HC Deb 09 December 1982 vol 33 cc969-71
10. Mr. Winnick

asked the Chancellor of the Exchequer how far a married man with two children on average and less than average income has benefited from changes in the levels of income tax and national insurance contributions under the present Administration.

Mr. Ridley

The burden of income tax for those on average earnings has reduced since the Government took office. National insurance contributions are higher, because they have had to finance increased benefits. After taking account of increases in child benefit, most married families at all income levels with two children are now better off in real terms than in 1978–79.

Mr. Winnick

Is it a fact that in written parliamentary answers information has been given that shows that the vast majority of people are now paying considerably more in taxes and national insurance contributions than when the Government took office? Only those people earning five times the national average and above have benefited. As the Government were elected on a promise of tax cuts, is it not obvious that they were elected on a plain lie?

Mr. Ridley

The hon. Gentleman's question asked how people had benefited. I shall therefore give him answers relating to real after-tax incomes, which. whether people are on half average earnings, average earnings or twice average earnings, have increased between 1 and 5 per cent. in all cases. That assumes that they have had the average rise in earnings.

Mr. Forman

While the figures that my hon. Friend has given the House represent a step in the right direction, does he agree that a great deal more progress is needed to raise the tax thresholds of those on low incomes?

Mr. Ridley

I have every sympathy with my hon. Friend's point of view. I hope that the House will cooperate to help the Government to reduce the level of public spending so that that desirable objective can be brought to fruition.

Mr. Straw

Is the Minister aware that he is wilfully misleading the House in the figures that he has just given, having failed to answer the original question? Is he aware that in an answer that he gave me some months ago the figures showed that the burden of income tax and national insurance contributions had risen by £7 in real terms above the level obtaining under the Labour Government in 1978–79? Does he want the figures? I have them here. Why is the Minister seeking to mislead the House We all know that the burden of taxation upon those with average incomes and below has risen and risen again under the Government. How does that square with the pledges given by every Minister at the general election to reduce taxation for all levels of income?

Mr. Ridley

The hon. Gentleman knows full well that I do not mislead the House, wilfully or otherwise. He does not distinguish between the question I was asked by his hon. Friend the Member for Walsall, North (Mr. Winnick) and those that he has asked me previously. The question asked how much certain people have benefited from changes in the level of income tax. The percentage of income tax that they pay is quite different. The hon. Gentleman never takes into account the fact that people have had a few wage increases since we came to power.

Mr. Ralph Howell

Will my hon. Friend face reality and recognise that the tax burden has increased and that it is vital that the Government take that message on board in order to restore incentives to work? Is he aware that the most important thing the Government should do in the forthcoming Budget is to raise tax thresholds above the supplementary benefit and family income supplement levels?

Mr. Ridley

I always face reality. I agree with my hon. Friend that the tax burden has increased. I hope that he agrees with me that the standard of living for all classes has slightly increased. I agree with him that it would be most desirable to lighten the burden of taxation in any way that we can.