilling its constitutional duty to scrutinise legislation."

I suspect that the institute would not depart far from that opinion in respect of this year's Bill.

I hope that my hon. Friend will take what I am about to say in good part. As far as I am aware, our party is acquiescing in much of this, so we are perhaps to some extent contributing to the fact that this legislation, which will be either ill considered or unconsidered, is to be allowed through, in so far as it has not been excluded by amendments. I am sure that the Minister will introduce those in Committee. There is a bit of a problem there for all of us, is there not?

My hon. Friend makes a helpful intervention, as he so often does on these occasions. I should say to him that it is the obligation of parties on both sides of the House, and of whoever forms the next Government, to listen to the concerns raised about the measures that we have passed, to understand where those measures are defective and to think about how they can be remedied in the future. Even when a Finance Bill receives full scrutiny, so often the Government-this is particularly true of the present Government-come back for a second bite of the cherry the following year just to tidy up the detail of the legislation in areas where perhaps proper, full consultation has not taken place. I wish to highlight some of the areas where adequate consultation has not taken place, and there are holes that the Government will need to think about carefully.

This Finance Bill contains much that is controversial, much that could be improved by scrutiny and much that could be amended, but Parliament has been denied that opportunity because the Government opted for the latest possible date for a Budget, thus precluding the opportunity to have a longer debate about the Bill. The Bill tells the tale of things left out, of things that should have been included in it, and of items that need further scrutiny and consultation.

Let us consider what is not in the Bill. The first things not included are the tax hikes planned by this Government for after polling day. The Prime Minister said on the steps of No. 10 Downing street yesterday:

"I have fought so hard for families on middle and modest incomes."

But they are the people who will have to pick up the bill for the Government's economic record after the election. My hon. Friend Mr. Cash intervened on the Financial Secretary to ask why national insurance increases planned for April 2011 are not in this Bill. Obviously, the Financial Secretary said that that Bill would come into effect in the next Parliament, but it is a pity that the Government did not have the courage of their convictions and did not seek to table that measure now for debate, because we could then have made the argument here in this House about the need to roll back those increases to protect those on the middle and modest incomes to whom the Prime Minister referred yesterday.

Let us also not forget that this is about protecting not just those people's incomes but their employment. My hon. Friend Mr. Fallon caught out the Chancellor on that last week in the Treasury Committee, when he probed the Chancellor as to whether he had taken into account the impact on unemployment. The Centre for Economics and Business Research has said that in addition to raising the tax burden on families, 57,000 people would lose their jobs as a consequence of the Government's planned national insurance increase. Is this what the Chancellor meant when he said:

"We think the impact is manageable, it will be limited"?

It certainly will not feel manageable or limited to the 57,000 people who will lose their jobs if the Government's plans go through.

Richard Lambert, the director general of the CBI, has said the following of our plans to oppose this tax hike:

"The Conservatives' plan to reduce next year's increase in employers' NICs is welcome, and will help large and small businesses alike."

He continued:

"NICs are a tax on jobs and increasing them is a bad idea when we want to promote job creation. We continue to call for the proposed increase to be cancelled entirely, as and when action on the public finances makes this possible."

I wonder whether the Financial Secretary believes that the head of the CBI has been deceived, and whether he adopts the same line as the Prime Minister and the Secretary of State for Business, Innovation and Skills about the opposition that nearly 60 business leaders have expressed to the Government's tax on jobs. Other things have been left out, too. There is no reference in the Bill or in the Chancellor's Budget statement to the freeze on personal allowances-another stealthy tax grab by this Government.

Of course, there are some things in the Bill of which we do approve. The two-year first-time buyer's stamp duty holiday is welcome, but if the Government had wanted to copy our policy properly they would not have stuck a two-year time limit on it. The reduction in bingo duty was something for which we argued in the Budget last year, and we expect to hear "David's den-No. 10" to be called in bingo houses across the country in celebration of the Government's climbdown.

Despite those points, the Bill is not in as poor shape as it might have been. Three tax rises on families and businesses have been scrapped and the measure attacking small and new businesses has been dropped-all as a consequence of Conservative opposition. The Government have been forced into a U-turn on cider by us, and the swingeing increase in the duty on normal strength cider will be reversed on 30 June so cider will be treated like any other drink; that will mean an 8 per cent. cut in duty rates. Again, as the Financial Secretary made very clear in the opening stages of his speech, the Government have pledged to reverse that if they are returned on 6 May. Cider drinkers have a choice: do they back the Government's across-the-board hike in the tax on a pint of cider, or do they back our option of increasing the tax on super-strength ciders, rewarding responsible drinkers and clamping down on problem drinkers?

We know how important furnished holiday cottages and flats are to the tourist trade, to rural areas and to seaside towns. That is why we forced the Government to drop their plans to increase taxes. According to the Tourism Alliance, 120,000 businesses would have been affected and 4,500 jobs lost at a cost to the UK economy of £200 million. We would consult on a regime to allow holiday cottages to be treated as a trade on a fiscally neutral basis. So people have another choice: another tax increase on business under Labour, or reforms to help the tourist trade under the Conservatives.

The telephone tax has also been dropped. A £7 per year tax on families and businesses has been binned. That was a tax that was attacked by the industry as regressive and disruptive, a tax which ordinary families would have to pay. Virgin Media said the duty

"risks distorting the market by penalising fixed line broadband and potentially disrupting existing next generation broadband investment plans".

Andrew Heaney, executive director of strategy and regulation at TalkTalk, said:

"The broadband tax is an unfair, regressive, and wasteful way of funding superfast broadband which would deliver less benefit than it will cost, slow superfast broadband roll-out and drive around 200,000 homes off broadband."

One might think that someone from TalkTalk would say that-but the figure for the number of houses that would come off broadband was the figure given in the Government's regulatory impact assessment. Far from unlocking investment, the telephone tax would clearly hamper it, and we got it dropped. That is another choice that people will have to make: a regressive tax adding to the burdens placed by this Government on families, or no tax on families and businesses and reforms to roll out broadband under a Conservative Government.

Lastly, we have also removed the proposals for security of payment of pay-as-you-earn. In the Financial Secretary's letter to the Chartered Institute of Taxation, he said that where the Government have not consulted they would explain why not. Pending that explanation on these provisions, we have taken matters into our hands and forced the Government to drop them. The problem was that a criminal offence was being created in connection with a requirement that had not been properly explained or scrutinised. The CIOT put it best when it said:

"If enacted, there are concerns that the provisions could be applied to many small businesses facing cash flow problems in the current financial recession, leading to a number being put out of business at a time when the economy is starting to pick up."

The Bill gives the Treasury power to make regulations to require businesses to offer security for PAYE bills, but there are no safeguards in the Bill and nothing to protect businesses from the heavy hand of HMRC. It seems wholly at odds with the Government's much-trumpeted time to pay scheme to introduce such a measure at this time.

The Government's message stresses the importance of locking in the recovery, yet the Budget and the Finance Bill contain measures that will hurt small businesses and families, and we know that there are still more in the pipeline. There is concern that some of the measures that remain in the Bill have not been properly thought through and consulted on. We might not have much time in the Committee of the whole House to go through the Bill clause by clause, but I want to touch on a few of those measures now. I have chosen as examples measures that, although they are probably well-intentioned, might need to be revisited because of the lack of proper parliamentary scrutiny.

There is still widespread concern about the provisions in clause 24 and the 12 pages of schedule 3 about the taxation of pension contributions by higher-rate income tax payers. In addition to the pages in the Bill, there are 74 pages of detailed technical notes. We have no argument with the Government's seeking to protect revenues by restricting tax relief for higher earners, but there are widespread concerns about the cost and complexity of the provisions.

As I said in an intervention on the Financial Secretary, within two months the one-off costs of implementation have tripled. I hope that when the Exchequer Secretary winds up she will give a fuller explanation of why those costs have tripled over such a short period. Given the number of areas that the Financial Secretary has outlined in which greater clarification is needed about how the rules will work in practice, I wonder whether those costs will continue to rise. We need to make sure that the Government's chosen measure of restricting the value of tax relief is the most straightforward and least expensive option available. The Chartered Institute of Taxation has said that the measures were drafted in such a way as to put a heavy and expensive administrative burden on employers, employees and pensions provisions.

The Institute of Chartered Accountants in England and Wales has said:

"The proposals are highly complex and will be difficult for those affected to understand, often creating unexpected and very high tax liabilities for those at whom the proposals were not aimed."

We will not oppose the measures at this stage because of the principle of protecting revenue, but we ought at this time to look very carefully at how they could be improved to make them easier for people to understand, easier to administer and cheaper to collect.

In clause 31, on charities and community sports clubs, a new definition of "fit and proper persons", with regard to those working with charities and sports clubs, is offered without proper debate or scrutiny. That would be monitored by HMRC rather than the Charity Commission, which is a major change.

On clause 35, the CIOT has again expressed concern about some of the technical details arising from the proposed changes to the remittance arrangements and the prevention of certain capital gains tax rules from producing allowable capital losses on disposals of amounts in foreign currency bank accounts.

Clause 36, on which the Financial Secretary and I had an exchange during his remarks, has been criticised by the low incomes tax reform group about the impact that it could have on unrepresented low-income taxpayers. Let me quote from its representations:

"Many unrepresented taxpayers who will be caught by these new provisions actually come from overseas territories which are likely to be placed in category 2 or 3. Will a Gurkha be affected because we do not have a double taxation agreement with Nepal? Will a nurse coming from a West Indian island without the 'correct' HMRC designation be affected disproportionately? Is every mistake in relation to a source of income or gains in their home country to be penalised at one-and-a-half times or double the normal rate, simply because of where they come from?"

The Financial Secretary will no doubt be aware of the experiences of the Minister for Borders and Immigration and the Under-Secretary of State for Defence, Mr. Jones, who has responsibility for veterans. They have both come off worse after locking horns with the Gurkhas. Does he want to be the Gurkhas' third scalp? We need to think carefully about how those on low incomes are going to be able to comply with the provisions, while ensuring that proportionate action is taken with regard to others.

