Income Tax (Hansard, 15 July 2004)

§ 1. Mr. David Amess (Southend, West) (Con)
What representations he has received regarding future levels of income tax. [184070]

§ The Paymaster General (Dawn Primarolo)
The Government have received a number of representations on the level of income tax, and we have committed ourselves not to raise the basic or top rates of income tax within the lifetime of this Parliament.
May I draw the House's attention to an announcement in a written statement that I made earlier this morning? The Government will legislate to ensure that payments by the Thalidomide Trust to people affected by the drug thalidomide will in future be exempt from income tax. That change will be worth about £1 million a year—up to £3,000 for each beneficiary of the trust. I know that Members on both sides of the House will welcome the announcement.

§ Mr. Amess
It is wonderful news that the Minister has accepted the suggestion of my hon. Friend the Member for Arundel and South Downs (Mr. Flight) and is helping thalidomide victims rather than wasting taxpayers' money looking for weapons of mass destruction.
Does the Minister accept that since 1997 there have been 66 tax rises and that each householder is paying an extra £5,000 a year? As she is getting advice from the Chancellor, is he authorising her to tell the House that those tax rises by stealth will continue?

§ Dawn Primarolo
I am sorry that the hon. Gentleman spoiled the welcome given to the change for the beneficiaries of the Thalidomide Trust. For the past 30 years, as he well knows, Governments of all political persuasions have struggled to settle that matter and it should be welcome that a restructuring of the trust will ensure that income tax is not paid on benefits from it.
The hon. Gentleman is completely wrong. If he looks at the facts, he will see that the Government have cut income tax and introduced the 10p rate and that, on 1526 average, households are £850 a year better off in real terms, that families with children are, on average, £1,350 a year better off in real terms and that pensioners are better off in real terms. By October 2004 about 18.3 million households will have gained as a result of the personal tax and benefit reforms that the Government have undertaken.

§ Mr. Bill O'Brien (Normanton) (Lab)
I thank my right hon. Friend for her statement. When considering further tax provisions, will she give an assurance that my right hon. Friend the Chancellor will not move from his programme for providing education, health, local government, transport, defence and all the other services on which people rely?

§ Dawn Primarolo
Of course I can give my hon. Friend that assurance. He will have noticed both from the 2004 Budget statement and from the spending review announcement made earlier this week that the Government's finances are sound and that the forecast is for spending more on public services over the next period—on police, child care, more nurses and teachers—and for investment in housing, transport and our security. Those are all things that the Government are committed to, but the Conservatives will cut them.

§ Mr. David Ruffley (Bury St. Edmunds) (Con)
The right hon. Lady will know that in 1997 2.1 million people paid top-rate tax. As a result of the Chancellor's tax policies, last year 3.27 million people paid top-rate tax. Will she give us her estimate of the number of people who will pay top-rate tax in the current tax year?

§ Dawn Primarolo
As the hon. Gentleman knows from his constituency experience, unemployment is down—[Interruption.] Just a moment. Unemployment in his constituency is down by 83 per cent. During the period 1997–98 to 2002–03, average earnings went up by 25 per cent. while prices went up by only 12 per cent. Employment has increased by nearly 1.8 million since the spring of 1997. The number of people in work is at a record level, and that is clearly reflected in the tax system; more people are working and earning more money and therefore contributing to public services.

§ Mr. Oliver Letwin (West Dorset) (Con)
It is clear that the Paymaster General has not yet heard of the word "threshold".
On behalf of the Opposition, I welcome the right hon. Lady's welcome announcement in response to the pleas of my hon. Friend the Member for Arundel and South Downs (Mr. Flight) about tax relief for thalidomide victims.
Derek Scott, a former adviser to the Prime Minister, has told us that he would not be surprised if there were tax rises under a third-term Labour Government. Will the Paymaster General give the House an assurance that if the Labour Government are re-elected and if the Chancellor is either the next Chancellor or Prime Minister, there will be no increase in either income tax or national insurance?

§ Dawn Primarolo
I am perfectly happy to share with all Members our pleasure that the proposals with regard to the Thalidomide Trust have now been sorted out, but 1527 the right hon. Gentleman really should not keep trying to claim as his original idea every good thing that the Government do. As he well knows, the Government's spending commitments are properly financed over the spending round and in the statements made in the Budget 2004. As I made clear in my opening remarks, the Government are committed in the lifetime of this Parliament not to raise either the basic or the higher rate of tax. Indeed, we have been reducing the tax burden, particularly on those who are the lowest paid.