Clause 34 - Annual exempt amount

Part of Finance Bill – in a Public Bill Committee at 9:00 am on 14th June 2012.

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Photo of John Mann John Mann Labour, Bassetlaw 9:00 am, 14th June 2012

I cite the arguments on fiscal drag put in the 1970s by Milton Friedman, Friedrich Hayek and Sir Keith Joseph. At the time they were quite successful in persuading the then leader of the Conservative party, one Margaret Hilda Thatcher, that fiscal drag was a particular problem. They put great effort and academic research into demonstrating that fiscal drag was one of the more dangerous tools of Government policy. Of course, they made the accusation against the then Chancellor Denis Healey and the previous one, James Callaghan.

I have an open mind on those criticisms, but there seems to be some validity in suggesting that fiscal drag is a rather dishonourable form of Government policy, because the public cannot see it. Has it now become part of official economic policy of the Conservative party? Is it something that the Liberals have managed to negotiate into the coalition through their key impetus in Treasury matters—the Chief Secretary to the Treasury, the right hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander)? He may well be the person responsible for this. It would be useful to know.

This is the last time today I will ask whether the European Union is restricting our rights to set taxation. It would be useful for the Government to put a box alongside each clause in the Bill that outlines where the EU is restricting our powers and when that was voted through Parliament. That would help clarify things, not least because a photo emerged yesterday of Margaret Hilda Thatcher campaigning for a yes vote in a rather natty blouse that comprised of the flags of all EU member states to be.

So, obviously this obsession with handing taxation powers to Europe is deep-rooted, beyond merely Edward Heath who initiated it. Perhaps the Minister could assist us, to save us asking the same question on each clause, because we all need to know whether Europe is  restricting our powers, although I am more interested in his analysis of his new policy of fiscal drag and what Sir Keith Joseph would think of it.