22:29 - The House divided: - Ayes: 215 / Noes: 313 - Mark Hunter
22:43 - The House divided: - Ayes: 315 / Noes: 208 - Question accordingly agreed to.
The Chief Secretary to the Treasury (Danny Alexander)
I beg to move, That the Bill be now read a Second time.
The clauses that we are here to debate are another important step on the long road to economic recovery. They will promote growth and provide support for households and small businesses under pressure. They will encourage investment as well as enterprise, and they will help us to clean up the mess that the previous Government left behind.
As we start this debate, it is worth recalling the state of the economy that this Government inherited nearly a year ago. Britain had endured the longest and deepest recession in living memory. We were borrowing one pound for every four we were spending. We had the largest budget deficit in our peacetime history, one of the largest in Europe and the largest in the G20, yet no detailed plan was in place to deal with it—and that was not the end of the story. In the preceding decade Britain had slipped down the international league of competitiveness from fourth to 12th. We had seen our share of world exports decline, and we were considered to be a worse place to start a business than many of our European neighbours.
That was the coalition Government’s inheritance, which is why we have set about restoring confidence and stability to our economy, with a clear strategy for growth. At its heart is a credible plan to tackle the enormous deficit—a plan we are already implementing—so that the current structural deficit will fall in each and every year of this Parliament, and is forecast to be eliminated by 2015. National debt is forecast to fall as a proportion of gross domestic product in the same year, so that we can finally start to reduce the huge interest payments with which this country has been saddled—the lasting legacy of Labour’s failure.
The action we have taken on the deficit has shown that Britain’s economic future is now in safe hands, that this is a Government who know how to manage the country’s finances and that we have a credible plan to deliver the strong, sustainable and rebalanced growth that this country needs.
Mr Andrew Love (Edmonton) (Lab/Co-op)
If things are so rosy, why has the Office for Budget Responsibility forecast for growth gone down from 2.6% to 1.7%? Why has it projected that unemployment will increase by 200,000 as a result of this and previous Budgets? Why is it that we are doing so badly under this Government?
Danny Alexander
I do not think I said that the position was rosy. I was going out of my way to describe the calamitous state of the public finances that the Labour party left.
I would like to touch on growth first. In the Budget we set out four economic ambitions: that Britain should have the most competitive tax system in the G20; that Britain should be the best place in Europe to start, finance and grow a business; that we should be a more balanced economy by encouraging exports and investment; and that we should have a more educated work force who should be the most flexible in Europe. The clauses in the Bill set us on the road to meet those objectives.
For the past decade Britain has been losing ground in the world economy. While other nations have reduced their business tax rates, ours have lost competitiveness. While other countries have removed barriers to enterprise, ours have grown higher still. We cannot afford this to continue. Instead, our plan for growth is based on private sector enterprise, not public sector borrowing—growing businesses, not growing debts—and on securing sustainable long-term investment.
Essential to that is creating a competitive tax system—one that enables our businesses to compete on a global stage. That is why clause 4 will see our corporation tax rate fall by 2% this year. As the House already knows, we will implement further cuts of 1% in each of the next three years, so that by 2015 we will have the lowest corporate tax rate in the G7, allowing businesses to invest more of the money that they earn, hire more workers, export more goods and support the recovery.
Dame Anne Begg (Aberdeen South) (Lab)
The right hon. Gentleman says that in order to encourage business growth he will drop corporation tax. Why has he taken a completely opposite approach to those who are developing the North sea oil and gas reserves?
Danny Alexander
For the simple reason that the very high price of oil on the world markets is having a direct effect on consumers and, I am sure, on motorists in the constituency of every Member. It is right, I think, to ask the one industry that is benefiting substantially from the high price of oil to make an additional contribution to help us to reduce fuel duty.
Danny Alexander
I will deal with the supplementary charge in more detail later, and the hon. Lady might want to come back to me at that stage, but I shall make some progress now, if I may.
