If he will make a statement on the change in the level of unemployment in the Conwy constituency since May 1997. [112212]

Claimant unemployment in the Conwy parliamentary constituency has fallen by 341–14.3 per cent.—since the general election. Youth unemployment has fallen by 76 per cent. To secure our objective of high and stable employment, the Government will proceed on the basis of matching rights and responsibilities, creating new opportunities for work in return for obligations. The report by Lord Grabiner QC on the informal economy proposes to toughen sanctions against working in the hidden economy. At the same time, for the vast majority who are looking for work, we are considering more intensive coaching and help, where appropriate, with training, travel, transitional costs and child care.

I thank my right hon. Friend. Hundreds of my constituents are grateful for the Labour Government's new deal and would condemn the Opposition for describing it as a colossal and expensive failure. What assurances can my right hon. Friend give to show that he intends to build on the success of the new deal to achieve Labour's historic aim of full employment?

Even though youth unemployment has fallen by 68 per cent. in the constituency of the shadow Chancellor, the right hon. Member for Kensington and Chelsea (Mr. Portillo) says that the new deal is an expensive failure and that he would abolish it. In October, the Conservatives announced that they would privatise the Employment Service. Their policy would be bad for Conwy: in addition to abolishing the new deal, they would return the economy to boom and bust. The shadow Chancellor made Tory policy clear when he said that the Tories were

linked to harshness, thought to be uncaring about unemployment, poverty, poor housing. We were thought to favour greed.

What increases in manufacturing and service industry productivity were secured in the calendar years (a) 1997, (b) 1998 and (c) 1999. [112213]

The service sector grew in those years respectively by 2.1 per cent., 1.7 per cent. and 0.7 per cent. The manufacturing sector grew by 0.7 per cent., minus 0.6 per cent. and 3.6 per cent. Whole-economy productivity growth including manufacturing and services per employee was 1.5 per cent., 1 per cent. and 1 per cent. Because whole-economy productivity during the 1980s and 1990s remained below that in the United States of America, France and Germany, we have instituted long-term measures for improvements in productivity—monetary and fiscal stability, a new competition policy matching innovative capital markets with a more favourable tax environment, and making Britain a skills centre for Europe with measures including labour market reforms.

Since the Chief Secretary to the Treasury told me at Treasury questions last month that no one could be complacent about the figures, what would it take for the Chief Secretary to become actively dissatisfied?

I am the Chancellor, not the Chief Secretary, but, like my right hon. Friend, I was appalled by the Conservative Government's failure to improve productivity during the 1980s and 1990s. The Conservatives failed to institute a new competition policy that would mean lower prices and greater efficiency. We have created an independent Competition Commission, which, I believe, the right hon. Gentleman would support. We have instituted labour market reforms, emphasising skills that are desperately needed in the economy but which the Conservatives failed to provide. At the same time, we have instituted measures that mean that investment in the economy is now 14.5 per cent.—a proportion of gross domestic product far above anything that the Conservatives achieved over 20 years.

With productivity in mind, does my right hon. Friend regard sterling as competitive?

I have made it clear that we understand manufacturers and exporters worries about sterling. In relation to the dollar, sterling has remained virtually unchanged over several years, but developments in the euro area have created difficulties for exporters. However, exporters and manufacturers to whom I have talked most fear a return to the policies adopted by the Conservatives—the policies that brought stop-go and boom and bust.

Does the Chancellor accept that any increases in productivity that British industry is likely to achieve will be insufficient to overcome the problem of an overvalued exchange rate, which is itself largely caused by our high interest rate policy?

The hon. Gentleman should look at the figures: manufacturing productivity is rising by 3.6 per cent. He should congratulate the manufacturing sector of the economy on its response to what is happening. Equally, he should look at the amount of business investment in the economy, which is more than £100 billion, and has risen from the maximum of slightly more than 12 per cent. of gross domestic product under the Conservatives to more than 14 per cent. under Labour. We are making the long-term changes that will give higher productivity in the economy. The Conservatives had 20 years to do so, and they failed.

Does my right hon. Friend agree that the steel industry is the most productive manufacturing industry in our country at present? However, it is encountering tough problems because of the high value of the pound. The steel workers at Shotton, who in 1980 suffered Europe's biggest redundancy, are anxious—as are those in other steel plants throughout Wales—about a statement by Corus, the new steel company, that no job and no plant is safe. The steel workers know that the strength of the pound and the merger are putting pressure on jobs. My right hon. Friend helped over the climate levy for the steel industry—in the same positive way, what he might do to enable the export of steel?

