HC Deb 24 November 1983 vol 49 cc448-50
12. Mr. Kirkwood

asked the Chancellor of the Exchequer whether he will take steps to adjust the economic strategy to reduce the tax burden on low-wage earning families.

Mr. Hayhoe

The Government's economic strategy is designed to reduce inflation and to create the conditions for sustained economic growth and lower taxes for everybody, including the low-paid.

Mr. Kirkwood

Is the Minister aware that the cuts in benefits recently announced in the autumn financial strategy have caused widespread concern? Can he not get together with the Secretary of State for Social Services and sort out the joint impact on low wage earning families of cuts in benefit as well as cuts in expenditure? If there is increased growth and if the Government can contain public expenditure, will they apply the released resources to increase welfare provision for low wage earning families?

Mr. Hayhoe

The hon. Gentleman should make up his mind. Either he wants increased public expenditure, or he wants lower taxation. It is for sure that he cannot have both.

Mr. Eggar

Does my hon. Friend accept that there is wide agreement with the Chief Secretary's undertaking to give priority to raising tax thresholds? Will my hon. Friend also ensure that priority is given to considering the unemployment and poverty traps, and the interaction between national insurance, social security and taxation?

Mr. Hayhoe

I can both endorse what my right hon. and learned Friend the Chief Secretary said and agree with what my hon. Friend has proposed. Those who saw the Chancellor's broadcast last Sunday will know that he made it clear that he thought it was fundamentally wrong, as well as bad for the economy, that poor people should have to pay such a high proportion of what they earn in taxation. Therefore, it is clear where my right hon. Friend's priorities lie.

Mr. Andrew F. Bennett

Will the Minister explain why, every time Ministers come to the Dispatch Box, they express concern about the poverty trap and the marginal rate of taxation on low incomes, but every time they do anything they make things worse? Will the Minister look carefully at the cuts in housing benefit, because they have made life much worse for almost all low wage earners in rented property?

Mr. Hayhoe

The hon. Gentleman has a short memory. Surely he recalls that in the past two Budgets the threshold for direct taxation was raised, which helped with the problem of the poverty trap.

Mr. Dorrell

Does my hon. Friend agree that one of the principal motors of economic recovery this year has been the rise in consumer expenditure? Does he further agree that one of the best ways to continue that trend next year would be to increase the tax threshold so that we are not only achieving the social purposes espoused by Liberal Members and my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), but maintaining the momentum of consumer demand?

Mr. Hayhoe

Without pre-empting what my right hon. Friend the Chancellor may or may not do when Budget time comes, I believe that it is clear from what has been said by Ministers today that the Government give a high priority to raising tax thresholds.

Mr. Rooker

If the Government have a policy on this matter, can the Minister tell the House whether it is by accident or design that over the lifetime of the Government the tax take as a proportion of earnings has increased for someone on two thirds average earnings by 8.3 per cent. and decreased for someone on 10 times average earnings by 22 per cent?

Mr. Hayhoe

Taking the whole period of Conservative Government, those who have been at work and whose earnings have increased have, on average had higher take-home pay than they had when the Labour Government left office.