An efficient tax system is not just about lower rates. To be competitive we must also look at how we tax, how that affects our businesses, and what has been holding them back in the past. The Bill legislates for reform of the taxation of foreign branches, as well as making interim changes to the outdated controlled foreign companies rules—a process started and consulted on under the previous Government. This will stem the tide of businesses leaving our shores for more favourable climes, and will ensure that the UK is an attractive place to locate and headquarter. This shows that Britain is once again open for business.
Mr Andrew Tyrie (Chichester) (Con)
Has the Chief Secretary had a chance to look at the six tax principles set out in the Treasury Committee’s recent report? Will he tell us whether he agrees with those principles, and if so, how the changes in the North sea tax regime accord with one of them—namely, that there should be certainty over time to enable businesses to plan?
Danny Alexander
I have looked at those principles. The Government will, of course, respond to the Committee’s report—along with other reports—in the usual way, but the principles seem very sensible.
In fact, this is among the Finance Bills on which there has been the most consultation in advance. I believe that 260 of its 390-odd pages were published in draft some months before its publication. [Interruption.] I am replying to the question asked by the hon. Member for Chichester (Mr Tyrie). We have taken on board some of the principles to which he referred, but the Government must be able to respond to economic circumstances with their tax policy. As I have said, one of the predominant economic circumstances that we face is the high price of fuel. The Government considered that in order to relieve motorists of some of the burden on them—which we felt was incredibly important—we should ask the oil industry to pay a little more tax in the form of a supplementary charge.
Dame Anne Begg
At what point—it was certainly not during any discussions, because there were none—did the Chief Secretary discover that slightly more than 50% of the business of offshore oil operators is in gas, and that the price of gas is the equivalent of about $55 a barrel?
Danny Alexander
As the hon. Lady knows, the price of gas has also been on an upward path. However, we have discussed the matter with representatives of the industry, including Centrica, which has raised it directly with me and with other Ministers. We said in the Budget that we were willing to consider extensions of the field allowance regime to provide breaks for particular fields in the event of particular problems, and we are doing that at the moment. Existing rules allow breaks for very deep oil wells and heavy oil, for example. The discussion continues. It is right for us to engage with the industry openly, in recognition of the issue raised by the hon. Lady.
Danny Alexander
I will give way to the hon. Gentleman, but I must make progress once I have heard his intervention.
Stewart Hosie
The right hon. Gentleman says that the price of gas is rising. It will be driven up by, possibly, a third because the $75 trigger point established by the Government is equivalent to about 80p a therm. The gas price is currently about 57p a therm. The Government’s actions will drive the price up to an extraordinary extent. Did they not understand that before they set their Budget?
Danny Alexander
I do not accept the hon. Gentleman’s analysis. As he will know, we are currently consulting and engaging with the industry on precisely that question of the trigger price.
I am sure Members in all parts of the House agree that on the road to sustainable growth, access to finance is also a critical issue. For that reason, clause 42 increases the relief available for the enterprise investment scheme to 30%, encouraging further investment in small and growing businesses; clause 9 doubles the lifetime limit on entrepreneurs’ relief from £5 million to £10 million; and clause 43 raises the rate of research and development tax credits for small and medium-sized enterprises to 200%. As we announced in the Budget, from next year it will rise again to 225%, providing real support for small firms investing in research and development.
Small and medium-sized enterprises are the driving force behind the recovery. They employ 60% of Britain’s work force, and contribute to about 50% of all output. Their success will help to define the future of our economy. The last Government planned to increase the small profits rate of corporation tax, but we have chosen to do the opposite. Clause 6 will reduce the rate paid by small businesses to just 20%. The Budget also revealed that we would continue to provide business rate relief for small firms for another year, which will support growing businesses up and down the country.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Many firms will, of course, be grateful for the reduction in corporation tax, but will not the slashing of investment allowances go a long way towards offsetting any benefit that might have been gained by small companies in particular? According to the Institute for Fiscal Studies, the real beneficiaries of both measures will be the less capital-intensive service sector,
“historically typified by the financial sector”,
rather than the small companies that export and depend on investment which the Chief Secretary is seeking to help.
