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Taxation
7. Mr. Thomason: To ask the Chancellor of the Exchequer what are his objectives in the field of taxation; and if he will make a statement. [33411]
Mr. Jack: We aim to reduce the basic rate of income tax to 20p in the pound and abolish capital gains tax and inheritance tax. The Chancellor will make progress towards these objectives when it is prudent and sensible to do so.
Mr. Thomason: I congratulate my hon. Friend on that answer, which is good news for current taxpayers and taxpayers for many years ahead. Will my hon. Friend confirm that he has no proposals for hidden taxes and that
he does not have anything up his sleeve, unlike the Labour party, which has so many proposals up its sleeve that it can hardly get its arm in it?
Mr. Jack: My hon. Friend rightly reminds us that the Opposition are trying to fix their policies, as usual--a state of division and divide. He is right about hidden taxes. We have no plans for a tartan tax, teenage tax, European jobs tax, car tax or a windfall tax. What are dangerous are the taxes that we can see coming, on the successful and the enterprising: the higher-rate taxes proposed for those who earn a little more than £30,000.
Mr. Winnick: Why does the Minister believe, like the rest of his ministerial colleagues, that a tax bribe before the next election will do the trick for them, when the large majority of people are paying a greater percentage in taxes than they were in 1979? That is a dismal failure, and it is unlikely that the electorate will forget it when the election comes.
Mr. Jack: That really is rich coming from the hon. Gentleman, who is a member of a party that disguised its own tax burden on the British people by borrowing so much money--to the equivalent of another 10p on the basic rate of tax. My right hon. and learned Friend the Chancellor is not in the business of playing fast and loose with the British economy. He made our position about future tax reductions absolutely clear in his Mansion house speech, and I commend that excellent text to the hon. Gentleman.
Inflation
8. Mr. Amess: To ask the Chancellor of the Exchequer if he will make a statement on his estimate of the rate of inflation for the remainder of 1996-97. [33412]
Mrs. Angela Knight: In the previous Budget, my right hon. and learned Friend the Chancellor forecast that underlying inflation would fall from 2¾ per cent. in the second quarter of 1996 to 2¼ per cent. by the second quarter of 1997. I remain confident that we are on course to meet our inflation target of 2½ per cent. or less.
Mr. Amess: In the light of that reply, does my hon. Friend agree that the rate of inflation still matters very much? Does she further agree that, if the Government were unwise enough to adopt the policies proposed by the Labour party and the Liberal Democrats, this country's trading position and its economic prospects generally would be fatally damaged?
Mrs. Knight: My hon. Friend is quite correct. Indeed, his analysis points out the terrible policies that the Labour party has on the economy, as indeed it has on so many other aspects of British life. He might be interested to know that the average rate of inflation when Labour was in control was just over 15 per cent., which meant that the average supermarket bill for an ordinary family rose by nearly £1,300 in two years. Those are the disgraceful consequences of the Labour party's absence of policy on inflation, as it is on every other aspect of the economy.
Mr. Pike: Does the Minister recognise that that inflation figure was achieved by taxing the average British family by an extra £2,000 a year? Do not most British families think that that taxation policy is hurting, that it is unfair and that it is not working?
Mrs. Knight: The hon. Gentleman always fails to recognise how much better off people are in this country now when we have run the economy so well. He also likes to deny that the average family will be some £450 better off this year. Our economy is growing when the economies of many other countries have stalled. Our economy is creating jobs; unemployment is rising elsewhere. The hon. Gentleman should congratulate the Government rather than always trying to run the country down.
Non-EU Countries
9. Sir Teddy Taylor: To ask the Chancellor of the Exchequer if he will initiate studies on the relative economic performance of west European nations that have decided, after referendums, not to join the EU. [33414]
Mr. Heathcoat-Amory: The country to which my hon. Friend refers is Norway, which decided not to join the European Union after a referendum. We have not conducted the study that my hon. Friend describes.