Clause 57, which the Minister mentioned, contains controversial provisions on information that promoters and users of certain tax avoidance schemes have to disclose to HMRC, and it imposes new penalties for non-compliance. There are several options to achieve the same goal. The ICAEW has said:

"The existing £5,000 penalty will be replaced, it is proposed, with a daily £600 penalty. This £600 daily penalty was one of the two options set out in the consultation document but we preferred the option which provided for an increase in the penalty to the extent that there has been non-compliant behaviour by the promoter or user. We remain strongly of that view that this would be a better option."

We have not had time to debate that clause in detail, or to explore which conclusion-the ICAEW's or the Government's-was right.

Does not clause 66 say something about our tax system, in that it appears that we will have to have a special Champion's League final tax exemption to enable us to hold next year's final? Will that open the floodgate for other changes? Will the Royal and Ancient push for competitors in the Open to be exempt if they are not resident in the UK? Will Lady Gaga refuse to tour the UK unless the next Finance Act is amended?

The Government need to provide a much better rational for why these exemptions are in the Bill than they have done so far. Perhaps the Exchequer Secretary will be able to refer to that in her winding-up speech.

There is a long shopping list of concerns about this Bill that are usually rehearsed during the Committee stage or addressed through ministerial statements or amendments. Those opportunities are not available to us today, as a result of this accelerated process.

This Finance Bill is a testament to the dying days of a Labour Government. It is evidence of all that we have known about this Government. The best ideas are pinched from us, and it is a rag-bag of measures with no narrative, from a Government who have run out of steam. The fact that it is being rammed through in a matter of hours shows a brazen disregard for Parliament. In this area, as in so many, the problems of today are being left for tomorrow's Government to resolve.

It seems rather extraordinary for Mr. Hoban to criticise the Government for their brazen disregard of Parliament in short-circuiting debate on the Bill, when it is of course the two main parties that decide the timetable and agree which measures will remain in the Bills discussed during this wash-up period, after the general election has been called. People will wonder how far they can trust what they hear in the election, so comments of that nature are not a great start.

The reality of how business is conducted and timetabled here means that the Conservative and Labour parties have every opportunity to decide such matters. Other parties do not get the same privilege, so it is a mistake to make comments that so mislead people.

Does the hon. Gentleman therefore accept that his party played no role in the amendments to the cider duty that have been introduced this afternoon?

We played a fundamental role in respect of the cider duty, in that we campaigned against it. I imagine that that is what lies behind the Conservative party taking the position that it has taken. It has taken the credit for the changes to the cider duty when they were announced. That is another example of a quick U-turn by Conservative Front Benchers.

I thank the hon. Gentleman for giving way, but we really must clear up his mix-up on the cider duty. Last year, the Liberal Democrats proposed freezing duty on spirits, but not on cider.

That is rather different from proposing a substantial increase in cider duty, for which the Conservative party claimed credit but which it now opposes.

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I think that we should move on from the knockabout, as it does no one any particular justice.

I want to begin my remarks by concentrating on the big picture that underpins the Finance Bill, rather than on the detail of individual clauses. Massive choices have to be made about how we go forward, in the light of the credit crunch and its impact on Government budgets. It has also impacted on the real world of people's lives, jobs and housing, and on their ability to afford homes and to provide for their families. Risks remain of a further downturn in the economy and a double-dip recession, and there are questions about the economy's real value and worth.

How much of what happened in the last decade or so was real, and how much was unreal? We must never forget that we face the deficits that we face mainly because what was assumed to be real economic growth has been recast, at a stroke of a Treasury pen, as not growth at all, and therefore not real income.

I do not know what the position of the hon. Gentleman's party is on the actual debt, but to provide for the shortfall and to deal realistically with the reduction of the deficit, does he agree that the bottom line-as seen by bond markets, credit risk agencies and so on-is the net debt, which is at least three times the amount of debt disclosed by the Government in the pre-Budget statement?

I would go a little further. It is not just a matter of those forms of debt, but debt in the wider economy-family indebtedness right through the economy. When we look at the figures as a whole, they show Britain not as a relatively low-debt economy, which the raw Government data still do, but as one of the most indebted nations in the world. Such issues are fundamental to what has happened to the British economy and to our response. They will be pivotal to the success or otherwise of whoever is in government in a few weeks' time.

In addressing the issues, we need to consider two big questions. The first relates to timing. I am not a simple Keynesian but I believe nevertheless that around the world-it is not just a British issue-we are coping relatively well with a massive shock to the banking systems and the wider economies of the world. The reason why our unemployment has not risen as projected and why growth is resuming, albeit at low levels, is that there has been willingness to invest massively to counter the withdrawal of credit by the private sector by maintaining and bringing forward significant Government spending. That means that the timing of the withdrawal of that spending, and the degree to which we can expect the private sector to pick up the necessary investment that will keep the economy moving forward and growing, is absolutely fundamental to whoever is in government.

The knockabout in the papers, which will involve all sides, portrays a Conservative party looking for earlier cuts, while Labour and the Liberal Democrats say that the timing is not yet right, which I believe is fundamentally correct. Anybody tempted to say, when they are being canvassed on the doorstep, "I am not interested. You're all just the same. It makes no difference how I vote," should be under no illusion: what we have seen in the past 12 months, and the response to it, and what we shall see in the next 12 months and the response to that, will be absolutely critical to what happens next in the wider economy.

We may disagree about the timing. We may disagree-and we do-about when the decisions should be taken, but for people to throw away their vote in the election, or perhaps not vote at all believing that their vote makes no difference, would be the wrong call.

Order. I have allowed the hon. Gentleman some latitude, because this is a Second Reading, but it is of the Finance Bill rather than the economy in general. Perhaps his remarks in future could bear some relation to the Bill before the House.

Thank you, Madam Deputy Speaker.

Will the hon. Gentleman give way?

I will in a moment, but I want to make the point that the decisions we are debating-about which taxes to raise and about how many taxes there are-fundamentally underpin both the question about the timing of the withdrawal of Government spend, and my next question, which is the balance between how much is raised through tax and how much is delivered through cutting back spending. There is a third issue, which is the fairness of distribution.

Will the hon. Gentleman clarify what the Liberal Democrats think about the wisdom of making cuts of £700 billion on the RBS balance sheet in a single year? The Government shrank the balance sheet by that amount-it is half of national income, judged by UK standards-so what impact will that have on tax revenue and activity levels?

I will not go into the technicalities, but we need to be straight about the balance sheets and to tackle the underlying problems in the banking sector. We need to separate the investment and gambling side of what the banks do from the retail side, and we therefore need substantial further reform.

The hon. Gentleman is right about timing and the balance of the way in which we tackle the deficit, but on the last day of the Budget debate, his colleague, Dr. Cable, made the point that the Liberal Democrats were on the same page as Labour. The UK will have no fiscal stimulus this year. Real-terms cuts are beginning this year, and £57 billion will come out of the economy in the single year of 2013-14. Does the hon. Gentleman think that that balance is right?

The evidence from the economy is that we are just about there. If we spend too much, we build up debt or tax problems for the future, but if we spend too little, the economy falls down. The small but real growth that we see suggests that, broadly speaking, the present balance might be right, but the question is whether the detail-that is what we are examining in the Bill-is correctly drawn, and I do not believe that that is the case.

Will the hon. Gentleman tell us what the savage cuts for which his party's leader has called might involve?

The hon. Gentleman invites me-

Order. I remind all hon. Members of my earlier comments about the fact that we are discussing the Finance Bill.

We have set out a series of tax changes that should be in the Bill. They are largely designed to move the burden that we are asking people to weather away from those on lower incomes. To pay for that, we would ask the more privileged on higher incomes to sacrifice some of their allowances, which I have never thought fair in any case. For example, we would deal with the distortion created by the tax reliefs on pensions that give more support to those on the highest incomes than people on the lowest, especially because we know that those on the lowest incomes are the people who struggle the most to have sufficient pensions.

The Conservatives propose a series of measures that are effectively tax cuts, but we do not believe that that is right either, because we need to prioritise maintaining economic growth and targeting those areas that require more support, especially education and giving those from the poorest backgrounds the opportunity to come out of the circumstances in which they were born.

Will the hon. Gentleman give way?

If I were to give way to the hon. Gentleman, I think that we would both be reminded that we are already straying a little far from the Bill.

Let me reiterate that the first issue relates to timing and that the second relates to distribution and the fairness of what we do. I do not believe that what the Government are doing in that regard is good, but what is offered by the Conservative party is worse, as it rewards those who have rather than those who have not. Our approach is designed to reward hard-working people on low incomes, and we believe that the Bill should relieve the tax burden on such people. In a way that other parties have not, we have set out specific cuts that need to take place to services and things that we do not believe are necessary, and I do not step back from that.

I started by saying that, clearly, this Finance Bill goes to the heart of the debates that will take place during the general election campaign. Clearly, whoever is next in government will make real decisions that will affect families all over the country. Twenty-three years ago, I came into Parliament on Budget day, after the by-election that followed the tragic death of my predecessor, David Penhaligon, who was the finance spokesman for the Liberal party, as it then was. I had been working with him on economic policy and I happened to be from Truro, so I was asked to stand in that by-election. I am leaving the House at the general election, because I do not believe it is a great place for the dad of a two-year-old and a three-year-old to be when they are at school in Cornwall and I am here. I think it is time for a change anyway, after having been here for 23 years. It may be a relief to all that I am leaving. It has been a privilege to represent the seat.

My first speech was made during the debate on that Budget and my first Committee work was on that Finance Bill. I saw that through, then a general election was called and I had to do it all again, so I became familiar with Finance Bills more quickly than anybody really deserves, particularly at the age of 24. Nobody should be under any illusion that what we had then in government was a fundamentally different approach to the tax system and spending from what we have today. Nobody should be under any illusion that what we had in response to recession in the 1980s and again in the 1990s was fundamentally different from what we have seen recently-more Keynesian, positive investment to keep down unemployment and no talk of unemployment being a price worth paying. However, in my view, the balance has not been got right on fairness-we see inequality increasing, not narrowing, in this country. The balance has not been got right in terms of setting out the real detail of what needs to be done to tackle the problems.

