| Previous Section | Index | Home Page |
Interest Rates
7. Mr. Ben Bradshaw (Exeter): What has been the average level of interest rates set by the Bank of England since May 1997. [141839]
The Chief Secretary to the Treasury (Mr. Andrew Smith): Since May 1997, interest rates have averaged just over 6 per cent. as compared with 10 per cent. in the years of the previous Government.
Mr. Bradshaw: Can I assure the Minister that my constituents remember all too well when interest rates
were 15 per cent. under the previous Conservative Government because many of them lost their homes, businesses and jobs? Has my right hon. Friend had a chance to calculate what the average mortgage payer has saved since Labour came to power? If so, may we have those figures, because they will be useful in the forthcoming general election campaign?
Mr. Smith: I am grateful for my hon. Friend's question. He is right to remind the House what a terrible price people paid for the high level and volatility of interest rates under the previous Conservative Government. He rightly reminds us that interest rates were above 15 per cent. for a whole year. One and a half million home owners suffered negative equity and 250,000 homes were repossessed between 1990 and 1993 alone. My hon. Friend invites me to calculate the benefits that home owners with mortgages have received from the lower and more stable interest rates that we have brought about. I can confirm that I have been able to do that calculation. Under the Conservatives, mortgage rates averaged 11 per cent. as compared with 7 per cent. under Labour. On a typical mortgage, that means a saving of £1,000 thanks to Labour's prudence and economic stability.
Mr. Richard Ottaway (Croydon, South): But can the Chief Secretary confirm that his plan to scrap the pound means scrapping the Monetary Policy Committee? Can he confirm that, at the next election, there will be just one party campaigning for interest rates to be set by an independent Bank of England--the Conservative party?
Mr. Smith: That is an extraordinary question, especially given the fact that the shadow Chancellor has been threatening to take away from the Monetary Policy Committee the right to determine interest rates. He is the one who says, "No, I could do it better. I consider them to be incompetent." What a cheek that is against the background of the Conservatives' record in government of those variations in interest rates--15 per cent. for more than a year.
Let us remember the effects that the shadow Chancellor's policy would have on stability. First, he says that he has a tax guarantee that turns out not to be a tax guarantee. Then he says that he will make £16 billion of cuts, but he cannot say where they will come from. Then he says that it is £8 billion of cuts. When asked where they can be made, he says that it is £5.3 billion of cuts, but when one looks at those one finds that some are not even in the Budget and some are savings that we are already making.
Mr. Speaker: Order. It would be best if the Minister talked about his own policy.
Mr. Smith: The Conservatives' sums do not add up. Where we are providing stability, they would destroy it.
Fiona Mactaggart (Slough): I urge the Minister not to take advice from the Conservative party on interest rates when, in the first 13 years of the previous Conservative Government, they were under 9 per cent. for only five months. In the last five years of Tory Government, they were higher than they have been under Labour. Throughout that time, we were told that we should have
high unemployment so that we could have low interest rates. Unemployment was more than 2 million for most of that time. As I recall, it was boom for interest rates and bust for workers. Can my right hon. Friend assure us that he will not return to that?
Mr. Smith: My hon. Friend is quite right; people are better off with Labour and I have no intention of taking the advice of the Conservatives.
Aviation Fuel
8. Mr. Gerald Howarth (Aldershot): How much tax was raised on AVGAS aviation fuel in (a) 1990, (b) 1997 and (c) 1999. [141840]
The Financial Secretary to the Treasury (Mr. Stephen Timms): The amount of excise duty was £4.8 million in 1990, £7.5 million in 1997 and £11 million in 1999.
Mr. Howarth: I am most grateful to the Minister for that reply. He will be aware--as will many of his right hon. and hon. Friends--that Britain is one of the world's leading aerospace countries, with a long history in aviation. Is he also aware that our flying training organisations are finding life extremely difficult at present? That is not simply because of the increased cost of crude oil, but because of the additional burdens imposed on them by new flight crew licensing requirements--and the need to invest about £4,000 per aeroplane in order to provide suppression of commercial radio stations by the extension of the FM band. Such is the burden on flying training organisations in this country that, for example, British Aerospace has moved its flying training from Perth in Scotland to Spain, where it saves 50 per cent. of its costs.
I suggest to the Financial Secretary that he might do something to help that important component of one of Britain's leading industries by cutting the rate of fuel duty--[Interruption.] It is a fairly modest amount of money. He might also try to help in other ways, because the industry is struggling greatly at present.
