On a point of order, Mr. Speaker. May I ask your advice? Last Wednesday, during the debate on the Pensions Bill, I asked the Minister for Pensions Reform, the hon. Member for Stalybridge and Hyde (James Purnell) about the pensions expert, Ros Altmann. He replied:

“I have great respect for Ros Altmann, but…she never worked as an adviser to No. 10 or No. 11, as is often said.”—[Official Report, 18 April 2007; Vol. 459, c. 329.]

Ros Altmann sent me an email pointing out—

Order. That is a matter for debate, not a point of order.

But, Mr. Speaker—

No. It is a matter for debate. Whatever information the lady gives, it is not a point of order.

On a point of order, Mr. Speaker. Perhaps you could help me. I gave the Minister more than three hours to research the case that I referred to, including the Child Support Agency number and the national insurance number. I wrote to the Minister on 26 March, so it cannot have been lost in the system. How much time does a Minister need to be able to find a case?

Once again, the hon. Lady is trying to extend Question Time, and that is not the purpose of a point of order.

On a point of order, Mr. Speaker. I seek your guidance on a written answer given on 16 April by the Minister for Local Environment, Marine and Animal Welfare, the hon. Member for Exeter (Mr. Bradshaw), in which he listed local councils that provide only fortnightly rubbish collections. He included Ashford borough council on that list, but that is factually wrong. Ashford borough council provides a weekly collection service—

Order. That is not a point of order. Sometimes Ministers get things wrong. They do not mean to do so, but sometimes they do, and points of order should not be used to try to put the matter right.

On a point of order, Mr. Speaker. May I seek your advice about what happens when constituents’ lives are affected because they are misquoted by a Minister? Ros Altmann worked at No. 10, yet the Minister said that she had not. How is that lady to get compensation?

The hon. Gentleman should go to the Table Office and put down a further question, or point the matter out at oral questions. Sometimes early-day motions are used to state that a Minister has got something wrong. There are ways to redress the balance.

I have selected the amendment in the name of the Leader of the Opposition.

I beg to move, That the Bill be now read a Second time.

At the time of the Budget, my right hon. Friend the Chancellor was able to set out an upbeat account of the state of the British economy. It was not just my right hon. Friend, however: I draw the House’s attention to the International Monetary Fund’s report on the UK economy in February, which referred to

“a decade-long record of strong and steady macroeconomic performance”,

and pointed out that

“growth of real GDP per capita was higher and less volatile than in any other G7 country”.

We have seen a remarkable transformation of the British economy over the past decade. Uniquely among major economies we have avoided a downturn; 29 million people are in employment for the first time ever and gross domestic product per capita is up from seventh to second in the G7 and the economy is growing faster this year than in every other G7 economy. Locking in that new stability, avoiding risks to it and sticking to our fiscal rules are the immovable constraints around which the Budget and the Finance Bill were constructed.

Can the Minister explain why 1 million manufacturing jobs were lost in Britain over that decade and why 5.3 million people of working age are on benefit with no job?

As I have just said, and as the right hon. Gentleman knows, record numbers of people are in employment in the UK and unemployment is falling. The claimant count fell again in the most recent figures. Of course, there has been a shift from manufacturing to services—as there has been across the developed economies—but there has been positive news from the manufacturing sector in recent months, which I am sure the right hon. Gentleman and the whole House will welcome.

As a west midlands MP, may I remind my right hon. Friend that although it is sad that a huge number of manufacturing jobs have been lost, there is record employment in the economy and in the west midlands? Manufacturing output has continued to grow significantly over the past 10 years under the Government.

It has, with particularly strong figures in recent months, as I said, which reflect the strength in manufacturing across the economy. I particularly welcome the strength of the economy in my hon. Friend’s region, to which he referred.

Acknowledging intensifying global competition, the Bill takes the next steps to prioritise investment and innovation. It includes important measures to simplify business tax and to ensure that everybody pays their fair share. With measures to deliver further emissions reductions, incentives to encourage fuel and energy efficiency and further support for renewable energy technologies, the Bill strengthens UK leadership in tackling climate change.

On fair taxation, can my right hon. Friend tell me how many representations he has received from low-paid workers about the abolition of the 10p rate of tax? Constituents of mine who earn only one sixth of what we earn are paying £3 a week more, and I have tabled questions asking how many other people are similarly affected. Is my right hon. Friend satisfied with the balance the Government have struck, and when might I receive a reply to my questions?

I am absolutely certain that my right hon. Friend will receive answers shortly. I am sure that he has seen the analysis published by the Institute for Fiscal Studies showing that the great majority of households will be better off. The IFS also points out that the proportionate gain is highest for those on the lowest incomes, although of course the changes to which my right hon. Friend refers will be in the Finance Bill next year, rather than this year.

But does my right hon. Friend not accept that some people will be worse off and that some of them might have noticed that they are thought to be so unimportant that they do not feature in the reasoned amendment opposing Second Reading?

My right hon. Friend may be correct about that. Some, no doubt, will find themselves a little worse off next year as a result of the changes in the Bill but, by and large, their position will have been considerably strengthened by the other changes over the past 10 years.

Will the Chief Secretary respond to the recommendations in the Treasury Committee’s report on the 2007 Budget, which raises two important issues? The first is that the winners and losers are not clearly identified in the Red Book and that this should be done in future. The second is that take-up of tax credits remains low and further efforts need to be undertaken to make sure that those who could benefit from tax credits actually do so. Many will lose out not only because of the tax changes, but because they are not claiming tax credits.

I welcome the report that has been published today. We will reflect on all the points that it makes. On the second issue that the hon. Lady raised, the report does welcome the recent initiatives, including the information that my right hon. Friend the Chancellor gave to the Treasury Select Committee at its meeting on take-up, but there is no doubt that more needs to be done.

May I clarify something for the House? The abolition of the 10p rate is not referred to in the reasoned amendment because it does not appear in the Bill. No doubt, the right hon. Member for Birkenhead (Mr. Field) will hear more about that issue later in the debate.

On tax, spending and borrowing, the balance that we strike is of crucial importance. Our commitment, with the golden rule, is to borrow only to invest over the course of the cycle, and the Budget reported an £11 billion surplus on the golden rule over the current cycle. On borrowing, to keep net debt sustainable below 40 per cent. of gross domestic product and consistent with those rules, this Bill sets the right balance and underpins our commitment to maintaining the new stability in the economy that has been so invaluable over the past decade.

