House of Commons
Thursday 13 March 1997
The House met at half-past Two o'clock
PRAYERS
[Madam Speaker in the Chair]
Oral Answers to Questions
TREASURY
Airport Taxes
1. Rev. Martin Smyth: To ask the Chancellor of the Exchequer how many EU countries levy (a) higher and (b) lower airport taxes than the United Kingdom. [18519]
The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim): The total tax a passenger pays can include embarkation taxes, passenger service charges and security charges, as well as VAT-type taxes.
On the basis of a £120 ticket for a domestic flight, the charge in Germany will be £27.61 in comparison with the £10 payable in the UK after November this year. Greece, Austria, France, Spain, Belgium, Sweden, Portugal and the Netherlands also have higher charges; France, Luxembourg, Denmark and Ireland have lower charges.
Rev. Martin Smyth:
Is not the Minister forgetting that airports in Germany and elsewhere are Government owned, so their taxes are hidden? A fair comparison shows that United Kingdom airports are charging two to three times more. In addition, does not the fuel form show the number of children? Could not that be reconciled with the number of children taxed rather than taking £5 million to £6 million in a tax on children?
Mr. Oppenheim:
I did point out that the tax in Germany is higher. Landing charges in the UK tend to be much lower than those on the continent, partly because we have privatised our airports which are therefore now more efficient. The hon. Gentleman's point concerning children is valid, and it is often made. Children under two who are carried by their parents are not charged, but anyone occupying a seat is charged. A cut-off point for children aged 10 or 12 would be almost impossible to administer because airline staff and ticket sellers would have to check children's age. However, I sympathise with the hon. Gentleman's general point.
2. Mr. Jessel:
To ask the Chancellor of the Exchequer what estimate he has made of the contribution of forecast privatisation proceeds in 1998-99 to the expenditure plans set out in his "Financial Statement and Budget Report". [18520]
The Chief Secretary to the Treasury (Mr. William Waldegrave):
The Red Book assumed privatisation
Mr. Jessel:
I believe that £1½ billion works out at about £80 a head for every man, woman and child in the UK. If the Labour party were to attempt to stop privatisation, would not it have to increase the rate of VAT by about 1 per cent. or income tax by about 1p in the pound, or a bit of each, to raise the same amount of money?
Mr. Waldegrave:
My hon. Friend is right; the absence of the predicted income from privatisation proceeds seems to have been missed by the right hon. Member for Dunfermline, East (Mr. Brown), who says that he will stick to our plans. Unless the right hon. Gentleman has done yet another U-turn on the matter, the Opposition are £1½ billion short on this, which contributes to the £12 billion gap that they have during the first two years, which is part of their £30 billion spending gap in general.
Mr. Stevenson:
Is the Minister aware that, according to figures produced by the House of Commons Library, since the Government embarked on their privatisation policy, privatisation receipts show a shortfall of £5.7 billion compared with the share market price the day after privatisation? Does not that show remarkable Government incompetence, and that the Government are prepared to pay any price in their dogmatic pursuit of privatisation?
Mr. Waldegrave:
No, it does not show any such thing. If we cast our minds back, on each of those occasions the Labour party either said that such businesses could not be privatised or would not be sold--or it tried to talk the market down. The hon. Gentleman helpfully makes another point, which is that the Labour party's proposed so-called windfall tax is based on the idea that there was a windfall--some 15 years ago in many cases. How one taxes the present shareholders to catch up with an alleged windfall 10 years ago is rather odd.
Mr. Congdon:
Given the success of the privatised industries in reducing prices while paying more than £2.5 billion a year into the Treasury, does my right hon. Friend think that it is somewhat perverse to reward that success by imposing a windfall tax? What incentive is there for such companies to be profitable when their success would be rewarded by the Labour party plundering their profits?
Mr. Waldegrave:
The Labour party justified that policy on the basis that it thought that some of the executives in those firms were too highly paid, but the proposal makes no difference to executive pay. It is a random tax on a selection of successful businesses, such as British Telecom, which has delivered a 40 per cent. cut in real terms in its prices to the consumer. It shows Labour's real underlying approach to industry: if it is successful, Labour does not like it.
Mr. Milburn:
Do the Government intend to privatise the Post Office?
Mr. Waldegrave:
The figures in the Red Book do not include any potential receipts from the Post Office.
Mr. John Marshall:
Will my right hon. Friend confirm to the House whether the figures include receipts from the proposed privatisation of London Underground? Will he confirm also that, unique among privatisations, the receipts from that privatisation will be used to increase investment in London Underground?
Mr. Waldegrave:
My hon. Friend is quite right: the Red Book does not include any assumptions about London Underground.