I am grateful to my right hon. Friend, who is a constant supporter of the steel industry in his constituency and throughout the country. I, too, have talked to representatives of the steel workers union and shall continue to hold discussions with them. I appreciate the problems that the exchange rate has given them. They have told me that they do not want to return to boom and bust—as happened under the Conservatives. Not only are there more jobs in Wales as a result of action taken by this Government, but there are now 800,000 more jobs throughout the whole economy. More people are in work than ever before as a result of stability and the measures in the new deal. The stop-go policies of the Opposition and their opposition to the new deal put that at risk.

What his projection is of the tax burden for 2001–02 measured as a percentage of GDP. [112214]

If he will make a statement on the number of quarters since May 1997 in which the percentage of GDP taken by the Government in tax over the previous 12 months has risen. [112217]

What estimate he has made of the net increase in the amount of tax that will be paid in the five financial years from 1997–98 to 2001–02 as a result of his Budget measures to date. [112218]

What projection he has made of the tax burden as a percentage of GDP in 2001–02; and if he will make a statement on the change in the tax burden since 1996–97. [112219]

As a result of last year's Budget, the tax:GDP ratio is lower this year than last year. The tax ratio in the two following years will also be lower than last year. Under the previous Government's plans, those rates would have been higher than the latest projections—not only in this year but in both of the next two years.

Is not the Chief Secretary aware that, since his Government came into office, the overall tax burden has risen? The Organisation for Economic Co-operation and Development has said that—as have the Office for National Statistics, the House of Commons Library, his own Red Book, the pre-Budget statement and the Fabian Society. In today's papers, Chantrey Vellacott has said it. Is not it time that the right hon. Gentleman gritted his teeth and, on behalf of the Chancellor, admitted that the tax burden has risen?

I keep giving the Conservatives the figures, but they do not seem to listen. Last year, the tax burden was 37.4 per cent. This year, it is 37 per cent. Next year, it is due to fall to 36.8 per cent. on the measures to date. That is a tax burden that is falling, not rising.

Returning to the precise figures, the ONS pointed out that the tax burden has risen in all but two quarters since Labour came to power. In the two quarters when it did not actually rise, it remained the same. Last year, the Prime Minister said that

it is clear, as the figures show, that the tax burden is falling.—[Official Report, 24 November 1999; Vol. 339. c. 609.]

I am tempted, in the interests of accuracy, to repeat to the hon. Gentleman the figures that I have just given. However, for his interest, I shall give him another set of figures that reflect the burden as it actually impacts on a typical family. The figures show that, when we came to office, the take was 21.5 per cent.; it then fell to 20.9 per cent.; this year it is due to fall to 20.4 per cent.; and next year it will be 18.9 per cent. Again, from the vantage point of the families who pay tax, that means less tax with Labour.

I suspect that the Chief Secretary's figures do not include all the stealth tax increases and the indirect taxes that have been piled on time after time. Is it not pathetic that the Government have to rely on semantics? When they are asked the straight question whether the tax burden has risen while they have been in office, they say that it is falling. Can they give the straight answer that the tax burden has risen, and will they stop relying on their own flimsy projections for what might happen in the future?

I do not have to rely on any flimsy projections; none of our projections are flimsy. Let me give the hon. Gentleman the flimsy projections that his Government were making before they left office. They said that, under their plans, tax under the Tories would have been 37.1 per cent. this year; it is lower with Labour. Next year, it would have been 37.6 per cent.; it will be lower with Labour. The year after that, it would have been 38 per cent.; with Labour the present projection is 37.2 per cent. In each and every case, our performance compared with the Conservative's projections shows a lower take in tax. We will not be lectured by Conservative Members, who broke every promise that they made on tax and imposed the 22 Tory tax increases and the boom and bust economics that did such damage to our economy. If they ever got the chance again, they would wreck the record rising living standards that we are now seeing in this country.

Does the Chief Secretary recall that his former hon. Friend, the hon. Member for Brent, East (Mr. Livingstone), said:

We haven't increased the top rate of tax or the standard rate of tax, but we have increased a lot of other taxes … we have done it with all these stealth taxes. I just think it would have been better to have honestly told people beforehand?

