HC Deb 12 March 1998 vol 308 cc732-3
2. Mr. Lansley

What estimate he has made of the domestic savings ratio in (a) 1997 and (b) 1998. [32494]

The Chief Secretary to the Treasury (Mr. Alistair Darling)

The pre-Budget report gave the latest projections. The Government's policy is to encourage savings for investment in the future and that means, among other things, creating the conditions of economic stability and low inflation. That is what we are doing.

Mr. Lansley

I thank the Chief Secretary for his reply. If his policy is to encourage savings, his tax on savings will do the reverse and contribute to a reduction in personal savings in 1998 compared with 1997. Will he see the error of his ways and abolish the tax on savings above £50,000 and thereby contribute to an increase in savings instead of a diminution?

Mr. Darling

The hon. Gentleman should bear two things in mind. First, during the 1980s, when the Government he supported were in power, the savings ratio dropped dramatically, and was negative for a number of years. This Government are determined to encourage savings, which is why we are putting in place the long-term economic stability that is an essential precondition of giving people the confidence they need to save. The Government are introducing measures that will help people to save in future.

Mr. Winnick

Will not one group of people have a great deal of money to save—those who have benefited substantially from the privatisation of the railways carried out by the previous Government? Bearing in mind how much the taxpayer has lost—billions of pounds—would it not be fair to apply a windfall tax to those who have benefited in such a way? The sooner that windfall tax is introduced, the fairer it will be for the country as a whole.

Mr. Darling

My hon. Friend is right in the sense that the way in which the Conservative Government sold off many of the former nationalised industries at knock-down prices, enabling many people to benefit in a way that could not have been imagined, was scandalous. We introduced the windfall tax on the privatised utilities, the nature and scope of which was made clear at the time. The windfall tax that we imposed has been widely supported, not least because the money has been taken away from those who obtained gains without earning them and is now being applied to the new deal, which is giving new hope to thousands of people throughout the country.

Mr. Fallon

Why did the Chief Secretary originally tell the Investors Chronicle that a Labour Government would not tamper with existing PEPs and TESSAs? Will he apologise for breaking that promise, or will he consider attaching to next week's Budget bundle a series of numbered apologies for each of the new taxes and broken promises since 1 May?

Mr. Darling

I am surprised that the hon. Gentleman cannot bring himself to mention 22 tax rises, which of course he knows all about. Our manifesto was clear and we have kept to it. I say to the hon. Gentleman and to the right hon. Member for Hitchin and Harpenden (Mr. Lilley), who I now discover misquoted me on Monday, that they should be careful about taking words out of context.