Danny Alexander
I believe that the reduction in corporation tax will benefit businesses in all sectors. As for the question of capital allowances, the changes in relation to short-life assets have been welcomed throughout the business community, and particularly by the Engineering Employers Federation.
In 2007 the last Government reduced the writing down allowances from 25% to 20%, and we are reducing them from 20% to 18%. That is a balanced move which will ensure that firms in all sectors, including manufacturing, benefit from the new corporation tax environment that we are introducing.
Ms Angela Eagle (Wallasey) (Lab)
The Chief Secretary has mentioned small business. It is clearly agreed throughout the House that the SME sector will make a vital contribution to future growth in the economy. Does it worry him that, once again, it has been demonstrated that lending to small business fell in the first quarter of this year, despite the attempts to boost it in Project Merlin? What is he going to do about that?
Danny Alexander
Of course I am worried if lending to small businesses is falling. The Merlin agreement, which we announced at the end of February, was an agreement with the major United Kingdom banks to secure an additional £10 billion of lending to small businesses this year. We will monitor the position, the figures will be made available, and we will watch the banks like a hawk to ensure that they deliver on the agreement. That is critically important: this Government have acted as the last Government did not manage to.
Danny Alexander
I am going to press on now. I want to deal with the issue of fairness.
Although growth is key to improving everyone’s prospects in the medium term, we know that many families face real financial pressure now. The Bill therefore includes measures to help hard-working people with low and middle incomes, and to support families who are struggling to make ends meet. The Government are committed to real increases in the personal allowance every year, until no one earning less than £10,000 is caught in the income tax net. Clause 3 takes the first step towards meeting this objective by increasing the personal allowance by £1,000 for this tax year. That is the largest single rise in history. It means that 23 million taxpayers in Britain will be £200 better off this year in cash terms, and that more than 800,000 people will be taken out of income tax altogether.
The Budget also revealed the next step in the process. An increase of £630 next year will keep us on track to deliver the £10,000 allowance by 2015, as promised. That is progressive action by a coalition Government who recognise that those with the broadest shoulders should continue to bear the largest burden, and that those on the highest incomes should pay their fair share.
The Bill includes 11 new measures to close tax loopholes that have remained open for too long. For example, clause 26 will help to end the unfair practice of disguised remuneration. No longer will highly paid employees be offered virtually tax-free lifetime loans which, in truth, will never be repaid. Such arrangements are completely unacceptable. We will ensure that they cannot continue, and that all income is properly taxed. We have consulted to ensure that the impact of the legislation on commercial arrangements is limited, and we intend to make further changes when the Bill is considered in the Public Bill Committee.
Those measures will give us more resources to help families who pay their taxes, but who are struggling with the daily cost of living. The same motivation lies behind clause 7, which increases the supplementary charge on the large profits being made from oil and gas extraction in the North sea.
I understand that the increases in the supplementary charge are controversial, at least in the oil and gas sector. Given that the sector is benefiting hugely from the rapid rise in the world oil price, which currently stands at $124 a barrel, it was right to ask it to share some of its profits with motorists, but we are listening carefully to its concerns about specific investments. As we said in the Budget, we are discussing with several firms the possibility of using the field allowance regime to continue to support investment. The industry is understandably concerned about the stability of the tax regime, given the long-term nature of investments in the North sea. That is why we committed ourselves in the Budget to working with the sector to provide certainty about the long-term future of decommissioning relief, and why we announced a fair fuel stabiliser to reduce the supplementary charge if oil prices fall below an agreed trigger level.
However, we should not lose sight of the fact that this money is financing a much-needed package of support for motorists. First, it is funding the 1p reduction in fuel duty to which clause 19 refers. Secondly, it has helped to cancel Labour’s inflation uprating until January next year. As a result of these two changes, fuel is 6p a litre cheaper now that it would have been under the plans we inherited.
I should also remind the House that this Government inherited plans for above-inflation increases in fuel duty for 2011, 2012, 2013 and 2014. The increase in the supplementary charge has allowed us to abolish this fuel duty escalator, so that duty will not rise above inflation for the rest of this Parliament. As with fairness, so in understanding the issues facing hard-pressed motorists it is this coalition Government who are looking to share the burden of higher oil prices.
