Derek McDowell (Labour)

The Minister has set out his priorities in an interesting way and I have no quibble with them. Can we take it that the commitment to reduce the higher rate of tax from 42% to 40% is also not a priority?

I invite the Minister to go a little further in terms of the PAYE tax credit. In principle I do not have a difficulty with this, but there is a problem, as the Minister knows, with regard to those who do not pay PAYE tax, principally people who live on pension income who do not get the increase in tax credit when it is focused largely on the PAYE tax credit. I appreciate we can get around this difficulty to some extent through exemption limits, and this has been the approach. However, this leads to a difficulty when people earn just above the exemption limit. While I do not have a problem in principle with increasing the PAYE tax credit, there is an inherent problem for people on pension income who do not get the benefit of that credit. We should not lose sight of that.