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Personal Incomes

Volume 131: debated on Thursday 14 April 1988

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To ask the Chancellor of the Exchequer what is his estimate of the weekly gain for a single person earning £50,000 a year from his Budget tax changes.

Just under £80 for an individual with no reliefs other than the single person's allowance.

Does the Minister agree that it would have been better to give that money to the pensioners, who have received nothing from the Budget? What has the Minister to say to the pensioner from my constituency, who has travelled here today, whose total income from a state pension and a British Rail pension is £60 per week and who received nothing from the Budget, but last Monday lost £8 as a result of housing benefit cuts? When will the Government stop taking from the poor and giving to the rich?

As the hon. Gentleman knows, it is not the custom to announce pension increases at the time of the Budget. That will be done at the time of the Autumn Statement. A single person with an income of £60 per week will be paying tax and will benefit from the Budget. The contribution made by the cuts in tax rates is that they will continue the economic growth that has enabled us to increase the total pensions and social security bills by very considerable amounts.

How does my hon. Friend account for the fact that when higher rates of taxation reached a maximum of 83 per cent. under the Labour Government they raised only £800 million, whereas today, when the highest rate is 60 per cent., £3,800 million is raised? Does this not show the logic of reducing, and continuing to reduce, higher rates of taxation?

My hon. Friend makes a very good point.

He and the Opposition may be interested to know that in 1978–79 the taxpayers on higher rates produced 19 per cent. of tax revenue, whereas the figure for this year is 30 per cent. We have thus demonstrated that it is possible to cut rates and increase revenue, as my hon. Friend has pointed out on this and other occasions.

Will the Minister confirm that as a result of the Finance Bill published today £800 million will be given in tax handouts to the very small minority of people with earnings in excess of £100,000 per year? Will he also confirm that for the same amount of money no pensioner need suffer a cut in housing benefit, no family need suffer a freeze in child benefit and no one at all need feel compelled to beg or borrow from the state charity that has been set up in the form of the social fund? Does he accept that in all sections of the community there is deep revulsion against the two-nation Toryism which he now represents and which has produced the most unjust, the most unfair and the most socially divisive Finance Bill this century?

I do not see anything "two-nation" about 70 per cent—[Interruption.] Hon. Members should listen to what I have to say. Seventy per cent. of the cost of the Budget is going on basic rate cuts and increases in personal allowances. I also see nothing "two-nation" about 23 million people benefiting from the basic rate cut.

Does my right hon. Friend agree that the reductions in the higher rates of tax will encourage the internationally mobile either to stay in the United Kingdom or to come back to it? Does he agree also that the presence of leading surgeons and leading industrialists, and leaders in other areas, can only benefit Britain?

That is no doubt why cutting the higher rates in the past has increased revenue. My hon. Friend rightly emphasises that we need to attract inward investment, and we also need to attract the managers that go with those projects. That is just one of the reasons why the higher rate cuts are to the benefit of the whole economy.