It behoves this place to be more honest with people, and it behoves the general election campaign to be more honest than it has been. I hope that the result of the leaders' debates and the challenges put down by the press and the public during the campaign will force out of everyone more detail than I dare say the manifestos will supply. That is one of the great advantages of democracy: the unexpected question from a member of the public often finds the detail that Parliament rarely does.

I hope that, for my children, the election will result in a Government who are committed to investment in education and the protection of the environment. Especially because my three-year-old has been going through cancer treatment and I have seen the real impact of the investment in the NHS at Great Ormond Street hospital, I hope that it is true-all the leaders say so-that all three parties are genuinely committed to investment in a national health service that is free for all at the levels and in the ways that people need when they need its help. To those who think that there is a lot of money sloshing around, I say that some of the facilities and staff at Great Ormond Street are undoubtedly among the best in the world, but anyone who thinks that it is overfunded needs to spend a little time there.

I am delighted that the leaders of all three main parties have young children, because that keeps their feet on the ground. I am delighted-not about the reasons why-that both the Conservative and the Labour leaders understand the importance of the NHS, because they have had children who have had to be recipients of the best care in the world. Let us keep it like that.

I remind the House that I have declared in the Register of Members' Financial Interests the fact that I advise an industrial and an investment company.

This is a disgraceful end to a dreadful Parliament. Tonight, we are invited to hasten through the large and contentious Digital Economy Bill, which we were able to debate only briefly yesterday, revealing the degree of disagreement about it. At the same time, we are given a very short time to debate Second Reading of the Finance Bill, and several other Bills have been rushed through today.

Of course, Ministers are right to say that any Government coming to the end of their term or seeking re-election in springtime may need to put a Finance Bill through Parliament quite quickly, but the convention has always been that if they need to do that, they put through a short, basic Bill, just to keep the revenues flowing in, and they make the big decisions in a later Budget, when there is proper time for a big Bill and proper scrutiny.

It really does beggar belief that we have been placed in this invidious position yet again. Most people in this country who are interested in politics have had 6 May in their diary as the general election date for many months. It appears that the only person in the country who had not got that clarity of view was the Prime Minister, but he got there in the end, and decided that the election would indeed be on the date that everyone else had put into their grids, plans and media schedules. So why on earth did the Government not hold the Budget at the beginning rather than the end of March? Why on earth, having held a late Budget, did the Government not get on with a more rapid preparation of the Finance Bill? In the past couple of weeks, when the House has not been that busy, we could have had a stab at debating it properly.

I do not object to having a Finance Bill that keeps the revenues coming in over the election; of course I understand the need for that, given the amount that the Government are spending and having to borrow. But I do object to being given 167 pages of Finance Bill on almost the last day of serious parliamentary business, and to being told that there will be just a few hours in which to debate all its stages.

My hon. Friend Mr. Hoban and his Front-Bench colleagues wisely said to the Government that they must strike out three of the nasty little tax increases and new taxes that they wanted to place in the Bill, and I am delighted that the Government have agreed to do that; that is an improvement to the version of the Bill that we have in our hands for this debate. So recent was the agreement that we do not even have the right document to debate; the one that I have still does not have the necessary changes or amendments to the Government's line. The Government must have known that the Opposition would not let through the new taxes or tax changes, which would have had adverse effects on important groups in our country, yet we are still given a text that implies that those measures will be introduced.

Like my hon. Friend the Member for Fareham, I welcome lowered bingo duty, the exemption from stamp duty and the other few crumbs in the Bill that recognise that Britain is now a grossly overtaxed country, and that high taxes are now an impediment to enterprise, growth and success-things that all Members here surely want. However, we had to listen to the Minister wandering off the subject and saying, in his opening remarks, that the Government got every economic call right, and I find that very difficult to accept.

This is the Government who said that they had abolished boom and bust, but they put the economy through the biggest boom and bust that any of us have ever seen in our lifetimes-a boom and bust far bigger than anything inflicted on this country since the great recession of the 1930s. This is the Government whose calls included building a debt mountain in the public and private sectors with easy money and low interest rates up to 2007, and who then decided to trigger an avalanche of debt collapse and collapsing asset prices by withdrawing all the money and restricting the banks too late in the cycle. That threatened the banks themselves and brought the system almost to its knees. This was the boom-and-bust Government to beat all boom-and-bust Governments. This is the Government who did unparalleled damage to our economy, yet the Minister dares to come here this evening to make party political points about how they got everything right. He should be concentrating on this mean and miserable Finance Bill, which he wishes to rush through without proper scrutiny.

Why do we need proper scrutiny of a Finance Bill? We need it because many people's livelihoods and working futures depend on the tax legislation that this and other Governments put through Parliament. Every one of the clauses could create joblessness, difficulty for a business, or problems for someone trying to wrestle with the complexities of an economy scarcely out of recession and performing very lamely and badly.

The Bill ranges extremely widely. We are asked to agree to items on income tax, corporation tax, capital gains tax, stamp duty land lax, inheritance tax, alcohol and tobacco duties, vehicle excise duties, fuel duties, environmental taxes, gambling, new taxes, losses and capital allowances, charities, the remittance basis relating to taxation, and international tax matters-and I am not even halfway through the list that we are invited to consider.

It is an insult to the people we represent, to the House of Commons and to democracy that the Government say they wish to strengthen that we are given this very shortened time when most colleagues wish to be back in their constituencies, starting to dust down their campaign plans, or carry on with the campaigns that some have already started, for obvious reasons, particularly those who worry about how their electorate might respond to the way that the Government whom they support have been handling events.

It is difficult to allow all this to go through without proper scrutiny because it means that none of these clauses has been properly tested. We have not had the chance to consult experts outside on whether each of the clauses will do what the Government intend, and we have not been able to consult people who will experience the impact of those clauses to see whether what the Government intend is fair and reasonable, given the parlous state of the British economy as we meet here this evening.

Just to take one example, which I hope to come on to in a moment, does my right hon. Friend, or could anybody, including the Ministers, have the foggiest idea what the "appropriate pension increase" is when it is defined as (ACP x CAPARF) - (UOP x OAPARF)?

Indeed, that has defeated me, and my hon. Friend is right to point out that that is exactly the kind of complexity that in a normal Committee stage we would ask a Minister to explain, and a good Minister would be able to explain it and a not-so-good Minister would know an official who could help to explain it, and we would also have had the chance to consult people who are experts in the field so that we could either pass over something quickly because the experts said it was perfectly reasonable, or they would say it would not work or would have unforeseen consequences. The inability to give it such attention will doubtless mean that the Government and their successor will come to regret the legislation, and will doubtless mean that some future House of Commons has to reopen these issues and put them right.

There is also a very complicated formula relating to capital allowances on page 81, similar to the pension formula that my hon. Friend read out. I will not detain the House by reading it out, because it is quite obvious that no one here today is equipped to discuss it sensibly. It means that these complicated matters will go through on the nod, not only with insufficient explanation but probably proposed by Ministers who have not teased them out and understood them fully, and certainly approved by a House of Commons that has not had the chance to do its normal job.

Voters elect to this House a variety of people with a range of experiences, talents and skills, and often individual Members have the experience needed to tease something out. But the complicated area of tax law, where the whole panoply of accumulated tax law is enormous, thanks to this Government's legislative energy, is one area where we all feel that we need some professional advice before we can do our job of scrutinising the Finance Bill.

Does my right hon. Friend agree that part of the problem is not just the complexity, but the consequence for and the burden on the taxpayer, who then has to employ accountants, lawyers, QCs and so on, at enormous expense, which thereby reduces our ability to be an enterprising nation?

I entirely agree. I favour lower taxes because they are fair and raise more revenue, and I think they raise more revenue for that very reason. Lower and simpler taxes impose less of a burden on people, who are then more willing to work harder and do not have to spend so much of their working time dealing with complicated tax issues to avoid falling foul of growingly complex and difficult to understand legislation.

We are now in the position where many people subject to a specialist tax in their area cannot understand the formula or the rationale and need to take on expensive tax advice to comply with the legislation. This can apply to quite small businesses that do not have that kind of resource and are not used to employing expensive accountants or lawyers but are forced into doing so by the enormous complexity.

So it is with a very heavy heart that I see that the Government's dying wish is to go out as they came in and be remembered as the Government who did more than any other we have known to add to the volume of tax legislation and the complexity and imperfect working of the tax system. Many Governments have queued up to win that prize, but this Government have beaten the rest of them hands down with their doubling of the length and complexity of the tax provisions in this country. To slide out 167 pages, 71 clauses and attached schedules this late in the Parliament, and then to offer us no time in which to probe or examine them, is typical of them but a complete disgrace.

The time available this evening does not permit me to go through the Bill even generally, clause by clause, much as I would like to and my colleagues would be grateful if I did not. However, that illustrates what is wrong with the situation: a 71-clause Bill, tackling every major tax and quite a few minor taxes in the country, with a view to changing them in some way and often to increase the amount of money that they raise, will not be properly scrutinised because of the way the Government have decided to behave.

The Government claim to have made all the calls correctly but they need a Finance Bill to raise more money. This, of course, is not that Finance Bill, because it is the pre-election Finance Bill, and we have already heard from the Minister that it does not include one of their main tax-raising proposals, which, if they win the election, will be the national insurance tax increase. So we know that the Government would have to come back to the House with more tax-raising legislation, but we know also that, even with their limited ambitions for deficit reduction in the next year or two, there is still a big black hole in their total figures. We know that the Budget, when delivered, did not have a proper statement of spending plans and cuts. There was a global figure for many cuts, but we do not know where they will fall or how they will be handled. And we know that there was a global figure for tax increases. The Government will say that this Bill does some of the work on that, but it in no way covers all the increased tax revenue that they have forecast, because they wish a bigger share of the deficit reduction to be achieved by tax increases than the Conservative Opposition do.

