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Public Spending Targets
4. Dr. Wright: To ask the Chancellor of the Exchequer what plans he has to review his public spending targets. [24309]
Mr. Waldegrave: The Government's objective for public spending is to reduce it as a share of gross domestic product over time, and in particular to reduce it to below 40 per cent. The last Budget set out plans to achieve that in 1997-98. If we can go further than 40 per cent. we will, and the target is constantly reviewed.
Dr. Wright: Is the Chief Secretary aware that Opposition Members follow the Chancellor's predictions with considerable interest? We particularly enjoyed his recent prediction that, because the electors of South-East Staffordshire now felt so good about the Government's economic policies, they would show their appreciation in the usual way. In view of the current state of the Chancellor's predictions on both growth and borrowing,
is it not the case that he will be able to deliver a pre-election tax bribe only at the expense of public spending cuts of a savagery that he personally would find unacceptable? Although Opposition Members might understand that, has the Chancellor the slightest chance of explaining it to the ideological warriors seated behind him?
Mr. Waldegrave: We do not follow either the predictions or the opinions of Opposition Front Benchers with much interest, because they have no predictions or opinions. That is one of the problems of debating economics in the House. My right hon. and learned Friend the Chancellor has delivered an economy that is working more strongly and stably than, perhaps, at any point in my lifetime, and I think that he and the House should be proud of that.
Mr. John Marshall: I thank my right hon. Friend for his answer. It will be warmly welcomed by most people, who realise that lower taxes will come only from lower Government expenditure. Would not public expenditure soar under a Government whose members approached every problem with a blank cheque?
Mr. Waldegrave: We have hit our spending targets in each of the past four years, although they have been tough, and I intend to ensure that we hit them again this year. I do not think that any serious economic commentator believes that Labour could keep spending at the levels that we have planned, but we will do so.
Taxation
5. Mr. Jamieson: To ask the Chancellor of the Exchequer what representations he has received from the public on current levels of taxation. [24312]
The Economic Secretary to the Treasury (Mrs. Angela Knight): My right hon. and learned Friend the Chancellor has received a number of representations on current levels of taxation, including some from residents of Plymouth welcoming the tax cuts made in his November Budget.
Mr. Jamieson: Can the Minister confirm that, by the end of this financial year, a typical family, even in Plymouth, will have paid £2,000 more in taxes since the general election? Will she also confirm that she supported those 22 tax rises which have confirmed that the Tories are instinctively a party of higher taxation?
Mrs. Knight: I will confirm that, as a consequence of the November Budget, tax changes are worth £190 this year to couples with children. The improvement in the economy means that they are likely to be £450 better off and, since 1979, they are £4,500 better off. That is our record. When the hon. Gentleman's party was in power from 1974 to 1979, people were better off by only £80. They are £4,500 better off under the Conservatives.
Mr. John Townend: Can my hon. Friend confirm that the Government intend to have plenty of clear water between themselves and the Opposition on taxation policy? I urge the Government to cut spending so that
they can safely continue to cut taxes and make it clear to voters at the next election that we are still the party of low taxation and Labour is the party of high taxation.
Mrs. Knight: I can assure my hon. Friend that we shall be prudent in everything we do. We are aware that successful countries are those that tax less and spend less, and we propose to make this a successful country. I can also assure him that a recent survey of 600 executives concluded that most of them forecast higher taxes, greater unemployment, a diminished international standing and a resurgence of the left if Labour came to power. The Opposition are not fooling people, I am glad to say.
Mr. Darling: Can the Economic Secretary confirm that a typical family is now paying a higher effective rate of tax than it did in 1979, and that the only Tory instinct on taxation is to mislead and distort? Far from getting a tax bonanza, as the chairman of the Tory party claimed today, Britain is getting a tax nightmare for millions, and that nightmare is about to be experienced by rather a large number of the Minister's colleagues.
Mrs. Knight: I can confirm that we have the lowest basic rate of tax for over 50 years, that people will be better off this year as a result of the combination of the Budget and the improving economy and that people are substantially better off since 1979. When Labour had its chance, it crucified people and companies with taxes. That is why people left the country and why businesses were doing so badly. Under us they are not doing that: they are doing well.
Film Industry
7. Sir Michael Shersby: To ask the Chancellor of the Exchequer what measures have been introduced by Her Majesty's Treasury since May 1979 to assist the British film industry; and if he will make a statement. [24315]
The Financial Secretary to the Treasury (Mr. Michael Jack): Before 1979, there were no special tax rules for the film industry. Since then, the Government have provided a number of special tax concessions to help the industry.
Sir Michael Shersby: Does my hon. Friend agree that since 1979 the Conservative party has been the true friend of the British film industry? Will he remind the House of some of those tax policies, such as income matching, and of the economic policies that have helped one of our most successful industries to prosper?
