Page:UK House of Commons Hansard 2016-04-11.pdf/58

99

Second Reading

7.56 pm

The Financial Secretary to the Treasury (Mr David Gauke): I beg to move, That the Bill be now read a Second time.

I do hope that this will be worth waiting for, Mr Speaker. As my right hon. Friend the Chancellor set out in the recent Budget, the Government’s long-term economic plan is securing the country’s economic recovery. The British economy is set to grow faster than that of any country in the G7. Our labour market is delivering the highest employment in our history. This year, the deficit is forecast to be cut by almost two thirds from its peak, and is set to fall each year after that, so that we will deliver a surplus in 2019-20. However, being one of most open economies in the world means that we are not immune to global slowdowns and shocks, which makes it all the more imperative that we continue the hard work we have carried out over the past six years to help our economy face up to those challenges.

This Finance Bill demonstrates this Government’s commitment to putting stability first.

Sir William Cash (Stone) (Con) rose—

Mr Gauke: I will very happily take interventions, but let me first set out to right hon. and hon. Members the order in which I intend to discuss the measures in the Bill. I will outline, first, how this Bill provides opportunities for households, then how it supports British business, and finally how it ensures that the businesses pay the tax that they owe.

Sir William Cash: In the context of the European side of the global question to which the Minister has referred, is he aware of the substantial deficit in the last quarter figures that the Office for National Statistics has just published in respect of our relations with Europe, which is causing a lot of difficulty for the United Kingdom economy? Last year, we had a deficit on current account transactions—imports, exports, goods and services—of £58 billion, whereas we had a surplus with the rest of the world in the same services of about £30 billion. By contrast, Germany had a surplus of £67 billion in its dealings with the other 27 member states, which shows a significant reason why we should leave the European Union: this single market just does not work for us.

Mr Gauke: My hon. Friend takes me away from the Bill, but let me say in response that I do not accept his analysis. First, on trade, both voluntary parties to any transaction benefit from trade. Secondly, we have to remember that trade deficits or surpluses are the result of a series of transactions decided by individuals and businesses on the basis of what they perceive is of value. I would argue that it is always desirable to seek to remove trade barriers to facilitate fair and free trade. The removal of trade barriers within the single market is, I think, one of the advantages of membership of the European Union, so I am not persuaded by his argument.

Let me start by looking at the measures in the Bill that provide opportunities for families who work hard and save. The Government have long been committed

To the principle that those who work should be able to keep more of the money they earn. As a result of action taken in the last Parliament, almost 28 million individuals received a tax cut, with a typical tax bill reduced by £825. We go even further in this Bill by increasing the tax-free personal allowance to £11,500 in 2017-18—a £500 increase from 2016-17. The higher rate threshold will also increase by £2,000 from £43,000 in 2016-17 to £45,000 in 2017-18. As a result of those changes, we will be cutting tax for more than 31 million people by 2017-18. Compared with 2010, a typical basic rate taxpayer will be paying more than £1,000 less in tax in April 2017. That is a proud record.

Sir Edward Leigh (Gainsborough) (Con): We still have one of the most complex tax systems in the world. I do not know if my hon. Friend was here for the Prime Minister’s statement and our long session of questions about tax avoidance, but does he recall that I wrote to him a year or two ago—I have also led debates on the subject—about moving towards a flatter tax system? I appreciate that because the top 1% pay 27% of all tax, we cannot make that move in one bound, but does he agree that unless we stop our tax system becoming so complex and instead have flatter taxation and merge rates and allowances, we will never get rid of the vast tax avoidance industry? I do not expect an answer, but I would appreciate an indication that, as the Treasury prepares for the next autumn statement and Budget, it will be thinking in terms of simplifying our tax system.

Mr Gauke: Simplification does matter. One of the measures announced in the Budget—it is not in the Bill, for reasons that will become apparent—is the abolition of class 2 national insurance contributions. National insurance contributions are not covered in Finance Bills, but that is an example of a tax being removed—a tax that created a considerable administrative burden for both taxpayers and Her Majesty's Revenue and Customs.

The Bill also puts the Office of Tax Simplification on a statutory footing. In the last Parliament, the OTS made approximately 400 recommendations, almost half of which have been implemented. The OTS is being strengthened; it has a new chair, Angela Knight, who is already performing a valuable role in leading the debate, and its resources have been increased. I am sure my hon. Friend will follow the OTS’s progress closely, scrutinise its performance and decide whether it is proposing measures that take us in the direction of which he approves.

Nigel Mills (Amber Valley) (Con): Would my hon. Friend welcome the OTS looking at some more fundamental tax simplification measures such as wholesale reform of individual taxation, rather than focusing on small, individual parts of taxes, as a way of moving us to a much simpler tax system more quickly?

Mr Gauke: My hon. Friend makes an important point. There is considerable value in the OTS looking at specific areas, but I think there is a case for it looking at broader matters. Indeed, in its reviews—of small business taxation, for example—it is addressing some of those bigger questions.