Sir Teddy Taylor: Should not the Chancellor of the Exchequer be genuinely alarmed that, in the European Union, almost 20 million people are unemployed--more than 11 per cent.--and rising; that in Britain, partly because of his natural brilliance, of which he is well aware, and also because we were chucked out of the exchange rate mechanism, unemployment is around 8 per cent.; and in Norway, which voted no against all the advice from the experts who said that it had to join to save jobs, unemployment is 4.5 per cent. and falling? Is that not a certain indication that further Euro-integration is simply a recipe for mass unemployment and despair? When will the Government wake up?
Mr. Heathcoat-Amory: Like Norway, this country has a good record on falling unemployment. Like Norway, we are determined not to catch the continental disease of tying up our labour market with regulations and red tape to such an extent that competitiveness and unemployment rises.
Mr. Skinner: What on earth possessed the Chancellor of the Exchequer to say the other day that Britain ought to be one of the first countries to join a European single currency? Do the Government not realise the madness of the exchange rate mechanism? The last time this Tory Government tried to shadow the mark, the last Chancellor and the Prime Minister together lost £10 billion in an afternoon, and never went near a betting shop.
Mr. Heathcoat-Amory: The hon. Gentleman has described Labour party policy on monetary union fairly accurately, but--not for the first time--he has not quoted my right hon. and learned Friend the Chancellor accurately. What is true is that this country would be among the first to qualify for monetary union under the
convergence criteria, if we chose to do so. That gives us the advantage of being able to choose from a position of strength whether to take the enterprise any further.Retail Prices Index
10. Mr. David Evans: To ask the Chancellor of the Exchequer which prices of which goods are monitored for the retail prices index. [33415]
Mrs. Angela Knight: The prices of over 600 representative goods and services are monitored each month to compile the retail prices index. For example, a variety of vegetables, such as peppers, are in the index. Details of the items are published each year in "Retail Prices Index Business Monitor".
Mr. Evans: I thank my hon. Friend for her reply. Will she thank and congratulate whoever included the red pepper in the retail prices index? It reminds us of Labour every single day, because it is bitter and twisted.
Does my hon. Friend agree that, if the red pepper ever returned to power via that lot opposite, with inflation at 26.9 per cent., it would not be long before members of the Transport and General Workers Union refused to collect rubbish in Leicester square? We would have rats as big as cats running around there. Moreover, members of the TGWU would not be prepared to dig graves, and we would not be able to bury our loved ones. Is that not what Labour is all about, always has been and always will be?
Mrs. Knight:
My hon. Friend has put the case extremely well. Let me mention a couple of other things that would happen if the red pepper party, alias the Labour party, ever came to power. What would happen is exactly what has happened in the past: savings and pensions would be wiped out, unemployment would rise, companies would leave the country and the United Kingdom's competitiveness would fall.
Mr. Connarty:
Is it not true that the current inflation rate has been reached through the crushing of the consumer expectations and hopes of the British people by adding £2,000 per annum to the average tax bill of a British family? Is it not also true that, in re-estimating the level of inflation, the Chancellor should re-estimate the level of the public sector borrowing requirement, which is expected to be £5 billion higher than his original estimate, and was £10 billion more last year than he had estimated? Is it not true that the national debt now amounts to £380 billion, having increased to that level over the past five years? We are storing up massive inflation for the British people.
Mrs. Knight:
I always find it extraordinary when the hon. Gentleman is so cavalier about some of the successes of our economy. I remind him--as I shall no doubt do on many occasions--that, in the past 17 years, people have become considerably better off. They have more goods at home than they had in the past, and they will be £450 better off in the coming year. We have brought down the borrowing requirement. When we look at the list, which country do we find has the lowest mortgage rate for 30 years, which has the lowest basic rate of tax for over 50 years, which has lower unemployment than any other major European country and which has had the longest
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