Finance Bill

I shall not detain the House long, but I wish strongly to support the new clauses tabled by my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke), particularly new clause 3, on simplification, and new clause 6, on competitiveness. There is obviously a trade-off between simplification and complexity. These things are never easy, but the entire benefit and tax system in this country has gone much too far towards complexity. There is rough justice in a simple system, but we are now trying to tailor both those systems to take account of every eventuality and the needs of every group. Very often, we cater for the demands of special interest groups and lobbyists rather than try to achieve equality across the board. The result is a system of benefits and tax that nobody really understands and that costs an enormous amount to administer. Nobody really knows what their entitlements are or what taxes they are paying. If we ask people how much tax they pay, either at corporate or personal level, they often do not know. That is bad for democracy. I am agnostic on whether we need an office of tax simplification. I simply ask my hon. Friend to think carefully before setting up a permanent, full-time body when there are many outside experts and bodies that would willingly give their time and advice for free, particularly if it was augmented by good special advisers. The whole system of special advisers has been corrupted in recent years, and they are now propagandists more often than not, acting as spin doctors at public expense. At their best, however, they provide independent, expert advice. The last Government had an individual in the Treasury called Edward Troup, who came with a great deal of tax and legal experience. He was able to challenge the revenue department and give advice to officials and Ministers from a commercial perspective, which was extremely valuable. Such advice, particularly when associated with some sort of voluntary body, may mean that we do not have to set up a whole new simplification office. I have only one point to make on the question of competitiveness, but I want to make it strongly. I reject the notion that international tax competition is bad. Indeed, it is not just the best way but probably the only effective way of countering the relentless upward pressure on tax rates. It is a realistic and effective constraint on Governments to know that if they push taxes up too far, they will lose business and revenue. My hon. Friend gave some good examples of when that has already happened. I am afraid that by international standards, we are now a rather high-tax jurisdiction, and we are paying a daily penalty in the loss of revenue and employment. However, that is an effective constraint. Of course, the reaction of Governments is to try to form a tax cartel internationally to prevent tax competition. In 1997, when the Government first came in, they encouraged a European Union package to prevent what was called "harmful tax competition". There was an EU committee, chaired by a Government Minister, to try to form a cartel to keep the EU as a high-tax, high-regulation regime and prevent what it called unfair tax competition. That was defined as meaning any competition that might affect the location of business activity, so almost any lower taxes in any part of the EU could be called unfair. What that committee could not do was prevent the rest of the world from providing competition. The obsession with the idea that there is too much tax competition in the EU blinds us to the real challenge, which is whether the EU as a whole is competitive in the wider world. There, too, we are losing altitude. The EU is demonstrably less competitive now than it was 10 or 20 years ago, and we are paying a heavy price in employment and output. The G20 is now on to this, and it is trying to form a cartel to drive out tax competition. I strongly support my hon. Friend's aim, which is to ensure that before every Budget, there must be a careful examination of whether it will help or damage Britain's position in the pitiless struggle for international competitiveness. It is much better to promote competition than to form cartels and reach agreements with other member states to prevent it. I hope that the House will divide if the new clauses are not accepted.