Mr. Jack: My hon. Friend speaks with considerable knowledge because of his involvement in the film industry. He is right to underscore the fact that, as I said in my answer, before 1979 there was no special tax help for the industry. Now the system of income matching, which we introduced, means that tax relief of up to £80 million a year is given to the industry. My hon. Friend may care to note a point in addition to tax, that Mr. Tony Scott, who recently bought Shepperton studios, told Barry Norman's "Film 96" that one of the reasons he made "Judge Dredd" in this country was that production costs were some 33 per cent. lower than in America. Goodness knows what that would be if Labour implemented the social chapter.
Taxation
8. Mr. Mullin: To ask the Chancellor of the Exchequer what plans he has for tax reductions; and if he will make a statement. [24316]
Mr. Kenneth Clarke: The Government are committed to making further progress towards a 20p basic rate of tax when it is right for the economy to do so.
Mr. Mullin: We know that the Chancellor comes from the civilised wing of his party--possibly the Chief Secretary does as well. Does the Chancellor agree that it would be wholly irresponsible to attempt to purchase the result of the next general election with tax cuts? Will he take this opportunity to make that clear to his hon. Friend the Member for Bridlington (Mr. Townend), his right hon. Friend the Member for Wokingham (Mr. Redwood) and their mean-minded friends on the Benches behind him?
Mr. Clarke: I confirm that it would be wholly wrong to attempt to buy the next election by irresponsible tax cuts, and we have no intention of doing so. We aim to lower taxation as part of our policy of producing a strong industrial economy. The hon. Gentleman comes from the civilised wing of his party, as does the hon. Member for Birmingham, Ladywood (Ms Short)--that section of the Labour party that believes in higher taxation, higher expenditure and higher public borrowing. Those hon. Members would revert to such a system if the present Labour Front Benchers--who are completely vacuous and empty on all these subjects in public--ever took Labour back into power.
Mr. Budgen: Has my right hon. and learned Friend received any advice recently from one of the most distinguished Labour statesmen, Lord Healey, who said in 1977 that he intended to squeeze the rich until the pips squeaked?
Mr. Clarke: I have not recently had his advice but, like my hon. Friend, I well recollect the experience of having Lord Healey as Chancellor, when the top rate of tax on earned income was 83 per cent. In addition, by taking the public sector borrowing requirement as a proportion of gross domestic product to 7 per cent., Labour was really deferring yet more taxation which would have come in had the Conservatives not taken office in 1979. We must avoid, above all else, a repeat of that experience.
Mr. Gordon Brown: Given that any statements that the Chancellor makes about tax and borrowing have been about as accurate as his forecast of a Conservative election victory in South-East Staffordshire, and given that the forecasts of public borrowing in the Conservative Budget at the previous election have been exceeded over the past four years by £46 billion--forecasts that were used to justify tax cuts that could not be sustained--does the Chancellor therefore now agree that his borrowing forecast for November should be subject to an independent audit by people outside the Treasury so that the Conservative party can never mislead the people of this country about tax and borrowing again?
Mr. Clarke: The hon. Gentleman advised his party not to vote against the tax cuts that I was able to introduce in
the last Budget, one of the few wise decisions--indeed, one of the few decisions of any kind--that he has taken since he started shadowing me. The borrowing forecast for next year will be below the £30 billion that the Liberal Democrat spokesman--[Interruption.] I know of no one who believes that it will be above £30 billion. It is clear that our borrowing requirement is on a downward path towards balance in the medium term, and that is the foundation of our policy. I forecast that we would move towards balance in the medium term, that we would move towards an inflation rate of 2½ per cent. and that we would make progress towards a 20 per cent. basic rate--all that is coming true, as is my forecast that we would have the strongest economic recovery in western Europe. The hon. Gentleman's history of forecasts used to be dreadful, when he made any, but he has not made one for a year or two.
Mr. Duncan Smith: Does my right hon. and learned Friend agree that the real debate is about whether the Government agree to what degree, how much and when we reduce taxation, as opposed to the Opposition, who wonder to what degree they can resist raising taxation? In line with that, has he received any quiet submissions from anybody in Birmingham, Ladywood?
Mr. Clarke: We know that tax reductions go in line with the proper control of public spending and that tax reductions have to be seen as part of an overall policy of creating a healthy enterprise economy. That is a clear and consistent policy that is producing results. I have received no representations from any Opposition Member, and it would be hopeless to expect any comment from Labour Front Benchers. I look forward to a reshuffle of shadow posts, because the shadow Secretary of State for Transport obviously has views on the subject--they lie in a tax-raising direction. Perhaps the hon. Member for Dunfermline, East (Mr. Brown) might have to devote himself to roads and tramways for a year or two to come.
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