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The Paymaster General (Dawn Primarolo): Since 1997, average earnings have grown by over 25 per cent. and there are now an extra 1.8 million people in work. Receipts of national insurance contributions reflect this economic success and increased national prosperity. The Government Actuary estimates that in 200405, £80,962 million will be paid in national insurance contributions. The amount paid in 199697 was £47,627 million.
Mr. Fallon: Is not the reason why Ministers refuse to rule out an increase in national insurance contributions, as they have ruled out increases in VAT on food and children's clothing, that if one votes Labour at the next election, national insurance is the tax most likely to be increased in the next Parliament, just as the Government increased it in this Parliament?
Dawn Primarolo: No. As the hon. Gentleman knows, all the Government's spending plans are affordable. The party that makes promises before an election and breaks them directly afterwards is the Conservative party, as it did in 1992, when it promised not to raise VAT and then did.
Kevin Brennan (Cardiff, West) (Lab): Is it not the case that the discretionary part of the increase in national insurance of 1 per cent. was supported strongly by the British people as necessary in order to put right the mess that had been made in the NHS over many years by the Conservatives, and that the automatic increase is a result of the success of the Government's management of the economy? Rather than the boom and bust approach of the Conservatives, we now have sustained investment and growth.
Dawn Primarolo: My hon. Friend is correct. Some £7.8 billion was raised to pay directly to the NHSto fund the investment necessary after it was starved of resources for a sustained period by the Conservativesand that was widely supported by all our communities. The question is whether the Opposition would remove that investment and cancel the 1 per cent. increase.
Mr. George Osborne (Tatton) (Con): Does the Paymaster General remember that before the last election the Prime Minister said that people "shouldn't suppose" that national insurance would go up if Labour were elected. Of course, it went up in the next Budget. Given her refusal to rule out increases in national insurances in response to my hon. Friend the Member for Sevenoaks (Mr. Fallon), should not people suppose that after the election national insurance will go up if Labour wins?
What we need to know from the hon. Gentleman, given that he is so obsessed with the 1 per cent. national insurance increase[Hon. Members: "Answer the question."] I have made the
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Government's position absolutely clear on the commitment to the 1 per cent. increase, which was supported by our communities to pay for investment in the NHS. Would the Conservatives remove it or are they committed to it?
The Chancellor of the Exchequer (Mr. Gordon Brown): The aim was successfully to achieve a reduction of risk in the net reserves portfolio. The reduction achieved, as measured by value of risk, was 30 per cent.
Sir Teddy Taylor: Would not it help the Government's credibility if they would accept it when mistakes are made? Does the Chancellor accept that the 395 tonnes of gold that he instructed the Bank to sell secured $3,496 million, but the current value of that gold is $4,961 million, which means a loss of $1,465 million or £800 million, which is equivalent to more than £15 for every person in Britain? Does not he accept that it was also an error to instruct the Bank to put 40 per cent. of the proceeds into the dollar just before it had an appalling fall? Does he accept that a mistake was made? While we accept that many things have gone right, would not it be helpful if the Government would accept it when something has gone wrong?
Mr. Brown: Almost all the major economies, including France and Switzerland, which are gold holders, have been selling gold recently, with the exception of the US and Germany. The mistake that we made as a country was not rebalancing our reserves earlier, in the 1980s and 1990s. When we came to power, we made a decision to do what it had been advised we should do for a long time. We made the right decision to have the right balance of reserves, including holding dollars, euros and yen. The hon. Gentleman will not like it, but the value of our euro holdings has gone up, as a result of the euro going up by 14 per cent.
Mr. Owen Paterson (North Shropshire) (Con): That argument is absolutely ridiculous. This is the most arrogant, blundering and incompetent Chancellor. He has thrown away nearly £1.5 billion of taxpayers' money, or £58 per household. As a little present to this country, would he just once like to apologise?
There is not much Christmas spirit around, is there? As we are talking about apologies in the running of the economy, could we have an apology for the 15 per cent. interest rates, the 10 per cent. inflation, the 3 million unemployed and the massive cuts in public spending?
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The Paymaster General (Dawn Primarolo): The Government received a representation from the hon. Gentleman dated 13 December 2004. A representation from the UK Sport council on taxation issues relating to international sports federations has also been received, and we shall consider representations on relevant tax issues as part of the Budget process.
Hugh Robertson: I thank the Minister for that answer. She will be aware that the UK has lost a number of international sports headquarters recentlyrugby, athletics, table tennis and badminton have all gone abroadbecause of the UK tax regime. That has clearly resulted in revenue loss to the Exchequer, jobs lost to the UK economy and damage to the UK's international sporting standard, which is not good news in front of the London 2012 bid. Can the right hon. Lady tell the House today exactly what action she is planning to take as a result of the submission from UK Sport to guarantee the future location of the International Cricket Council in London?
Dawn Primarolo: It would clearly be inappropriate for me to comment on an individual taxpayer, due to taxpayer confidentiality[Laughter.] It is a simple fact: I am unable to do that. The sports council raised three issues on taxation, one of which was about corporation tax. The fact of the matter is that most international sports federations pay little or no corporation taxan absolutely negligible amount. They are based here for a wide range of other reasons. An exemption from corporation tax would allow those federations to develop a wide range of commercial activities, free of tax considerations, and that would run counter to the policy not only of this Government but also of the previous Government, which strictly observes that commercial activities should maintain a level playing field to avoid potential unfair tax competition and state-aid issues. The other issues raised by the sports council were on VAT and the national insurance contributions of their employees and it has received a response from the Government on both.
Mr. Andy Reed (Loughborough)
(Lab/Co-op): I understand the complexities of the situation, which also pertain to a large number of other national governing bodies, especially with regard to corporation tax. I hear what my right hon. Friend says, but is she aware, for example, that rugby football union paid £3 million in corporation tax last year on a loss? Will she look again at the VAT question right across the board, so that we can have a whole-sport approach? A number of governing bodies, including athletics, say that some of the impacts have complications regionally. Could we have a national approach to work with sport, to build on the fantastic success of community and amateur sports clubs and the rate relief that we have given to sports clubs up and down the country? There is some concern
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at national governing level, and we need to work together to createI am afraid to use this phrasea level playing field.
Dawn Primarolo: Because of my hon. Friend's involvement in the subject, I know that he is very aware that the Government have been committed to improving sport right across the country, including investing in schools, communities and elite sports in a way that has never been done before. He will recall that the 2004 spending review announced that the Government would pledge another £431 million for sport in the period 200508, which represents a rise of 31 per cent. in the amount that we are investing. It is simply not possible to bend tax rules for some. It is quite straightforward: corporation tax is levied except in circumstances where there is an exemptionfor instance, a charityand all the sports councils pay barely any corporation tax. The amount is negligible, so there cannot be the massive effect that is being claimed with regard to their future locations.
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