HC Deb 09 November 2000 vol 356 cc425-6
5. Mrs. Jacqui Lait (Beckenham)

What estimate he has made of the extra tax payable since May 1997 as a result of his Budget measures.[135952]

The Chief Secretary to the Treasury (Mr. Andrew Smith)

The figures are set out in successive Budget reports, which are, of course, available in the Library of the House.

Mrs. Lait

I assume that the Chief Secretary is aware that yesterday's PBR indicated that the tax burden has increased even this year, since the figures were announced in the Budget. I assume that he is also aware that stealth taxes have been increased by the higher rate in the national insurance threshold that was announced yesterday. On which page of the Labour party's election manifesto can we find the promise to increase taxes by £26 billion a year?

Mr. Smith

Our manifesto promise was about fair taxation and sound management of the economy. We promised that we would not put up the higher or basic rates of tax, and we did not do so—in fact, we cut the basic rate of tax. We said that when it was prudent to do so, we would introduce a 10p starting rate of tax, and we introduced that rate. We said that we wanted competitive and fair corporate taxation, and we have cut corporate taxes to the lowest level among our European competitors. When Conservative Members were in government, they imposed VAT on fuel as part of their 22 tax rises—their broken promises. We cut VAT on fuel to its lowest possible level. That shows how the Labour party keeps its promises and the Conservatives break theirs.

Mr. Bill Rammell (Harlow)

Does my right hon. Friend recall that the only people paying less tax in 1997 than in 1979 were those earning more than £64,000 a year? Do not people want fair taxation? Is it not the case that the Labour party is delivering fair taxation and the Conservative party is opposing it?

Mr. Smith

My hon. Friend is absolutely right. That was indeed the £64,000 question under the Conservative Government, with their record of broken promises and economic instability. We will take no lectures from the Tories on taxation or management of the economy, given that they not only broke all their promises, but led us into boom and bust. Now we hear from the shadow Chancellor that he has no rules for stability in the economy and no inflation target. All he has are tax promises that he cannot fund and spending cuts that he cannot name. Those are the politics and economics that previously led us to boom and bust. Given the chance again, that is precisely what the Conservatives would do.

Mr. Howard Flight (Arundel and South Downs)

After yesterday's acrobatics, will the Minister focus on the simple fact that, hidden away in yesterday's upward revisions of the tax take, is the fact that living standards are falling? Tax receipts—[Interruption.] Well may hon. Members on the Government Benches laugh. Tax receipts are rising by 6.4 per cent. per annum, versus a 2 per cent. increase in earnings. In simple terms, that means that the tax paid by the average family is increasing faster than the rise in average earnings.

Mr. Smith

In the shadow Chancellor's extraordinarily feeble response to my right hon. Friend the Chancellor's statement yesterday, he said that real disposable incomes had not been growing. He is wrong. Each and every year the Government have been in office, real disposable incomes have been increasing. Moreover, people have the benefit of £1,000 on average, thanks to the lower mortgage interest payments that they are making, because we have kept interest rates down, whereas the Conservatives had them high.

Mr. Roger Casale (Wimbledon)

Is it not the case that as well as working to reduce the share of tax in national income, we are bringing down the share of debt in national income? Is it not right that, as well as reminding the British people of the 22 tax rises under the Tories, we should remind them of the massive and uncontrollable levels of public debt? Were not those levels of public debt a massive monument to Tory mismanagement of our economy? Were it not for Labour, levels of debt would remain high.

Mr. Smith

Indeed. Debt doubled under the Conservatives. They left a millstone of debt for the country and for the Government when we came in, with their unsustainable £28 billion-worth of borrowing. The level of debt was 44 per cent. of gross domestic product when we came in. We have reduced that to 33 per cent. and, as the pre-Budget report shows, we are on course to get it down to 30 per cent. and keep it there, consistent with firm and disciplined fiscal rules, which we are applying and which the shadow Chancellor does not have. Because we have reduced the debt, are responsible with the public finances and have strong and sound public finances, interest rates are lower, and individuals with mortgages, as well as businesses, see the consequent benefit.