The truth of the matter is that, unlike the Conservative party, we have kept each and every promise that we made on tax. We promised not to raise the basic or top rates of income tax throughout the next parliament. We have not and we will not. We said that we would bring in a lower starting rate of income tax of 10p in the pound, and we have. We said that we would cut VAT on fuel to 5 per cent.—the lowest level allowed—when the Conservatives put it up. We said that we would not extend VAT to food, children's clothes, books, newspapers and public transport fares, and we have not and will not. We said that we would bring in, with the windfall levy on the excess profits of the privatised utilities, welfare-to-work programmes and the new deals that have helped this country get 800,000 more people into jobs. They are all gains for hard-working families in this country that the Tories would take away.

Is it not right that where the tax burden falls is just as important as the overall tax take? Is it not right that the tax burden should not fall on those who can afford it least? A low starting rate of tax encourages people back to work and helps the economy, so it is good for Britain and good for taxpayers.

My hon. Friend is quite right. As a consequence of the changes that we have brought in, families with children are, on average, £740 a year better off. Moreover, thanks to steady growth, low inflation, stability, the introduction of the minimum wage and the working families tax credit—measures in which the Government take pride—the real take-home pay of average families in this country rose faster last year than at almost any time for the past quarter of a century. That is the measure of the extent to which this Government are on the side of hard-working families, whereas Conservative Members put the whole future of those families at risk.

Is my right hon. Friend aware that many of us in the House and in the country would not give a monkey's if the tax burden went up to 40 per cent., provided that the money went on the national health service, pensioners and the welfare state generally? I have a Budget proposal: we should put another tax—we can call it a stealth tax, if we like—on the Tories' outside earnings, and then we would hear them squeal.

All Budget representations to the Chancellor are very carefully considered.

Does my right hon. Friend recall that the only people in this country paying less tax in May 1997 than in 1979 were those earning over £64,000 a year? We will therefore take no lectures on fair taxation from the Conservative party. Is my right hon. Friend aware that the Conservative party has put forward a tax guarantee that it contradicts in the Chamber, week after week, by making additional spending pledges? Will he therefore make available the Treasury's computer model for the Conservatives' alternative Budget this year, so that the public can properly, rigorously and honestly work out the benefits and costs of their policies?

My hon. Friend indeed raises the £64,000 question. He is absolutely right to say that Conservative Members talk of the so-called Tory tax guarantee, which their former Prime Minister called mad and their former Chancellor of the Exchequer said was inoperable. The truth, as my hon. Friend said, is that it is not a Tory tax cuts guarantee, but a Tory NHS cuts guarantee, because it would put at risk the very welfare services that my hon. Friend rightly commends.

Does my right hon. Friend accept that the rise in gross domestic product that is forecast for next year, combined with the cut in the percentage of taxation, means not only that people will be better off as a result of the lower tax take, but that overall, as a result of the growth in the economy which the Government have achieved, they will be substantially better off in real terms under Labour?

Indeed, I have already said that last year people experienced the biggest real increase in take-home pay for a quarter of a century. I am confident that the Government's policies for stability, growth and economic responsibility and for getting people into jobs mean that during this Parliament we will see, as my hon. Friend says, a significantly bigger real increase in take-home pay than was achieved, on average, in the Tory years.

Does the Chief Secretary agree with the Prime Minister's comment in Question Time, that on coming to office Labour put up taxes to tackle the deficit left by Conservative mismanagement of the economy? That deficit was built on when the Conservative Treasury team, of which the shadow Chancellor was a member, mismanaged the economy in the early 1990s and forgot Baroness Thatcher's advice when she was Prime Minister that one cannot spend money that one does not have. Perhaps the right hon. Gentleman should listen to the previous Conservative Chancellor, who admitted that borrowing a deficit of that size was simply taxation deferred.

No.

With Mothers' day coming up in a couple of weeks, does my right hon. Friend agree that the shift in the tax burden under the Government represents a clear shift from wallet to purse? With the children's tax credit, the child care tax credit and the record increases in child benefit, people will be able to choose between a Government with a commitment to families, and in particular to working women and mothers, and the Opposition, who would strip most of those benefits away.

My hon. Friend is right. The measures that we have taken have been of enormous benefit to working families. They have helped working women and working mothers, and we will continue to follow those policies during and after the Budget.

