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Mr. Flight rose—

Mr. Baron: Will the right hon. Lady give way?

Dawn Primarolo: As I have just referred to the hon. Member for Arundel and South Downs, I should give way to him; that would be the polite thing to do.

Mr. Flight: I thank the Paymaster General for giving way. She said that all of the 1 per cent. national insurance charge is being devoted to health service expenditure, but I distinctly recollect that approximately half is for the health service, with half going towards tax credits. Would she care to comment on that? Secondly, I repeat that she should not indulge in what she knows to be Labour party misrepresentations. She should instead be concerned by, and take note of, factors such as the 50 per cent. increase in the cost of the central civil service, whose numbers are rising from 450,000 to 529,000. She should also consider ways in which Government expenditure on unnecessary

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bureaucratic costs might be reduced. That is what I was talking about, rather than Government spending overall.

Dawn Primarolo: All of the 1 per cent. national insurance rise is devoted to the national health service. If the hon. Gentleman refers to last year's national insurance legislation, which provided for that, he will discover that I said that repeatedly and that it is on the record. Indeed, the figures demonstrate that fact; the rise is not being used for anything else.

Mr. Bercow: Will the right hon. Lady give way?

Dawn Primarolo: If I may, I shall deal with the second point made by the hon. Member for Arundel and South Downs. I can only go on the newspaper reports about, and the direct quotes from, the hon. Gentleman himself and the right hon. Gentleman the Leader of the Opposition. If I were to engage in propaganda devised by the Labour party, I would opt for something more spectacular—but I do not need to, as I can merely report the words that have come from the hon. Gentleman's mouth.

1.30 pm

I shall now deal with the points raised by the hon. Member for North Norfolk (Norman Lamb). He asserted—[Interruption.] I shall answer the hon. Member for North Norfolk, who has waited patiently; I may give way to the hon. Member for Buckingham later.

The hon. Member for North Norfolk asserted that the poorest 20 per cent. of households pay 40 per cent. of their annual income in tax. He bases that assertion on a publication from the Office for National Statistics, "Effects of Tax and Benefits on Household Income". However, the hon. Gentleman wants to forget—conveniently—some crucial and substantial facts that did not appear in that publication. The first is that the latest figures for 2001–02—the figures used by the hon. Gentleman—do not include any measures that the Government have introduced to help low-income households, which came into effect from April 2002.

Some of the excluded measures are the working tax credit, the child tax credit and the baby tax credit, the above-inflation increases in the basic state pension in April 2002 and 2003, and the increase in the minimum income guarantee for pensioners to match the increase in earnings. The article does not take into account the working families tax credit, which, following OECD guidelines, would reduce income tax payments for those in receipt of the benefit. Taking all the measures announced between 1997–98 and 2001–02, independent research by the Institute for Fiscal Studies shows that households in the bottom two quintiles have experienced the greatest proportion of real income gains over the five-year period.

What of the assertions of the hon. Member for North Norfolk about council tax and the proposal that a 50 per cent. rate for those earning £100,000 or more will somehow pay for a £100 reduction of council tax—and just about everything else that the Liberal Democrats want to fund? It is interesting to recall that the Liberal Democrats wanted to increase public spending last year,

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but this year they want to cut council taxes. It seems that they want to fund whatever is fashionable. However, the hon. Gentleman's figures are wrong. The 50 per cent. rate on £100,000 would raise—the Treasury confirmed, when asked—an income of about £4.5 billion. That is the net take when the whole United Kingdom—England, Wales, Scotland and Northern Ireland—is costed. However, when the £100 deduction on council tax is calculated, the Liberal Democrat figure applies only to England.

As the hon. Member for Buckingham said, it is difficult to take people seriously when their figures do not add up. It is also difficult to take them seriously when it is clear that they read the papers every day to find out what might be in vogue and then shape their policies around it. As confirmed by the hon. Member for Truro and St. Austell (Matthew Taylor), who speaks as the Liberal Democrat shadow Chancellor, the Liberal Democrats now believe that the Government are making the correct and necessary investment in public services. The direct tax burden on a single-earner family on average earnings and with two children will be 20.1 per cent., which is lower than in 1998 or any previous year since 1997, so it is irritating to hear the hon. Member for North Norfolk and his party asserting that such people are paying more tax. That does not sit well with the facts.

Norman Lamb: Does the Paymaster General have any concerns about the impact of this year's council tax increases—four times the rate of inflation—on low paid and pensioner households this year?

Dawn Primarolo: Of course I have concerns about impacts on lower income households. I shall not try your patience by listing the figures, Mr. Gale, but the Government were generous with the local government settlement on council tax this year. However, many Liberal Democrat authorities chose to increase local taxes on a large scale, so for the hon. Gentleman to stand in his place and claim that his party is concerned—when his councillors are not—is simply not a coherent position. I know that the Liberal Democrats like to be all things to all men and women—even depending on which ward, let alone which city, people live in—but when they are in the House, they should be more consistent in their suggestions. For the party that massively raised council taxes to suggest that it is now someone else's fault is not fair, correct, or accurate. I hope that the hon. Gentleman will not persist.

Clause 130 is a modest clause and I have explained the effect on tax rates in detail. I have answered the many and varied questions put to me at the Dispatch Box. Before I sit down, may I say that for the rest of the proceedings I shall confine myself to the clauses—and not with questions unconnected with them—if that is how you would like me to proceed, Mr. Gale? I commend the clause to the House.

Question put and agreed to.

Clause 130 ordered to stand part of the Bill.

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Clause 131

Indexed Rate Bands for 2003–04: PAYE Deductions Etc

Question proposed, That the clause stand part of the Bill.

Mr. Flight: The clause extends by one month the date on which statutory inflation-linked changes to income tax bands must be made to PAYE deductions. It changes from May to the first pay day after 14 June. Essentially, it short-changes taxpayers by £10 as a result of the Chancellor introducing the Budget later than usual. People have received no apology. They will get the money back: in a sense, it is a £20 million interest-free loan from taxpayers to the Government.

Such disregard of ordinary people is objectionable. Why cannot the Government get their act together? They were able to charge increased national insurance contributions with effect from May, but here they are messing about with ordinary people, who were expecting to see income tax band adjustments in their May salary. It may be a small matter, but it represents the arrogance of the Government, who could not care less about short-changing people a pound or two here or there.

Mr. Redwood: I support my hon. Friend, who has summed up the main point extremely well. The Government's action is arrogant, thoughtless and unhelpful to employers, who are under pressure to explain it to their employees. There is no need for an interest-free loan from taxpayers to the Government, given that they are proposing to raise vast amounts of taxation through the Bill and from existing legislation. I hope that the Paymaster General will apologise to the British people for the incompetence of her boss, the Chancellor of the Exchequer. He may well have been preoccupied with his rows with the Prime Minister about the euro, but he has not even offered a statement to the House on that matter. As a result, we have had a delayed and bodged Budget, and we now have a forced loan from the British people to the Treasury. We deserve an apology.

Norman Lamb: I endorse the views of the Conservative spokesman on the matter. Is it not possible, as the Treasury Select Committee recommended in its report on the pre-Budget report last autumn, for much more notice to be given of the date of the Budget? It should take place in time to ensure that proper arrangements can be made for the new tax year. The problem that we are seeing here should never be allowed to happen.

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