§ 9. Mr. James Gray (North Wiltshire)What percentage of GDP he estimates will be taken in tax in 2000–01; and what was the equivalent figure in 1996–97. [141841]
§ The Chief Secretary to the Treasury (Mr. Andrew Smith)Figures for taxes and social security contributions, as a proportion of gross domestic product, are shown in tables B10 and B26 of the pre-Budget report.
§ Mr. GrayOne sometimes wonders why the Minister cannot answer a simple, straightforward, factual question with a simple, straightforward, factual answer. Will he allow me to give him and the House the figures? In 1997, the percentage was 35.2 per cent; in 2000, it is 37.3 per cent; and in 2001, it will be 37.5 per cent. If the working families tax credit is included—not as a tax reduction but as an addition to public expenditure—the percentage becomes 37.8 per cent. Why will the Minister not simply admit to the nation that tax has gone up by £25 billion a year—the equivalent of lop in the pound on income tax? Those are the facts. Why cannot he stand at the Dispatch Box and admit them?
§ Mr. SmithI have already answered that question. I point out to the hon. Gentleman that, for 2000–01, the Conservative plans were for tax at a proportion of 37.6 per cent., rising in 2001–02 to 38 per cent. Moreover, he and the whole House will be aware that we had to sort out the millstone of debt and the financial mess that we inherited from the previous Administration—borrowing of £28 billion and the £350 billion debt. We have sorted that out, providing the platform for stability, prosperity and opportunity for all that we offer to the people.
§ Mr. Andrew Reed (Loughborough)First, will the Minister confirm that Britain remains one of the lowest taxed countries in Europe? Secondly, and more importantly, will he tell the House exactly how much each year it cost every family in this country to repay the debt that we inherited from the Conservative party? How much money was wasted on repayments each year on that borrowing of £28 billion? What did that mean for every family in this country?
§ Mr. SmithMy hon. Friend is right. We were spending more on servicing debt than on the nation's schools. It is important for people to understand that of every extra 801 pound that the previous Administration raised in tax, no less than 42p went on servicing debt interest and meeting social security benefit payments. With our spending plans, we have got that figure down to 17p.
My hon. Friend is also right to refer to the comparisons with Europe: 10 member states of the European Union have a higher tax ratio than the United Kingdom. Our share is 1.1 per cent. lower than that of Germany, 6.4 lower than that of Italy and 10 per cent. lower than that of France.
§ Mr. Matthew Taylor (Truro and St. Austell)Can the Minister confirm, however, that there is a flip side to the coin? The Government say that they are taxing less than the Conservatives had planned to tax. The Minister is right about that—there is a fundamental flaw in the Conservative case—but the flip side is that the Chancellor, who is now Miss Bountiful and spending more, cut services as Miss Prudence at the start of this Parliament. Because of those cuts, the share of the national cake spent on health, education and pensioners will be less over this Parliament than the Conservatives spent in the last Parliament.
§ Mr. SmithThe truth of the matter is that the share spent on those priority services is rising, and rising sharply. Because we have been able to cut the cost of social security payments and of debt interest, more than 80 per cent. of that extra spending is going to the priority areas of health, education, investment in transport and fighting crime. Although I welcome the hon. Gentleman's support in exposing the fallacy of the Conservatives' arguments, he should also recognise that if we had not taken the tough decisions necessary to get the economy and the public finances straight, we should not have been in the position to invest in and improve our public services in the way that the British people want.