Crucially, the Bill also provides the resources to equip us to meet future challenges successfully, enabling the new investments for education and skills, science and the other key areas that my right hon. Friend the Chancellor set out in the Budget to be made. With total spending rising to £674 billion in 2010, we are committed to continuing to invest. In a world economy in which competition is intensifying, technology is changing fast and almost every country faces challenges from global insecurity, investment is vital to enable us successfully to address the long-term challenges ahead.

Let me turn to the details of the Bill. First, on business and productivity, our starting point is a very strong one indeed. In the past year, total investment is up by 6½ per cent., business investment is up by 7¾ per cent and inward investment is up by 15 per cent. Business investment is forecast to rise again by more than 7 per cent. this year. Maintaining that success requires a modern, corporate tax system that reflects the intense worldwide competition in the globalised economy, and the Bill introduces the changes that we need. From 2008, there will be a cut in the main rate of corporation tax from 30 per cent. to 28 per cent.

The Chief Secretary appears to think that everything in the economy is rosy. Is he concerned that inflation has hit a 16-year high?

Inflation is currently at 3.1 per cent., and the hon. Lady may have noticed that the recent sending of a letter by the Governor of the Bank of England to my right hon. Friend the Chancellor was the first time it had happened in 10 years. At the outset, it was expected that that would be required every year or two. The system and the macro-economic framework that we have put in place have been remarkably robust and successful. Inflation at 3.1 per cent. is a great deal lower than the rates of inflation that obtained when the party that she speaks for was last in government. At that time, we had double-digit inflation and double-digit mortgage rates. The system continues to work extremely well and the fact that, after 10 years, it has been necessary for a letter to be sent need not give rise to undue concern. Indeed, it is generally agreed by those who study these things that the rate of inflation will fall sharply towards target in the second part of this year.

From 2008, as I said, there will be a cut in the main corporation tax rate from 30 per cent. to 28 per cent. That is a lower rate than those of all our major competitors and has been widely welcomed by, for example, the Institute of Directors and the City of London Corporation, which said:

“The City is very pleased that the Government is making such a clear commitment to keeping London competitive”.

There is clear evidence that a lower headline rate of corporation tax attracts foreign direct investment and that the change will strengthen our position further.

I am listening carefully to the Chief Secretary’s comments about corporation tax. Small companies in my constituency are concerned about the increase in the small companies rate. Will he go on to talk about the representations that he has received from the Federation of Small Business and others?

I shall come to the small companies corporation tax rate in a moment, but let me say a little more about how we are funding the welcome and significant reduction in the main rate. It is being funded by modernising and streamlining the capital allowances system, which has been largely unchanged for the past 20 years and which, in part, still reflects the needs of post-war redevelopment. This is the most extensive reform of investment allowances since the 1980s, better aligning allowances for buildings and plant with economic depreciation, removing tax-driven distortions in business decisions and giving incentives for long-term investment.

My right hon. Friend announced just two rates in future for capital allowances—20 per cent. for short life assets and 10 per cent. for long life assets. Clause 35 paves the way for phasing out over four years industrial and agricultural buildings allowances, so removing a selective and outdated subsidy for some buildings, which is not available, for example, for commercial office space or for science parks. It is a strong package, pro-growth and pro-investment, which is expected to add 0.2 percentage points per annum to investment above the trend rate, strengthening our global competitiveness.

The Bill also sets the small companies rate of corporation tax at 20 per cent. for 2007. We have announced that we will raise it further to 22 per cent. from April 2009 as we remove incentives to incorporate solely for tax reasons. As the Red Book shows, setting out the figures for this year and the following two years, all the proceeds from that increase will be recycled to small businesses that invest, through a package that reduces the tax due from them and gives them incentives to invest, with current first year capital allowances for small firms maintained in the Bill at 50 per cent. until April 2008, and with the Finance Bill next year to introduce a 100 per cent. annual investment allowance of £50,000 for all firms. That shifts the incentives in favour of investment, which will further strengthen small firms.

The Chief Secretary has been extremely generous in giving way. Does he recognise the problem for many small retailers or small service businesses, which cannot make that level of investment to recoup for the tax increase? For example, a newsagent will not be able to make those high levels of investment and will end up with a higher tax bill.

Perhaps the hon. Lady will tell us when she speaks whether her party would reverse the change. We are using the tax system to improve the incentives for investment and thereby strengthening businesses, particularly the wealth-creating, job-creating businesses. I have no doubt that as a result of this package the economy will be strengthened further. It is a matter of using the available incentives in the right way, as we are doing. There will be a significant cash-flow benefit to small businesses that reinvest their profits, offsetting the small companies rate increase for small companies that are investing.

Through clause 50 and schedule 16, the Bill reforms venture capital trusts, the enterprise investment scheme and the corporate venturing scheme. Those measures will give greater certainty to investors and the companies in which they invest and help to secure the future of the schemes, which have been very valuable. All the yields from those changes are being recycled to fund enhancements in research and development tax credits to strengthen further innovation and productivity in the UK. These measures will encourage investment and innovation, promote competitiveness and help to equip the UK to meet successfully the challenges of globalisation ahead.

The Chief Secretary is talking about the ability of companies to invest in some of the things that the Government are doing. However, of the 265,000 businesses in Scotland, 98 per cent. have fewer than 49 employees and 1.3 per cent. have between 50 and 249 employees. That leaves only a couple of thousand firms, of which 1,510 employ more than 500 people. The new definition of small and medium-sized enterprises that applies to much of the research and development tax credit stuff will apply to merely a few hundred companies out of 265,000. Is the Chief Secretary not overstating the benefits in the Finance Bill?

No, I do not think that I am. Of course, I am not familiar with the figures that the hon. Gentleman is quoting, but I suspect that he is including a large number of self-employed individuals. I am certainly not overstating the benefits. He will see in the Red Book the analysis of the additional revenue raised from the change in the small companies rate and the additional sums being relieved through the changes that I have described. Over the period set out, all the proceeds are being recycled.

The Budget extended support to hard-working families. It announced tax changes to help more people into work and to boost further the incentives for employment. But for 2007-08, in the Bill income tax rates are unchanged at 10 per cent., 22 per cent. and 40 per cent. The personal tax reforms set out in the Budget, amounting in total to a reduction in personal taxation of £2.5 billion, will come into effect from April 2008 and will be contained in the Finance Bill next year.

