Taxation

HC Deb 14 April 1994 vol 241 cc401-2

1. Mrs. Angela Knight

To ask the Chancellor of the Exchequer how much more in income tax and national insurance contributions would be paid by a married man on average earnings with two children under (a) the 1977–78 tax regime indexed to current prices and (b) the 1978–79 tax regime indexed to current prices, than under the present tax regime.

The Financial Secretary to the Treasury (Mr. Stephen Dorrell)

If a married man with two children and on average earnings paid tax and national insurance contributions in 1994–95 on the basis of the 1977–78 tax regime indexed to current prices he would be £18 a week worse off; on the same basis, the 1978–79 regime would make him £13 a week worse off.

Mrs. Knight

I thank my hon. Friend for that reply, which shows how much better off families have become under our tax policies. Would not any additional public spending above the Government's plans simply add to taxes? Will my hon. Friend confirm that nearly two weeks ago he wrote to the hon. Member for Dunfermline, East (Mr. Brown) asking him to confirm or deny the billions of pounds-worth of additional spending pledges that have been made by his Front-Bench colleagues? Has he received a reply yet?

Mr. Dorrell

My hon. Friend is quite right to say that I wrote to the hon. Member for Dunfermline, East (Mr. Brown) drawing attention to the fact that many of his Front-Bench colleagues are travelling around the country promising that a Labour Government would spend extra taxpayers' money but that he himself has not made any proposal to the House or to the country as regards how he intends to finance their spending plans. His position, and that of his party, is fundamentally dishonest.

Mr. Skinner

The Minister has got a cheek to talk about 1978–79 because since then the Government have had more than £100 billion-worth of tax revenue from North sea oil, about £50 billion of which finished up in the pockets of the richest 10 per cent. of people. Does the hon. Gentleman agree that the answer to the present problems is not to inflict further hardship on ordinary people and pensioners but to take that £50 billion from the richest pockets and build a welfare state with it?

Mr. Dorrell

The hon. Gentleman neglects to mention the fact that since 1978–79 the man on average earnings has seen his take-home pay rise by £83 a week in real terms. That increase is the result of the Government's policies and has come about because the great majority of the British people, including the hon. Gentleman's constituents, do not take his advice when it comes to critical issues concerning the future of this country.

Mr. Lester

Does my hon. Friend agree that borrowing is in fact deferred taxation and that the previous Labour Government borrowed so much money that we had to use the taxes from 1979 to pay for it?

Mr. Dorrell

My hon. Friend is absolutely right. The Labour party believes that it can promise to spend extra money without having to finance that spending. That holds out the prospect that a Labour Government would borrow or mortgage future tax revenues in the hope that someone else would pick up the tab.

Ms Harman

Is the Minister aware that the Chancellor wrote to me on 28 February saying: Under the Conservatives living standards … will go on rising in the years to come"?

Will the Minister admit that Treasury figures show that, because of the tax increases of £10 a week, living standards will fall? Why should anyone believe the Chancellor or any of his Treasury Ministers when they are clearly incapable of telling the truth about their own tax increases?

Mr. Dorrell

The hon. Lady cannot even get through a question without misleading people about the scale of the tax increases. The tax bills of the average household will increase this year, compared with the previous year and as a result of the two Budgets, by £5.75 a week. I shall answer other questions from the hon. Lady when she uses accurate figures in relation to the scale of the tax increases introduced last year.

Mr. Harry Greenway

Will my hon. Friend confirm that the Government will continue to ensure that people keep as much as possible of what they earn and are able to decide their own expenditure, rather than following the principle, "What's yours is mine and what's mine's my own," which has always been the Labour party's policy in local and national government alike?

Mr. Dorrell

My hon. Friend is absolutely right, and we shall do that for two reasons: first because it is right and, secondly, because it leads to a more successful economy and to the delivery of precisely the improved living standards that my right hon. and learned Friend the Chancellor promised the hon. Member for Peckham (Ms Harman).