Select Committee on Treasury Minutes of Evidence



Examination of witnesses (Questions 260 - 279)

TUESDAY 20 MARCH 2001

THE RT HON GORDON BROWN, MR ED BALLS, MR GUS O'DONNELL and MR NICHOLAS MACPHERSON

  260. You are going a bit off piste here, Chancellor.
  (Mr Brown) You have asked me, Mr Ruffley, to look at an historic—

  261. What we require is 1996-97, that is all, it is very simple.
  (Mr Brown) Mr Ruffley, you have asked me to look at a Table that has perhaps 300 or 400 separate figures on it.

  262. You are meant to be a clever chap. You can read 1996-97, can you not? Could you read it for the benefit of everyone in this room? It is 35.2 per cent.
  (Mr Brown) You can read what you like. I will answer questions.

  263. What is the answer to my question?
  (Mr Brown) The answer to your question is that—

  264. 1996-97.
  (Mr Brown) The answer to your question is that this is an historical series. I have already explained to you that we inherited a situation where the last Conservative Government was predicting that taxes would rise to 38 per cent. of national income.

  265. So you will not confirm that figure your own Red Book? Could you subtract 37.7 per cent. from that 35.2 per cent. and tell us what the difference is?
  (Mr Brown) I am not going to get into the business of this—

  266. It is 2.5 per cent.
  (Mr Brown)—if you wish to put figures in this way.

  267. It is a higher tax burden.
  (Mr Brown) I have drawn attention to the fact that there are a variety of reasons why the tax burden changes over time. One of the first is economic growth; the second is fiscal drag; the third is better collection of income taxes; and the fourth is historical decisions that are inherited by governments from previous governments; and the fifth are decisions that are made by these governments. There are a lot of factors which contribute to the changes in the tax burden over time. I think it is material to this Committee to draw attention to the fact that we inherited a situation where the last Conservative Government was expecting the tax burden to rise to 38 per cent.

  268. Chancellor, are you denying the tax burden between 1996-97 and 2000-01 has increased by 2.5 per cent? Are you denying that?
  (Mr Brown) I am happy to draw attention to the figures that are in the Red Book because the figures are accurate. The figures are accurate because they reflect what has happened as a result of a series of different decisions.

  269. Chancellor, you are denying the tax burden went up. You will be denying next that you tried to save Geoffrey Robinson from the sack.
  (Mr Brown) Mr Ruffley, if you want to reduce the tenor of this debate.

  270. No, you are denying a basic fact in your own Red Book—you will deny anything.
  (Mr Brown) I said that the facts in the Red Book are accurate, and I have said that every time I have come before this Committee. The idea, Mr Chairman, I have given the impression that the facts in the Red Book are inaccurate is wrong. The facts in the Red Book are accurate; but I am pointing out to you that, as far as the inherited situation was concerned, the tax burden was due to rise to 38 per cent.

Mr Davey

  271. A quick supplementary to Mr Ruffley's. The figures you read out of the tax burden as predicted by the last Conservative Chancellor, those figures which you said go up to 38 per cent., are they calculated on the same basis as the figures in the Red Book?
  (Mr Brown) Yes.

  272. On exactly the same basis?
  (Mr Brown) Yes.

  273. Thank you very much. Chancellor, will you be spending more or less next year than previously planned?
  (Mr Brown) I will be spending more over the next three years—

  274. No, next year.
  (Mr Brown) I will be spending more over the next three years than we planned in the Spending Review in July 2000.

  275. Next year, will you be spending more or less than previously planned?
  (Mr Brown) Next year the figures will be 393.7, compared with 392.9. I may say for the benefit of the Committee, what has actually happened over the course of the last year is something I hope the Committee will want to draw attention to. We have substantially cut, above even the projections in the Comprehensive Spending Review, the amount of money that is being spent on debt interest, and we have cut the amount of money that is being spent on unemployment. As a result of that, there are considerable savings, and the savings are being used to fund a rise in pensions; to fund a rise in children's benefits; and to fund the increased spending in health, education and in public services. For the benefit of the Committee—

  276. Thank you, Chancellor, for your answer. Can I ask you another question, please.
  (Mr Brown) For the benefit of the Committee, should I not draw attention to these figures so that people do know. 393.7 rising to 417.8, rising to 442.6 in 2003-04.

  277. This saving and this underspend that you have just been helpfully telling the Committee about, are you fully reallocating this underspend, or are you paying off the debt with some of it?
  (Mr Brown) We are paying off the debt as a result of very substantial savings from unemployment and debt interest. Equally, we are spending more over the course of the next year. If you would like the figures for health and education, I am very happy to give you them, to show the additional amount of money we are going to be spending on these areas.

  278. Could I just ask you a particular question—you may have this figure. What was the average spend by the Government on health in the last Parliament as a proportion of national income? Do you have that figure?
  (Mr Brown) I do have the figure.

  279. You have the figure of the average spend by Government on health in the last Parliament?
  (Mr Brown) If you will allow me to get to it. What I can say is that the real annual growth rates in Health Service expenditure in the last Parliament was 2.6 per cent; in this Parliament it will be 4.9 per cent. As a result of the Spending Review 2000 it will be 5.6 per cent. In other words, it will be twice the rate of growth of the last Parliament, and twice the rate of growth of the Conservative years.


 
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