Mr. Timms: I agree with the hon. Gentleman that the UK aerospace industry is thriving; it is doing extremely well and is a shining example of success in the current British economy. On aviation gasoline duty, it is the case that, since 1982, the rate has been set at half the duty on leaded petrol--previously, it had been set at the full rate. In 1982, the Government of the day reduced it to half rate; that was a compromise between the view that there should be no duty, as, by international agreement, no duty is levied on jet fuel, and the view that aviation should bear the same duty burden as other forms of transport. The compromise reached at that time was right. I continue to support it.
My right hon. Friend the Chancellor cancelled the escalator on fuel duty, introduced by the Conservatives in 1993. He announced a freeze on fuel duty for the coming year. The package of measures that he announced on fuel duty has been widely welcomed.
Mr. Geraint Davies (Croydon, Central): Does my hon. Friend agree that there is an argument for a review of
aviation tax--especially given both the differential with the tax on cars and the environmental impact? Does he agree that if such a review were to take place, in an internationally harmonised framework, there is an argument that some of that money should be hypothecated to areas near airports, where environmental damage and noise are greater--in particular, in Croydon?
Mr. Timms: I think that there is a case for taxing aircraft fuel using international criteria, but at present that is excluded by international agreement. However, we have supported action through the International Civil Aviation Organisation to remove that exemption. We have also supported a request for a European Union study of the implications of taxing aviation fuel in the EU.
Taxation
9. Mr. James Gray (North Wiltshire): What percentage of GDP he estimates will be taken in tax in 2000-01; and what was the equivalent figure in 1996-97. [141841]
The Chief Secretary to the Treasury (Mr. Andrew Smith): Figures for taxes and social security contributions, as a proportion of gross domestic product, are shown in tables B10 and B26 of the pre-Budget report.
Mr. Gray: One sometimes wonders why the Minister cannot answer a simple, straightforward, factual question with a simple, straightforward, factual answer. Will he allow me to give him and the House the figures? In 1997, the percentage was 35.2 per cent; in 2000, it is 37.3 per cent; and in 2001, it will be 37.5 per cent. If the working families tax credit is included--not as a tax reduction but as an addition to public expenditure--the percentage becomes 37.8 per cent. Why will the Minister not simply admit to the nation that tax has gone up by £25 billion a year--the equivalent of 10p in the pound on income tax? Those are the facts. Why cannot he stand at the Dispatch Box and admit them?
Mr. Smith: I have already answered that question. I point out to the hon. Gentleman that, for 2000-01, the Conservative plans were for tax at a proportion of 37.6 per cent., rising in 2001-02 to 38 per cent. Moreover, he and the whole House will be aware that we had to sort out the millstone of debt and the financial mess that we inherited from the previous Administration--borrowing of £28 billion and the £350 billion debt. We have sorted that out, providing the platform for stability, prosperity and opportunity for all that we offer to the people.
Mr. Andrew Reed (Loughborough): First, will the Minister confirm that Britain remains one of the lowest taxed countries in Europe? Secondly, and more importantly, will he tell the House exactly how much each year it cost every family in this country to repay the debt that we inherited from the Conservative party? How much money was wasted on repayments each year on that borrowing of £28 billion? What did that mean for every family in this country?
Mr. Smith: My hon. Friend is right. We were spending more on servicing debt than on the nation's schools. It is important for people to understand that of every extra
pound that the previous Administration raised in tax, no less than 42p went on servicing debt interest and meeting social security benefit payments. With our spending plans, we have got that figure down to 17p.My hon. Friend is also right to refer to the comparisons with Europe: 10 member states of the European Union have a higher tax ratio than the United Kingdom. Our share is 1.1 per cent. lower than that of Germany, 6.4 lower than that of Italy and 10 per cent. lower than that of France.
Mr. Matthew Taylor (Truro and St. Austell): Can the Minister confirm, however, that there is a flip side to the coin? The Government say that they are taxing less than the Conservatives had planned to tax. The Minister is right about that--there is a fundamental flaw in the Conservative case--but the flip side is that the Chancellor, who is now Miss Bountiful and spending more, cut services as Miss Prudence at the start of this Parliament. Because of those cuts, the share of the national cake spent on health, education and pensioners will be less over this Parliament than the Conservatives spent in the last Parliament.
Mr. Smith: The truth of the matter is that the share spent on those priority services is rising, and rising sharply. Because we have been able to cut the cost of social security payments and of debt interest, more than 80 per cent. of that extra spending is going to the priority areas of health, education, investment in transport and fighting crime. Although I welcome the hon. Gentleman's support in exposing the fallacy of the Conservatives' arguments, he should also recognise that if we had not taken the tough decisions necessary to get the economy and the public finances straight, we should not have been in the position to invest in and improve our public services in the way that the British people want.
| Next Section
| Index | Home Page |