My right hon. Friend has just mentioned the imminent increase in national insurance, although it is not part of the Finance Bill. Surely, however, that must be part of our debate, because it will affect employment in manufacturing and commerce. At Prime Minister's questions today, the Prime Minister made great play saying that the increase was necessary to provide for education and the health service, but what is more important: increasing our manufacturing capacity and output, and thereby increasing our tax revenues; or harming manufacturing industry merely to sustain what are, I accept, important-education and the health service?

Madam Deputy Speaker, I do not think my hon. Friend was in the Chamber for your very wise advice to others in this debate-that we must stick to the contents of the Finance Bill, or to the things we would like to see in it, because some of us would have liked to move amendments to improve it, but we will not be able to do so owing to the restricted time. I fear that, because national insurance will be legislated for differently, it does not strictly fall within that remit. However, I think my hon. Friend stayed in order, because he wisely said that the national insurance increase could have such a damaging impact on the general state of the economy-it will definitely restrict growth and it is a tax on jobs, as even Ministers admit-that it could damage the revenues for which the Bill makes provision.

At the beginning of the debate, I tried to tease out of the Minister by way of an intervention what he thought the revenue loss would be on his figures if we struck out or modified the four clauses to which Opposition Front Benchers object. He said that in a full year he thought it would cost £220 million. However, other measures in the Bill and more generally could lose the Government rather more revenue than that, because they have made such an assault on enterprise, business, growth and development that they might find that higher tax rates, far from yielding the increased revenue that their models predict, yield rather less or, in some cases, even lead to a drop. We may well find that there are timing differences on tax payments and that there is a change in the place of residence to which businesses and rich individuals might relocate. The Government might find that they have gone over the top with the rates and will have a problem filling part of their budget black hole through the tax revenue that they will collect if they stay in office.

On all those grounds, this is a very bad Bill. It is not a Bill for recovery, because it does not offer the tax incentives for growth that one would expect to see. It confirms the pattern of taxing more and subsidising more that has characterised the more recent years of this Government's lack of progress. It greatly increases the complexity and detail of the tax code in a way that is wholly inimical to the wish of honest people to get on with earning a good living and running a good business, as my hon. Friends and I have sought to set out. Above all, it misses the main points because it does not tackle the spending side of the equation, which is being kept secret until after the election, or bring in some of the biggest tax rises that the Government are planning, which have to be introduced in another way.

The Government are now attempting to drive the car of the economy with one foot flat on the accelerator pedal, trying to create as much easy money as possible, and the other flat on the brake because they are trying to restrict the banks as much as possible. That is, of course, the way to go absolutely nowhere. It surprises me that they can present a Finance Bill such as this and say that it is part of a package of recovery, when we have experienced the longest recession of any of the major economies and had about the feeblest signs up upturn. The Government say that that means we have done very well, but it clearly means that we have done very badly. It is quite obvious why-they chose the wrong point of the cycle at which to clobber and restrict the banks. They should have restricted, managed and regulated them properly on the way up and not brought them juddering to a halt as they did in 2007-08.

The Government are still doing that to the banks, as I have been trying to illustrate to Members on the Treasury Bench, by taking £700 billion out of the balance sheet of our leading bank, the Royal Bank of Scotland, which they happen to own. No Treasury Minister has ever explained why they are doing that. This Bill contains provisions for another tax on banks-I understand how popular that is-but does not make provisions for expanding banks. Surely what we need, if we are to have a positive and strong recovery, is banks that can expand their lending to British business and individuals sensibly, so that there is an increase in private sector demand as well as the limited increases in public sector spending that the Government think represent the way to a recovery.

Driving with one foot on the accelerator and one on the brake is the way to go absolutely nowhere. The Government are creating a lop-sided economy with fast-expanding public spending and fast-contracting private sector debt and activity in many areas. That is the way to national bankruptcy. This Finance Bill will not raise anything like enough revenue to pay for the huge amount of spending that they are proposing. Their model of running the economy will not lead to a rapid recovery of the kind that we desperately need, and it will not create the jobs that we need to get people off benefit. That is the type of public spending cut that I would like to see-really big cuts in the social security programme because people have gone back to work or got a job for the first time and do not need benefit any more. Surely that is a cut that we can all agree on, but the Bill will not deliver it because it does not provide the friendly tax environment for business and enterprise that must be required if we are to get a decent recovery.

My right hon. Friend Mr. Cameron made an excellent response to the Budget and reminded the House that, under this Government's lack of tender care, the UK has gone from being the fourth best tax regime for business in the free world to being the 84th best, which is a dreadful reduction in our tax competitiveness as a result of the measures in this and other recent Finance Bills. That is why our economy is not going anywhere-because of an anti-enterprise Finance Bill and because the Government will not sort the banks out properly. Until Ministers can explain to the House why they have pursued a boom and bust policy towards the banks, we will not have a proper explanation of the mess we are in, and until they come forward with a Finance Bill that is pro-enterprise, we are not going anywhere fast.

I hope that this farce of a Finance Bill will end as soon as is humanely possible. We need a new Budget that does the spending and taxation together and is honest with the British people about both sides of the equation. We need a new Budget that leads to a proper Finance Bill that has rates of tax that might support and promote growth.

Mr. Redwood is right about the lack of time to debate and scrutinise the Bill. We would normally have about three months, but today we have about three hours. It is not simply the lack of scrutiny by right hon. and hon. Members; it is the lack of scrutiny by outside professional bodies that do such an invaluable job for us all. Only a few years ago, the Government introduced the real estate investment trust regime, which they had to change within a year or two, and which was subjected to intense internal and external scrutiny. However, many of the measures in the Finance Bill are being subjected to no scrutiny whatsoever.

I do not intend to speak for long, but my main concern is that, although this might be billed as a Finance Bill for growth and fiscal consolidation, as far as I am concerned it does very little to encourage the key thing-growth in the economy. It has been mentioned already that the national insurance changes, which will limit businesses' ability to recruit and take spending power away from local economies, are not in the Bill, but many other things are. It includes provisions for three fuel duty rises-that is in addition to the three that we have had in the past 12 months or so. A 17 per cent. rise in fuel duty-that makes it six rises over just two years-is massively over inflation and hugely damaging.

The Bill also includes higher duty on Scotch, which will do precisely nothing to tackle the issue of problem drinking and antisocial behaviour that follows, but will, of course, have a huge impact on the manufacturers and distillers. The Bill also freezes tax allowances, representing a real-terms cut in take-home pay for real people and taking more spending power out of local economies. It takes no recognition of the fact that for many people the real inflation rate is about 50 per cent. higher than the published rate used by the Government. With tax allowance thresholds frozen, that is a double whammy when it comes to spending power and inflation.

The Bill is linked to the Government's fiscal responsibility plan, which, at its heart, is simply for deep and savage cuts-cuts deeper and tougher than even under Baroness Thatcher. It is worth reminding ourselves that the Bill is the starter to many of the cuts to come, which will include real-terms cuts to budgets this year, but without a comprehensive spending review to tell us where they will come from, and £57 billion out of the economy in 2013-14. For the avoidance of doubt-people should remember this-that is nearly £20 billion in tax rises and nearly £40 billion in service cuts, which represents nearly 3 per cent. of gross domestic product, assuming that the Government's forecast of 3.25 per cent. growth in four of the next five years is remotely achievable.

I do not believe that this is a Finance Bill for growth, and I am not at all convinced that the Government's plan for fiscal consolidation has any credibility. As the right hon. Member for Wokingham said, there is no time to go through the Bill in any considerable detail, but it is worth highlighting one or two of the clauses. The changes in clause 1 to rates and thresholds will mean a real-terms tax rise and a real-terms cut in take-home pay. Clause 3 and the changes on small profits rates and fractions will have an impact on small businesses. I happen to welcome clause 6 on the relief for first-time buyers and the increase of the threshold to £250,000 for first-time buyers. However, a first-time buyer still needs to get a mortgage, and even if they can only get 80 per cent., they will still need to find £50,000 in cash to buy a £250,000 home. There cannot be very many people in the Minister's part of east London who have a spare £50,000 in their pockets for a deposit for a house. I suspect that even those on the Tory Front Bench might struggle to find that kind of loose change, so although I welcome the move, it is slightly surreal.

The hon. Gentleman has just talked about the amount that individual first-time buyers might need to put down to obtain a mortgage from a bank or building society. However, I hope he will accept that part of the problem in this country was that we were giving people too much money to buy houses with. In some cases Northern Rock was giving people 125 per cent. of the capital value. That surely led to some of the problems. Is there a figure that the hon. Gentleman believes it would be right for people to put down as a meaningful deposit on a mortgage?

I would not want to set the business model for any bank or building society. If there was a particularly wealthy individual to whom it was quite safe to lend 100 per cent., it would be quite safe to do so. For others, the old rule of three or three-and-a-half times one salary, or two or two-and-a-half times a joint salary seems to make perfect sense. The hon. Gentleman is absolutely right: we cannot go back to lending at five times joint salary based on future pension provision; that was an act of absolute madness. But as his right hon. Friend the Member for Wokingham said in a debate a few weeks ago, if we need to invoke counter-cyclical measures from time to time when we begin to grow out of the recession, then perhaps we need to look again at some of the rules and restrictions.

With clause 12-this bears repetition-we are seeing six fuel duty rises in just over two years. With record prices at the pump and the barrel price having gone up by, I think, $30 in a year, that could be catastrophic for the haulage sector, for families and for those who need to drive to work, and the measure is, of course, inflationary in its own right.

I would like to raise my concerns in support of the hon. Gentleman's speech. With the price at about $80 a barrel, petrol is now more expensive at the pump than it was last year, when the price was $150 a barrel.

