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Mrs. Knight : Does my right hon. Friend agree that it is interest rates that have the major influence on the housing market? Is it not correct that the low mortgage rates are giving very great encouragement to first-time buyers, the housing market as a whole and the construction industry, as new private housing starts have now increased by 20 per cent?

Sir John Cope : I agree with all that. Private housing starts are up strongly, as are the completions and the particulars delivered. All that is the consequence of the measures that I have outlined, especially mortgage interest rates.

Mr. Raynsford : Will the Minister recognise that, following the short-term increase in spending as a result of the relaxation of restrictions on capital receipts and the housing market package, the rented housing market is likely, once again, to decline this year? Does he now recognise that there is no justification for preventing local authorities from spending capital receipts in the long term? Will he extend the relaxation of the restrictions next year as well as this year?

Sir John Cope : We will not announce anything of that sort at the moment. I notice that new public housing has risen in the first quarter of this year to the highest level for more than eight years. That will greatly help that part of the rented sector.

Mr. Paice : Will my right hon. Friend resist the calls to release those capital receipts in one go? Is it not the case that, however attractive it may be, that would add £6 billion to the bottom line of our public sector borrowing requirement? Labour Members appear to care about that figure.

Sir John Cope : That is indeed the case, and that is why we are cautious about it.

Income Tax and National Insurance

11. Mr. Milburn : To ask the Chancellor of the Exchequer what was the average total annual payment in income tax and national insurance per employed person in 1992-93.

Mr. Dorrell : A married man on average earnings of £17,992 would pay £3,107 in income tax and £1,423 in employee's national insurance contributions.

Mr. Milburn : Does the Minister recognise that the March Budget has meant a huge tax hike which will bear down hardest on those who are least able to afford to pay? Will he take this opportunity to tell the House and the public what further tax rises he has in store? Will he now admit that the whole country is being asked to foot the bill for the £10 billion- worth of tax handouts that have been given to the very rich since 1988? Why should the poor, pensioners and NHS patients be asked to pay the price for the Government's extravagance?

Mr. Dorrell : The hon. Gentleman refers to the record of the 1980s. One might have thought that he would take the opportunity to welcome the increase in the real take-home pay that was available to all people as a result of the

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economic policies of the 1980s. Under the Labour Government, real take-home pay for the man on average earnings rose by £1.20 a week at today's values--between 1979 and 1993, it has risen by £81.50 a week. Real take-home pay is what matters, not the statistical analysis offered by the hon. Gentleman.

Mr. Barry Field : Is it not a fact that no post-war Government have done so much to simplify the personal taxation structure of the United Kingdom as this Government? When my hon. Friend puts the final cornerstone in place in the autumn Budget with regard to future expenditure and taxation plans, I invite him to go a stage further and introduce the reform that is so necessary in the European Community--bringing our pay-as-you- earn year into line with the calendar year. Only Ireland and this country continue with the peculiar date of 5 April.

Mr. Dorrell : My hon. Friend is meddling with a long-standing piece of history when he wishes to put the tax system on the same calendar as that by which every one has lived since the 1750s, but I shall certainly look at it.

On the more substantive point, my hon. Friend is right to stress that the simplification of the tax system is one of the major steps that the Government have put in place which has enocuraged the development of a more competitive and successful economy and delivered the improvement in real take-home pay to which I referred earlier, and which is the bell-wether of success.

Mr. Nicholas Brown : Has the Financial Secretary seen the revised parliamentary answer given to me yesterday stating that the number of people who earn less than the basic rate tax threshold but will pay more in national insurance contributions in 1994-95 as a result of the Budget changes is not 500,000, as previously stated, but 2.5 million? Is not he ashamed that 2.5 million of his fellow citizens who are in work but are too poorly paid to have to pay basic rate income tax will still be required to pay extra national insurance contributions as well as extra value added tax on fuel? Can the hon. Gentleman give the House an assurance that that parliamentary answer has not anticipated Government policy-- [Interruption.] --and called the 20 per cent. band the basic rate band, solely for the purpose of-- [Interruption.] --restricting allowances?

Mr. Dorrell : It must be a long time since the hon. Gentleman asked a question that secured two cheers while he asked it, particularly one so badly based on the facts. His question reflects the fact that we have increased the personal allowance in real terms by 25 per cent. since 1979. The hon. Gentleman might like to refer also to our change in the system of national insurance contributions for employees, which has reduced the burden on the low paid. It is now a more rational system and more friendly to incentives. The key to a tax system is that it is friendly to incentives and makes it worth while for people to make extra effort. That is the guiding light of our tax policy and will continue to be so.

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Q1. Mr. Evennett : To ask the Prime Minister if he will list his official engagements for Thursday 17 June.

The Prime Minister (Mr. John Major) : This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Evennett : I thank my right hon. Friend for his reply. Will he join me in welcoming today's unemployment figures which show the fourth consecutive fall? Does he agree that that is good news for the unemployed, the economy and Britain?

