§ 7. Mr. Peter Bottomleyasked the Chancellor of the Exchequer what increase in income tax would finance a 1 per cent. pay increase in the public sector.
§ Mr. Joel BarnettIf a 1 per cent. pay increase in the public sector was financed wholly from income tax, this would require an increase of about one quarter of one penny in all rates of tax. In practice, of course, central Government revenue does not bear the whole cost of increases in pay in the public sector.
§ Mr. BottomleyGiven that the increase in public and private sector pay is likely to be four times 1 per cent., will the right hon. Gentleman explain why this extra taxation burden will go on so many people who would be better off if they did not work, and why he did not use the funds which appeared to be available to raise child and family allowances, as proposed by the Child Poverty Action Group?
§ Mr. BarnettI find that question quite remarkable. If we had taken the advice of the Opposition, the pay deal would not have been remotely like the one we have obtained, and public sector pay would have been hugely increased, as would the tax burden.