When we last had Question Time, I got the impression that the Chancellor had not got the hang of Question Time at all. While I was willing to make straightforward statements about Conservative policy, he was not willing to answer any questions. Is it not astonishing that today, when we have four questions on the basis of Government policy—the tax burden—and so much interest in the House, the Chancellor of the Exchequer will not answer the questions himself?

Order. The right hon. Gentleman must understand that this is not a debate. There are other hon. Members who wish to ask questions.

The Chancellor likes to claim to be the Iron Chancellor, but he is merely a Labour Chancellor. He increases taxes like every other Labour Chancellor, but instead of being straightforward, he does it by stealth, and instead of taxing the rich, he taxes ordinary people who serve and try to do the right thing.

I am sure that the right hon. Gentleman will get the hang of it, given time. I am surprised that with all his experience, he did not have the dexterity to come in on my right hon. Friend the Chancellor on questions 1 and 2, when he had every opportunity to question him. I am surprised, too, that the right hon. Gentleman has not learned to make his questions rather more pointed.

I doubt that the reduction to be made in the first year … could be held to be crucial for those deciding whether they should be married.—[Official Report, Standing Committee A, 22 February 1994; c. 347.]

Well, yes, the Conservatives did put up some taxes, and we paid a heavy price for it. The Labour Opposition criticised us at the time, so why are they putting up taxes now they are in government? Why are they taxing ordinary people on marriage, pensions, savings and petrol? Why are our public services getting no better? Why were 57,000 operations cancelled last year? Why are people waiting a day and a half on trolleys in hospitals? Why has the number of policemen been cut by 1,700? Why is crime rising? Why are a Government who promised us that we would pay less and get more making us pay more, yet we are getting less?

The right hon. Gentleman is not getting the hang of it very quickly. With a record of driving through 22 Tory tax increases, and having been one of those responsible for the policy of boom and bust, the people of this country will never trust him and the Conservative party on tax or public spending.

Is my right hon. Friend aware of the recent Institute for Fiscal Studies report, which shows the distributional impact of post-tax income since 1997? It underlines not only his point that there are major increases in the take-home pay of the average family, but shows major increases in the pay of the majority of families, including the bottom 90 per cent. Does not that show that Britain is richer and fairer under Labour, through more take-home pay, more jobs and lower inflation?

My hon. Friend is right. Unlike the Conservative party, the Labour Government care about the low paid—that is why we introduced the minimum wage. We care about working families—that is why we introduced the working families tax credit. As my hon. Friend said, thanks to our management of the economy and our policies for fairness as well as for enterprise, those on half of average earnings will receive as big an increase in real take-home pay in this Parliament as they received in all the Parliaments of the previous Administration.

If he will make a statement on his recent discussions with IT contractors' representatives on IR35. [112215]

I met representatives of the professional contractors group in December. I explained to them why the Government believe that it is necessary to prevent avoidance of tax and national insurance contributions by workers using personal service companies.

What advice has the Minister received from the Prime Minister's adviser on e-commerce, who has publicly expressed his disquiet about the impact of the tax on our knowledge-based industry? How does the Inland Revenue propose to treat the tens of thousands of IT contractors, who are honest and do not avoid taxation, but have great difficulty in distinguishing between employed and self-employed status, as they are now required to do, because of the complexities of IT contracts?

First, it is not true that the e-commerce envoy has been making representations to the Treasury about relaxing the rules. He made it clear that he supports the Government's policy of stopping unfair tax and national insurance avoidance.

A small IT business in my constituency has told me that it fears that it will not be able to survive and continue to prosper under the new IR35 rules. Will my hon. Friend liaise with colleagues in the Government to ensure that the Inland Revenue and the Small Business Service work with such companies to ensure that they can continue to be successful?

Frightening and undermining the legitimacy of the many hundreds of thousands of legitimate companies that operate as service companies is part of the scare tactics of those who seek to avoid tax by using service companies. The Inland Revenue continues to advise those companies that will be caught by the rules through a helpline and a comprehensive website. We are ensuring that honest taxpayers will be strengthened by the rules, not undermined, and that people compete on skills, not by using the rules only for tax advantage, as the few are doing.