The hon. Gentleman is absolutely right. As we have seen those rises in the barrel price-something like $2 in the past month, $10 in the past six months and $30 in the past year-we have seen a corresponding rise in the price at the pump. This issue is within the Government's control: they get the duty, but they also get a VAT windfall when the price at the pump goes up. In addition, as the barrel price rises, they get more North sea corporation tax, from the normal corporation tax and the ring-fenced regime. There are therefore windfalls for the Government from VAT, their own duty rises and North sea corporation tax, which is why the fuel duty regulator-or the Conservatives' version of a fair fuel stabiliser, or whatever some of the sensible Members on the Labour Benches called the measure-is exactly the right thing to introduce. Should the Conservatives win the next election, I hope they can be held to their promise to introduce their version of the fuel duty regulator quickly, to smooth out spikes in prices at the pump.

I agree with the hon. Gentleman, but can he confirm that while tax is now two thirds of the pump price-the Government's imposition is a big reason why the price has gone up so much-the huge devaluation of the pound also means that the sterling price of oil has gone up far more than the dollar price?

The right hon. Gentleman is right about the impact of currency fluctuations. He is right that duty and tax amount to approximately two thirds of the price of a litre, but the real killer is in wholesale diesel. Before tax, our diesel is among the cheapest in Europe; after tax, it is possibly the most expensive. From my point of view, as a Scot in an oil-rich nation, I find that quite abhorrent, especially when people are struggling to make ends meet and when we are seeing six rises-a 17 per cent. hike-in fuel duty over two years.

Schedule 1 deals with the levy on bankers' bonuses. The Minister said, as the Chancellor has previously, that it had brought in £2 billion, but the bankers do not pay the tax: the banks pay it. If there is £2 billion in the Treasury coffers, there is £2 billion less to lend to real people in the real world. As for scrutiny of these proposals, schedule 1 is 21 pages long, and we could easily have a two-day debate on that schedule alone to ensure that there were no loopholes in it. Instead, we are going to skip over it in the next hour-and-a-half.

This Bill is not a plan for recovery or growth; it is not even part of the package of proper fiscal consolidation. It is merely a harbinger of the deep and savage cuts to come. The Prime Minister said today, "We cannot cut our way to recovery, but we could cut our way to double-dip recession." That was hyperbole-delivered in the style of practised statistics oratory-but given the real-terms cuts now proposed, and the £57 billion that will come out of the economy in a single year a couple of years hence, why are those on the Treasury Bench not listening to him? Why do they think that the cuts proposed in the Bill and in their other measures will lead to anything other than a return to recession?

We have had an object lesson today in the problems relating to the necessity for radical parliamentary reform. We all know that during the American revolution, it was a case of "No taxation without representation". Tonight, with no one at all on the Labour Back Benches, we have a situation of plenty of taxation but no representation, and I am extremely worried about the taxation proposals before us, for reasons that I have already identified. I am not being critical of those on my own Front Bench when I say that I am deeply worried that this Finance Bill is somewhat unprecedented-to my mind, at any rate, but I have been here for 26 years. To my knowledge, we have never been through this procedure before. There have been proposals that have gone through rather rapidly in the wash-up stages, but I have never before witnessed what we have seen today.

The most important thing is to tell the British people the truth about the economy in the context of the public expenditure commitments, the cuts that will be required and the taxation that will be needed, which will supposedly be derived from the provisions in the Bill and other legislative measures, the effect of which the Government claim will balance off the deficit and reduce the debt.

My hon. Friend Sir Nicholas Winterton and my right hon. Friend Mr. Redwood pointed out that the most important thing is to regenerate the economy, and that in order to do so we must take an enterprise approach to manufacturing as well as to the service industries and to small businesses, to give them a chance to get up off their knees and to get the economy going again. I cannot see anything in the Bill-apart from one or two measures that our Front Benchers have identified-that would assist the small business community.

The national insurance issue is not even in the Bill, yet we know that it will cause immense damage to small and medium-sized businesses and to the people of this country at large, as hundreds of commentators have already said. I understand why it is not in the Bill, but its omission will have an impact on the Bill because there will be a greater requirement to raise more revenue as a result of what the Bill does contain. The real problem is that not a single penny-not one farthing-of public expenditure to pay for public services comes from anything other than private enterprise.

We all understand that public services are important and essential in their own way-no one on the Opposition side is advocating the abolition of public services; we are just asking for a proper and efficient public service sector-and the pensions that go with the sector are also important. As the CBI has commented over the last few days, public sector pensions are out of control.

Mr. Newmark and myself call ourselves-or at least I call us-the Three Musketeers, as we have hammered away on the subject of the net debt for the best part of nearly two years. The reality is that the true debt this country carries has a huge significance for the amount of money that needs to be raised by taxation to fill the gap-and the amount of tax raised is woefully inadequate. According to the Office for National Statistics, it is in the order of £3 trillion. I received a letter from Sir Michael Stoner the other day, confirming my figures, as I had raised with him certain matters relating to this issue, and the House of Commons Library also confirmed them.

The figures vary between about £2.65 trillion and £3.21 trillion, but that is the minimum, as it gets worse if we add in the hidden costs of public sector pensions, Network Rail, private finance initiatives and nuclear decommissioning, on which an announcement has recently been made-and it is pretty horrendous. These amounts can be aggregated with the amount of debt to which the Government admit. Then there is the business of whether we include or exclude the financial sector interventions. If we include them, the situation becomes dramatically worse.

Does my hon. Friend, like me, wonder who the Government think they are fooling? The markets are already making this Government pay a lot more to borrow than the German Government do, because they know that this Government have borrowed an awful lot more than the German Government have.

Indeed, that is completely true. I do not claim to be an expert economist by any means, but I am certainly trying to be analytical about the figures that I can see. I sometimes wonder whether the economists are quite as good as they are cracked up to be, because they quite frequently seem to get these things wrong. I acknowledge my right hon. Friend's point in relation to the veracity that can be attributed to the figures that we are given. As we saw only yesterday, in Greece there is a massive shortfall-

Order. The hon. Member must now focus his remarks on the Finance Bill that is currently before the House and on the measures contained in that Bill.

I entirely understand and accept the point you make, Madam Deputy Speaker. I also have to say that I am talking very realistically and in a practical way about the fact that the Finance Bill simply does not fill the gap created by the massive debt that has been accumulated. If the truth is not being told about the true level of the debt, it affects the Finance Bill and every provision in it. I regard this Second Reading as a kind of massive omnibus stand part discussion. This is the only opportunity to debate the issue, if I may say so, given that every single clause coming to its Committee stage will not be subjected to the clause stand part debates that normally take place with a Finance Bill. In addition, no amendments have been tabled-or, at least, none has been selected-from anyone other than the Government. The Committee stage will not take long, for the simple reason that there is no real opportunity to look at the context in which this massive deficit and massive gap in public expenditure can be filled.

There is another real problem here. If we look for a second at the level of unemployment that needs to be paid for, we see that the figures we have been given are themselves unrealistic.

I believe that, according to the economic indicators in a House of Commons research paper, the International Labour Organisation has said that 2.6 million people are unemployed, but there are about 1,600,000 job claimants. Given the effective unemployment level that results if those figures are added together, and given all the revenue that must be raised, the Bill will have to fund the payment of 4.1 million people.

As I said earlier, not one penny of public expenditure will come from any source other than private enterprise unless we simply go to the printing presses and print the money off. Not a single penny to pay for the public services that people need-and we advocate that, but on a rational basis-will come from any other source. If a Government do not get growth and enterprise right, which means putting the cart and the horse in the right order, they will not be able to provide for public expenditure. That is the one thing that this Government-in fact, all Labour Governments-totally fail to understand.

You run out of money.

Indeed: you just run out of money. I strongly believe, given the inadequacy of this Bill, that the Government are not merely gazing into a black hole but leading us into it. We are beyond looking over the precipice, we are actually in the black hole, and never in the history of British financial affairs and taxation has a situation been so dire.

My hon. Friend could describe the situation even more clearly. The Government believe in continuing to fund the public sector-that is their policy-but are destroying the private manufacturing commercial sector that could fill in that black hole by funding public services.

I pay tribute to my hon. Friend, who is leaving the House at the election, for continually and rightly emphasising that point. In the last two years the extent of the public sector has increased by 200,000, and that is another burden that the Bill will not be able to fund. There is a massive problem, and the Government are making it worse.

Other Members have mentioned fuel costs. Farmers in my constituency have told me that the costs of fuel to them and to the rural community are huge, and I entirely agree with them. Hauliers, and others involved in road transport, are having to pay much more because of increases in fuel prices, as are ordinary road users. There are so many increasing costs.

As the Bill makes clear, there is also a problem of over-regulation. I have already quoted from page 69 of the Bill and the proposed new section 213J to the Finance Act 2004, which deals with the appropriate pension increase, so I shall not do so again. I will, however, refer to the provision relating to what is described as

"The appropriate lump sum increase", because I think it would be unfair not to make the House aware of it.

I am sure that these provisions will not be understood by anyone except a very small elite-and, of course, the expensive accountants and lawyers who will be wheeled in to work it all out at enormous expense. The effect of over-regulation on those who are afflicted by it is in itself a disincentive that lessens our ability to run an efficient economy. People can spend all their time dealing with this. That applies to farmers dealing with the over-regulation of their affairs and with their tax problems, and to other small businesses. How are pensioners supposed to cope with this kind of thing, even if they are relatively well off? It is absurd to have legislation of this complexity.

The definition of the "appropriate lump sum increase" is

"(ACLS × CALSARF) - (UOLS × OALSARF)".

That is just the defined benefits arrangement in respect of the so-called "appropriate lump sum increase". That has to be weighed up with the "appropriate pension increase". which I cited earlier in an intervention. My right hon. Friend the Member for Wokingham mentioned allowances, about which new section 212J(1) says

"C or P"- whoever they may be-

"has a relevant excess of allowances in relation to the relevant trade if-

RTWDV > BSV"

That is all it says.

Subsection (2) says:

"Section 212K defines RTWDV and section 212L defines BSV."

Honestly, this is absolutely ridiculous. This is the kind of legislation that we are being asked to passed. We are only on the Bill's Second Reading; we are not going to be able to examine things in Committee; and this is pure, unadulterated absurdity.

I wonder whether my hon. Friend will be able to catch the eye of the Exchequer Secretary, because I am sure that she would love to intervene to explain this.

