HC Deb 08 April 1982 vol 21 cc1073-5
4. Mr. William Hamilton

asked the Chancellor of the Exchequer what is the estimated effect of the Budget proposals on the tax and price index; and how this compares with the similar effect of previous Budgets.

Mr. Brittan

The Budget proposals will directly reduce the TPI by ½ per cent. compared with what could have been the case if all duties and tax allowances had simply been increased in line with inflation. Previous Budgets of this Government have not had such an effect, because of the need to take action to restrain Government borrowing.

Mr. Hamilton

Do those figures include the substantially increased national insurance contribution? Even if they do not, is it not the case that in the past year, apart from the Budget increases, the margin between the TPI and the retail price index has been more than 3 per cent.? At a time when the TPI has risen by about 14.4 per cent. compared with last year, is it not disgraceful meanness by the Government to offer our nurses about a 4 per cent. increase in pay?

Mr. Brittan

The figure that I have given does not include national insurance contributions, as they were not part of the Budget proposals but were announced separately and earlier. With regard to the nurses, the fact that the Government have indicated a readiness to provide substantial extra sums over and above what had previously been provided shows that we recognise the special position of nurses and are prepared to put our money where our mouth is.

Mr. Kenneth Carlisle

Does my right hon. and learned Friend agree that high inflation has done more than anything to affect living standards, especially for the most vulnerable members of our society? Therefore, does not the decline in inflation augur well for the improvement of living standards in the long term?

Mr. Brittan

I entirely agree. I think that it augurs extremely well for the improvement of living standards in the long term. Those who have industrial muscle can always protect themselves against inflation. It is the Government's job to ensure that the more vulnerable people have similar protection.

Mr. Cook

For the record, will the Chief Secretary confirm that the increase in national insurance contributions will add a whole 1 per cent. to the TPI? Does he also accept that, as a result of the Government's increases in national insurance contributions, combined with their abolition of the reduced rate tax band, low-income taxpayers in Britain are now paying a marginal rate 7 per cent. higher than they paid under the Labour Government and higher than anywhere else in the Western world? As the TPI has been rising faster than the RPI since July 1980, will he admit that the Government have failed to translate their election pledges into action?

Mr. Brittan

As the hon. Gentleman complains about the burden of taxation, I can no doubt look forward to his assistance in ensuring that the burden of public expenditure which must be financed by that taxation is kept under control.

Mr. Peter Bottomley

Will my right hon. and learned Friend give further consideration to some form of automatic indexation of the specific duties on tobacco and alcohol which make up part of both the TPI and the RPI?

Mr. Brittan

I am prepared to consider that, but my hon. Friend will be aware of the problems associated with it.

Mr. Horam

The Chief Secretary said that it was the job of the Government to protect the worst-off in society. Does he agree that, as the hon. Member for Edinburgh, Central (Mr. Cook) said, the worst-off have become even worse off as a result not just of the last Budget but of the Government's whole economic policy since its inception?

Mr. Brittan

I do not accept that that follows from the last Budget. In terms of protecting the worst-off, what I have said is absolutely right. Many of the worst-off are people who cannot exercise industrial muscle to secure wage increases in line with inflation. The best action that the Government can take to protect such people is therefore to pursue a firm anti-inflation policy.