Clause 4 of the present Bill will increase the nil rate band for inheritance tax to £350,000 for the financial year 2010-11, maintaining recent practice of pre-announcing nil rate band increases for future years. That means that 94 per cent. of estates are expected to pay no inheritance tax, with transfers of assets to spouses, civil partners and charities, of course, exempt.

On the issue of personal taxation, will the Minister explain why the changes were not included in this year’s Finance Bill?

If the hon. Lady looks at the arithmetic set out in the Red Book, she will see that the package has been carefully designed. There will be changes next year, balanced by other changes, which are all set out. The phasing of those changes is consistent with our commitments both to fairness and to stability in the economy as a whole.

Part 3 of the Bill includes important changes to ensure that everybody pays their fair share of taxation. We remain firmly committed to advancing fairness by tackling tax avoidance, as well as fraud. For example, clause 25 ensures that workers providing their services through managed service companies pay the same income tax and national insurance as those who provide their service as employees.

The Bill also takes the next steps in our response to the Stern report. It introduces further measures to protect the environment, building on the success of the climate change levy in tackling carbon emissions, supporting the introduction of carbon trading, reflecting our commitment to tackle climate change through effective international action, and providing incentives for change while maintaining our other economic and social objectives. Changes in clause 11 to vehicle excise duty sharpen the environmental signals to motorists to purchase more fuel-efficient cars. Clauses 17 to 19 introduce a range of other measures to encourage energy efficiency.

Stamp duty land tax relief for new zero-carbon homes was a feature of the Budget and is provided for in clause 19. In view of the absence of details in the list of measures, will the Chief Secretary tell the House the estimated cost of clause 19 in a full year and his latest estimate of the number of prospective beneficiaries?

The cost on introduction is small because there are very few zero-carbon homes. I am pleased to be able to tell the hon. Gentleman that a development of zero-carbon homes is going forward at Gallions Park in my constituency. We want to change the nature of house building in the UK and to provide incentives for a completely new zero-carbon approach. There is a lot of confidence in the construction industry that the measure and other mechanisms will enable us to bring about the changes that we want in the coming decade on a large scale.

Is the Chief Secretary aware of how many zero-carbon homes exist in the United Kingdom?

A very small number, but we want a great deal more. As I said, we want to change the whole nature of house building in the UK. The important and welcome measure will contribute towards that goal.

Will the right hon. Gentleman give way?

I am going to make a little more progress.

Clauses 20 and 21 encourage the use of domestic microgeneration by helpfully and supportively clarifying the tax rules. The increases in the rates of fuel duty will help to reduce polluting emissions from road transport.

Clause 12 doubles the rate of air passenger duty with effect from 1 February 2007. I know that the principle of increasing the tax burden on aviation is supported by hon. Members on both sides of the House. The change reflects better the principle that the sector should meet its environmental costs. It is estimated that the measure will save 300,000 tonnes of carbon a year by 2010-11. Of course, we continue to work to ensure that aviation is included as soon as possible within the European Union emissions trading scheme, which is the right long-term solution. Taken together, measures outlined in the Budget will deliver a carbon saving of 6 million tonnes. They will also strengthen the UK’s leadership on critically important international decisions that alone can deliver the worldwide changes that we need.

Did the figure on aviation that the Chief Secretary gave us take account of the proposed expansion of Heathrow?

The figure that I cited is the difference between the emissions after the change to APD and the amount if there was no change.

The Bill is the right next step in extending further our decade-long record of economic success, stability, growth, investment and fairness that my right hon. Friend the Chancellor set out in the Budget. It promotes the international competitiveness of the UK economy because maintaining our success on competitiveness is vital to the prosperity of every family in Britain. The Bill provides further protection for the environment to ensure not only that we stay on track to exceed our Kyoto commitment, but that we strengthen UK leadership internationally. Our aims are to build on the longest period of economic stability and sustained growth in Britain’s history, with a strong economy alongside a strong society, the right balance among tax, spending and borrowing, and Britain equipped to address successfully the long-term challenges of the future. The Bill takes those important next steps and I commend it to the House.

I beg to move, To leave out from “That” to the end of the Question, and to add instead thereof:

“this House declines to give a second reading to the Finance Bill because it fails to equip the UK to compete in the globalised world economy in the face of ever increasing competition from countries such as China and India, penalises small companies with higher tax rates and a more complicated tax system, hits freelance workers with more tax bureaucracy and uncertainty, involves yet further instability and U-turns on pensions policy and does nothing to tackle the UK’s worsening pensions crisis, gives HM Revenue and Customs intrusive and disproportionate new powers of investigation, misses the opportunity to provide effective mechanisms for tackling climate change, fails to reform the UK tax law after years of erosion of its competitiveness, and fails to reverse the massive increase in complexity and instability which the Chancellor has inflicted on the tax system of the UK.”

This Finance Bill might not be quite as long as last year’s—the Government have been able to squeeze it into a single volume—but that cannot make up for the massive increase in complexity and continuing instability that we have seen during the Chancellor’s 10 years in charge of our tax system. Recent reports from Grant Thornton and Ernst and Young highlight the erosion of our competitiveness that has been caused by the complexity of a tax code that has doubled in length during that decade. We believe that there is an urgent and pressing need for tax reform. If the Government shirk the challenge, there is a real risk of an outflow of jobs to other countries. The limited steps in the Bill towards simplification and reform do not meet that challenge, which is one of the key reasons why we decline to give it a Second Reading.

Let me begin with clause 1. The right hon. Member for Birkenhead (Mr. Field) asked why our reasoned amendment did not cover the income tax changes announced in the Budget. As I said in an intervention, that is because they are not in the Bill. However, we remain concerned about the proposals that will be imposed next year, and my hon. Friend the Member for Rayleigh (Mr. Francois) will deal with that matter in his winding-up speech.

When the time comes and an amendment is tabled to provide transitional protection for workers who will be made worse off, does the hon. Lady think that Opposition Members will support the Labour Members who table it?

We will assess that amendment when we see it. We will certainly give consideration to the question that the right hon. Gentleman asks.

I now turn to clause 3. The Chancellor has changed the tax system for small companies in every one of his 11 Budgets, which have included six rate changes. The Bill not only raises tax rates for small businesses, but makes the tax system more complicated for them. More than 12 million people in this country work for small businesses, and it is they who will lose out—the thousands of small retailers on our local high streets just trying to make a living.

Nick Goulding, the chief executive of the Forum of Private Business, described the measures as

“a kick in the teeth for Britain’s small businesses.”