I do not want to embarrass the Exchequer Secretary. I am sure that she does not have the foggiest idea what I am talking about. I find that slightly alarming, given that we are about to have a general election and all the birds have flown-there is not a single person standing or sitting behind her. They have all flown back to their constituencies and landed the British people with this nonsense, which we are debating.

I was going to explain to the hon. Gentleman in my wind-up that these are formulae to value the defined benefit, and I assure him that they are understood by the pensions industry-the people who will have to use them. The industry has been consulted on them extensively.

Part of the trouble is that the ordinary man in the street-the kind of person whom we meet during a constituency campaign when we wander around-is not from the pensions industry; I am talking about real people, who would not understand this any more than I suspect would any of the hon. Members who ought to be here in serried ranks behind the Exchequer Secretary but who have all flown off to their constituencies because they find it so embarrassing to listen to this kind of attack.

The Exchequer Secretary said that these formulae related to pensions, but of course the formula that my hon. Friend read out related to capital allowances.

It did indeed, and I am so glad that my hon. Friend made that point. I was correctly referring to the formulae as relating to allowances, because the matter arose out of a point made by my right hon. Friend the Member for Wokingham, who always understands these things or at any rate does his best to do so.

My hon. Friend rather quickly passed over the problems of rural communities and farming. I believe that he was referring, to an extent, to the increase in hydrocarbon taxes. Is he aware that in many rural communities there is little or no public transport and so people, in many cases those on low wages, including pensioners, cannot lead a reasonable standard of life if they do not use a car? Is he also aware that the cost of such usage is being dramatically increased through taxation year on year? Does he agree that this is a very serious matter?

I certainly agree with that. I mentioned the unhelpful and damaging increase in road tax and fuel tax for rural people in my constituency, as well as the fact that the number of buses is being cut back-I have just presented a petition to Parliament on that very subject-for all the reasons that my hon. Friend, who perhaps ought to be right honourable, has just mentioned.

In the last hour, I have just received an answer from the Exchequer Secretary, who is sitting in front of us. I received a holding answer on 16 March and the question was answered on 7 April, so I have had to wait a bit of time for it.

Was it worth it?

My hon. Friend asks whether it was worth it, and we shall soon find out. I want to ask the Minister to give me a proper answer to the question that I put. My question was:

"To ask Mr. Chancellor of the Exchequer, what changes in levels of (a) taxation"- in the Finance Bill-

"and (b) public expenditure will be required to finance the requirement to repay loans made from the public purse to banks, as referred to in the Financial Services Authority's publication Financial Risk Outlook of 10 March 2010."

It will be noted that I tabled my question soon after the FSA produced its financial risk outlook. I had to wait the best part of a month to get the answer, but the fact is that the FSA report said that it was inevitable that a significant proportion of the money that would be required to finance the repayment of loans was going to have to come from the taxpayer. The figures are horrendous. That is yet another element of the gap that exists between the Government's Finance Bill and the ability to pay for the mistakes and problems that have been accumulating.

What answer did I get from the Exchequer Secretary? She might or might not know what the answer is-she might not have even seen it, I do not know-

Of course I have seen it.

She says that of course she has seen it, but in that case she should have improved it. The answer that I have just received is as bland as this:

"The Financial Risk Outlook discusses liquidity and funding support provided to eligible institutions. Responsibility for repayment of such support lies with the eligible institution itself."

That is not what the financial risk outlook says. It is appalling that I should get an answer at this late hour, just before the debate on the Finance Bill. It was only by chance that I happened to be passing the letter board as I went out of this debate and I received an answer on the subject of the monumental amount of taxpayer burden. It arises out of the monumental and wanton increase in debt that itself does not even touch on the amount of net debt, which gets up to as much as £3.1 trillion if the Office for National Statistics is to be believed-I repeat that "if". I have much more faith in the ONS than I used to have, and I hope that it and the new UK Statistics Authority will develop into something akin to the Public Accounts Committee and the National Audit Office and establish a reputation, as has been suggested by Sir Michael Scholar's strictures on the Government in the past few days, which I must say I applaud, However, I discovered something from the ONS the other day that deeply concerns me and I refer, just this once, to a subject with which some people might associate me: the ONS statistical base is agreed by EUROSTAT and that is a warning to us all. It was EUROSTAT's statistical assumptions that led to the ability of certain accountants, lawyers and bankers to advise the Greeks to enter into arrangements that have led to the crisis there. In other words, the EUROSTAT arrangements look as though they did not enable true figures to be provided, which enabled the Greeks to get away with it. That is where this Government are heading.

Thank you for calling me to speak in this debate, Mr. Deputy Speaker. I am surrounded by four excellent gentlemen: my right hon. Friend Mr. Redwood, two knights of the shires-my hon. Friends the Members for South Staffordshire (Sir Patrick Cormack) and for Macclesfield (Sir Nicholas Winterton)-and my hon. Friend Mr. Cash. I am sure that if he pulls his finger out in the next few years, he, too, will be a knight of the shire or even a right hon. Gentleman.

This has been an excellent debate. I am not taken to acts of naked partisanship in the run-up to a general election, and I shall resist that temptation for at least the next 30 seconds. I have read the Finance Bill from cover to cover and it is very grim reading. It is a very concerning document. Its 167 pages are a metaphor for this Government's failing over the past 13 years. This is what we are left with: impenetrable clauses talking about figures and numbers that nobody could possibly understand unless they were working in a bank inventing impossible figures and numbers that would eventually bankrupt this country. It is not a document for growth: it is a document for further contraction in our economy.

We, in this place, have every right to be hugely concerned about this document, but the issue is not whether we are concerned: it is whether our constituents are concerned, and they should be. In this document, we have yet more hidden taxes-hidden taxes on middle-class families, hidden taxes on working-class families, frozen allowances and higher duties. Those will all damage people's quality of life. This is going to be a very short speech, as we prepare for the general election. The only people who are doing well out of this document are the people who publish "Tolley's Tax Guide", which has trebled in size over the past 13 years. If we have much more of this, it will treble again in just the weeks ahead.

Earlier in the debate, when my hon. Friend was not here, I ventured to suggest that we should consider a flat-rate tax. This legislation is so complicated and absurd that we have to find a way of reducing it. The rest of it is over-complicated for the people out there in our constituencies, and it is simply a milch cow for the accountancy and legal professions.

I agree. It is absolutely impossible, even for well-educated people who think they might have an understanding of these things, to penetrate the complexity of this document. As we speak, accountants and advisers around the country are popping champagne corks because they are the only ones who will benefit from this document.

I shall not try your patience, Mr. Deputy Speaker, because you will want me to talk about specific clauses, but as my right hon. Friend the Member for Wokingham has pointed out, there are so many clauses that it is impossible to do justice to even one of them, let alone all of them, in this truncated debate. I shall conclude by saying that we have had the boom and that this document represents the bust. It is a depressing and frightening 167 pages, and I am sure that the bulk of it will be rejected by my constituents, because it certainly is not an offer that they will feel able to sign up to.

I am happy to put this question to my hon. Friend, but if he is unable to answer it, I intend to try to catch your eye, Mr. Deputy Speaker, to ask a single question of those on the Treasury Bench. Is my hon. Friend worried that the Budget does very little to reduce the Budget deficit? Unless we reduce our indebtedness in this country, the money markets are going to lose confidence in our ability to take sensible steps to do that. If they lose that confidence, we will lose our triple A credit status, which will immediately lead to increased taxation, increased interest rates and, I believe, increased unemployment. Is my hon. Friend, who is a young and virile Member of this House and who will go a long way in his parliamentary career, able to answer that question, or will I have to put it to those on the Treasury Bench in a speech, short though it will be?

This must not turn into a love-in, as we have serious matters before us, but I shall miss my hon. Friend greatly in the next Parliament.

The tragedy of the past 13 years is that all our constituents are left having to carry an enormous of burden of debt. The Government have no money: they spend our money on our behalf, and they borrow money on our behalf. Our hard-working constituents are left with the millstone of this Government's debt around their necks. That is a disgraceful legacy, and one that the Government should be ashamed of.

I shall be brief, but I want to put a question to the two Ministers on the Treasury Bench.

Where are the others?

I am amazed that there is not a single Labour Back Bencher in the Chamber for the Second Reading of a very important Finance Bill.

This country is burdened with the greatest debt in its history. I am a long-serving Member of this House, and I come from a business background. In my view, the budget deficit is unsustainable. The Budget contains very few measures that will reduce it in a meaningful way that will regain the confidence of the financial markets.

If the money and bond markets lose confidence in this country and downgrade our triple A credit status, what will the Government do? Would that not mean that they would have to pay a great deal more for the money that they are continuing to borrow, and would that not lead immediately to emergency tax rises, rising inflation and the inevitable increase in unemployment that would cost a great deal of money?

This is a very truncated Second Reading debate, and it is most unsatisfactory to deal with a Finance Bill in only three hours. I am about to leave the House, but I am deeply concerned about the future of the country, as are most of my constituents in Macclesfield. My area has a lot of manufacturing industry, including high-technology centres and pharmaceutical development and production. I am concerned for the future of our economic growth and our economy.

I am extremely grateful to my hon. Friend for giving way. My constituency is close to his, and I share his concern. He has led on the question of manufacturing for a great many years, through his all-party group and in other ways. Manufacturing in Staffordshire has fallen by 18 per cent. in the last three years. That is what he is talking about, and it is what worries us so much.

I do not think that I need respond to my hon. Friend, who has made the point very clearly. I agree with everything that he said.

I believe that we are owed a response, because so many serious economists, as well as commentators on the economy of this country and on Government policy, are deeply concerned. We do not want to worsen the recession that we have had, but neither do we want to fall back into it. We must take serious steps to reduce the debt that this country has incurred.

