Examination of Witnesses (Questions 440
WEDNESDAY 24 APRIL 2002
440. I would rather have the Lawsonian approach
where you can have less of these breaks and lower rates, in particular
for people on low incomes.
(Mr Brown) I think you will find, for example, that
the CBI, who pressed very hard for the investment allowances to
be made available, as did other business organisations, will find
what you are proposing less acceptable than you think. I think
you will find that the capital gains tax cuts we made, while trying
to prevent avoidance which would mean people declaring their income
as capital, are a means by which we are stimulating entrepreneurship
in this country, and I have to disagree with you therefore on
the way that the tax system should develop. Where there is a loophole
it is inevitably requiring a regulation or legislation or some
statutory action to deal with that loophole and it is right for
us to deal with these loopholes.
441. We will leave it to the future to find
out whether that is right or not.
(Mr Brown) One of the programmes that is said to be
getting this relief is They Think It's All Over.
442. We did discuss yesterday, Chancellor, that
it was suggested that there would be some less than wholesome
family programmes that were getting it so, given that it is a
family show here, we would like that loophole to be closed.
(Mr Brown) Yes. Thank you very much.
443. Chancellor, you said that health spending
for 2007-08 was covered. Could you point to the part of the Red
Book where that is demonstrated?
(Mr Brown) Yes. The figures are covered to 2006-07
in the published documents, but by tradition we will publish the
2007-08 borrowing requirement at the time of the November-pre-Budget
444. So can you point to that document?
(Mr Brown) We will publish it at the time of the pre-Budget
445. So you have not got it covered, have you?
(Mr Brown) No. We publish long term tables as well.
(Mr Balls) It is covered in two places. One is in
Annex C where we set it out. I think the difficulty with the IFS
the other day was that they had not noticed this set of assumptions.
446. What page are we on?
(Mr Balls) It is on page 210, paragraph C22, where
we say that "firm overall spending plans for the 2002 Spending
Review from 2003-04 to 2005-06 are set out in Chapter 6",
and "prior to spending plans being set in the 2004 Spending
Review, the fiscal projections assume DEL growth after 2005-06
of 2.5 per cent in real terms, in line with the assumption on
economic growth used for the public finances, supplemented by
an addition to allow for the 5 year health settlement of the difference
between planned health growth and health's long term average growth,
3.6 per cent. This delivers DEL growth of 3.8 per cent in 2006-07."
In our numbers up to 2006 we have made an explicit assumption
above the numbers we had in the pre-Budget Report to allow for
the health addition in 2006-07, and then obviously that trend
and that number continues to 2007-08 too. In addition to that,
in Annex A, the "Illustrative long-term fiscal projections",
which is page 145 onwards, we show on the basis of cautious assumptions
our fiscal projections up to 2032 and those projections show nearly
all our fiscal assumptions up to 2032 and that includes explicitly
in the numbers which you have here the allocations for 2007-08
so, while it is true to say that it is not in the pre-Budget Report
or formally in the Code in producing the numbers for 2007-08,
that number and subsequent years is included in the long term
projections in that chapter, so clearly the assumptions are included
in the numbers for 2006-07, and it is included in Annex A, so
it is all fully covered and that is why the IFS was wrong in the
statement it made.
(Mr Brown) I think the IFS will be in a position,
I hope, to correct their misinterpretation of these figures. I
am gratified by the Committee's interest in going right up to
Mr Ruffley: We will be watching. And
you will be, Chancellor.
Chairman: Chancellor, you did mention
that you would provide a note to us on a number of issues. 7
We are making our report on Monday and it would be helpful if
as soon as possible you could get that information across. Can
I thank you and your colleagues today and yesterday for coming
and answering our questions so extensively.
5 See Appendix 8. Back