The Prime Minister : Yes ; above all, it is good news for those workers and their families who find themselves back in work. I am delighted at the fall of 26,000--the fourth fall in a row. I concede that unemployment remains far too high. It has fallen by nearly 80, 000 since the beginning of the year. Equally encouraging, vacancies are at their highest level for two years. A few months ago, many people expected unemployment to rise throughout the year. Instead, it has fallen in Scotland, Wales and every English region.

Mr. John Smith : Can the Prime Minister explain--his Minister was asked this question--why only last week the Department of Social Security claimed that the number of people on low incomes who would be worse off as a result of the national insurance increases in the Budget was only 500,000, but yesterday was forced to admit that that was wrong and the real figure was 2.25 million? What sort of advertisement is that for the competence of his Government or their understanding of the effects that his policies have on so many people?

The Prime Minister : The right hon. and learned Gentleman is operating under a misapprehension. Suggestions of a mistake are wrong. My hon. Friend was asked about the number of people below the basic rate tax threshold who will pay more national insurance in 1994-95. The answer he gave on 7 June related to people whose earnings fall below the 20 per cent. tax band. The answer he gave on 16 June related to people whose earnings fall below the 25 per cent. tax band. [Hon. Members :-- "Ah."] Therefore, naturally the figures are different.

Mr. Smith : The Prime Minister-- [Interruption.]

Madam Speaker : Order. The House must come to order. We must hear not only answers, but questions.

Mr. Smith : The Prime Minister seeks to defend his Department on the basis that it cannot read the questions. The question was the same in both cases, but it received different answers. Leaving that matter aside-- [Laughter.]

Madam Speaker : Order. The House must come to order. We are using up valuable time.

Mr. Smith : It relates to precisely the same issue. Does the Prime Minister recollect saying on that very issue during that election campaign :

"taxpayers with the lowest incomes will benefit most"?

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Why, then, has he imposed a higher national insurance burden on over 2 million low-paid people? Does he admit that, once again, he has broken his word, or was it just another of those throwaway lines delivered on a wet night somewhere in Dudley?

The Prime Minister : The right hon. and learned Gentleman's suggestion that it might be wise to put that aside is an answer which many people will recall for some time. If he looks at what has happened, he will see that we have raised the threshold for the 20 per cent. band by £500 in the Budget and by a further £500 from next year. Most taxpayers in the lower rate band will gain more from the 20 per cent. lower rate than they will lose from the 1 per cent. increase in national insurance contributions.

Mr. Smith : Does the Prime Minister still not understand, as millions of low-paid people do, that putting 1 per cent. on national insurance for people who do not pay income tax is putting up the tax on their income? Why did he say on page 7 of the Conservative party election manifesto :

"We have reduced the burden of national insurance on low earners"? Was the whole manifesto written on a wet night somewhere in Dudley?

The Prime Minister : I must tell the right hon. and learned Gentleman that it did not sound any better the second time, so perhaps he should put that aside as well. He should look at what has happened, with the introduction of a 20 per cent. tax band and the raising of a 20 per cent. tax band, and I reiterate--as he clearly did not hear it the first time--that most taxpayers in the lower rate band gain more from the 20 per cent. rate than they lose from the 1 per cent. increase in national insurance contributions. In short--so that the right hon. and learned Gentleman clearly understands--they are better off under our plans than they ever would have been under his plans, which would have involved the largest increase in direct taxation ever seen this century.

Mr. Sims : Has my right hon. Friend had an opportunity to study the current issue of the journal of the Royal Society of Medicine? Is he aware that it includes a survey carried out by a distinguished doctor of general practice in 12 countries in Europe, north America and the far east in which he reaches the conclusion that British is best? Will my right hon. Friend confirm that, as we proceed with the implementation of the NHS reforms, that will continue to be the case?

The Prime Minister : The immediate answer to my hon. Friend is no, I have not seen that survey, but, as he has drawn it to my attention, I shall take the opportunity of looking at it. There has been a dramatic improvement both in the resources available to the health services and in the quality of health treatment provided in recent years by the people who work in the service. It is our intention that that should continue-- [Interruption.] --and I am sorry if the right hon. Member for Derby, South (Mrs. Beckett) thinks that it is nonsense that the people in the health service are providing a better service. I believe that they are.

Mr. Ashdown : Is it not the case that in the 17 or so years since the decision was taken to build THORP--the thermal oxide reprocessing plant --at Sellafield, the economics of THORP have collapsed, the risk of nuclear proliferation has increased, international opposition has

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hardened and the threshold of safe nuclear emissions has been substantially reduced? Will the right hon. Gentleman undertake that, before a decision is taken to put THORP into operation, the widest possible consultation and debate will be conducted on that dubious project?

The Prime Minister : THORP is a substantial engineering and export success for this country. It supports some 3,000 jobs and has £9 billion-worth of contracts, which is a powerful vote of confidence in the plant from people around the world who will be its customers. As the right hon. Gentleman may know, my right hon. Friends the Secretary of State for the Environment and the Minister of Agriculture, Fisheries and Food are considering the inspectors' reports on the proposed new discharge authorisations for the site. The right hon. Gentleman will realise that it would be inappropriate for me to prejudge their considerations.