We cannot go on living on other people's money. We have got to produce money to reduce our debt, and the budget deficit that, sadly, has been built up by this Labour Government. Through you, Mr. Deputy Speaker, I make a plea for those on the Treasury Bench to make a proper and constructive response to what I believe is a very serious question. As my hon. Friend Mr. Cash said, I came into this House championing manufacturing industry. I go out doing the same because, as I have said before, it is the only source of sustainable non-inflationary economic growth. It can drag this country out of the dire problems that it faces at this time. Please let the people of this country-and me, as I have raised the question-have a sensible and proper response in the wind-up speech.

It is a great pleasure to wind up this relatively brief Second Reading debate on behalf of the Opposition. I thank Members for their contributions.

Matthew Taylor spoke for the Liberal Democrats, standing in for his colleagues. He made the fair point that only limited time was available for the debate, although if more time had been allowed I do not know whether we would have heard more contributions from his parliamentary colleagues; perhaps not. It was his final speech in the House, and he must be one of the youngest Members to retire after 23 years. On behalf of the whole House, I wish him, and in particular his eldest son, well in the future.

I thank my right hon. Friend Mr. Redwood for an excellent speech. He highlighted the need for professional advice and input for our deliberations on these highly technical matters. There have been only two working days since the publication of the Bill, so we have not had the opportunity to receive professional input as we would normally do.

Stewart Hosie raised the issue of fuel duty, and made a persuasive case for our fair fuel stabiliser policy, on which we are consulting. My hon. Friend Mr. Cash argued that nothing in the Bill would assist small businesses, and that the real debt figure is considerably higher than the Government would admit to-a point that was also made by my right hon. Friend the Member for Wokingham, and has been made in the past by my hon. Friend Mr. Newmark. I think that my hon. Friend the Member for Stone described them as the Three Musketeers.

No Second Reading debate on any subject is complete without a contribution from my hon. Friend Mr. Walker-or perhaps I should call him my hon. and virile Friend, to use the terminology of our hon. Friend Sir Nicholas Winterton. My hon. Friend the Member for Broxbourne persuasively made the case that it was not possible to scrutinise the Bill properly in the time available.

Finally, I thank my hon. Friend the Member for Macclesfield. I know there is a convention in the House that Members are not supposed to make speeches or interventions before they make their maiden speech. I am grateful that no such convention applies to Members after they have made their valedictory speech. I had the great pleasure of winding up after my hon. Friend's valedictory speech during the Budget debate, and it was an equally great pleasure to hear him address the Chamber again this evening.

This is, we hope, this Government's final Finance Bill. Over the past 13 years our taxation system has developed a reputation for complexity and unpredictability. It has acquired a reputation for stealth taxes and the use of tax policy as a means to lay political traps for opponents rather than as the fairest and most efficient way of raising revenue. The Bill contains elements of all those attributes.

The Bill could have taken the minimalist approach and focused only on matters that needed to be addressed urgently. The Chartered Institute of Taxation made that point in a hurried but none the less professional submission, saying that

"the challenge to the Government is, quite simply, why any clauses more than those necessary to provide for the continuation of income tax and setting of duty rates should be passed."

It makes the point that a number of technical or practical problems might well be detected, given the limited time available to consider the Bill.

My hon. Friend Mr. Hoban highlighted several aspects of the Bill about which there could be difficulty. For example, clause 24 and its related schedule, which relate to pensions, are particularly complex. Clauses 31 to 33, which relate to charities, also contain numerous complexities, and the Chartered Institute of Taxation states:

"as far as we are aware the detail of these proposals has not been consulted on."

My hon. Friend also talked about clause 36, which relates to penalties in respect of offshore income, and might affect the nationals of countries with which we do not have tax information exchange agreements. He also highlighted the position of the Gurkhas who have settled here, and raised the prospect of Joanna Lumley turning her attentions to Treasury Ministers; they may or may not find that an appealing thought.

Clause 56 deals with stamp duty land tax and partnerships, and the Chartered Institute of Taxation says:

"the clause as drafted will catch many transactions carried out for commercial reasons."

Clause 57 addresses the disclosure of tax avoidance schemes, and the institute says:

"we still have concerns about the breadth of the legislation."

It makes the point that given that implementation will not take place until autumn,

"it seems bizarre to rush it through in the first Finance Act".

The institute also raised concerns about clause 58, but we have succeeded in arguing that that should be removed from the Bill.

In many ways, the Bill introduces greater complexity, yet it is clearly not receiving the scrutiny that such measures normally receive. The situation helpfully supports an argument that Conservative Members have been making for some time: we need to do much more to improve scrutiny. We argue that it is necessary to publish draft legislation at the time of the pre-Budget report-in advance of the publication of the Finance Bill-to allow for proper scrutiny, including pre-legislative scrutiny by a parliamentary Committee. We would also establish an office of tax simplification that could advocate reforms to our tax law to make it less complex.

We will let these clauses through. Tackling avoidance is a perfectly reasonable intention-we have no difficulty with it-but we make a commitment that we will listen to representations made by professional bodies on the technical and practical implications of the Bill, and if appropriate return to those matters. I hope that the Exchequer Secretary will make a similar commitment. Many aspects of the Bill have not received the necessary pre-legislative scrutiny, and the Bill is clearly not getting the legislative scrutiny that one would expect, so there is a fair chance that it will contain errors that would have been picked up under the normal process. I do not believe for a moment that the normal process is sufficient in itself, but I hope that the hon. Lady will make a commitment that if her Government are re-elected, and if there are representations that deserve a proper response in a second Finance Bill this year, they will, if necessary, make revisions. We are certainly prepared to consult on these technical matters and to consider them further.

I have referred to the complexity and unpredictability in the tax system, but let me touch on stealth taxes. I am delighted that we will manage to remove three of those taxes from the Bill. The first is the increase in duty on cider: an increase 10 per cent. above inflation that does not focus on super-strength cider-a focus for which we have long argued-was a regrettable move and we are pleased that we have forced the Government to drop it from the Bill, or at least amend the provision. There will be a clear choice at the general election on whether it is implemented.

We have raised concerns about the policy on furnished holiday lettings ever since it was announced in last year's Budget. The proposed change in taxation treatment could affect 45,000 jobs and 60,000 businesses, and have a serious impact on various rural and seaside areas.

I apologise for not having been here for the entire debate. Does the hon. Gentleman agree with me that the change in holiday lettings taxation could not only seriously disrupt the potentially lucrative holiday lettings sector in areas where, for example, farmers are seeking to diversify, but force that business abroad? That would be utterly counter-productive, not only for the British economy but for British tourism.

Clearly, there could be a serious impact on British tourism, which would be regrettable. That is why we proposed reforms that would be revenue-neutral, and we want to consult further to protect revenue and ensure that individual parts of the country are not heavily affected by the Government's proposal, which would damage tourism and wider communities. We are pleased to have got that out of the Bill.

I congratulate my hon. Friends on getting those unpleasant taxes out of the Bill. Will my hon. Friend confirm that, as this is a Finance Bill, the Government, who have a majority in this place, can still do what they like, because the other place cannot stop the Bill?

Of course, the other place does not have a view on the Bill. It is a matter of timing, and I am pleased that those of my hon. Friends who were engaged in negotiations on the wash-up were able to achieve three measures that prevented tax rises. Of course, they are only temporary measures. Stopping them properly is not in our hands or the Government's; it is in the hands of the British people.

The third tax I should mention is the landline duty-a levy that the Business, Innovation and Skills Committee described as

"both regressive and poorly targeted. It would have a much greater impact on the less well-off who will pay for an enhanced service which only a minority will enjoy."

There is a clear choice at the general election. We could continue with the present Government and see further tax rises-not just the three that I have mentioned, but the substantial increases in national insurance contributions, which are opposed overwhelmingly by businesses. We could continue with the present Government, who regard parliamentary scrutiny as nothing more than an inconvenience where tax law is concerned, or we could change to our policy of pre-legislative and parliamentary scrutiny. We could continue with a Government who believe in heaping yet more complexity on to our tax system, or change to a Conservative Government who are committed to simplifying the tax system.

We will not oppose Second Reading of the Bill. We have mitigated some of its worst effects, but it symbolises the present Government's approach, being about higher taxes, greater complexity and lack of scrutiny. That approach has run its course. It is time for a change.

It is a pleasure to close the Second Reading debate on this year's Finance Bill. I thank all hon. Members who contributed, some of whom did so at great length and some of whom did so very briefly. Matthew Taylor gave a valedictory speech; I guess that explains why most of his remarks were not actually directed at the Bill, but they were interesting none the less. We also heard contributions from Mr. Hoban, Mr. Redwood, the hon. Members for Dundee, East (Stewart Hosie) and for Stone (Mr. Cash), and the virile Member for Broxbourne (Mr. Walker)-that is how he will go down. We also heard from the hon. Members for Macclesfield (Sir Nicholas Winterton) and for South-West Hertfordshire (Mr. Gauke). A number of points have been raised, and I will try to pick up as many of them as I can in my speech.

I am sorry that I could not be here earlier, but I want to raise an issue about one of the Bill's provisions, given that it seems that there will not be a Committee stage. My point relates to clause 59, which is about the opening of postal packages. The Minister might have a chance to get a note on the subject. Why is the safeguard of allowing the addressee to be present, or indeed to be notified, being removed by an amendment to section 106 of the Postal Services Act 2000, which deals with contraband? Article 8 of the European convention on human rights is engaged by the opening of private mail. I would be grateful if she clarified the justification for removing that important safeguard, as that is not in the explanatory notes.

It is unfortunate that the hon. Gentleman was not here for, and unable to contribute to, the Second Reading debate. I will try to get the exact answer to his question, but the customs powers relate to the examination of goods imported in postal packets. Customs does not have powers to open or read correspondence. We are trying to tackle organised tobacco smuggling through the post-a point that was made in an intervention on the Financial Secretary when we were talking about tobacco rates and the incidence of smuggling.

That is very helpful, but I remind the Minister that under section 106 of the 2000 Act-I raise the point because it has been covered in the media-the threshold is that a postal operator may detain any postal packet that they suspect contains relevant goods and forward it to Her Majesty's Revenue and Customs. HMRC can then open whatever it receives. As it is, there is no reasonableness test. The only safeguard is that the person to whom the packet is addressed ought to be there, or at least needs to be notified. That is being stripped away by clause 59 of the Bill. The threshold is not HMRC suspecting anything; it is a postal operator suspecting. There is a low threshold, and the Bill removes one of the safeguards, or perhaps the only safeguard.

