HL Deb 03 February 2000 vol 609 cc346-7

3.23 p.m.

The Earl of Northesk

asked Her Majesty's Government:

How much money the Treasury will save as a result of the abolition of the married couple's allowance and MIRAS; how much the reduction of 1 p in the pound on income tax will cost the Treasury; and whether the Treasury will be a net loser or winner.

Lord McIntosh of Haringey

My Lords, we are introducing measures to make work pay and improve support for families with children, including a new children's tax credit worth up to twice as much as the married couple's allowance. The estimates of the effects which provide the figures the noble Earl requires were published in the Economic and Fiscal Strategy Report and Financial Statement and Budget Report last year. When the children's tax credit is in place, the estimates show a net decrease in revenue from the measures mentioned by the noble Earl of £750 million.

The Earl of Northesk

My Lords, I am grateful to the Minister for that reply although it does not answer my specific questions. I am always chary of trading statistics with the noble Lord. However, does he question the integrity of figures from the House of Commons Library which demonstrate the Treasury to be a net winner to the tune of £700 million as a result of the measures mentioned in my Question? Can we infer that the Treasury's gain is the compensation to the taxpayer mentioned by the Prime Minister in his interview with Mr David Frost on 16th January?

Lord McIntosh of Haringey

My Lords, the figure the noble Earl quotes from the House of Commons Library is, as I said, also available in the Economic and Fiscal Strategy Report and Financial Statement and Budget Report, so there is no concealment of any kind. It was only for the sake of brevity that I referred the noble Earl to the published figures. Yes, indeed, for 2000–01, before the full package is complete—none is in place yet—the figure shows a benefit to the Treasury of £700 million. However, when we take into account, as we must, the children's tax credit, the figure of £750 million in the other direction is correct.

Lord Taverne

My Lords, there are enormous demands on the public purse. There is a severe short age of resources available for the health service and other public services. There are not sufficient resources available for the relief of farmers. Is it not perverse in the extreme to proceed with the cut of 1p in the tax rate? It seems to have little public support.

Lord McIntosh of Haringey

My Lords, no. The Chancellor announced last year the cut of 1p in the tax rate. It has, of course, to be enacted in the Finance Act for this year. It has wide public support and fits in with our general economic strategies. It fits in with the golden rule on taxation and borrowing. As I have shown from the figures on family support, it is progressive and beneficial to families.

Lord Stoddart of Swindon

My Lords, the MIRAS system seems to have been phased out to the great benefit of the Treasury. However, the stamp duty on houses when they change hands has increased. That does not seem right. I hope my noble friend can assure me that there will be no further increases in stamp duty. As a quid pro quo for the abolition of MIRAS, perhaps it could be abolished.

Lord McIntosh of Haringey

My Lords, my noble friend's remarks will be noted, as always. I am sure that the Chancellor will take them into account when he makes his decisions in advance of the Budget. As regards MIRAS, as my noble friend knows, the level of relief on mortgage interest has been declining for several years under both governments. It amounts now to only 10 per cent on loans up to £30,000. This is the last stage of a process which has continued for some time.

Lord Saatchi

My Lords, is it true that there exists in the Treasury a document which describes the Government's tax strategy as being to cut visible taxes on voters and raise invisible taxes elsewhere? Is it true that by manipulating a mass of complicated tax allowances, reliefs and exemptions, the net effect of all the Government's tax changes is equal to an increase of 4½p in the basic rate of income tax? Does the Minister agree that this gives a new meaning to the phrase "rip-off Britain"?

Lord McIntosh of Haringey

My Lords, there is no such document in the Treasury.