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Social Security

Part of Ways and Means – in the House of Commons at 10:41 pm on 20th December 1983.

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Photo of Mr Andrew Rowe Mr Andrew Rowe , Kent Mid 10:41 pm, 20th December 1983

It is absurd for the Opposition to argue that simply because a Labour Government levied a wholly unrealistic and unreasonable rate of tax we should do realistic sums based on how much it has been reduced. There is no doubt that the higher rates of tax levied in Britain have been levied by Labour Governments — they were absurdly high, and much higher than those levied by our more successful competitors abroad.

I am one of many Conservative Members who wait for the second part of Conservative policy to come home to roost. We promised to do our utmost to release the inventiveness of our people. We can do that by ensuring that the large numbers who are now bravely venturing into working for themselves can look forward to a tax and insurance package that makes it profitable for them to be self-employed—especially in the early years when it is difficult for them to make ends meet and to keep their heads above water. I ask my hon. Friend the Minister to assure us that he will look closely at the position of the self-employed, especially those at the lower end of the income scale.

We have waited rather a long time for the fulfilment of the pledge of the previous Chancellor of the Exchequer that he would release Britain from its dependence on Truck. Many people receive benefits in kind. When all our social services are under the pressure of the need to reduce expenditure, we should look closely at the practice whereby people receive benefits in kind to an extent which distorts the economy and makes it difficult for people to make the choices about how they spend their money that are essential to a healthy society. If we did that, we could release the spare resources to redeem the pledge of the Chancellor—which gave me great pleasure—that his first priority would be to take those on the lowest incomes out of tax altogether. That is overdue. Far too many people are trapped in tax and national insurance contributions that only deepen the poverty trap. On that point, I accept the argument put forward by the hon. Member for Birkenhead (Mr. Field). Our biggest problem is the extraordinary disincentive to work. It is not that people willingly give up working in exchange for a life on the state. Many of us know from our daily constituency correspondence that people are forced to make an entirely rational decision to stop work.

There was a watershed in the history of British society when it became apparent that a penny on income tax would yield more than increasing the rates of higher taxation. Similarly, there will be another watershed if tax is removed from the poorest in our society, so that many of them can return to the labour market in a Conservative way that is good for human dignity. I very much hope that this necessary move tonight is only one step towards redeeming the pledge that the Chancellor of the Exchequer gave in his autumn statement, when he said that before long a substantial number of people would be removed from tax altogether.