§ 5. Mr. Ridleyasked the Chancellor of the Exchequer what would be the cost in a full year of increasing the thresholds for investment income surcharge to the levels, in real terms, of April 1973.
§ Mr. Denzil DaviesAbout £130 million at 197–78 income levels.
§ Mr. RidleyIs it not very hard of the Chancellor to have increased the State pension to cover pensioners against the erosion of the standard of living by inflation but at the same time to have taken this sum of money out of the pensions of those who have saved? Will he make it a top priority in his Budget to restore the real value of the threshold?
§ Mr. DaviesThe hon. Gentleman's supplementary question presupposes that 1724 the level fixed by Lord Barber for the investment income threshold when he was Chancellor in 1973 was right. We dispute that, because we changed the rate when we came into office. Investment income surcharge is a tax not merely on pensions but on all unearned incomes.
§ Sir A. MeyerIs the hon. Gentleman aware that the effect of inflation on the threshold for investment income surcharge is causing particular hardship to retired elderly people who had made certain savings during their lifetime which they thought would prevent their having to apply to the State for charity?
§ Mr. DaviesI am fully aware, as are the Government, of the effect of inflation on savings and other incomes. If the Conservatives had been more responsible when in office over the control of the money supply, for example, we would not have been suffering the rates of inflation that we have had in the past few years.
§ Mr. LawsonWill the right hon. Gentleman reconsider his stony reply? Is he not aware that of all those who are liable to pay the investment income surcharge 43 per cent, are old-age pensioners?
§ Mr. DaviesI am fully aware of the figures, but I repeat that this Government have brought inflation under control, whereas the previous Government, through their financial policies, caused inflation to increase to very high levels.