David Frost, director general of British Chambers of Commerce, said:

“This is a substantial rise and will hit those looking to grow their business.”

The verdict of John Wright of the Federation of Small Businesses is that

“Small businesses were the main victims of this Budget”.

The Chancellor and the Chief Secretary to the Treasury claim that the new allowances mean that businesses that invest will not lose out.

I have listened to the hon. Lady’s speech but I am slightly confused, because she quoted a business man saying that businesses seeking to grow would lose out, but a few moments ago another Opposition Member, the hon. Member for Falmouth and Camborne (Julia Goldsworthy), admitted that the Government’s proposals will help firms that seek to invest.

The proposals will not help small business. They will lead to a higher tax bill for small business and a more complicated tax system, and other parts of the Finance Bill make it more difficult for small business to get advice about that complicated tax system. Most small businesses simply do not have the expertise to navigate their way around the Chancellor’s eye-wateringly complex system of incentives and reliefs. The average hairdresser, newsagent or owner of a rural post office will not shell out on the research and development tax credit; it just is not feasible for them. What the Chancellor and the Chief Secretary do not seem to understand is that reinvesting profits is a luxury that many small businesses cannot afford at the moment. Most of them need to take money out of their business to live on, particularly now that inflation is at a 16-year high, and mortgage rates are going up.

I am not trying to be awkward, and I understand some of the points that the hon. Lady is making about the dilemma facing small businesses, but will she concede that the main factor that affects small businesses is what is happening to big businesses and to the economy generally? When the economy is operating at a high level of demand, people have more money in their pockets, and there is more work for small businesses.

Small businesses are affected by rising inflation, like everyone else; they are also affected by rising interest rates and a rising tax bill, and under this Government they have all three.

Does the hon. Lady agree that small and medium-sized enterprises include micro-businesses with fewer than five employees, and that those are exactly the type of business that will find it so difficult to navigate the ever more complex regulations?

The hon. Lady makes a good point, and one of the big disadvantages of the increasing complexity in the tax system is that it is more difficult for micro-businesses to make sense of it. Small companies such as hairdressers, newsagents, post offices and one-man businesses will be badly hit by the Bill, because it is not feasible in all cases for them to invest at significant levels.

In a double whammy, the Chancellor has hit small service businesses again in schedule 3, on managed service companies. Let me make it clear that we support attempts to crack down on abuse and abusive behaviour. Of course people who are not genuine freelance contractors but are in reality in a relationship with their end client that amounts, to all intents and purposes, to employment, should pay their fair share of tax. However, it sometimes seems as though the Government think that all freelancers are tax dodgers. They are not, and those who are genuinely outside an employment relationship should not be penalised for making that choice about their working life. Flexible contract working is an important part of our economy, and it is invaluable in allowing businesses to respond quickly to changes in demand and innovations in the market. In particular, it plays a vital role in the IT sector, which, as I am sure the Chief Secretary will agree, is a crucial area for maintaining our economic competitiveness in a globalised world.

In seeking to crack down on abusive behaviour, the Government are in danger of hitting all contractors who have incorporated and chosen to outsource some of the administration and finance connected with their company. Whether someone is a genuine freelancer is irrelevant to the operation of schedule 3. It looks as if more or less any involvement with a third-party organisation that provides regular services to contractors and assists them with the operation of their service companies could bring the freelancer and her company within the new managed service companies legislation and completely change her tax status.

One of the worrying consequences of these proposals is that many contractors who have—understandably, given the complexity in the tax system and in regulation— allowed an adviser to take some of the burden of administration off their shoulders will have to set up their own personal service companies. They will no longer be able to outsource day-to-day corporate administration to an adviser. On top of an increase in tax rates and an increase in tax complexity, freelancers will have the hassle and bureaucracy of registering and running their own company into the bargain.

The hon. Lady talks about complexity. Why, therefore, are more small companies operating in the British economy now than when her party was in power? Specifically, which bits of the tax code would the Conservative party abolish?

There are many ways in which we need seriously to reform the tax system so that it becomes much simpler, and in due course we will come forward with detailed proposals.

According to the Institute of Chartered Accountants, we are already seeing the symptoms of the changes involving managed service companies, because well over 56,000 new companies were registered in February—around double the usual monthly figure. Freelancers, as well as having to set up their own companies and being unable to outsource, are likely to see the bill for professional advice go up because of the risk that their advisers could find themselves caught by the definition of a managed service company provider; those professionals could find themselves liable for the tax debts of their clients. It is difficult to know in advance how the carve-out for professional advisers in proposed new section 61B(3) will be interpreted. While some basic accountancy and legal services may steer clear of the rocks, how will everyday tax advice, company formation and company secretarial work be treated? We will have to wait for a court decision before we can understand the legal position with confidence, leaving freelance workers and their professional advisers in an expensive limbo in the meantime.

The Contractors UK website reported many contractors feeling that

“this latest legislation is just part of an inevitable ongoing revenue attack. Freelance contractors are a valuable section of our flexible workforce, and once again, they feel victimised by this assault on their livelihoods.”

Freelance software development expert Mr. David Hazell recently wrote that the Chancellor

“and his ilk have spent the last 10 years slowly twisting the public view of my chosen way of keeping myself in work to something akin to benefit fraud. Contractors are not tax dodgers, and they have better things to do with their time than spend it getting their heads around Gordon’s corkscrew-like reinterpretations of tax and company law.”

Martin Hesketh, who provides professional services to freelance workers, said:

“The UK economy relies heavily on people freelancing, and the Government has promoted this ‘flexible’ way of working for some time now to attract more people into the work force. However, the new rules seem to work against the Government's own agenda. Not only are they adding more confusion to this already complex market, but…are also requiring contractors to take on additional layers of legal and accounting responsibilities—something they’ve clearly not asked for”.

A major plank of the Government’s proposals is not even in the Bill for scrutiny this afternoon. Their highly controversial draft rules on making third parties liable for other people’s tax debts are still to come, so we only have part of the picture—the rest is to be inserted via regulations. Yet clause 25 would bring the rules into effect from 6 April. People are being asked to deal with that upheaval even before the rules have been finalised and agreed by the House.

The Chancellor’s attack on enterprise and small business start-ups continues in schedule 4 with the restrictions imposed on sideways loss relief. Under the Bill, it seems that people are damned if they do incorporate and damned if they do not, with schedule 4 hitting business partnerships. Restricting the ability to set off partnership losses against other income could have an impact on several important high-risk investment areas.

