§ 8. Mr. MullinTo ask the Chancellor of the Exchequer what plans he has for tax reductions; and if he will make a statement. [24316]
§ Mr. Kenneth ClarkeThe Government are committed to making further progress towards a 20p basic rate of tax when it is right for the economy to do so.
§ Mr. MullinWe know that the Chancellor comes from the civilised wing of his party—possibly the Chief Secretary does as well. Does the Chancellor agree that it would be wholly irresponsible to attempt to purchase the result of the next general election with tax cuts? Will he take this opportunity to make that clear to his hon. Friend the Member for Bridlington (Mr. Townend), his right hon. Friend the Member for Wokingham (Mr. Redwood) and their mean-minded friends on the Benches behind him?
§ Mr. ClarkeI confirm that it would be wholly wrong to attempt to buy the next election by irresponsible tax cuts, and we have no intention of doing so. We aim to lower taxation as part of our policy of producing a strong industrial economy. The hon. Gentleman comes from the civilised wing of his party, as does the hon. Member for Birmingham, Ladywood (Ms Short)—that section of the Labour party that believes in higher taxation, higher expenditure and higher public borrowing. Those hon. Members would revert to such a system if the present Labour Front Benchers—who are completely vacuous and empty on all these subjects in public—ever took Labour back into power.
§ Mr. BudgenHas my right hon. and learned Friend received any advice recently from one of the most distinguished Labour statesmen, Lord Healey, who said in 1977 that he intended to squeeze the rich until the pips squeaked?
§ Mr. ClarkeI have not recently had his advice but, like my hon. Friend, I well recollect the experience of having Lord Healey as Chancellor, when the top rate of tax on earned income was 83 per cent. In addition, by taking the public sector borrowing requirement as a proportion of gross domestic product to 7 per cent., Labour was really deferring yet more taxation which would have come in had the Conservatives not taken office in 1979. We must avoid, above all else, a repeat of that experience.
§ Mr. Gordon BrownGiven that any statements that the Chancellor makes about tax and borrowing have been about as accurate as his forecast of a Conservative election victory in South-East Staffordshire, and given that the forecasts of public borrowing in the Conservative Budget at the previous election have been exceeded over the past four years by £46 billion—forecasts that were used to justify tax cuts that could not be sustained—does the Chancellor therefore now agree that his borrowing forecast for November should be subject to an independent audit by people outside the Treasury so that the Conservative party can never mislead the people of this country about tax and borrowing again?
§ Mr. ClarkeThe hon. Gentleman advised his party not to vote against the tax cuts that I was able to introduce in 834 the last Budget, one of the few wise decisions—indeed, one of the few decisions of any kind—that he has taken since he started shadowing me. The borrowing forecast for next year will be below the £30 billion that the Liberal Democrat spokesman—[Interruption.] I know of no one who believes that it will be above £30 billion. It is clear that our borrowing requirement is on a downward path towards balance in the medium term, and that is the foundation of our policy. I forecast that we would move towards balance in the medium term, that we would move towards an inflation rate of 21/2 per cent. and that we would make progress towards a 20 per cent. basic rate—all that is coming true, as is my —forecast that we would have the strongest economic recovery in western Europe. The hon. Gentleman's history of forecasts used to be dreadful, when he made any, but he has not made one for a year or two.
§ Mr. Duncan SmithDoes my right hon. and learned Friend agree that the real debate is about whether the Government agree to what degree, how much and when we reduce taxation, as opposed to the Opposition, who wonder to what degree they can resist raising taxation? In line with that, has he received any quiet submissions from anybody in Birmingham, Ladywood?
§ Mr. ClarkeWe know that tax reductions go in line with the proper control of public spending and that tax reductions have to be seen as part of an overall policy of creating a healthy enterprise economy. That is a clear and consistent policy that is producing results. I have received no representations from any Opposition Member, and it would be hopeless to expect any comment from Labour Front Benchers. I look forward to a reshuffle of shadow posts, because the shadow Secretary of State for Transport obviously has views on the subject—they lie in a tax-raising direction. Perhaps the hon. Member for Dunfermline, East (Mr. Brown) might have to devote himself to roads and tramways for a year or two to come.