Is it not clear from yesterday's written answers that the Minister has absolutely no idea of the damage that IR35 is causing to the knowledge-driven economy? The Government's manifesto at the last election said that they would

Give Britain's entrepreneurs and small businesses the backing they deserve.

Perhaps the hon. Gentleman needs to be reminded of everything that the Government have done for small businesses: the small business company rate cut; the new 10p corporation tax starting rate; first-year capital allowances; enterprise management incentives; and help through the Small Business Service. He still has not told the House why his party supports a few workers who use their companies to avoid paying tax when millions of others pay their tax. I direct him to Computer Contractor magazine of October 1999. Under the headline "Make hay while the sun shines", it said:

Beg, borrow or steal to avoid paying higher tax rates this year. Next year you will not be able to avoid it. You should recognise that your company … is a tax haven.

If he will make a statement on the importance of markets in the European Union to firms in the north-east. [112220]

It is estimated that 14,500—one in three—small and medium-sized enterprises in the north-east have links with Europe. Government policy towards the euro is to prepare and decide. Today I am placing in the House of Commons Library and publishing the second draft national changeover plan. The euro standing committee, which includes the Governor of the Bank of England and the president of the Confederation of British Industry, met on Tuesday and discussed the draft changeover plan. In the draft plan that we are publishing today, which is in the Vote Office, we itemise and update the preparations being made.

I welcome my right hon. Friend's statement on the priority that the Government give to the changeover preparations. Will he acknowledge that more than 500 jobs in my constituency rely on a good and positive relationship with the euro? In the northern region, the figure goes up to 150,000 jobs, so it is very significant to us. Will he also acknowledge that business in the north-east sees the Tories' anti-European stance as undermining jobs and investment?

I am grateful to my hon. Friend. I much enjoyed my visit to her constituency this week, when I met many business men and women who know the importance of our constructive links with the European Union, and know how many firms depend on the continuation of that trade.

By how much does the Chancellor want sterling to fall from its present level against the euro?

The hon. Gentleman knows very well that we do not comment on the individual movements of sterling. He also knows that I appreciate the concerns of exporters and manufacturers about what has been happening in the euro area in relation to sterling—but the manufacturers to whom I talk in the north-east know that the greatest danger would be posed to them by action to return our economy to the stop-go, boom-and-bust policies of the bad old days.

How many claims for working families tax credit have been received from Scotland since its introduction. [112221]

The number of claims for working families tax credit received from Scotland is not readily available, but it is estimated that 67,000 families in Scotland had been awarded it by the end of January 2000.

That means that 67,000 families in Scotland are better off by an average of £1,250 a year than they were last year.

I am sure the House is shocked to learn that £71 a week is the average wage in my hon. Friend's constituency. That demonstrates the importance of the Government's policies on the national minimum wage and working families tax credit, and our reforms of national insurance, to low-paid workers who want to raise their incomes.

Why does the Paymaster General not accept the verdict of Filip de Kam, a tax expert from the Organisation for Economic Co-operation and Development, who argues that the Government are breaching international accounting conventions by describing working families tax credit as a tax cut when in fact it constitutes a hike in public expenditure? Is the hon. Lady proud of the fact that more than 50 per cent. of the cost of compliance with the WFTC—which is a recurring cost—is to be borne by small businesses, including small businesses in Scotland that have already been savaged by this Government, which employ fewer than 100 people?

First, the hon. Gentleman is wrong to assert that the Government are breaching OECD rules. Secondly, he is entirely wrong in what he says about the benefits involved. This is the man who opposed the introduction of the minimum wage and said that it would be a disaster; what would he know about helping low-income families? Thirdly, as the Government have made clear, the burdens on small business have been reduced by the many changes that we have made to assist it, and by what we have done to support the few small businesses that may have an employee in receipt of working families tax credit.

What responses he has received to the changes that he announced in his pre-Budget report to the proposed climate change levy. [112222]

The refinements to the design of the climate change levy announced by the Chancellor of the Exchequer in November will further both our aims for the levy: to increase its environmental effectiveness, while protecting the competitiveness of UK firms. Those changes were welcomed by both business leaders and environmental groups.

I thank my hon. Friend for that reply. First, does he think that we now have the right balance between the need to protect the environment and the need to support industry? Secondly and quite specifically, will he look again at the operation of the combined heat and power exemption, particularly the definition of what constitutes high-quality CHP, as I understand that there is a debate about that?

