HC Deb 08 May 2003 vol 404 cc824-5
4. Mr. Michael Jack (Fylde)

If he will make a statement on the methodology used to calculate tax receipts. [111885]

The Chief Secretary to the Treasury (Mr. Paul Boateng)

The Treasury makes forecasts for each individual tax based on relevant economic assumptions and forecasting methodologies, and then aggregates them to arrive at forecasts of total taxes.

Mr. Jack

I am grateful to the Chief Secretary for admitting that the Treasury produces forecasts for each tax. The Treasury makes available, in public, its economic model, and independent commentators can offer their own views about the performance of the economy. Will the Chief Secretary publish the economic model that underpinned his answer to me, so that in the interests of transparency, knowledge and understanding of the economy we can all know more about the way in which our tax receipts are progressing?

Mr. Boateng

We have no intention of producing any such publication, but as a former Financial Secretary the right hon. Gentleman understands very well the basic methodology that is applied in these cases. He understands it well because it is exactly the same as that used by past Governments, including the Government in which he served.

There are, however, a number of crucial differences. The most important are that the key assumptions underlying our forecasts are subject to audit by the National Audit Office, that we are committed to more transparency than the right hon. Gentleman ever was, and that we ensure that our forecasts are cautious and seen to be cautious—something that the right hon. Gentleman and his Administration never did.

Mr. Stephen McCabe (Birmingham, Hall Green)

Is not a policy of full employment the best guarantee of a solid base of tax receipts, and in that regard is there not a fundamental contrast between Labour in power and that lot when they were in power?

Mr. Boateng

My hon. Friend is absolutely right. The difference is between stability under a Labour Government and instability under a Conservative Government; between employment under a Labour Government and unemployment under a Conservative Government. The right hon. Member for Fylde (Mr. Jack) is himself the beneficiary, in his constituency, of a 32 per cent. drop in the claimant count, a 74 per cent. drop in long-term youth unemployment, and a 66 per cent. drop in long-term unemployment. That is the record under a Labour Government. Imagine what it would have been like had the right hon. Gentleman's party been in power!

Mr. John Redwood (Wokingham)

If by any chance the private-sector forecasters were right and the Treasury wrong, and growth this year and next were 0.5 per cent. lower than the central Treasury forecast, what would be the shortfall in tax receipts compared with what is in the Red Book?

Mr. Boateng

I refer the right hon. Gentleman to table C.8 in the Red Book, which I think he will find useful and valuable. The fact is, however, that UK growth is still strong in global terms, and is forecast to be higher than growth in Italy, Germany and France. That is a record of which we are proud, and the right hon. Gentleman should at least give us some credit for it.