HC Deb 14 April 1988 vol 131 cc328-9
1. Mr. Wareing

To ask the Chancellor of the Exchequer what is his estimate of the effect on the weekly income of a single unemployed person with no private income of his Budget changes.

The Chief Secretary to the Treasury (Mr. John Major)

My right hon. Friend the Chancellor has asked me to apologise to the House for his absence today. He is attending meetings of the interim and development committees of the IMF and the International Bank for Reconstruction and Development in Washington.

The answer to the hon. Gentleman's question is that the Budget is about tax and will not therefore have a direct effect on the incomes of those who do not pay tax.

Mr. Wareing

Can the Chief Secretary justify an unemployed young person under the age of 25 having his social security benefit reduced to £26.05 a week when one of the right hon. Gentleman's millionaire friends earning—or should I say, receiving—an income of £1 million a year has been given £3,729 a week as a result of the Chancellor's Budget? Is that not a disgrace, and does the right hon. Gentleman not go in fear that his rich friends might now become part of the dependancy culture of which his right hon. Friend the Secretary of State for Social Services is so fearful?

Mr. Major

A substantial part of that question does not arise from the original question. However, more than half a million people under 25 gain in cash terms, as the hon. Gentleman should know.

The hon. Gentleman asked about the unemployed, and the Budget does several things of material interest to them. First and foremost, it will, in my judgment, improve their chances of getting a job. Secondly, when they have jobs the Budget will raise the threshold at which they will pay tax. Thirdly, it reduces the basic rate at which they pay. Fourthly, the unemployed will receive any tax rebates speedily, and they will be substantial rebates if they have been unemployed for some time.

Mr. Higgins

Despite the precise wording of my right hon. Friend's original answer., does he agree that as a result of the Budget some of those who were paying tax will not now pay it?

Mr. Major

I am entirely content to agree with my right hon. Friend about that. The figure that my right hon. Friend perhaps had in the back of his mind was 780,000—the number of people who will not pay tax and who otherwise would have done so.

Mr. Nicholas Brown

We will refuse to separate the tax cuts of the Budget from the benefit cuts of the social security changes. Does the Minister agree with my estimate that, after this Budget, a person earning £100,000 a year will receive a staggering extra £268 a week, while the benefit changes mean that a single unemployed person will receive less than one tenth of that amount? Can the right hon. Gentleman—he is spoken of as a future leader of the Conservative party—not see what anyone with a basic sense of fairness can see, namely, that it is the function of government to eradicate social injustice, not deliberately seek to create it?

Mr. Major

The Government spend one third of their income on social security to eradicate social injustice.