HC Deb 11 April 1978 vol 947 cc1207-8

Let me now explain the effect of this Budget on living standards.

With the usual Budget tables, I am arranging to have published this year, as in the last two years, tables which show the effect of my tax changes on individuals at different levels of earnings. In order to illustrate this, let me take first the example of a man earning £75 a week who has a wife and two children under eleven. The tax reliefs in today's Budget will give him an extra £1.82 a week in his pay packet.

As I have said, however, these tax reliefs are only the second phase of the process which I began last October, when he got an extra £1.05 a week. From the beginning of this April, the new provisions for child benefit and child tax allowances have come into force, as well as the increased national insurance contributions. Taking all these into account, the £75 a week family is better off by £3.32 and, when the child benefit rises in November by a further 70p for each child, the family will be better off by a total of £4.72 a week.

But these calculations do not, of course, take into account the effects on living standards of wage increases over the current pay round. Taking again the man on £75 a week, if his earnings rise by 10 per cent. in accordance with the Government's guideline, his standard of living will rise by nearly 6 per cent. in real terms between August 1977 and August 1978 as a result of last October's measures and those I have just described.

The man earning £50 a week will do even better. His living standards will rise by nearly 7½ per cent. On the same basis, a single man on £75 a week will be about 4¾ per cent. better off, and on £50 a week will be just over 6 per cent. better off.

Thus I do not in this Budget make any call for sacrifice. With the rate of inflation remaining low, and with these sub- stantial tax reliefs, modest increases in earnings should ensure that real living standards can continue to rise over the year ahead without unduly increasing our industrial costs. This is the best possible recipe for commercial and industrial success. It is the only recipe for curing unemployment.

Mr. Deputy Speaker

Under Standing Order No. 94, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate. When that matter has been disposed of I shall call on the Chancellor to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on the succeeding days. The remaining motions will not be put until the end of the debate on Monday, and they will then be decided without debate.