Several concerned entrepreneurs have contacted me about sideways loss relief, including Mr. Antony Blakey, who told me that many investors and scientists were worried about the impact on private collective investment. He told me that

“we now have a serious problem for environmental research and small business start-ups.”

Film production is an example of something that could be negatively affected. I acknowledge that not everyone in the film industry is worried, especially since the Government carried out their spectacularly rapid U-turn on applying the rules to section 42 and section 48 reliefs. However, some in the film industry are worried, and concern about schedule 4 stretches to several other sectors, including the multi-billion-pound computer games industry, in which the UK has such an important opportunity to compete alongside the best in the globalised world economy.

I have also received representations about the damage that schedule 4 could do those trying to make use of the special capital allowances that the Chancellor introduced to encourage environmental projects. Biotech investment could also be hit. Rupert Lywood of Matrix Securities contacted me about a project to develop cancer vaccines. He told me that it would have been much harder to get that off the ground without sideways loss relief, because it would have been difficult to find a single investor who could fund the entire project. To get the necessary critical mass of investment for such high-risk projects, one generally needs several investors and, consequently, a partnership.

If investors can no longer relieve losses against other income, the risk increases and ventures find it more difficult to get financial backing. In many cases, spending 10 hours a week on the project, as required by the new rules, simply would not be practical. Mr. Lywood tells me of a business venture concerning Down’s syndrome and genetic diseases, which is now in jeopardy as a result of schedule 4.

Again, it is true that avoidance has occurred, and we support attempts to crack down on abusive schemes, but the Government already have extensive tools with which to deal with partnership-based avoidance. Schedule 4 fails to distinguish between abusive and non-abusive schemes. We need to find a way to save sideways loss relief for projects undertaken for genuine commercial and entrepreneurial motives rather than for tax reasons, and we will table amendments in Committee to bring that about.

Coupled with the new restrictions on venture capital trusts in clause 50, schedule 4 comes as a body blow to enterprise in Britain, and we desperately need to encourage enterprise if more jobs are not to be sent offshore to India and China.

Let us consider the Bill’s proposals on green issues. Tony Juniper of Friends of the Earth said that the measures announced were “disappointingly weak” and described the Chancellor’s record as “woeful”. During his 10 years at No. 11, green taxes have been falling as a proportion of total tax receipts. The much-hyped climate change levy is flawed because it targets the use of energy rather than focusing on carbon emissions. The Renewable Energy Association branded the low carbon buildings programme a fiasco. Clause 19’s stamp duty exemption for zero carbon homes will make a minimal difference, especially as the Chief Secretary cannot tell us with certainty whether any houses in the entire country qualify for that relief.

The Chancellor’s tax break for microgenerated energy sold back to the national grid is not exactly a big giveaway, since HMRC admits that it has never collected income tax on such payments to date. The Renewable Energy Association called the £22 a year that that might save home owners

“a drop in the ocean”.

The Bill may contain provisions that are labelled as environmental, but it is not a genuinely green Finance Bill.

Part 6 deals with powers. Of course we acknowledge the importance of ensuring that the authorities have the right tools to fight tax fraud and organised crime such as missing trader intra-Community—MTIC—fraud. However, we also agree with the Chartered Institute of Taxation about the importance of

“ensuring those powers are used only by those who need them and are subject to proper control.”

We welcome the extensive consultation carried out on that issue. There has certainly been an improvement since the initial draft, which took an Inspector Gene Hunt-type approach: “Kick the door down first and ask questions afterwards.” Real progress has been made since the “PACE is for wimps” stance with which some of the proposals started. However, there are still a number of instances where the criminal powers granted by clause 81 to HMRC exceed those given to the police under the Police and Criminal Evidence Act 1984, so we will scrutinise those proposals with care.

Vesting responsibility for both civil and criminal investigation in the hands of a single body does give rise to certain risks; I am sure the Chief Secretary will acknowledge that. HMRC’s criminal investigation officers should be separate and distinct from the rest of the organisation. There needs to be a limit to the range of people who can exercise the very considerable powers that the Government are asking the House to sanction in the Bill. We do not want to see every tax inspector given a power of arrest, so we seek assurance from the Government that the draconian powers to tackle smugglers that have built up at Customs and Excise over the years will not be allowed to leak into HMRC’s civil jurisdiction.

Without even getting into the issue of the ferocious powers already vested in the Revenue and Customs Prosecution Office, we would welcome the clearest guarantees from the Financial Secretary in his summing up that that the powers of arrest and investigation contained in the Bill will not be used in the context of HMRC’s day-to-day tax collection duties. We hope and trust that he will also be able to assure us that submitting a late tax return will not mean a dawn raid and frozen bank accounts.

Before my hon. Friend leaves the subject of fraud—specifically MTIC, or missing trader intra-Community fraud—she will recall that we debated the provisions of the reverse charge in last year’s Finance Bill. The Government appear to have gained agreement from our allies in the European Union on this subject, but reports suggest that in doing so, they made concessions on our rebate. Does my hon. Friend share my concerns that the Government may have made concessions on the rebate in order to deal with MTIC fraud?

Getting the derogation is certainly welcome, but it is deeply regrettable that it has come at the expense of our rebate. The Prime Minister’s original decision to give £7.2 billion more of our money to the EU is regrettable, and the Chancellor is only confirming that in the negotiations on MTIC. That is indeed of great concern to Conservative Members.

Lastly I turn to pensions, and clauses 67 and 68. Clause 67 is not a particularly high-profile part of the Bill. It removes tax relief from something called pensions term assurance. On 6 April 2006, as probably every hon. Member knows, the Government introduced new rules on certain types of life cover as part of their A-day reforms, which included new rules on certain types of life cover. Their aim, they said, was to increase fairness, but their premise seemed to be to give people who did not have access to employer-based death-in-service schemes access to similar benefits if they set up their own personal cover. The result was that the tax treatment for such schemes was the same both for employees and for the self-employed.

The Secretary of State for Communities and Local Government, when she was Financial Secretary to the Treasury, told the House that A-day reforms would

“create a transparent, consistent and flexible system that is readily understood. That will make it easier for people to concentrate on the things that matter, such as when and how much to save for their retirement, rather than on trying to understand anomalies between the different tax regimes.”—[Official Report, Standing Committee A, 8 June 2004; c. 427.]