Let me now turn to the issue of taxing Britain’s banks. The previous Government announced and implemented a temporary tax on bonuses for one year only. Indeed, it was the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), who advised against repeating that. Clause 72 introduces a permanent levy on bank balance sheets, which will raise £2.5 billion in each and every year of this Parliament. That amounts to £10 billion of additional tax from the banks over the next four years, and, thanks to the decision announced by the Chancellor in February, an extra £800 million for this year too. There will be extra money to help us support jobs and growth this year, such as by providing the finance for an additional £100 million of investment in new science facilities at Cambridge, Norwich, Harwell and Daresbury, and £250 million of investment in the FirstBuy scheme for new-build homes, giving a helping hand to 10,000 people as they climb the first rung of the property ladder.
The Bill will also deliver fairness over the longer term. The changes to the requirements on annuitisation set out in clause 65 have long been called for, and will give people more control over their finances. They will allow those approaching retirement to make their own choices about how they use their pension savings, and they will offer greater flexibility in planning for old age. The introduction of automatic enrolment that is supported by the taxation changes in clauses 68 to 71 will help ensure that a low-cost pension scheme is available for the 5 million employees expected to save in the National Employment Savings Trust. The simpler, fairer rules on pensions tax relief in clauses 66 and 67 will limit the amount of tax relief received by those who make the highest pension contribution. From this year, the annual allowance will be set at £50,000 and the lifetime allowance will be reduced to £1.5 million. That will generate about £12.5 billion by the end of this Parliament, and it will ensure that the pension system remains generous for savers, is fair to taxpayers, and is affordable for the Exchequer. At the other end of the age range, clause 40 introduces individual savings accounts for children, offering a simple and tax-free way to save for a child’s future
Turning to the environment, the introduction of a carbon price floor in clause 77 is a revolutionary move. It demonstrates this Government’s commitment to being the greenest Government ever, and it makes us the first country in the world to introduce such a measure for the power industry.
Joan Walley (Stoke-on-Trent North) (Lab)
Does the right hon. Gentleman accept, however, that there is concern about the amount of hidden subsidy for the nuclear industry in the Finance Bill, and given the coalition agreement that there is to be no subsidy for nuclear power, does he share my concern on behalf of manufacturers, particularly in my constituency, that if there is any windfall tax it should be directed to promoting energy and waste-resource efficiency in terms of manufacturing? Is there not a complete mismatch here?
Danny Alexander
I understand the concern, and I know that it has been expressed by a number of lobby groups, although I have to say that I think it has been grossly exaggerated. The purpose of the carbon price floor is to ensure a stronger, and strengthening, market over future years for investment in low-carbon energy. It will deliver a genuine incentive for green and renewable energies to be developed and invested in. Meeting the carbon reduction targets, which I think all Members support, will require several tens, or even hundreds, of billions of pounds of new investment in renewable and other energy sources, and I think that introducing a carbon price floor is exactly the right mechanism to achieve that.
Dr Alan Whitehead (Southampton, Test) (Lab)
Does the right hon. Gentleman not accept that raising the carbon price floor initially to such a level above the EU emissions trading scheme will not actually reduce emissions across Europe because they are fixed on a European basis, will risk investment moving to the other end of the interconnectors, and will move us substantially away from consultation on the issue of £1 above EU ETS, which I think most people would have accepted as a starting point for a longer-term carbon price floor to move towards the 2030s? Does he accept that he has got that price floor wrong, and that he needs to review it so as to make it actually work by genuinely increasing investment and reducing emissions?
Danny Alexander
No, I do not accept that we have got this wrong; I think we have got it right. The level of the carbon price floor was set out in the consultation. A range of options were given, and we have taken a mid-point of the various responses we received. I think it is right that this country is the first country to introduce a carbon price floor. That is a very important mechanism to help us deliver on the low-carbon power generation to which I thought those on the hon. Gentleman’s side of the House were as committed as we are on this side. Of course this will have an impact; it is designed to have an impact. It is designed to have the impact of ensuring that companies and industries seeking to invest in low-carbon power generation have a clear sense of certainty about the price they will receive for that energy over future years. As a result of that, our country can ensure that we deliver on our targets for renewable energy and carbon emissions reduction, which are, I hope, very important to every Member of this House.