The climate change levy forms an important part of our climate change programme, which, as my hon. Friend may know, is published today. One feature of the package in the pre-Budget report that has been particularly welcomed has been the trebling of support for business energy-efficiency measures, including combined heat and power. That underlines our determination to tackle the huge challenge of climate change, but to do so in partnership with business and other interested parties.

Why are the Government persisting with that damaging energy tax, which will be levied on all firms, whatever their size, in all sections of industry? Will the Minister confirm that the same firms that will have money taken off them through the tax are being blocked from installing gas-fired electricity generating plant, which would itself reduce carbon dioxide emissions and counter the threat of global warming? Why do not the Government start to practise joined-up government, instead of just talking about it? As usual, it is all talk and no delivery.

I can certainly reassure the right hon. Gentleman that we are delivering the climate change levy. The problem of climate change is huge and a major programme is required to tackle it. That is why we are publishing the programme today. It makes it clear that the climate change levy will make an important contribution to achieving our Kyoto targets. It will save 2 million tonnes of carbon a year by 2010, and there will be at least as much again in negotiated agreements. That is a big contribution towards meeting our objectives. The right hon. Gentleman asks about the stricter consents policy. That policy addresses entirely different issues about the security and diversity of UK energy supply. Both policies are right.

How would my hon. Friend compare the energy tax rates in the UK with those of our main competitors in the European Union, and what impact might such rates have?

Many other EU countries have introduced carbon or energy taxes—eight of them so far. France and Belgium are working up their proposals at the moment. My hon. Friend asks about the rate of the climate change levy. The headline rate is around the middle of the rates in the eight EU states that have already introduced such taxes, so we are about in the middle.

What estimate he has made of the incremental amount of tax that will be paid in the next financial year as a result of measures announced since 1 May 1997. [112224]

How much extra tax will be paid per annum as a result of his Budget measures to date. [112225]

All changes to the tax system are included in the relevant Budget reports, which are publicly available. As a result of those Budgets, the direct tax rate on an average family with children will fall below 20 per cent. for the first time since 1979, and will be at its lowest level since 1972.

The Chief Secretary focuses on direct taxes, of course. Is it not a fact that, if the total tax burden as a percentage of GDP had remained at the 1996–97 level—which applied before the general election and before the Chancellor started introducing his stealth taxes—in the coming financial year, the British people would pay £15 billion less in tax? Is that not the truth that the Chancellor and the Prime Minister will go to any lengths to try to conceal from the British people?

No. Conservative Members are the last people who should focus on indirect taxes—they are the ones who put VAT on fuel, in breach of their election promises. The hon. Gentleman would do well to heed the advice of the shadow Chancellor, who, on 20 September, said:

Conservatives have become increasingly connected with uncaring social attitudes, selfish behaviour and sleaze. It is not easy for the party to strike the right tone. Of course it should be apologetic for mismanaging the economy.

Is it not remarkable that, whereas other Ministers are so keen on adjectives such as "new", "modern", and even "joined-up", Treasury Ministers become sensitive—they dislike it—when a particular noun is used in relation to tax changes, which are otherwise commonly known as "tax increases"? For the sake of argument, let us call them tax changes. Will the Chief Secretary tell us what assessment he has made of the impact on ordinary people of those tax changes? What is the effect, for example, of an annual petrol tax hike of £178 on people in rural areas and on heads of families on the national minimum wage? What is the impact on pensioners with incomes below the income support level, but who have small savings incomes, whose payable tax credits have been withdrawn?

The hon. Gentleman should remember who it was who introduced the automatic petrol tax escalator, which we have now abandoned. Who was it who imposed VAT on fuel, which did the damage to pensioners? The answer to his question is that families with children are £740 a year better off as a consequence of our tax changes.

Many of my constituents are paying more tax than they were prior to May 1997, and they are doing so because they are earning a great deal more than they were prior to May 1997. Would my right hon. Friend like to take the opportunity to congratulate some of the high-tech entrepreneurs in my constituency—such as Mike Lynch, of Autonomy—who have done so well with the economic stability that the Government have created?

Yes, I do join my hon. Friend in congratulating those high-tech and other firms in her constituency, and across the country, that are making an investment in, and success of, the crucial sphere of the knowledge economy and high-tech industries. We have been helping those companies by cutting corporation tax to the lowest level. We are also helping them by introducing research and development incentives and the management enterprise initiative, and by operating the economy so that there is stability, enabling businesses to plan and invest with confidence for the future.