When the A-day reforms were being negotiated, the insurance industry made very plain to the Government what the impact of those changes would be—that certain types of life cover would be given the same tax treatment as a pension. The Government were clearly told by the industry about the sort of products that would be developed in response to the legislation. From A-day onwards, a competitive market developed in what became known as pension term assurance, or PTA.

Then suddenly, in December last year, after only 9 months, the axe fell and the Chancellor announced that tax relief for PTA policies was to be scrapped. As the Association of British Insurers put it, the Government had managed

“in one blow—to put an end to a developing market that they had only just helped create”.

Scottish Widows estimated that £35 million had been spent on developing PTA plans.

We can see that the Government also found their reverse gear on clause 68, which introduces significant restrictions on the use of alternatively secured pensions—again, only nine months after their introduction on A-day. The Government have carried out U-turn after U-turn on pensions. These two latest examples come hard on the heels of their reverse on self-invested personal pensions—SIPPs—last year.

Does the hon. Lady support the principle of pensions tax relief being available for term assurance?

What we want is for the Government to work out what they want to happen to pensions and to stick to that. We want them to get their pensions legislation right the first time, not to create legislation that generates whole industries, and then shut them down. Time and again, we see the Government producing legislation with a wholly predictable outcome about which they are warned in advance—yet when that outcome duly materialises, they decide that they do not like the consequence about which they were warned, and seek to amend the legislation and crack down on products that they themselves were effectively responsible for creating.

This instability serves only to heighten the pensions crisis in this country. No wonder the savings ratio has halved in Britain since in 1997, when there is always a threat that the rug could be pulled from under people’s feet at any moment if the Government decide that they have got their legislation wrong yet again. These repeated blows to Britain’s savings come on top of the Chancellor’s £100 billion raid on our pension funds. The right hon. Member for Birkenhead (Mr. Field) has pointed out that

“when Labour came to office we had one of the strongest pension provisions in Europe and now probably we have some of the weakest”.

The Chancellor should accept his share of the blame for that disastrous decline.

Will the hon. Lady give way?

No, I am about to conclude my speech. The hon. Gentleman will have his chance later.

In conclusion, the Opposition decline to give a Second Reading to the Finance Bill because it fails to equip the UK to compete in the globalised world economy in the face of ever-increasing competition from China and India; it penalises enterprise and business start-ups and imposes higher tax rates and a more complicated tax system on small companies; it hits freelance workers with more bureaucracy and uncertainty; it does nothing to tackle the UK’s worsening pensions crisis; it is ineffective in the fight against climate change; it fails to reverse the massive increase in complexity and instability that the Chancellor has inflicted on Britain’s tax system; and it implements a Budget that was a tax con, not a tax cut.

I refer the House to my entry in the Register of Members’ Interests.

It is sometimes useful to remind ourselves of why we have Finance Bills. They have two principal purposes, and one is to assess the state of the economy and make the necessary fiscal changes to ensure that we strike the proper balance between expenditure programmes and reasonably fair revenue raising systems. If we look back at Finance Bill debates of the past—I see at least one face opposite who used to take part in them with me—we see that the major focus has been on the macro-economic impact of the legislation. It was about whether the Finance Bill that followed on from the Budget was appropriate to regulate the state of the economy.

The second purpose of a Finance Bill, today as always, is to look at the way in which fiscal rules—and sometimes expenditure rules relating to matters such as education—affect the economy. Do they achieve what they set out to achieve? Do they raise the necessary revenues that the system was introduced to raise in the first place? Is it a fair and efficient system? Has it kept up with the times? Those are both legitimate purposes for a Finance Bill, and those are legitimate arguments that should take place across the Floor of the House.

I have read the Opposition’s reasoned amendment—it is more of a rhetorical amendment—which comments on competing in the globalised economy. I hope that I am right in assuming that that relates to the first purpose of a Finance Bill, in that it deals with Britain’s place in the world. The amendment goes on to mention a number of other issues, including whether small company taxation and the system that taxes freelance workers are appropriate. Is it better to be a freelance worker who sets up a company to manage the system or to have it managed by someone else? Should those people simply be self-employed? That is a legitimate argument, as is the question about the extent to which interventions or intrusions by the Revenue are proportionate. Those are all legitimate issues for debate on the Finance Bill, both in the House and in Committee, and our colleagues who will serve on the Public Bill Committee look forward to them. I may take part in the Committee of the whole House next week, but they may wish to look at the detail of those issues, and it is right that they should do so.

The problem with the Conservative amendment is that the first part does not relate to the second part. The way in which small companies are taxed, the tax regime for freelance workers and the degree to which the Revenue has powers of intrusion do not, in the real world, make a massive difference to the British economy. They make a difference to people who employ freelance workers and to people involved in a small company but, generally, but there is consensus among those who take an interest in those subjects that they do not make a big difference to Britain in the globalised economy, because they do not relate to the major issue of the level of expenditure and revenue in the economy. They do not relate largely to interest rate regimes in the economy or to Government expenditure programmes that equip the economy for future effectiveness and so on.

That is the problem with the amendment. It would have been better if the Opposition were more honest, like the right hon. and learned Member for North-East Fife (Sir Menzies Campbell), the Liberal Democrat leader, who said in the Budget debate that the Chancellor had governed a successful economy. At least the Liberal Democrats conceded that there was a successful economy in Britain, so it would be legitimate for them to argue about whether those micro-fiscal regulations are appropriate. The Conservatives, however, have not conceded the point about Britain competing in the globalised economy, and I want to focus on that in my contribution. I am happy to look at other issues, but I am not prepared to concede that what we do on the tax regime for freelance workers will make a colossal difference to the state of the British economy and our ability to compete in a globalised world, which is the principal point made by the Conservative amendment.

The amendment is entitled to refer to all aspects of the Budget, but on its first point—competitiveness—what does the hon. Gentleman think about a whole dockyard in Britain being stripped out, sold and taken half way round the world, and a whole car plant being folded up and sent half way round the world to China? Is that a sign of success?

I am tempted to tell the right hon. Gentleman that a few more dockyards, shipyards, car plants, steelworks, coal mines, engineering factories and chemical factories were either closed or shipped off somewhere else when the Conservatives were in power than is the case now. I am not one to say that, because an industry is in a particular position, it should be there forever. Things change, and I will come on to discuss high-value investment and jobs.

