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Lord Clark of Kempston: My Lords, does my noble friend agree that the philosophy of the Conservative Party and the Conservative Government is to tax spending rather more than income, and that that has happened over the past few years because the amount taken by direct taxation is now a much lower percentage of one's income, bearing in mind the fact that VAT does not extend to the essentials of life such as food and transport? Does my noble friend also agree that despite some taxes being increased, the standard of living of the average family in this country has increased by 40 per cent. in real terms over the period of our government?

Lord Mackay of Ardbrecknish: My Lords, my noble friend is right that real income per head has increased by nearly £50 per week since 1979. My noble friend is also right that a balance has to be struck between direct and indirect taxes. It is well worth pointing out that the United Kingdom's standard rate of value added tax is lower than that of most of our fellow members of the European Union, and our effective rate of VAT is lower than the European Union average.

Lord Dubs: My Lords, is not the real truth that the British people are more heavily taxed now than in 1979 despite the fact that we have had a government who claim to be a tax-cutting government? Is not that the truth and is not whatever else one says about the balance between direct and indirect taxation a smokescreen to hide the truth from the people?

Lord Mackay of Ardbrecknish: My Lords, the figures are difficult to quantify because the standards of living and the incomes of the great majority of our people have increased considerably since 1979 and, of course, they have paid more in taxes. Indeed, the top 10 per cent. pay a greater share of income tax now than they did in 1979. I should have thought that the party opposite would welcome that.

Lord Hailsham of Saint Marylebone: My Lords, is it not the case that it is rather indecent for a party which is constantly demanding increases in expenditure to complain about increases in taxation?

Baroness Hollis of Heigham: When?

Lord Mackay of Ardbrecknish: My Lords, I had refrained from making that point, but my noble and learned friend has made it for me—

Lord Graham of Edmonton: When?

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Lord Mackay of Ardbrecknish: My Lords, I hear the question "When?". I suggest that those of your Lordships who attend deliberations on the Pensions Bill will from time to time hear a cry for more expenditure. Indeed, the same cry has been heard on all other Bills on which I have served. I think that we all know that the party opposite is keen to increase expenditure on certain areas although it is pretty reticent about putting a figure on that at the moment because it realises that the British people are with the Conservatives—

Lord Richard: Look behind you!

Lord Mackay of Ardbrecknish: —as far as tax cutting is concerned. Come the next election, noble Lords opposite may find that once again they have laughed too soon.

Baroness Seear: My Lords, does the Minister agree that if we want a decent society we have to pay for it?

Lord Mackay of Ardbrecknish: My Lords, of course we agree with that. That is why government expenditure in my Department of Social Security is at £90 billion. That does not mean that we should abrogate any responsibility to try to control that expenditure on behalf of the taxpayers whose money it is.

Lord Peston: My Lords, I find it difficult to keep up with all this. Has the Minister found time today to read the Financial Times, which says that there is concern among Tory Back-Benchers that his party has deserted its core electorate and broken promises to be the champions of low taxation? The reason for that is the latest Inland Revenue figures which show that more people are paying taxes than ever before. Does not that concern him? Even if he is not worried about what the British people feel, does he not think that he should pay a little attention to the concerns of his Back-Benchers? I think the reference is to the Back-Benchers in the other place rather than those now sitting stolidly behind him.

Lord Mackay of Ardbrecknish: My Lords, of course I accept that the British people believe in paying as little tax as possible. That is why in the past 16 years we have appealed to them so successfully as a party which has tried to keep down taxes. However, they also, as the noble Baroness, Lady Seear, pointed out, want to ensure that we spend taxpayers' money on the kind of things of which they approve, such as some of the social security budget and other government department budgets. There is a balance to be struck. The idea that the party opposite has suddenly become tax cutters by instinct beggars belief. More people have come into taxation because we have a larger working population, and, as I said earlier, many of our people are very much better of now than they were in 1979 and so do pay more taxes.

Lord Peston: My Lords, will the Minister at least correct his last factual statement? The reason more people have come into taxation is that the Government have reduced the married man's tax allowance. That is what the Inland Revenue says. It has nothing to do with the points that he makes.

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Lord Mackay of Ardbrecknish: My Lords, there is a combination of factors. The point the noble Lord makes may be one of the factors. As he has gone into these territories and thus allowed me to give this answer, perhaps I may say that today over 1 million fewer people pay tax than they would do had we maintained and indexed the tax regime we inherited in 1979.

Lord Mackie of Benshie: My Lords, the Minister has referred continually to the great majority of people being better off. Does that mean that he does not care about the minority who are no doubt worse off?

Lord Mackay of Ardbrecknish: My Lords, as I said, the great majority of our people are much better off. Most of our people are either better off or much better off. Through the social security system we attempt to cater for those people who, through no fault of their own, are without proper means and without jobs. We run a social security system that costs this country £90 billion. That is generous by anyone's standards.

Apple Growers and EU Directive

2.53 p.m.

Lord Cornwallis asked Her Majesty's Government:

    Whether their interpretation of the European Union's apple-grubbing directive has disadvantaged fruit growers; and, if so, what plans they have for compensation.

The Earl of Lindsay: My Lords, we believe that the steps which the ministry has taken have benefited growers. I believe the Question refers to one of the scheme's conditions which could have led to bad husbandry. The ministry's legal advice was that the Commission regulation required that condition for effective enforcement. However, MAFF officials pursued the matter vigorously. As a result, the Commission issued an interpretative note which will allow us to solve the problem and will be most helpful to growers in the scheme.

Lord Cornwallis: My Lords, I thank the Minister for that reply. First, I declare an interest as the president of English Apples and Pears, although I am no longer a fruit grower and have no financial interest in the Question. I should not like the Question to pass without saying publicly what tremendous support the horticultural division has given the industry over the past 18 months. Will the Minister assure the House that those who have suffered severe financial loss which they believe to be due to incorrect advice will receive a sympathetic hearing from the ministry if they present a case?

The Earl of Lindsay: My Lords, as the noble Lord pointed out, the ministry has already demonstrated its willingness to help the industry. It is open to any grower at any time to make representations to the ministry. They will be considered. While I cannot readily see a case for compensation, I underline the point that the ministry has sought at all times to help growers in

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relation to the apple-grubbing scheme. On a more general level, it works closely with growers and their customers to ensure the future success of English apples.

Lord Renton: My Lords, bearing in mind that the apple-grubbing scheme was not fundamental to the CAP's purposes and policy, was the directive necessary? Could not we avoid having such directives in future?

The Earl of Lindsay: My Lords, it was a regulation rather than a directive. It sought to strike some balance in the European apple market so that demand and supply were better equated. An excess of supply—in bad years there were notorious gluts—means that low prices cause growers to lose considerable amounts of money, and it also costs money to put apples into intervention.

Lord Carter: My Lords, will the Minister confirm that of all the member states of the European Union only the UK told its growers that their right to take the partial grubbing grant was conditional and that the condition proscribed any future replanting beyond the confines of existing retained orchard areas? It seems that the UK got it wrong. Do the Government now intend to put it right?

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