HC Deb 12 March 1992 vol 205 cc961-2
8. Mr. Andy Stewart

To ask the Chancellor of the Exchequer what measures the Government have taken to assist the growth of savings since 1987.

10. Mr. David Martin

To ask the Chancellor of the Exchequer what measures the Government have taken to assist the growth of savings since 1979.

Mrs. Gillian Shephard

We have encouraged private saving by cutting income tax rates, implementing independent taxation, which has allowed married women to use their own tax allowance against their investment income, abolishing the composite rate tax which forced non-taxpayers to pay tax on their savings, extending personal equity plans and introducing tax-exempt special savings accounts.

Mr. Stewart

In my constituency, more than 3,000 miners took early retirement and invested their money in savings schemes. Only this week I received a letter from a miner in Clipstone who wanted to know what would happen to his capital and income if the Labour party's savings tax were ever implemented. Will my hon. Friend tell me, my constituency and the country what a Labour Government would cost us?

Mrs. Shephard

My hon. Friend raises a good point. In the unlikely event of a Labour Government being elected, they would impose national insurance contributions on income from savings above £3,000 a year, neatly targeting the group described by my hon. Friend. That would hit almost 250,000 people with gross incomes of less than £10,000 a year. Of course, Labour also proposes to vote against the tax cuts for people on lower incomes and, according to financial analysts, its policies would increase inflation, which would further erode the income that that group of people could expect to get from their savings.

Mr. David Martin

Will my hon. Friend continue to make it clear that we believe in people keeping more of their money to spend or to save, in stark contrast to the Opposition whose attack on savings and so-called unearned income would prejudice pensioners in particular who, if they have any sense, will vote Conservative on 9 April?

Mrs. Shephard

The Labour party has always sought to tax savings. Under the last Labour Government someone on the top level of tax and paying investment income surcharge was paying tax at the rate of 98 per cent.

Mr. Trimble

What does the Minister think the impact will be on savings and interest rates of the 100 per cent. increase in Government borrowing?

Mrs. Shephard

As the hon. Gentleman knows, the increase in borrowing is almost entirely accounted for by the effects of the recession. There will be no effects.

Mr. Tony Banks

A lot of people thought that their savings were safe in the houses that they were trying to buy. What does the Minister have to say about savings to the 85,000 people who had their houses repossessed last year?

Mrs. Shephard

Repossession is extremely sad, and disastrous for the families concerned. With the inflationary policies and disastrous taxation policies likely to be pursued by a Labour Government, if ever one were elected, people would see a disastrous erosion in all their capital assets.