Mr. Stephen : Is my right hon. Friend aware that visiting the House today is a very special group of 21 men who served this country in the Army, Navy and Royal Flying Corps during the great battles of the first world war? Does my right hon. Friend agree that all of us who live in freedom today owe everything we have to those gallant men and their comrades who died in that most terrible of all wars?

The Prime Minister : I agree with my hon. Friend. I have sent a message to those very welcome guests to the House today. I am sure they will be welcomed by everyone in the House.

Q2. Mr. Llwyd : To ask the Prime Minister if he will list his official engagements for Thursday 17 June.

The Prime Minister : I refer the hon. Member to the answer I gave some moments ago.

Mr. Llwyd : Given the widespread alarm among millions of constituents about the proposed imposition of value added tax on domestic fuel, which will result in an increased incidence of hypothermia and even more poverty among middle-income groups, will the Prime Minister urge his colleagues to reconsider this pernicious and indiscriminate form of indirect taxation? In so doing, he might just assist his albeit fragile, political future.

The Prime Minister : I am grateful to the hon. Gentleman for his concern. We have set out a policy that we believe is correct and we have stated that we will take action to assist vulnerable groups. That assistance will be in place before the extra charges are introduced. The hon. Gentleman utterly fails to mention that the cost of fuel has been falling as a result of our policies, not rising astronomically as it did before we came to office.

Mrs. Roe : Does my right hon. Friend agree that it is typically British for commentators and Opposition Members to talk British industry down, yet totally ignore the best manufacturing output figures for five years?

The Prime Minister : I think that my hon. Friend understates her case a little. They do not just talk Britain down--given the chance, they do it down and do it in. Opposition policies would impose an extra tax on jobs and would be no good for British industry. Raising employers' costs and introducing the social charter would be no good for employment prospects or employers. The minimum wage would further damage job prospects. Yet again, the

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use of flying pickets would be legalised. [Hon. Members :-- "Boring."] That is the Labour party's policy. Labour Members may regard my comments as boring, but people in work regard their policy as a job destruction programme.

Q3. Mr. Bennett : To ask the Prime Minister if he will list his official engagements for Thursday 17 June.

The Prime Minister : I refer the hon. Member to the answer I gave some moments ago.

Mr. Bennett : Will the Prime Minister join me in congratulating Mr. Pink on winning his case for unfair dismissal against the Stockport health authority? Does he agree that whistleblowers play a very important part in a democracy? Will he urge the Stockport health authority to reinstate Mr. Pink and ensure that resources are available to improve the staffing of the geriatric wards at the hospital in question?

The Prime Minister : I am not aware of the details of the case, but if justice has been done I am delighted.

Q4. Mr. Fabricant : To ask the Prime Minister if he will list his official engagements for Thursday 17 June.

The Prime Minister : I refer my hon. Friend to the answer I gave some moments ago.

Mr. Fabricant : Following his Cabinet meeting this morning, will my right hon. Friend unequivocally assure the House that--despite the rumours and smears from the Labour party, which preys on the fears of the most vulnerable in our society--the national health service and welfare state always were, are, and for ever will be safe in Conservative hands?

The Prime Minister : As I indicated a moment or so ago, the health service has improved dramatically during recent years, partly as a result of the increased resources made available to it and partly as a result of the activities of the many dedicated people who work in it. I have no doubt that will continue to be the case in the future. [Interruption.] It is thriving.

Q5. Mr. Win Griffiths : To ask the Prime Minister if he will list his official engagements for Thursday 17 June.

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The Prime Minister : I refer the hon. Member to the answer I gave some moments ago.

Mr. Griffiths : Has the Prime Minister given the President of the Board of Trade a list of the companies that have donated to the Conservative party since 1979? Will the Prime Minister confirm that if the President finds that they have not declared those donations in their accounts, they will all be repaid?

The Prime Minister : The hon. Gentleman must understand that British business supports the Conservative party because it believes that our policies are right for British business, the British future and British jobs. Perhaps it is because business understands and applies that test that precious little money from companies goes to the Labour party.

Sir Jim Spicer : Would my right hon. Friend remember today that, over the past year, the wild and sometimes woolly Members of this House have said that the Government should intervene more directly in Yugoslavia? Will he accept the thanks of most sensible Members for all that he and the Government have done, on behalf not only of the United Kingdom but of the world, in not allowing such intervention to take place?

The Prime Minister : I am grateful to my hon. Friend. In my judgment, there is no doubt that it was right to assist with the humanitarian operation, and I believe that the activity of our troops has been widely admired, not just in this country but around the world. They have certainly done a magnificent job.

There are only two ways of settling the dispute. One is to put in hundreds of thousands of troops for an indefinite period--no one wise wants to do that, and no other country would be prepared to do it. The only alternative is to seek a diplomatic solution allied to the humanitarian aid that we and others have been providing. We still seek that diplomatic solution.

I understand that Lord Owen and Mr. Stoltenberg had a useful meeting yesterday with the Presidents of Serbia and Croatia. They will continue their negotiations next week. Lord Owen will brief me on Saturday before I go to the European Council His determined efforts over recent months have done as much as those of any other individual to keep alive the prospect of a political settlement.

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