Family Income

HC Deb 13 February 1992 vol 203 cc1100-1

11. Mr. Tredinnick

To ask the Chancellor of the Exchequer what was the average family income in (a) 1979 and (b) 1991 in real terms.

Mr. Norman Lamont

The real net income of a married couple on average male earnings with two children has increased from £194 in 1978–79 to £262 in 1991–92—a rise of 35 per cent.

Mr. Tredinnick

Does my right hon. Friend agree that that huge increase in real income clearly demonstrates the overall success of Conservative policies and would not have come about without the tax cuts that all families have experienced? Would it not be a disaster if families in my constituency in Leicestershire and throughout the country faced the huge tax increases proposed by Labour and the Liberals?

Mr. Lamont

It remains the situation that if we had not altered the income tax regime that we inherited when we came to office, and if we had merely indexed the rates and allowances, the average family would be paying £1,200 more in income tax. That is what it would be paying under the previous regime of the last Labour Government.

Mr. John Smith

What about value added tax?

Mr. Lamont

I may inform the right hon. and learned Gentleman that a single man on average earnings in 1978–79 was paying 42½ per cent. of his income away in income tax, national insurance contributions, and VAT. Today the proportion is 40½ per cent.

Mr. Cohen

Will the Chancellor comment on the recently published "Social Trends", which shows that the income of the richest one fifth increased by more than 50 per cent. as an overall proportion, whereas the bottom 60 per cent. saw their proportion of income fall relative to that top one fifth? As most average families are in the bottom 60 per cent., does not that show that the Government have given money to the rich at the expense of ordinary families?

Mr. Lamont

A person on half average male earnings—a married man with two children—has seen his after-tax, post-inflation income rise some 28 per cent. That is the increase in real take-home pay for someone on half average earnings. The hon. Gentleman does a valuable service by reminding us that Labour is committed to a policy of heavy redistributive taxation.

Mr. Peter Bottomley

My right hon. Friend informed us that the previous tax rates would have cost each family an extra £1,200. Perhaps I may turn briefly to the higher rates, which may he in the minds of some, and ask whether it would be possible to picket Park lane, to ask those attending this evening's £500 per head dinner whether they are paying more tax this year at the lower rate, or whether they paid more tax in 1979 at Labour's higher rates?

Mr. Lamont

My hon. Friend makes an excellent point. It is utterly baffling why Labour wants to pursue a policy that is likely to raise less revenue and do less good for everybody.