Finance Bill

I shall be pleased to answer that question, and will do so almost immediately. The abolition of the 10 per cent. rate adversely affected 5.3 million people, and the Chancellor's statement on 13 May more than fully compensated 4.2 million of them—in fact some of them had not quite suffered a hit of £120—but 1.1 million people remained, and my new clause 20 is designed to compensate that group. What will it cost? It is a matter of relatively straightforward and simple arithmetic. The maximum uncompensated loss at present, which went from 0 to £240 to 0—from £7,200 and so on—has been reduced by £120, so the uncompensated loss runs from 0 to £120 to 0 again. The average uncompensated loss, which my new clause will address, is around the £60 mark as far as we can tell: thus, 1.1 million people at £60 is £66 million. That is not an enormous sum; it is the kind of amount that the Chancellor might find down the back of the metaphorical settee when announcing his Budget. It really is a trivial sum. It is about 100th of 1 per cent. of his total tax take, not a major hit on the level of taxation. At only £66 million it is very good value, and I am sure that the Chancellor and his representative on the Treasury Bench must be tempted to snatch my hand off at this point. The Treasury Committee also had its doubts. I have reflected on its excellent report, and I am pleased to see that its Chairman, my right hon. Friend the Member for West Dunbartonshire (John McFall), is in the Chamber. There is a lot of good reading in the report, even for the 640 non-accountants in Parliament. We do not necessarily find out who the culprit is at the end, and there is not much love interest, but by and large it is an excellent report that people can read in the recess, which starts three weeks today. I should like to mention two of its conclusions. The first is conclusion 20 on page 111, which states:"““There were consequences from the abolition of the starting rate of income tax. The Government has attempted to tackle this ""problem through the 13 May announcement. However, this has still left 1.1 million households as losers. There is a pressing need for the Government seriously to examine ways in which the remaining losers can be compensated.””" That is precisely and entirely the object of new clause 20, to which I am speaking. The report says:"““The Government must set out proposals to achieve this by the time of the 2008 Pre-Budget Report””," which will be in the autumn. The other part of the report that I wish to quote mentions the £2.7 billion cost. A lot of it was dead weight, although the dead weight was dressed up as an attempt to compensate tens of millions of families for higher fuel bills. That is fine; I support that, and that is why I shall vote for new clauses 11 and 12. The report says:"““Even though the £2.7 billion was not substantially well-targeted, the raising of personal allowances announced on 13 May was a welcome step towards creating a simpler tax system””." The phrase, ““not substantially well-targeted””, was rather kind. I think that there may have been heated debates about that in the Committee. I would love to get on to the Treasury Committee; that is a bid for membership, although the Environment, Food and Rural Affairs Committee, which I have served for seven years, is a fine Committee. I guess that there were heated debates in which a rather stronger phrase than ““not substantially well-targeted”” was used. The phrase is much too kind, because the approach that the 13 May statement took towards dealing with the uncompensated 1.1 million people was like using a blunderbuss at Bisley, as I heard someone on the radio say this morning. I agree with that statement, not least because I made it myself. The £2.7 billion cost can be broken down into £2 billion for the 16 million or so non-losers and the 4.2 million people who were fully, or even more than fully, compensated; there is also the issue of partial compensation for 1.1 million people, which I am trying to address now. There was always a trade-off between targeting and complexity; we know that. Such trade-offs are endemic in the taxation and welfare systems. We have to deal with that in whatever way we can. The Chancellor faced a dichotomy—a clear choice. He could go for a simple system, perhaps with a simple flat-rate allowance, but that would be expensive because of the dead weight and the lack of tapering. Otherwise, he could go for a slightly more complicated system that was cheap, focused and targeted. I think that that is a fair description of new clause 20, which I am promoting.