Finance Bill

It is a privilege to follow what felt like a Reithian lecture, certainly in its length and to some extent in its content. I agreed with large parts of what the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, some of which was not particularly partisan and may even assist the House in its future deliberations. There were other parts about which I had some reservations, but should the Conservatives choose to press either new clause 17 or new clause 18 to a Division, my party will support them. The former would require the Government to report annually on the technical tax content of each Finance Bill, and the latter would require annual reporting on how the Government intended to simplify taxation. We have already had quite a lengthy debate, if I can call it that, and I shall not speak for long because I know that others wish to dwell on other matters later. I wish to make a couple of brief points to follow those made by the hon. Gentleman. First, there is virtue in simplification. A lot of people are intimidated by the tax system—certainly if they are trying to file their own tax return, but even if they are using accountants to help them. There is merit in simplicity, and one of the problems has been that when the Government have tried to target tax breaks on different sections of the economy or categories of individual, they have introduced excessive complexity. Even when they have made a virtue of simplification, as they have sought to do in recent Budget statements, they have then had to unpick that simplification to rectify political controversies. Nevertheless, there is virtue in pursuing simplification as an objective. The hon. Gentleman accused the Government of introducing stealth taxes, which is of course true. He talked about the discrediting of environmental taxation, and we will come to that subject this afternoon when we discuss the retrospective introduction of vehicle excise duty increases. It is only fair to say in passing that Chancellors of all political persuasions have sought to place the tax burden in areas where they thought the public would notice its effects least. It is an irony of sorts that Lord Howe of Aberavon is being asked to report to the Conservative party. People will remember him for many reasons, one of which is that he was the Chancellor who increased VAT from 9 to 15 per cent. One of Lord Howe's successors, Lord Lamont, who taught the current leader of the Conservative party all that he knows about the matter, further increased VAT from 15 to 17.5 per cent. He made that tax-neutral change to VAT so that he could reduce the newly introduced council tax. I think it is fair to say—everybody accepted it at the time—that he calculated that people would be grateful for the cut in their council tax more than they would notice the increase in their VAT, which after all is not normally itemised with each purchase. It was a straightforward calculation by the then Conservative Chancellor that he could introduce revenue-neutral proposals that would bring greater stealth to the system. Of course, there are now people across the country who pay more as a result. It is very noticeable when one buys something expensive such as a new car. The difference between the VAT rate of 9 per cent. when the Conservatives came into government and the rate of 17.5 per cent.—almost double—when they left government means that a hefty amount is added to the overall bill.