Sammy Wilson (East Antrim) (DUP)
Does the right hon. Gentleman not see any contradiction in terms in what he has said about making industry more competitive by giving it tax breaks? Introducing a carbon price floor will take more money from industry than corporation tax reductions give to it. Does he not recognise the point made by the hon. Member for Southampton, Test (Dr Whitehead): that in places like Northern Ireland this will simply push investment in electricity into the Irish Republic because of the single electricity market, rather than keep electricity production in Northern Ireland?
Danny Alexander
I recognise the force of the hon. Gentleman’s concerns, and I have great respect for the detailed way in which he puts them forward, which I have learned about through the relationship we have had as a result of his role as Finance Minister in the Northern Ireland Assembly Government. On this point however, I have to say that I think he is wrong. I hope that the carbon price floor will, alongside other measures, encourage investment in low-carbon power generation, including in Northern Ireland. That is what we are seeking to achieve through this mechanism. I think he also referred to energy-intensive industries, and we have announced that the climate change agreements, which are to the benefit of such industries, are to be rolled forward for another phase and that the relief given through those agreements is to be significantly increased. I hope that will ensure that such energy-intensive industries will be able to make the transition to lower, or different, energy use in a way that does not have the economic effects he describes.
Joan Walley
Given what the right hon. Gentleman has just said about the importance of investment, does he agree that the Budget should actually be giving the advantage to energy efficiency? Because of the delays in developing the green investment bank, are there not now real concerns about where we are going to get the resource efficiency from?
Danny Alexander
I agree that energy efficiency is important, of course. That is precisely why the Department of Energy and Climate Change has been working so hard to bring forward the green deal scheme, which will start next year. It is designed precisely to give additional encouragement and incentive, and to provide a mechanism for people to engage in the sort of action on domestic energy efficiency in which they have not previously engaged over the years, which I hope the hon. Lady agrees is very important. Also, there are not delays in respect of the green investment bank. Quite the contrary; we announced in the Budget both a trebling of the amount of public money going into the bank, partly through asset sales, and that it will start its operations in September next year, thereby providing yet another strand to the additional investment we all want to see in green energy.
The measure I have been discussing will make us the first country in the world to introduce a carbon price floor for the power industry. It will help to provide an incentive for the billions of pounds of investment in cleaner sources of energy that this country needs, so ensuring we are on course to meet our carbon reduction targets. We have also preserved the link between the climate change levy and prices, through clause 23, to act as a further incentive to low-carbon investment.
The Bill will also help to address other important social issues. The new duty on high-strength beers in clause 15 will help to tackle problem drinking, increasing the cost of a typical can of high-strength lager by 25p. That is coupled with a reduction in the duty on lower-strength beers to help encourage the consumption of alcohol in a more responsible way.
Andrew Griffiths (Burton) (Con)
I agree with the intention of the measure, which is to encourage people to drink lower-strength beers. However, does the Chief Secretary agree that what would help both the industry and the health of the nation would be if the Government were to go to Europe to argue for that level to be raised from 2.8% to 3.2% or 3.4%, so that brewers could brew something tasty and drinkable that would nudge people to reduce their alcohol consumption?
Danny Alexander
The hon. Gentleman makes a very good point. He will perhaps know that the Economic Secretary, having taken this measure forward, is making that case for greater flexibility at a European level. As this country has taken a lead on having greater flexibility in beer duties, we are in a stronger position to argue this case. Similarly, as this country has taken the lead on deficit reduction, we are in a stronger position to argue the case that we must argue at a European level, which is that further increases in the EU budget are unacceptable. So in a number of ways the actions this Government have taken put us in a position to make strong cases at European level.
