§ Mr. Gordon BrownTo ask the Chancellor of the Exchequer what is his estimate of the savings in a full year at 1988–89 rates of restricting all allowances and reliefs to the standard rate of tax; and if he will provide a breakdown by category of allowance and relief.
§ Mr. Norman Lamont[holding answer 12 April 1988]: The direct revenue cost at 1988–89 levels of income of allowing personal tax allowances at rates in excess of the basic rate of income tax is estimated to be about £700 million. Information on the similar cost of other income tax reliefs is available only in respect of mortgage interest, retirement annuity premiums, employee's superannuation contributions, the business expansion scheme, and donations to charities; in total it is about £630 million. Within this total is a cost of about £280 million for mortgage interest relief and about £100 million for retirement annuity premiums. It is not possible to provide reliable estimates for the other individual reliefs. Nor is it possible to estimate precisely the combined yield from restricting these reliefs and personal allowances to the basic rate, but it is thought to be about £1,500 million. These estimates make no allowance for any possible behavioural effects if allowances and reliefs were to be restricted to the basic rate.