My main point is that the evidence for the Conservatives’ argument that we are failing to compete in a global world does not hold up. I am happy to trade any evidence that the Opposition Front Bench wishes to use as a test. We would all agree, for example, that growth is a reasonable test, and the British economy has now had an all-time record 59 consecutive quarters of growth.

Is the hon. Gentleman concerned that this country came 22nd out of 27 European Union member states on economic growth? Is he also concerned that the UK has fallen from fourth to 10th in the World Economic Forum competitiveness league?

I am also a bit of an anorak on football goal averages, so I am always happy to look at statistics. I want to take time to reflect on the hon. Lady’s particular points, but in 1997 we came bottom among the G7 countries for growth, whereas in the last year for which figures are available we were second only to the United States. A longish to medium-term analysis of the past 10 years demonstrates significant, sustained growth in the British economy. That may have just fallen out of the sky—some would allege that that is the case—but I think that there are more fundamental reasons why that has taken place.

The hon. Gentleman was comparing the position in 1997 with the position now. Is he concerned that inflation is now running at about twice the 1997 rate?

I am grateful to the hon. Lady for raising that point again. When I was a union official in the early 1980s, I used to negotiate 27 per cent. wage increases as my contribution to improving the state of the British economy. She will know that the Conservative years in the 1990s had average annual inflation of more than 10 per cent., and between 1981 and 1991, that figure was worse.

There is no scope for the hon. Lady to say that we might have won the growth argument, but that we can be challenged on the inflation argument. Inflation is a reasonable test of the direction of the economy, as it affects expectations, which are colossally important for investment. It is the right measure to consider, but I am not sure that the conclusions drawn are accurate.

Will my hon. Friend also consider the impact of interest rates—which, in the early 1990s, were at 15 or 16 per cent.—on businesses?

I welcome my hon. Friend’s point. In those days, it was not just the high level of interest rates that made planning future investment difficult, but the wild fluctuation in interest rates. A fluctuation of 15 or 20 per cent. on an annual interest rate of, say, 15 or 17 per cent, has a lot more impact on the international competitiveness of a company than a 15 per cent. fluctuation on a 3 or 4 per cent. interest rate, as will be obvious to most Members.

I am grateful to the hon. Gentleman for the history lesson in fluctuating interest rates. I think that the point he is trying to make is that expectation of interest rate movements has an influence on business investment. Does he agree that businesses currently have to operate in a very uncertain environment, with rising inflation and the expectation of rising interest rates? What will be the impact of that on business investment this year?

I am happy to have an interjection of monetarism into my historical examination. To go back to the 1990s—in the sense of saying, “You started it”—the fluctuations on high interest rates made conditions extremely difficult. I am not saying that we can accurately predict interest rates—indeed, I am still in a quandary about whether to buy dollars today or wait until Friday. I accept that there is an expectations issue, but there is much greater stability. The ability to predict generally the trend that is going to take place greatly affects those who make the major investment decisions. As I said to the hon. Member for Chipping Barnet (Mrs. Villiers), if we get the major investment decisions right, in general, the small investment decisions will be right as well.

Does the hon. Gentleman agree that one key to ensuring that we have more stable inflation and interest rates was the decision to give independence to the Bank of England to allow the Monetary Policy Committee, rather than a politician, to decide such things? That was obviously a Liberal Democrat proposal.

The leader of the hon. Lady’s party was helpful in the Budget debate in acknowledging the success of the British economy. I am grateful that she has acknowledged the correctness of the policy that was struck in 1997. If that was a policy that the Liberal Democrats agree with, it goes to show that it is not possible to get it wrong all the time. We all very much welcome that.

There are many other indicators. My test is not growth, although that is important. The thing that affects human beings of working age more than anything else is whether they have a job. If one looks at the misery in families up and down the country over the years, which we have all come across, sometimes in our own families, we can see that things have been at a nadir when people have had the least opportunity of getting employment.

The major gain in our economic performance made by the Government is the fact that employment is at an all-time high. Unemployment—not just this year or last year, or this month or last month, but over 10 years—is at a sustained low level. Unemployment in my constituency is way under half of what it was in 1997. That is the major achievement. That is what gives people hope, dignity and opportunity. That, to me, is the test of success in a global economy. If we do not compete successfully in a global economy, we do not compete on employment in the world in which we live.

It is useful again to consider further why we have been able to achieve that. To some extent, it is about the business world and people in general having confidence in what is going to happen—in knowing that the economy is in good hands and that policies on tackling inflation, on having an independent determination of interest rates and on having high employment as a major political and economic goal are going to be consistent. Everybody knows that that is the case. People might not agree with some of the objectives, but they know what they are. It is that stability, given by the strong leadership of this Government, and in particular by the Chancellor, who has sustained it over 11 Budgets, that has got the economy in a position where it is competing successfully in the global world.

Does the hon. Gentleman appreciate that we are in the middle of a cycle where UK plc is shedding about 1.5 million jobs and the small and medium-sized business sector is creating about 2 million jobs? In the light of his comments about employment, what impact does he think the increase in corporation tax for small business will have on that scenario?

I come back to the point that I raised with the hon. Member for Chipping Barnet. I am not underplaying the importance of taxation regimes for the small business world, although they have to be fair. There must be equity between people who work for themselves and people who work for themselves with perhaps others in a company. That is an important principle of taxation. However, I do not believe that what we do in that regard ultimately affects our international competitiveness very much. What does affect our competitiveness is the ability of the economy to sustain a high level of aggregate demand, along with our ability to invest now to ensure that that continues in the future.

I know that I have been speaking for rather a long time, and that many other hon. Members want to speak, but I want to say more about education and reskilling. I do not wish to underplay the hon. Gentleman’s point, but sustained demand helps small businesses more than anything else. If someone wants to buy a product, there is an incentive for the producer to ensure that it is worth buying. Businesses must live with the various regulatory regimes—financial, environmental, or whatever they may be.

Leadership and predictability are important. It is also important to understand that we live in a global world in economic and indeed in social terms. It is not a case of Bradford competing with Birmingham or Bordeaux; it must compete with every town in the world that begins with “B”.

Beijing?

Bombay?

Beijing, yes. Bombay—well, that has changed to Mumbai.