Kelvin Hopkins (Luton North) (Lab)
Are the Government not just tinkering with the alcohol measures, rather than facing up to the reality of the drink problem that Britain faces? Would it not be much better to have a significant unit price for alcohol, which would not affect pubs, beer drinkers in pubs or the average bottle of wine, but would raise the floor price for those who drink to excess, particularly the young?
Danny Alexander
If the hon. Gentleman were being fair, as I hope he would be, he would recognise that this Government have taken a number of measures to tackle problem drinking and that our approach on beer taxation, which is the subject of part of the Bill, will send further right signals. I hope that many hon. Members would agree that the consumption of high-strength beer is a particular problem in relation to antisocial drinking, and that allowing this sort of differentiation within the tax system should help to send the right signals. The Bill also includes a further step to help people to stop smoking, as clause 16 raises the duty on tobacco.
In conclusion, the Bill sets out changes that will enable our businesses to grow and succeed, supports the necessary plan to deal with the deficit, helps to tackle the rising cost of living, supports growth and supports fairness. I commend it to the House.
The Exchequer Secretary to the Treasury (Mr David Gauke)
We have had a very useful debate this evening with a number of contributions. In particular, I thank my hon. Friends the Members for Newton Abbot (Anne Marie Morris), for Watford (Richard Harrington) and for Waveney (Peter Aldous), who spoke about the measures for small businesses in the Budget and the Finance Bill, my hon. Friend the Member for Bristol West (Stephen Williams), who brought his expertise in tax matters to the debate in a wide-ranging speech, my hon. Friends the Members for North East Somerset (Jacob Rees-Mogg) and for Elmet and Rothwell (Alec Shelbrooke), who, in their different—but both eloquent—ways, set out how a Government must live within their means, and my hon. Friend the Member for West Suffolk (Matthew Hancock), who brought his economic expertise to the fore by highlighting the circumstances in which we find ourselves.
I remember our debate on last year’s Finance Bill following the June Budget, and this has been a somewhat shorter debate. I listened with great care to the speech of the hon. Member for Wallasey (Ms Eagle) and I think that only two of her 26 minutes were devoted to the Finance Bill. I wonder whether the Labour party’s interest in these matters is diminishing. If so, I would like to think that that is because much of the content of the Bill is uncontroversial, and because we have relatively few areas of contention. The Bill has been widely welcomed. It promotes growth alongside fairness, encourages investment and responsibility and provides for those who need help by supporting a more balanced economy on the basis of a credible and sustainable position.
We have set out our plans to reduce corporation tax—by 2p this year—moving us towards having one of the most competitive tax systems in the world once again, and meeting our objective of having the most competitive tax regime in the G20. We have set out our reforms of the taxation of foreign branches and our interim changes to the controlled foreign companies rules, which are resulting in companies looking to move back to the UK, not away from it. Britain is open for business again. We have set out our plans to double the amount of entrepreneurs’ relief to £10 million, and we have increased the research and development tax credits for small and medium-sized enterprises to 200%. Clause 42 increases the relief available through the enterprise investment scheme to 30%. Of course, tax rates matter as much to small companies as to large ones. Last year, we announced that instead of increasing the small profits rate we would cut it, and clause 5 reduces it to 20%.
Clause 1 increases the personal allowance by £1,000, which is the largest ever increase. In doing that we are removing 800,000 people from income tax altogether, as a step towards meeting our objective of a personal allowance of £10,000. Indeed, we announced in the Budget further measures toward achieving that objective.
Although supporting business is a necessary part of all this, it is important that the sectors with circumstances on their side contribute sufficiently to helping society. That is why we have increased the supplementary charge on profits from oil and gas extraction in the North sea. That will fund the 1p cut in the fuel duty that my right hon. Friend the Chancellor announced in the Budget and will delay the increase legislated for by Labour. As of 1 April, average pump prices have been approximately 6p a litre lower than they would have been had we continued with the previous Government’s escalator.
On VAT—this point was ignored entirely by the shadow Chief Secretary—it is remarkable that the shadow Chancellor still wants to talk about reducing VAT on fuel, which would take six or seven years to negotiate if it could be achieved at all. There is an easier way of cutting tax on fuel: it is by reducing fuel duty, and this Government have done it.
