Taxation (Hansard, 12 March 1992)

§ 6. Sir John Hunt
To ask the Chancellor of the Exchequer how many people have been relieved of liability to direct taxation as a result of his recent Budget proposals.

§ The Chancellor of the Exchequer (Mr. Norman Lamont)
About 380,000, and nearly 4 million will pay tax at only 20 per cent.

§ Sir John Hunt
Is not it clear that for those lower-paid people and for those whose basic tax rate has been cut to 20p in the pound, only the threat of a Labour Government stands between them and the better deal that they can expect from a continuing Conservative Government?

§ Mr. Lamont
The tax changes in the Budget, as my hon. Friend said, were worth £100 a year to 21 million taxpayers. A key point is that 75 per cent. of the benefit will go to those who receive below average earnings. One would have thought that the Labour party might welcome that. It is absolutely extraordinary that the Labour party is so determined to vote against that, given that it issued a policy document only a few weeks ago in February that said that that was its policy. What is also astonishing is that one would have thought that when the Leader of the Opposition rose to reply to the Budget he might know that that was his party's policy.

§ Mr. Beith
What leads the Chancellor of the Exchequer to believe that the prospect of £100 a year or less, which, in some cases, will be offset against family credit—will send everyone running to the shops to spend large amounts of money and bring about a consumer-led recovery? Does not he realise that £2 billion, if invested, could bring about the recovery more quickly?

§ Mr. Lamont
The tax cut was never presented and justified in the way that the hon. Gentleman seeks to put it. We believe in low taxes because they are good for incentives. It is good that people should keep money that they earn and right that they should have the choice. That logic should apply to low-paid people as much as to anyone else.

§ Mr. Nicholls
What does my right hon. Friend think that the working poor will make of Labour's plans to increase the tax on them? Is not this the message as far as the Labour party is concerned: one is never too poor to pay more tax?

§ Mr. Lamont
My hon. Friend might observe, however, that it is clear that the Labour party wants to increase taxes on those who earn above average earnings—anyone on more than £20,000—and on the poor and on savings.

§ Mr. Nicholas Brown
Will the Chancellor confirm that the past three Conservative party manifestos contain stern injunctions against borrowing, let alone borrowing billions to bribe millions with their own money? Will he also confirm that he justified that policy by saying: The objective of fiscal policy remains to balance the budget over the medium term"? [Official Report, 10 March 1992; Vol. 205, c. 749.] Will the right hon. Gentleman confirm that in the Red Book, for which he has some responsibility, on page 17 in table 2A.5 the Government confirm that not only will they not balance the public sector borrowing requirement over the cycle but that there is no scope for tax reductions either?

§ Mr. Lamont
I am afraid that the hon. Gentleman reads table 2A.5 wrongly, perhaps because he does not have a copy in front of him. If he looks at it, he will see a fiscal adjustment of £1 million in the past two years, so what he says is totally wrong. It is a bit rich for the hon. Gentleman to lecture us on borrowing. The fact is that the PSBR that we have projected for next year is well below the average for the entire period of the past Labour Government and it is half that which was reached in the peak year, when the right hon. Member for Leeds, East (Mr. Healey) had to go off to the International Monetary Fund and he had a PSBR of 9 per cent. of gross domestic product. I remind the hon. Gentleman that not so long ago the Leader of the 961 Opposition used to say that he could not understand why we did not borrow more and that borrowing was not a sin. That used to be his attitude.