National Insurance Contributions Bill

This has undoubtedly been an interesting debate about an important Bill that is absolutely central to the Government’s aim of deterring tax and NICs avoidance. Before I address some of the specific points raised during the debate in a little detail, I shall reiterate the Bill’s purpose. The Bill demonstrates our continuing commitment to take action against avoidance. It is key to achieving the Treasury and Government’s objectives of fairness and opportunity by ensuring that all pay the correct amount of tax and national insurance. It is an essential element in building a serious and credible deterrent against future avoidance activity, and is needed to secure a total tax and national insurance yield of £200 million in 2004–05 and £500 million a year thereafter. As the income tax disclosure provisions have demonstrated, it is not possible to anticipate the range and complexity of such extremely contrived arrangements. The Government intend to close such activity down permanently. The Bill will ensure that the Government can deal with any arrangements that emerge in future that are designed to frustrate their intention that employers and employees should pay the proper amount of national insurance on the rewards of employment. I now turn to specific points raised during the debate. The hon. Member for Cities of London and Westminster (Mr. Field) made a typically reasoned and fair speech. Indeed, it was based in the real world to a large extent, but when he talked about sitting on this side of the House and visiting the constituency of my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) one day, it began to reach the realms of fantasy. The hon. Gentleman seemed to advocate the virtues of a flat tax. I tell him that we will make it absolutely clear to the British people at every opportunity that if the Conservative party were ever to govern this country, it would impose on the people a flat tax that would be both unfair and impractical. The people of this country will make judgments about the nature of such policies when the time comes. The hon. Gentleman used the phrase ““desperate Treasury”” and that sentiment was echoed by several Conservative Members. That desperate Treasury has delivered to this country low inflation, low interest rates, 2 million new jobs and the lowest unemployment in living memory. Let us be clear what the business community asks of any Government—that they deliver stability. If a Government deliver economic stability, businesses will grow and prosper. No Government since the war in this country have delivered such macro-economic stability as ours, so let us stop the nonsense of labelling the Treasury as desperate, or of saying that measures such as the Bill somehow undermine business competitiveness. The hon. Gentleman talked about bona fide avoidance schemes, although I am sure that he did not mean to do so. There is no such thing as a bona fide avoidance scheme, although his comment colours several contributions made by Conservative Members. Avoiding taxation is not a demonstration of flair and innovation. If we gave people the impression that we will incentivise, reward and encourage flair and innovation in the context of avoiding tax responsibilities, what kind of message would we be sending to the private sector in this country?