3. Mr. Olner:
To ask the Chancellor of the Exchequer by how much the amount of tax paid by a typical family has changed since 1992. [18521]
The Chancellor of the Exchequer (Mr. Kenneth Clarke):
A family on average earnings should be around £370 better off next financial year, 1997-98, after tax, inflation and earnings growth, relative to the current financial year, 1996-97. This takes the total rise in real take-home pay for the typical family to more than £1,100 since 1991-92.
Mr. Olner:
Will the Chancellor take this last opportunity before the general election to come to the Dispatch Box and apologise to my constituents in Nuneaton for the 22 Tory tax rises that they have suffered, which have put them £2,000 out of pocket since this Government came to office? Will he join Labour in not pursuing increases in VAT on food, children's clothing, books and newspapers?
Mr. Clarke:
Untypically, the hon. Gentleman does not appear to have paid any great attention to my answer. The average family in Nuneaton is £1,100 a year better off compared with the year before the last election, after taking account of changes in incomes, tax and inflation. If the Labour party had been elected--it had pledged to increase taxes and has since opposed everything that we have done to get the recovery going--families would have been poorer.
People face the prospect of being asked to elect a Labour Government, but the Labour party cannot explain how it would raise £12 billion in the first two years. Labour would make people poorer if they turned to it. The hon. Gentleman's constituents are better off under the Conservative Government and, to quote another occasion, he should rejoice in that fact rather than try to find ways of getting around it.
Sir Sydney Chapman:
Does my right hon. and learned Friend accept that, as the typical family is earning much more today than in 1979--it has an extra £1,000 a year in its pockets--people are quite happy to pay a few more pounds to protect our vital public services? Will he also accept their thanks for the 25 tax cuts that he has made in his last two Budgets?
Mr. Clarke:
When people are able to earn more in cash terms in a successful economy, they tend to pay more
Mr. Malcolm Bruce:
Does the Chancellor acknowledge that living standards have risen in spite of the Government's tax increases, not because of them? Will he acknowledge that the cut in the basic rate of income tax and overall cuts in income tax have been financed by the receipts of privatisation and North sea oil and the extension of the tax base in other areas? Is that why he told The Grocer magazine that the next challenge was to ensure that VAT on fuel was put back up to 17.5 per cent.?
Mr. Clarke:
That is absolute nonsense; the economy would not have recovered if we had not tackled borrowing. That is why I had some tax increases in my first two Budgets, and thereby controlled public spending. By controlling public spending thereafter, we reduced borrowing. As my hon. Friend the Member for Chipping Barnet (Sir S. Chapman) said, we have had 25 tax cuts as well. The lady from The Grocer who spoke to me was surrounded by other journalists, who failed to hear any reference that she says I made to tax on fuel, and what she says I said does not represent my views.
We have had tax-cutting Budgets for the past two years because we have done what was necessary to get borrowing on course and, therefore, the economy on course. The average family is therefore becoming better off and will continue to do so for so long as we stick to my Budget plans.
Mr. Spring:
Will my right hon. and learned Friend confirm that we shall soon be having the lowest basic rate of tax for 60 years? Will he confirm also that it is his intention to move towards a 20p basic rate of tax, thus further boosting the living standards of the average British family?
Mr. Clarke:
My hon. Friend is right. In April, the income tax rate will come down to the lowest since Stanley Baldwin was Prime Minister before the war. That gives credibility to our pledge to reduce the standard rate of income tax to 20p in the pound when, and only when, it is safe to do so, and consistent with keeping the economy on the strong growth pattern that it is maintaining at the moment.
Ms Primarolo:
Will the Chancellor of the Exchequer take this opportunity to explain to the House exactly what he meant when he said to the reporter from The Grocer that
Mr. Clarke:
I was surrounded by other journalists and others, none of whom recalls my making that remark, which does not in any event represent my views. If we stick to my published Budget plans, in due course we shall maintain our tax-cutting agenda. If a Labour Government
Mr. Garnier:
Is it not the case--indeed, is it not certain--that whereas dogs bark and lambs bleat, Labour Governments increase taxes? Is that not the only way in which the Labour party will be able to fill the enormous black hole that it has in its public spending plans?
Mr. Clarke:
Just so. The Labour party is already committed to raising the windfall tax, which will increase the total burden of taxation on the people of this country and raise their fuel bills. It is on top of that that the Labour party is £12 billion short in the first two years and £30 billion short over five years. My hon. and learned Friend is right: on all past and present form the Labour party will turn to taxation to raise that money and thereby make the public worse off.
"the challenge now is to get"
VAT on fuel
"up to 17.5 per cent."
Will the right hon. and learned Gentleman deny that it is the Government's intention, if re-elected, to do that?
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