Finance (No. 2) Bill

David Rutley Excerpts

Monday 11th October 2010 Commons Chamber

[David Rutley (Macclesfield) (Con)]

I think the phrase is, “Follow that.” What an amazing tour de force. I congratulate my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) on his great remarks. I should like also to congratulate the hon. Member for Nottingham East (Chris Leslie) on his elevation and my hon. Friend the Member for Skipton and Ripon (Julian Smith) on a wonderful maiden speech. He represents a great part of the world, and I am sure that the people there will be well satisfied that he represents them well.

As has been discussed, the main purpose of the Bill is to enact a series of technical tax measures inherited from the previous Government. It is a wide-ranging Bill, and it is part of a package of measures that this Government are having to take to tackle the economic crisis. The first Finance Bill, this Bill and the comprehensive spending review will each assist us to address the economic challenges facing our country.

I shall begin by focusing on the clauses relating to Her Majesty’s Revenue and Customs. It is important that the necessary improvements be made to help income tax to be more effectively deducted at source, as set out in clause 8. We need to support HMRC in doing a better job of collecting the taxes that are owed. That is a critically important job, given the state of our public finances. That said, however, it is not just the legislation that needs to be updated. It is clear that HMRC’s senior management team has more work to do, given the recent huge problems with PAYE.

The Treasury Committee held a meeting in September to review HMRC’s operation of the PAYE system. Like other members of the Committee, I had the chance to probe the issues surrounding the new computer system, and the announcement that 1.4 million taxpayers would be receiving letters informing them that they had underpaid their taxes. The hearing also highlighted the much broader issue of HMRC’s mind-boggling backlog of 18 million open cases of overpayment and underpayment in previous years. Dealing with that must be a major priority. The senior management team will simply have to improve its communication skills, enhance the so-called customer journey—which for too many has felt like a short trip down a dead end—and prove its new system’s capability as it moves to full roll-out. Based on my postbag, and on conversations that I have had with HMRC staff in Macclesfield, I believe that much more work is required to improve taxpayer confidence in the organisation and to raise employee morale across its operations. I welcome the clauses in the Bill that will help HMRC to do its job, but these other challenges must be addressed to enable the Government to achieve the objectives that they have set out in their tax measures.

The challenges facing HMRC would not be so huge or so critical if the public finances were not in such a mess, however. That is why it is important to examine the context in which the Bill is before the House. This country’s record deficit has repeatedly been highlighted in the debate. It is not the product of a mythical global economic crisis. Even before the credit crunch, there was clear evidence that spending and the burden of tax were too high. The truth is that the previous Government were caught completely flat-footed as they faced the economic crisis. The scale of the challenge has now been starkly set out, and it is time for the coalition Government to pay back Labour’s debts.

It is against that backdrop that the Chancellor announced his emergency Budget, which included a clear fiscal consolidation plan that placed a priority on lowering spending, combined with tax measures to reduce the deficit and to reform the tax system. Clearly, this Bill has a role to play in that regard. Strong medicine is needed, and it must be taken in the months and years ahead. That is what the British public expect; they recognise that it must happen. The detail will be spelled out in the comprehensive spending review in a few days’ time. Radical welfare reform must be an essential part of the plans, and tough decisions on tax have also been made, with VAT having to be increased to 20% in January.

All that is necessary to get the public finances back under control and to get through the economic crisis, but we need to go further and create the conditions for sustainable economic growth that must be based on an expanding private sector. Colleagues have mentioned that in their speeches today. Growth comes from the private sector, not the public sector, and restoring national competitiveness must be a priority. It will be critical to give greater confidence to small and medium-sized enterprises, which form the backbone of our economy and are the engine of job creation. That is why I am pleased to support the Bill, as clause 13 sets out help for SMEs with tax relief for research and development.

It is good that the Chancellor is also taking forward other critical measures, including scrapping Labour’s tax on jobs, and reducing corporation tax year on year for four years, down to just 24% in 2014. It is good to see that Britain is definitely open for business once again, as it should be. All that must be underpinned by a change in direction in economic policy making. This is about asking the right questions, and about taking a new approach to getting the best possible answers.

Over the past 13 years, the previous Government and many in the media were simply asking the wrong questions. They wanted to know, “How much can we spend on this, and what steps are you taking to protect spending on that?” No one asked whether we could afford a particular policy, or how much it would increase the burden on taxation. Coming from the world of business, I find it obvious that a different question must be asked by most companies in competitive marketplaces day in, day out. The way in which it is asked may vary from business to business, but the substance of the question remains the same: “How can we give our customers more for less?”

That is not a question that businesses are ashamed to ask. It lies at the heart of how they compete and how they provide worthwhile work for their colleagues: it is ingrained in their culture. However, although some in the public sector have sought to take the question seriously, it has not been heard above the demands to spend, spend, spend that have come from Opposition Members. It is a tragedy that it has taken an economic crisis of this scale to enable it to be heard.

I am pleased that the right questions are being asked now, and that legislation such as this will help to address the challenges that we face. Behind the questions, however, there must be a new approach if we are to obtain the answers. Faced with big challenges following the general election, the Conservatives and the Liberal Democrats made a bold decision to work in coalition. That is not something for which I hoped at the time of the election, but it means that there must be give as well as take. It means that both parties must get around the table, and the evidence so far suggests that it has led to radical and bold solutions as both parties seek to work in the national interest.

I believe that, given the tough challenges that lie ahead, that approach will have wider applications. I believe that it will define new, creative ways of working between Government Departments, between businesses and Government, and between local councils and community groups. It is about people working together in new ways in the interests of their country and, indeed, their communities in this most difficult of times. We see it working in Macclesfield as residents, community groups, local businesses and Cheshire East council work together, strengthen the local economy and revitalise the town centre. Our new treacle market is a tremendous success, and I recommend it to the House. It is held on the last Sunday of every month, and I suggest that anyone interested come along.

At least the Bill sets out business initiated by the previous Government that needed to be progressed, but it is sad to note that not much more was worth progressing, and that so much was left undone. A complete mess was left for the present Government to clear up, and today’s evidence suggests that the Labour party, not notable for the huge number of its Members present, has nothing much to add to the debate. Faced with such challenges, unlike the coalition Government, they have chosen denial—or, as today’s attendance suggests, avoidance—rather than a constructive dialogue.

I am no psychoanalyst, but I understand—and I am sure that Members will be interested to hear this—that denial is a defence mechanism used by a person who is faced with a fact that is too uncomfortable to accept. Such a person will insist that something is not true despite overwhelming evidence to the contrary, and will often behave in ways that others see as quite bizarre. We see such behaviour on a regular basis on the Opposition Benches. To make matters worse, the Opposition are in double denial. They cannot see the scale of the crisis, and they are not willing to accept that they are responsible for it.

We might have hoped that things would improve with the birth of new-generation Labour—although that too is not obvious from today’s debate—but we have heard nothing to support that hope today. For once I agree with Alastair Campbell, who said over the weekend that what Labour needed was a proper economic narrative. We on the Government side of the House have been saying that for a long time, and I am pleased that the hon. Member for Bassetlaw (John Mann) joined us this afternoon.

I support the Bill, and support the work that the Government are doing in tackling the deficit. Difficult challenges and uncomfortable decisions lie ahead, but the right questions are finally being asked, and the Government are making important progress in the most difficult of circumstances.