Finance Bill

I wish that I could talk about the Bill with the same degree of conviction as the Financial Secretary. He has referred to what appeared to be a cornucopia of goodies, but I have to say that this has been a relatively uncontroversial Finance Bill. It has ducked the main issues. Although we have the legislation to establish the 50p rate, the measure to set the rate is deferred to another day; there are measures aimed at fiscal consolidation, such as the anti-forestalling measures on pension contributions, but the increase in national insurance contributions announced in the pre-Budget report is not in the Bill. That has rather limited the areas of heated debate between those on the two Front Benches. As ever with Finance Bills, the areas of controversy have been principally those on which the Government have not consulted beforehand—the measures that were slipped into the Bill in the days and hours leading up to the Budget. We have had debates about the role of senior accounting officers, and about pensions anti-forestalling rules, for example. In both areas the Government have been widely criticised for failing to consult industry. That lack of consultation undermines the competitiveness of the tax system and creates uncertainty for businesses. It sends out a message that businesses cannot be sure that measures announced in the pre-Budget report represent the full sum of the technical measures to be introduced in the Finance Bill. That causes business a great deal of concern. Once the Government had bunged those measures into the Bill, they had to retreat and listen to the forceful arguments put forward by us and by those outside the House. That is why, to reflect some of those concerns, we have seen amendments tabled in Committee and on Report. We have made the Government see the merits of allowing people who make irregular contributions to their pension scheme to receive higher-rate tax relief on their contributions. We have forced the Government to modify the rules on senior accounting officers in a way that leads us to ask what the measure is actually for. Will it simply impose additional costs on business but bring in no real return to HMRC? Those are not the only areas in which the Government have been prepared to listen. My hon. Friends the Members for South-West Hertfordshire (Mr. Gauke) and for Hammersmith and Fulham (Mr. Hands) have either had amendments accepted by the Government or provided the inspiration for amendments that have been accepted. The Government might say that that shows that they are a listening Government, but it also demonstrates the value of consultation and discussion, as opposed to acting first and thinking later. The Bill also demonstrates a lack of political will on the part of the Government, and a failure to push forward with difficult reforms. They have abandoned proposals for a per-plane duty as a replacement for air passenger duty. With political will, those proposals could have worked; instead the Government have introduced banded air passenger duty, which will affect many from the Caribbean community who will end up paying more for their flights. A lack of nerve has meant that sensible environmental tax changes have been abandoned. There are measures in the Bill that we commend. The reforms to the taxation of foreign profits should make Britain a more attractive place to do business. I hope that it will stem the outflow of businesses from the UK seeking to re-domicile their headquarters overseas, but it should be a salutary reminder to the Government that they cannot afford to neglect the competitiveness of the UK's tax system. That is why my hon. Friend the Member for South-West Hertfordshire tabled a new clause asking the Government to produce an annual report on the measure. Government neglect of the competitiveness of the UK tax system not only risks businesses from this country moving elsewhere, but acts as a barrier to the inward investment that we will need to restart the economy when the recession is over. Businesses are mobile and tax competition can erode our tax base as businesses move overseas, forcing tax rates to go up. I have referred to measures introduced to deal with the taxation of foreign profits, and the new debt cap rules were part of that package. A number of representations have been made about the detail and the practical impact of those rules. A number of people have expressed the concern that there is a risk of incentivising debt at the expense of international businesses that use their own resources to fund inward investment. Our debate on dividend exemption demonstrated the increasing influence of the EU on our tax affairs, as rules on the free movement of capital and establishment now make it difficult to have rules that favour UK companies. It was because of a threat from the EU that the dividend exemption rules dictate that dividends from UK companies are not automatically exempt. That is a retrograde step for UK companies that were previously used to having all their dividends and distributions automatically exempted. Despite the Finance Bill running to 448 pages, there were only three measures on tax simplification. At a time when we need to reduce the burden on businesses, we should be seeking more opportunities to reduce the complexity of legislation and the costs of compliance. There were few controversial issues for the Committee to get its teeth into. Difficult decisions, as with so many other areas of this Government's policy, have been kicked into the long grass. At a time when the tax system needs reform to help businesses, to support families and to adjust to the realities of modern business, the Bill does little to address the challenges that lie ahead. This is a Bill from a Government who have run out of steam, run out of ideas and run out of road—no big arguments, no big ideas.