There are long-term proposals in the Bill dealing with annuitisation, the national employment savings trust and the taxation of pensions. At the other end of the scale, clause 40 introduces individual savings accounts for children, and my right hon. Friend the Chancellor has announced that support will be available for looked-after children through junior ISAs.
We are providing for a better environment. Clause 77 introduces a carbon price floor, which will provide the incentive for billions of pounds-worth of investment in cleaner sources of energy. The fact that we have ensured that the climate change levy maintains its real value adds to that incentive.
The Bill also helps to address other issues. The new duty on high-strength beers will help to tackle problem drinking by adding 25p to the price of a can of super-strength lager. That is coupled with a reduction in the duty on lower-strength beers to help to encourage the more responsible consumption of alcohol. I cannot promise my hon. Friend the Member for Elmet and Rothwell that there is anything in the Bill on draught beer, although we note his comments. I can only suggest that as he is dieting for his wedding, perhaps he should stay off the draught beer for another month or so. On behalf of the whole House, I wish him well. It is clearly the wedding of the year, and everyone will be looking forward to it.
We have set out to have a better tax system in the way that we make tax law, through a more deliberative and consultative approach, with greater emphasis on simplification. First, the corporate tax road map published last year set out changes to the regime. By introducing the changes to foreign branches and controlled foreign companies, the Bill takes the first steps alongside the corporate tax road map. Secondly, we published the majority of clauses in draft in the autumn. The Government have allowed proper time for better developed proposals and consultation. More than 200 responses were received on the draft clauses. Through the tax professionals forum which we set up, I received a large number of positive comments on our decision to consult.
Mr Gauke
The tax system needs to be simpler. Simplicity reduces the burdens on businesses—[Hon. Members: “Give way!”] Let me finish this point, then I will give way to the right hon. Gentleman. Simplicity reduces the burdens on businesses, individuals and HM Revenue and Customs. The Office of Tax Simplification set up last summer has already provided the first in a series of recommendations, and the Bill takes forward the first of those recommendations by removing tax reliefs. We will introduce further abolitions next year, after a period of consultation.
Malcolm Wicks
I am grateful to the Minister for so graciously giving way. He has spent most of his speech listing the contents of the Bill. Will he find time soon to respond to the debate?
Mr Gauke
I am not sure that it is necessarily wrong to describe what is in the Bill when we are debating that matter. I know it is not an approach that the shadow Chief Secretary took.
The Bill sets out our objectives. We need a competitive tax system. We must respond to the needs of the British people, who are facing higher fuel prices. The Government have been able to respond. Most of the debate today has not been about the specific measures; it has been about the broad approach. The Government believe that the structural deficit needs to be eliminated by the end of the Parliament. That position has the support of the International Monetary Fund, the OECD, the CBI, the British Chambers of Commerce, the European Commission, the World Bank, the Governor of the Bank of England, Tony Blair, credit rating agencies, the leading bond traders, the Institute for Fiscal Studies and a host of business leaders.
It is the lonely position of the official Opposition to believe that the biggest problem facing the UK economy is that the Government are not borrowing enough, but what have we seen in recent weeks? We have seen the likes of Portugal, after its Parliament could not reach agreement on a credible deficit reduction package, having to seek a bail-out. We have seen credit rating downgrades for the likes of Portugal and the Republic of Ireland. We have seen long-term interest rates rising, and we have seen, in response to the situation across the world, President Obama setting out a deficit reduction plan that is faster than that proposed by the Government.
It is clear that this is no time to be complacent about the dangers to our economy from failing to reduce the deficit. To abandon our plans for fiscal consolidation, as advocated by the Opposition, would risk a credit rating downgrade. It would put at risk our long-term interest rates and even put us back in the danger zone of a sovereign debt crisis. Those are not risks that the Government are prepared to take. That is why, in the Budget and the Bill, the Government remain determined to stay on course. I commend the Bill to the House.
Question put, That the amendment be made.