§ 2.59 p.m.
§ Lord MolloyMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows: To ask Her Majesty's Government whether the replacement of the retail price index by the tax price index has proved satisfactory.
§ The Chancellor of the Duchy of Lancaster (Lord Cockfield)My Lords, the RPI is alive and well. It is published in the morning of the last Thursday of each month. Figures for the last 10 years are published in the Monthly Digest of Statistics. The noble Lord will find these interesting and instructive reading. The TPI is an alternative or supplementary measure of the changes taking place and it reflects tax changes as well as changes in prices. People are not necessarily worse off when prices rise if there has been a corresponding reduction in taxation. The TPI is designed to reflect this.
§ Lord MolloyMy Lords, I am grateful to the noble Lord the Minister for his reply. Is he aware that what he told the House on 5th March in answer to my supplementary question to Lord Diamond's Question is quite inaccurate and that there were criticisms of the tax price index from the Institute of Fiscal Studies, the TUC, the Financial Times, the Observer and the Daily Telegraph? Is he prepared to accept that, in all fairness, 233 there should be some way of recording the number of people who are too poor to pay tax so that they do not slip down the line and become even poorer, and that this could assist Government economists to make a proper assessment in order to help them?
§ Lord CockfieldMy Lords, there are always criticisms of any statistics that are produced. The TPI is a valuable insight into the effect of price and tax changes on the great majority of people. The Budget proposals will reduce the TPI by 1.4 percentage points. The Budget will be of benefit to all the 25 million or so people who pay income tax. So far as the people who are not paying income tax are concerned, the RPI itself of course clearly indicates the impact of changing prices.
Lord Bruce of DoningtonMy Lords, has the noble Lord seen the report in The Times today that for a married couple on average earnings it would need a cut in income tax of 9p in the pound to restore them to the position that they were in in 1979?
§ Lord CockfieldMy Lords, I think that we should all like to see a cut of 9p in the pound in income tax, but that would depend upon large reductions in Government expenditure. I am glad to see that we have the support of the noble Lord, Lord Bruce of Donington, for movements in that direction. The fact that people on average earnings are paying more tax than they were in 1979 is in part a reflection of the fact that earnings have increased in real terms.
§ Lord MolloyMy Lords, is the noble Lord aware that I agree with him that all forms of indexing are a tax but I have said that was not his view on 5th March? He did not recognise any criticism of that. I welcome his conversion which should be to the benefit of us all. Is he further aware that the index does not reflect the loss of social wages or what it has meant for millions of ordinary people to lose various local government services? Examples are OAP luncheon clubs, and the fact that National Health prescription charges are going up and old people will not be able to have NHS spectacles in the future. All these things are very important to ordinary poor people in our community and I submit that they are worthy of better consideration from the Government.
§ Lord CockfieldMy Lords, earlier in our exchanges the noble Lord appeared to be criticising the fact that we were publishing two indexes while he would prefer to have one only. He now seems to be advocating the publication of an even further range of statistics.
§ Lord MolloyMy Lords, will the noble Lord now make some endeavour this afternoon in this House to respond to the very important question which I put on behalf of millions of people who form the poorer section of the community in Great Britain?
§ Lord CockfieldMy Lords, I do not accept the noble Lord's allegation that the poorer sectors of the community have suffered under this Government. That is not in fact true at all. If one looks at the level, for example, of the retirement pension and of supplementary benefits in real terms, these both show improvements over this period.