Small business people who are trying to sell engineering products or the like know who they must compete with. They know the market: they know what other businesses compete in it, and what those businesses are doing. There is now a recognition in the British economy, driven to some extent, but not entirely, by the Government, that we operate in a global world. It does not matter whether we are talking about BAE Systems, employing thousands of people, or a small contractor, perhaps a freelancer, doing some computer work for it. That recognition is a major achievement. It may not have been achieved only by the Labour Government, but it has been achieved while there has been a Labour Government. It means that we must have a more flexible economy than we have ever had before, in all sorts of different ways. A flexible economy does not mean throwing away workers’ rights, which should be secured, but the workers must be flexible in the way in which they do their jobs.

How can we keep all this going? There is not much difference in the availability of capital around the world. Someone who has a good idea in the relatively stable political environment that much of the world can offer can usually obtain capital from somewhere to finance it. If it is necessary to develop or purchase technology, it does not matter where one is in the world, as long as people are prepared to provide money to be invested in technology. Where we can make a difference is in labour. The business environment factor is also important, but the labour factor is crucial, as I think all Members recognise.

The test of the Budget is, does it help? Will the Government’s policies generally, as reinforced by the Budget, and the specific policies in the Finance Bill help us to invest in a skills base in the future? The evidence suggests that it is possible. I am told that we expect to spend £90 billion on education in 2010. We are now spending 5.6 per cent. of our gross domestic product on education, compared with 4.7 per cent. in 1997. Our expenditure levels have increased dramatically, and we all know what that has enabled us to do in our constituencies. There are new schools in Westerhope and Gosforth and new equipment in virtually all the schools in my constituency, and that is replicated in most constituencies in the country. There has also been more spending per pupil. Earlier Budget decisions gave head teachers more control over the way in which expenditure could be used, and those welcome decisions have been reinforced in this year’s Budget.

We have doubled the number of apprenticeships, which provide an important way of improving how we adapt to the new technologies that we must use in our economy. The one-to-one tuition proposal, which is partly financed by the revenues raised in the Finance Bill, is one of the most radical measures taken in education policy—certainly by this Government, and arguably by any Government in my political lifetime. We all know that if a child attending a state school—and sometimes even a child at a private school—is suffering, a parent who has a couple of bob in their pocket can buy extra tuition. Many people have done that, but it has not been possible for those whose finances are tight—and they are tight for far more than 50 per cent. of families. The Government’s proposal that anyone can get additional tuition in English and maths is fundamental to improving skills levels, which will help small businesses in five or 10 years’ time—or 15 to 20 years’ time—to get the skilled labour that they need and that we as a nation need if our economy is to be successful.

I will not trade in education statistics—because, to be frank, I do not know much about that—but the aggregate figures that I have looked at show that we have better results at all levels in education, right through from primary school to university. That is a reflection of a greater commitment to society and of the investment of more resources. However, although there will be many long-term benefits in our economy, there is a problem to do with labour which we must address more effectively than we have thus far been able to address.

In the past few years, the strange situation has occasionally arisen that at the same time as unemployment has increased—which it did in some months last year—so, too, has employment. That has never happened in any period of economic history that I have looked at, and certainly not during my political lifetime. There is a simple explanation for it: where companies have had a demand for labour, they have met that demand by bringing in people from somewhere else—such as Australia or eastern Europe. They have frequently got good skilled labour, but as they have been able to do that, some employers have not worked as hard as they might have done in the past, when it was not possible to do that, to improve the skill levels of our indigenous people—of those who have been in the country a lot longer. There is a certain amount of alienation among some of those people who have not experienced the benefits of increased prosperity and growth in the economy. We must look into that territory more carefully.

I am vehemently in favour of the mobility of labour. I would hate it if a Government somewhere in the world were to tell me that I could not go and sell football programmes in their country—in Milan, or Africa, or wherever. As a human being, I like to live under a regime where people can do that. Therefore, I do not want any restrictions on immigration. There must sometimes be controls on the numbers over certain periods by using different methods—such as visas—but the principle should be that people are able to move around: people should be allowed to move to where there is demand for labour. However, we must also help people in our country—especially in constituencies such as mine—who often do not get any of the benefits that come from that.

The Budget has recognised that issue in a number of ways, and it is therefore covered in our Finance Bill. The extension of the working tax credit threshold will help, as will the extension of the £40 work credit. Increasing the minimum wage, which is financed by the Budget, is another helpful measure, and the partnership for jobs proposal points in the right direction. However, we must address the issue more seriously than we have in the past.

I absolutely accept that the business climate is nowadays merely a factor of production. We must make sure that we get that climate right, if we are to achieve economic prosperity. The corporation tax proposals in clause 2 will overwhelmingly be welcomed by large and small companies alike. They will be welcomed by large companies because their tax burden will be reduced, and by small companies because that will create more growth in the economy. The provisions in clause 36 for extending capital allowances for small companies are also important. In past Finance Bills we have extended tax relief on research and development. That is done again in this Bill, and it needs to be done on a greater scale. Investment in public science is a crucial factor in improving our productivity in the future.

I do not wish to interrupt the hon. Gentleman’s paeon of praise for the various measures in the Budget, but he mentioned the welcome that he anticipates that they will receive from smaller companies. How many smaller company proprietors or managers in his constituency have actively welcomed the measures to increase the rate of corporation tax for smaller companies?

Before the hon. Gentleman intervenes again, he should know that I am not a born sycophant. Although I have a list, it does not include every measure. If one consults the bodies that represent small companies in my constituency, such as the chamber of commerce, one finds that they have all said that education is the priority and that we need to raise the revenues and have the right educational programmes to make us more efficient and productive in the future. They are right about that.

Every small company that I know, and I know quite a few, is most concerned about whether someone wants to buy their product, not the hassle they have with Revenue and Customs. One always has hassle with Revenue and Customs, so that is not the issue. They are concerned whether anyone wants to buy their product or service and whether they can make that product or deliver the service in a way that will make people want to buy it tomorrow. That tends to be determined by attitudinal feelings in the economy and the level of aggregate demand.

Does my hon. Friend agree—in relation to his earlier point—that when it comes to selling products around the globe, the need is for the highest levels of skill, ability and knowledge to make a product stand out, which is of crucial importance when wage rates across the globe are so markedly different? For example, tax rates are so low in the far east that companies in this country will never be able to compete on price if they are simply trying to sell the same product.

I agree. When a product has many different inputs, the question is which bit we want to concentrate on, and that is a decision that companies often have to make. The machine tool industry is a classic example. Instead of trying to sell the whole machine—the whole Cincinnati, for example—one can try to sell a specific high-value part of it as a contribution to others’ productions systems. Decisions like that have to be made all the time, and my hon. Friend is right about that.