HC Deb 12 July 1984 vol 63 cc1343-4
2. Mr. Nicholls

asked the Chancellor of the Exchequer if he will consider the scope for reductions in personal taxation in the forthcoming year, taking into account the conflicting demands made by the social services allocation.

The Chancellor of the Exchequer (Mr. Nigel Lawson)

The Cabinet has reaffirmed the need to keep public spending at broadly constant levels in real terms. On this basis, there is a reasonable prospect of further cuts in personal taxation in next year's Budget.

Mr. Nicholls

Will my right hon. Friend accept that his achievement and that of his predecessor in reducing rates of income tax while fully protecting retirement pensions against inflation reflects great credit upon him? Does he agree that in our desire to achieve further cuts in income tax we should keep in the forefront of our minds the need to protect those pensions?

Mr. Lawson

I am grateful to my hon. Friend for his comments. Of course the Government are committed to maintaining the purchasing power of the old-age pension, and I am glad to say that since we have been in office we have done a little better than that.

Mr. Kirkwood

If the Chancellor has any spare resources to give away, will he consider child benefit as a cost-effective way of giving help to the most needy families in the country? Will he especially ask his Department to recalculate his recent memorandum for the Select Committee on the Treasury and Civil Service and use a much broader base than the 100,000 acute cases?

Mr. Lawson

I think that the memorandum produced by the Treasury for the Select Committee on the Treasury and Civil Service, and published by that Committee, is a considerable help in elucidating the problems of the poverty trap and the unemployment trap, which are misunderstood by many hon. Members. Child benefit is at its highest level in real terms. But we must decide whether to give priority to increases in child benefit over revalorisation or increases in tax thresholds, because clearly the same pound cannot be spent twice. The priority decided by me and my hon. Friends hitherto— and I think that we should adhere to it—is that it is more important to use the resources available to increase tax thresholds.

Mr. Powley

Before he gives out money, will my right hon. Friend remember, as I am sure he does constantly, that he is giving out taxpayers' money? Does he agree that before we listen to demands from the Opposition to increase pensions, social services and public expenditure, we should remember that those increases would increase the borrowing requirement, lead to inflation and affect the value of the pound, and that money has to be earned before the Government can give it out?

Mr. Lawson

My hon. Friend is right. His strictures would be more properly addressed to the Opposition, who have never understood them. We have succeeded in getting the borrowing requirement down, and—as I said when I answered the original question—provided that we succeed in keeping public expenditure constant in real terms the growth in the economy can be applied to reductions in taxation, which it is the Government's firm commitment to achieve.

Mr. Skinner

He will be asking Argentina to bail him out.

Mr. Speaker

Order. I must tell the hon. Member for Bolsover (Mr. Skinner) that it bores the House to death to hear his constant interruptions from a sedentary position. I must ask him to desist, please.

Mr. Skinner

I was only making the point——

Mr. Speaker

Order. Mr. Hattersley.

Mr. Hattersley

Referring to the social services allocation as mentioned in the original question, will the Chancellor now tell us when he proposes to announce the cuts in public expenditure which the Treasury has told various newspapers will be part of the right hon. Gentleman's response to the depreciating pound?

Mr. Lawson

The Treasury has said nothing of the sort.