I can only repeat that we take tobacco smuggling very seriously, which is why an amendment is being made to clause 59. It is something that we wish to tackle. I shall try to get an answer to the hon. Gentleman's particular point, and if we do not get it by the end of the debate, I will undertake to write to him on the subject.

I want to pick up a point that the hon. Member for Macclesfield made, because he made his speech deliberately to raise it. He took the view that the Finance Bill does little to reduce the deficit. I do not agree with him, because it delivers our key tax measures, which are at the heart of our plan to halve the deficit over four years. Although this is a limited Finance Bill, we have in it the 50p tax rate, the pensions tax relief, the freezing of the inheritance tax threshold and the bank payroll tax.

The hon. Gentleman made a point about unemployment. I have to tell him that the actions that we took during the global financial crisis mean that we have not had the high levels of unemployment that there certainly were under the Conservative Government.

Many hon. Members spoke about manufacturing, yet we are increasing the capital allowances and the annual allowance for small businesses. I understand that the Conservative proposal is to cut capital allowances, which many manufacturing organisations have been very unhappy about, because that would not help manufacturing.

On the subject of unemployment, what assessment has the Treasury made of the impact on employment caused by the increase in employers' national insurance contributions?

The national insurance increase will not come in until 2011. The whole point is that we will sustain the recovery, so we are not putting that measure in place now. We believe that it would damage industry, if it were to happen now.

Is the Minister saying that unemployment in 2010 matters, but it does not matter in 2011? She must have an assessment of what effect those increases will have in 2011.

Of course I am not saying that unemployment does not matter in 2011. What I am saying is that if we took the Opposition's advice and started cutting things now and not supporting industry this year, we would see far higher unemployment. We believe that we have the balance and the timing right.

I am grateful to the Minister for seeking to respond to my direct questions to the Treasury Bench. Will she not accept that one of the reasons that unemployment has not increased, as many feared, is because the Government have sustained the public sector, and a lot of unemployment has still occurred in the manufacturing and private sector? That the Government have sustained employment in the public sector is the reason why unemployment has not risen much higher.

I do not agree with that. The car scrappage scheme had nothing to do with the public sector, and it has sustained industry. The measures that we have taken have helped to keep unemployment down across the board.

I am curious about this argument about manufacturing. Gross fixed capital formation is down-it has been bottom of the EU heap since 1997-and research and development spend has been lower than our major competitors since 1997. We lost a million manufacturing jobs since 1997 before the recession, and we had an £81 billion balance of trade deficit in goods last year. Which bit of it does Labour think that it has got right?

Perhaps the hon. Gentleman will explain why we still have the sixth largest manufacturing industry in the world. We are supporting manufacturing industry; we need to support manufacturing industry. In particular, we need to support the green industries and the new industries that are coming through, which we want the UK to be at the forefront of.

I could not agree more. We should support the new industries. There was an announcement about the games industry, which is vitally important in Dundee, but there is nothing in the Finance Bill and nothing in the Budget for 2010-11. It is always jam tomorrow, is it not?

That returns me to the point that this is deliberately a limited Finance Bill, because of the wash-up that we face. To those who claim that there has not been time to scrutinise the Bill, I say that it is deliberately limited, but around two thirds of the measures in it have been aired for comment and been consulted on formally and informally before their introduction here.

Will the Minister explain why not a single Labour Back Bencher has attended most of the debate? No single Labour Back Bencher has thought it worth speaking on this very wide-ranging Finance Bill.

I am sure that our Back Benchers can speak for themselves on why they were not here. They have certainly been involved in the Budget process, and I am sure that they have confidence in those on the Treasury Bench to put the Finance Bill forward.

The right hon. Gentleman spoke a lot about the Bill's complexity. On the measures used by the World Bank, the UK compares favourably with other countries, and the World Bank ranks the UK first in the G7 for ease of paying taxes.

Turning to the points made by my right hon. Friend the Financial Secretary, we all know that we faced the deepest global recession in more than 60 years, and, as I said earlier, we have had to make difficult choices and take unprecedented action to support the economy, businesses and families. That support has worked. The economy has slowly returned to growth and the effects of the recession on households and businesses have been less severe than many feared-they have certainly been less severe than in previous recessions. However, uncertainties persist, and for that reason my right hon. Friend the Chancellor set out in the Budget debate the action that we will need to take as we confront the challenges.

It is right that we continue to provide targeted support for businesses. We have made huge strides, and, as I have said, we do not want to derail the recovery by withdrawing support from businesses too hastily.

But one effective way of derailing the recovery would be gravely to underestimate the net debt and the deficit. If the amount of money that the Government raise has absolutely no prospect of filling the deficit target that they have set, how much worse will the situation be based on the true debt, which the Office for National Statistics and the Library's researchers have indicated, and which is causing so much concern among credit risk agencies and the bond markets?

I have had these exchanges with the hon. Gentleman before. We believe that we have set forth the right measures, and that we will be able to support the economy as it comes through to recovery and enables us to reach our target of halving the deficit over four years.

I was talking about businesses, and the Finance Bill includes a number of measures to ensure that businesses continue to invest and grow, doubling both the support provided through the annual investment allowance and the lifetime limit on entrepreneurs' relief. The planned increase in corporation tax for small companies is being deferred further to support businesses through challenging times, and, as I have said, we also hope to support the low-carbon economy. We are halving company car tax for ultra-low-carbon cars, bringing in a zero rate for cars with no emissions and thereby helping to make the UK one of the best places in the world to build low-carbon vehicles.

We want to reduce borrowing at a pace that does not impede the recovery or damage front-line services. Borrowing has increased as a result of the help that we have given, and we have always maintained that it must be brought down once the recovery is assured. We have been clear that, as the economy recovers, the Government will halve the level of borrowing, and we believe it right that those with the broadest shoulders take the greatest burden, so the top 1 per cent. of taxpayers alone will pay the additional 50 per cent. rate of income tax. Most people do not pay inheritance tax, and, even with the freeze in the allowance, only 4 per cent. of estates are expected to pay in 2014-15. The restriction on tax relief on pensions will affect only 2 per cent. of pension savers.

The hon. Member for Fareham asked about the impact assessment changes to the administration costs. The original impact assessment, which was published at the pre-Budget report, was part of the industry consultation. As I have said, there was extensive consultation, in groups, seminars and by going out to talk to the industry, and the upward revision of the impact assessment costs reflects the evidence that stakeholders provided. However, we believe that the numbers in the final impact assessment are reasonable estimates, and we do not expect them to increase significantly.

Many people have said that pensions tax relief is complicated, and the hon. Member for Stone read out a formula. The second formula that he read out is in schedule 5, and he asked me whether I understood it. Sadly, I am afraid that I probably did, because in my job before I became an MP I used to deal with capital allowances for businesses. However, the formula that we discussed in schedule 3-the pensions formula-is being dealt with and is understood by the pensions industry, and the pension schemes will value that benefit.

We are taking a fair approach to halving the deficit, and many hon. Members-in particular, the hon. Members for Broxbourne and for Dundee, East-mentioned fuel duty. Questions were also raised about a regulator and stabiliser. There is an assumption, which the hon. Member for Dundee, East expressed, that the Government receive a tax windfall when oil prices are high. Although revenues from North sea taxes admittedly increase, that is offset by a number of factors, such as lower corporation tax receipts because high oil prices reduce company profits, higher payments on index-linked benefits because rising oil prices push up inflation and greater costs of servicing index-linked bonds. Although the VAT take from fuel increases when pump prices rise, that is offset by the fact that people who pay more for fuel tend to spend less on other goods and services, so we have not seen a VAT windfall at such times.

A rise in fuel duty will play an important role in securing the public finances in the medium term, but we are sensitive to other pressures faced by families and businesses, which is why we are staging the increase in the next year.

Will the hon. Lady respond to the serious and growing problems of rural areas, such as the hill country to the east of Macclesfield, where there is no public transport? How are people expected to live and have a proper standard of life if they have to pay more for transport, their allowances are frozen and they are not getting any increase in their wages? How can they pay?

We recognise the difficulties faced by people in rural areas who are dependent on the car. I say to the hon. Gentleman that fuel duty is still lower in real terms now than it was in 1999, and it is just one part of the cost of fuel. It is because we are sensitive to the pressures that people face that we are staging the increase.

I wish to move on to cider. Several hon. Members have made much of saying that we had proposed a pernicious increase in cider tax and that the increase should have been imposed just on higher-strength ciders. People pray in aid small cider producers, but in clause 69, which will remain in the Bill, we change the definition of cider. Much of the difficulty that people have had with the problem ciders is that they do not have a very high apple juice content. That is why we are changing the definition, which will not affect rural producers.

I wonder whether Members of all parties have seen the letters that I have received from those in the beer brewing industry, who have been complaining for a long time about the iniquity of the situation. In their view, with which we agree, there is an unfair difference between beer and cider duty.

Is the Exchequer Secretary saying that those letters from the beer industry argue that duty should be raised on cider but left unchanged on beer? Surely the Government created the wider differential in the first place.

Certainly the letters that I have had from the beer industry, including small brewers, express the opinion that it is very unfair. Even with the 10 per cent. increase that we planned to introduce, the rate of duty on cider would still have been half that on beer. We were trying not to close the gap totally, but to bring the two closer together. The two largest companies produce more than 80 per cent. of cider, and under our proposed regulations the majority of cider makers-almost 400 of the smallest producers-would have been subject to special conditions and not affected. None the less, we have gone through a process of negotiation and consensus, and the measure will not be in the Bill, although when we are returned to Government we will bring it back.

I believe that we have made the right choices through the duration of this global downturn. The Finance Bill continues the provision of help where it is needed most, and we are introducing measures in it to ensure that we can meet our commitment to halve the deficit over four years. I commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.