Is my right hon. Friend aware that, in 1949, the great socialist Government of Clement Attlee cut income tax by 10p in the pound, and that, in 1951, the average industrial-wage worker with a family of two had to earn 107 per cent. of industrial wages before he paid any tax? In today's terms, that would be about £22,000. Although I do not invite my right hon. Friend to put that in the Budget, will he move in the general, socialist direction of cutting taxes, letting workers have more money to spend from their wages?

Yes indeed. As I said earlier, all Budget representations are carefully considered. The good socialist record of the Labour party in ensuring fair and low taxes is commendable, and stands in stark contrast to the record of the Conservatives, who were responsible for the highest tax burden in the past century when they took the tax take above 39 per cent. We shall not follow that example.

Will the Minister stop trying to conceal the truth about tax increases? As he well knows, the Government's Red Book figures show a 2 per cent. increase over this Parliament. If we count the fiddle on the working families tax credit, that becomes 2.5 per cent. The latest wheeze is to quote figures on average families that exclude the increases in indirect taxes. Ordinary people well know that their taxes have gone up, while the health and education services that they receive have declined. They are paying more and getting less. The Prime Minister has—[Interruption.]

Order. It is about time that I heard a question.

Will the Government at last come clean on taxes, before we have to apply the same edict when referring to them as the Prime Minister has applied to all references to the hon. Member for Brent, East (Mr. Livingstone): stop using the "L" word and call him untrustworthy?

I shall give the figures again. Last year, the tax take was 37.4 per cent. of gross domestic product. This year it is 37 per cent. Next year, on present measures, it is projected to be 36.8 per cent. That is a falling tax burden, not a rising one. Coupled with the record increases in real take-home pay, it is a conclusive demonstration that people are better off with Labour.

What is his estimate of the number of jobs created in London since May 1997. [112227]

The UK economy is continuing to expand and create new employment. Since the general election, 140,000 new jobs have been created in London.

I thank my hon. Friend for that reply and congratulate the Government on their success in creating a vibrant economy in the capital. In the past year, unemployment in my constituency has gone down by 7 per cent. and the latest estimate is that around 150,000 new jobs will be created in the coming year. Does my hon. Friend agree that, in the very unlikely event of the Conservatives being returned at the next general election, they would squander that golden legacy of the past three years with a return to the boom and bust of the 1980s and early 1990s?

I entirely agree with my hon. Friend about what would happen were the Conservatives to be returned at the next general election. He talked about their record of boom and bust and the two recessions for which they were responsible. Almost 2 million jobs were lost in the UK during the recession in the 1980s and a similar number were lost in the 1990s recession. The Conservatives would abolish the new deal, which has so benefited my hon. Friend's constituency, as well as those of many Conservative Members. The right hon. Member for Kensington and Chelsea (Mr. Portillo) has seen a fall of nearly 64 per cent. in youth unemployment in his constituency as a result of Government policies that he does not support and would end.

Does the hon. Lady agree that the ability of the economy in London to create and sustain prosperity and jobs depends on a low-tax regime from local and national government? Will she assure the House that the withholding tax on the savings income of European Union citizens in the City of London will be vetoed, so that it goes away for good? Why has the Paymaster General not published the report on so-called unfair tax competition, which she drafted at the behest of the European Union? The competitiveness of the City of London depends on a highly favourable tax regime, which many in the European Union would like to destroy.

My hon. Friend the Paymaster General has indeed published the report to which the hon. Gentleman referred and it is now in the public domain. I agree with the hon. Gentleman on just one of the points that he made. We continue to defend Britain's interests in the matter of the withholding tax, as we said we would do. I share the hon. Gentleman's views on that, but with regard to the economy in London, I remind him that there have been 800,000 new jobs across the country, 140,000 of which are in London, and that a record 3.3 million people are employed in London. I can attribute that only to the Government's excellent policies—the new deal, the national minimum wage, the working families tax credit—which provide the right framework for job creation through stability and meeting our inflation target. The hon. Gentleman should look at the record of his own party and ask himself how it was that the Tories presided over so much unemployment and so many periods of boom and bust. Who would trust the Tories again with the economy? The British people know that the Labour party and the Labour Government can be trusted to run UK plc.