§ 5. Mr. MacGregor
asked the Chancellor of the Exchequer what the starting threshold for higher rates of tax would be today for a married man with two children under 11 years of age to produce the equivalent in net real income as compared with a similar taxpayer at the £5,000 threshold in February 1974 and in 1961–62, respectively, when the £5,000 surtax threshold was first established.
§ Mr. Denzil Davies
On the assumption that income is all earned income, about £10,850 for February 1974 and £18,750 for 1961–62.
§ Mr. MacGregor
Do not these staggering figures go a long way to explaining the serious state of morale and motivation in the management of British industry today, as evidence now shows? Do they not explain why many in that group have suffered a significant cut in real take-home pay? Will the Minister make clear to the Chancellor of the Exchequer that tinkering on the edges of the problem is not enough and that he will have to do a great deal in his Budget?
§ Mr. Davies
The figures show that inflation has affected those people as it has affected others. Everybody in the country has been affected and people at the lower end of the scale are probably worse off than people at that level. However, we accept that inflation has had this effect and the main object is to get inflation under control, because that will solve the real problem.
§ Mr. Alexander W. Lyon
Has it not also been the policy of this Government and preceding Governments to transfer some of the expenditure on the standard of living from the personal part of the wages back to State spending through public expenditure? Is it not the case that now, as distinct from in 1961–62, a great and essential part of the standard of living, even for middle management, comes out of public expenditure that has to be paid for out of taxation?
§ Mr. Davies
I can assure my hon. Friend that, as he knows, such a transfer has taken place over the last few years. Partly through taxation, we have been able to increase social security benefits at the same rate as the increase in inflation and that has required a transfer from taxpayers to people on social security. I am sure that my hon. Friend supports that.