Family Tax Burden (Hansard, 3 February 1994)

§ 2. Mr. Hutton
To ask the Chancellor of the Exchequer what was the tax burden for a married couple on average earnings, and with two children, in 1978–79; and what is the most recent figure.

§ The Financial Secretary to the Treasury (Mr. Stephen Dorrell)
A single-earner couple with two children on average earnings will pay 20.3 per cent. of their gross earnings in income tax and national insurance contributions in the current year, compared with 20.9 per cent. in 1978–79. Over the same period, the real take-home pay of the same couple will have risen by £83 per week in today's values.

§ Mr. Hutton
Do not those figures confirm the scale of the deception perpetrated by the Conservatives at the last general election, when they promised the British public year-on-year tax cuts? Instead, they have delivered year-on-year tax rises. Is not it clear that the current record level of taxation is not being used to lay the foundations for future growth and prosperity, but is simply the price that we are all paying for 15 years of Tory failure?

§ Mr. Dorrell
I find it utterly impossible to link that question with my previous answer. What we have done is to introduce a tax system that has made growth possible, while delivering £83 a week in extra purchasing power to the average man. That is the result of our policies, and it is not something for which any of us need apologise.

§ Mr. Nigel Evans
Has my hon. Friend been able to calculate what would have happened to the taxes of a married couple on average earnings if the Government had decided not to control public spending—if, indeed, they had increased it by £38 billion?

§ Mr. Dorrell
The straight answer is that £38 billion represents about 19p on the basic rate of income tax. My hon. Friend has illustrated the dishonesty of the claim of Opposition Front Benchers to be interested in controlling the tax burden: in fact, they lose no opportunity to commit themselves to future spending that must be translated into a future tax burden.

§ Mr. Andrew Smith
Will the Financial Secretary now answer the question that the Chancellor evidently lacked the mastery of detail to answer? Is not the hard truth that the only people who have benefited from the Tories' tax policies are those earning more than £64,000 a year? Let us have an answer.

§ Mr. Dorrell
The question to which the country wants an answer is this: when will Labour start to take an interest in the creation of wealth? The question that we have just 1012 heard demonstrated, yet again, Labour's myopic obsession with redistribution, and their utter lack of interest in the generation of wealth. It is because the British economy became more successful during the 1980s that we have been able to deliver the £83 a week to which I referred, which translates directly into the 40 per cent. mentioned by my right hon. and learned Friend the Chancellor. That is the pay-off from the success of the Government's economic policies.

§ Mr. Brazier
Following that answer, does my hon. Friend agree that further improvements in living standards can be delivered only through growth? According to the Organisation for Economic Co-operation and Development, our projected growth level is more than double the EC average, while our inflation rate is approximately half the EC average. That means that living standards will continue to improve.

§ Mr. Dorrell
My hon. Friend is absolutely right to point out that the only way to improve living standards is to create circumstances favourable to economic growth. That is why, as a result of our policies throughout the 1980s, this country moved from the bottom to the top of the developed countries' growth league. Our policies delivered improved living standards in the 1980s and they will continue to do that throughout the 1990s.