Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 440 - 446)



  440. I would rather have the Lawsonian approach where you can have less of these breaks and lower rates, in particular for people on low incomes.
  (Mr Brown) I think you will find, for example, that the CBI, who pressed very hard for the investment allowances to be made available, as did other business organisations, will find what you are proposing less acceptable than you think. I think you will find that the capital gains tax cuts we made, while trying to prevent avoidance which would mean people declaring their income as capital, are a means by which we are stimulating entrepreneurship in this country, and I have to disagree with you therefore on the way that the tax system should develop. Where there is a loophole it is inevitably requiring a regulation or legislation or some statutory action to deal with that loophole and it is right for us to deal with these loopholes.

  441. We will leave it to the future to find out whether that is right or not.
  (Mr Brown) One of the programmes that is said to be getting this relief is They Think It's All Over.


  442. We did discuss yesterday, Chancellor, that it was suggested that there would be some less than wholesome family programmes that were getting it so, given that it is a family show here, we would like that loophole to be closed.
  (Mr Brown) Yes. Thank you very much.

Mr Ruffley

  443. Chancellor, you said that health spending for 2007-08 was covered. Could you point to the part of the Red Book where that is demonstrated?
  (Mr Brown) Yes. The figures are covered to 2006-07 in the published documents, but by tradition we will publish the 2007-08 borrowing requirement at the time of the November-pre-Budget Report.

  444. So can you point to that document?
  (Mr Brown) We will publish it at the time of the pre-Budget Report.

  445. So you have not got it covered, have you?
  (Mr Brown) No. We publish long term tables as well.
  (Mr Balls) It is covered in two places. One is in Annex C where we set it out. I think the difficulty with the IFS the other day was that they had not noticed this set of assumptions.

  446. What page are we on?
  (Mr Balls) It is on page 210, paragraph C22, where we say that "firm overall spending plans for the 2002 Spending Review from 2003-04 to 2005-06 are set out in Chapter 6", and "prior to spending plans being set in the 2004 Spending Review, the fiscal projections assume DEL growth after 2005-06 of 2.5 per cent in real terms, in line with the assumption on economic growth used for the public finances, supplemented by an addition to allow for the 5 year health settlement of the difference between planned health growth and health's long term average growth, 3.6 per cent. This delivers DEL growth of 3.8 per cent in 2006-07." In our numbers up to 2006 we have made an explicit assumption above the numbers we had in the pre-Budget Report to allow for the health addition in 2006-07, and then obviously that trend and that number continues to 2007-08 too. In addition to that, in Annex A, the "Illustrative long-term fiscal projections", which is page 145 onwards, we show on the basis of cautious assumptions our fiscal projections up to 2032 and those projections show nearly all our fiscal assumptions up to 2032 and that includes explicitly in the numbers which you have here the allocations for 2007-08 so, while it is true to say that it is not in the pre-Budget Report or formally in the Code in producing the numbers for 2007-08, that number and subsequent years is included in the long term projections in that chapter, so clearly the assumptions are included in the numbers for 2006-07, and it is included in Annex A, so it is all fully covered and that is why the IFS was wrong in the statement it made.
  (Mr Brown) I think the IFS will be in a position, I hope, to correct their misinterpretation of these figures. I am gratified by the Committee's interest in going right up to 2007-08.

  Mr Ruffley: We will be watching. And you will be, Chancellor.

  Chairman: Chancellor, you did mention that you would provide a note to us on a number of issues. [5]7 We are making our report on Monday and it would be helpful if as soon as possible you could get that information across. Can I thank you and your colleagues today and yesterday for coming and answering our questions so extensively.

5   See Appendix 8. Back

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