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Married Couples Allowance
6. Mr. Andrew Robathan (Blaby): How much the abolition of the married couples allowance will cost the average couple of working age in this financial year. [121376]
The Paymaster General (Dawn Primarolo): As a result of the measures that we have taken in this and previous Budgets, from April 2001 households will be on average £460 a year better off, and families with children will be on average £850 a year better off.
Mr. Robathan: I am sure that the House will deprecate the fact that the Minister, like everyone else on the Treasury Front Bench, is unable to answer a simple question. Let me help her out--the abolition of the married couples tax allowance will lead to approximately £200 in extra tax paid by 10 million couples in this country. How does she square that with the statement by the Prime Minister who, when he was Leader of the Opposition, said:
- The programme of the Labour party does not imply any tax increases at all . . . ?
Dawn Primarolo: I am delighted to help the hon. Gentleman by reminding him that the cost to married couples when the allowance was cut from 40p to 15p under the previous Government was £430 a year. Indeed, the shadow Chancellor, who was then Chief Secretary, described the married couples allowance as having "the least ongoing justification".
The hon. Gentleman misses the point. The purpose of the abolition of the married couples allowance was to focus resources on families with children. As a result of the Conservative Government's policies, there were 3 million children in poverty when this Government were elected. The increases in child benefit, the introduction of
the working families tax credit, the rises in income support, the 10p tax rate and the cut in the tax rate to 22p have helped families when they need help most--when their children are small.
Ms Sally Keeble (Northampton, North): Does my hon. Friend agree that the married couples allowance was a hangover from the days when married men were compensated because they took on financially dependent wives? The allowance bears no relation to present circumstances, in which 70 per cent. or more of married women work and are financially independent. Does my hon. Friend agree also that most couples will very much welcome the extra help that will be introduced next year? I refer to the £416 that will be available when couples need it most, which is when children come along.
Dawn Primarolo: My hon. Friend is right. In, I think, 1994 Lord Lamont, the then Chancellor of the Exchequer, said that the married couples allowance gave the most help to those on the highest incomes who needed it least, and the least help to those on the lowest incomes, who needed it most. The introduction of the children's tax credit will give, on average next year, £8.50 a week to lower and middle-income families. That is in addition to the extra resources that we introduced this year for child benefit increases, which are the greatest that have ever been made available. The previous Government were freezing such increases, which this year more than equal the married couples allowance.
Mr. David Ruffley (Bury St. Edmunds): Is the Paymaster General aware of the report produced by the Independent Item Club of economists, which was sponsored by Ernst and Young, which draws attention to an interesting feature of the abolition of tax allowances? The report demonstrates that when new Labour came to power, income tax accounted for 10 per cent. of household pre-tax income. After three years of new Labour Budgets, that has risen to 12.5 per cent. Will the hon. Lady give an undertaking that Treasury Ministers will cease to claim that the tax burden on households is decreasing, when independent evidence shows that it is increasing?
Dawn Primarolo: I am interested to hear what the hon. Gentleman says. I always follow his comments with care. In the Select Committee on the Treasury, when he was studying the tables for the Budget for the year 2000, he said:
- From these tables it will be seen that the 2000 Budget makes successive reductions in tax (compared to the position if thresholds . . .
Unemployment
8. Dr. Stephen Ladyman (South Thanet): If he will make a statement on the impact of his Department's policies on the levels of employment and unemployment in the south-east. [121378]
The Economic Secretary to the Treasury (Miss Melanie Johnson): In the south-east, as in the rest of the UK, we have created a sound and credible platform of economic stability that will help us attain our objective
of high and stable levels of growth and employment. Since the election, employment in the south-east has risen by 203,000 and unemployment has fallen by 60,000.
Dr. Ladyman: I am grateful for that answer. Certainly business is booming in the south-east. Many Conservative Members who are straining to find bad news in the economy have constituencies with more than full employment. Unfortunately, however, that is not the position everywhere. Although the new deal has made great inroads into unemployment in Thanet, we still have far higher levels of unemployment than the national average. Will my hon. Friend consider the possibility of an employment action zone or action team, as announced in the Budget, for Thanet?
Miss Johnson: I am grateful to my hon. Friend for making those points. We have heard already today that the Tories would scrap the new deal. However, I have the figures for those who are benefiting from it in Canterbury, which includes my hon. Friend's constituency. The new deal for young people there is benefiting 2,100 who started the programme. More than 1,000 of those people have moved into employment, with 750 securing sustained employment. I recognise that there may be further opportunities in Thanet through employment action zones and action taskforces for further work to be done. I know that my hon. Friend will share with me the conviction that it is the Government who are getting people back into work and that the Tories are the party of mass unemployment.
Mr. Nicholas Soames (Mid-Sussex): I warmly endorse the words of the shadow Chancellor, my right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo), and acknowledge that in my constituency the economy is doing extremely well. However, that is nothing to do with Labour; it is due to the policies it was bequeathed by a very successful Conservative Government. Does the hon. Lady understand--or does she realise--the punitive effects on companies in the south-east and elsewhere of increased stealth taxes and, above all, of an ever- increasing burden of regulation? Does she believe that those disadvantages are likely to ensure that the economy continues to grow or rather that, as is the case in Mid-Sussex, a number of companies will remain on a knife edge?
Miss Johnson: We are the party that introduced independence for the Bank of England. We introduced the national minimum wage, the new deal and the working families tax credit. Furthermore, we introduced the rules that are leading to a stable economy in which people are able to plan ahead. We have the lowest corporation tax ever. Equally, we are able to invest in public services--with record increases in expenditure in the health service and, for example, on child benefit. We shall take no lessons from the Conservatives, who left us a £28 billion deficit to deal with.
Mr. Geraint Davies (Croydon, Central): My hon. Friend will know that yesterday the pound hit a six-year low against the dollar. Given the benign trading conditions that that creates, does she agree that the Government should encourage our manufacturers and exporters to refocus their sales towards the buoyant US
market, and that that will help to lift employment rates higher even than the record historic highs that we already enjoy in the south-east?
Miss Johnson: As my hon. Friend is aware, our management of the economy is leading to growth. Indeed, the volume of manufacturing exports rose by 9.5 per cent. in the year to February 2000, and manufacturing productivity is increasing by about 5 per cent. That shows that our management of the economy is succeeding. If one compares that with the Tory record--under the Tories, manufacturing employment fell by almost 1 million from its peak in 1989 to its trough in 1993 and output fell by 7 per cent. between 1990 and 1991--one can see a sharp contrast with this Government who are able to manage the economy and set the rules in the right way so that we can plan ahead on a stable platform. Employment growth shows that--there are 929,000 extra jobs. The Tory record is one of mass unemployment and mismanagement of the public finances.
Mr. Edward Davey (Kingston and Surbiton): As the Chancellor failed to answer the question put by my hon. Friend the Member for Truro and St. Austell (Mr. Taylor), will the hon. Lady have a go? Does the Treasury agree with the shadow Chancellor and, apparently, the hon. Member for Bolsover (Mr. Skinner), that British business must learn to live with the strong pound? Is the answer yes or no?
Madam Speaker: Order. I called the hon. Gentleman because the substantive question referred to the south-east and he has a constituency there. We will move on.
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