§ Mr. Spellar
To ask the Chancellor of the Exchequer what is his Department's policy in respect of companies cutting basic pay in order to increase the tax-free element through profit-related pay.
§ Mr. Dorrell
The Government's purpose in introducing tax relief for profit-related pay—PRP—was to encourage flexibility in pay determination arrangements. The tax relief, subject to certain limits, is available only for PRP schemes which satisfy certain legislative requirements. Responsibility for the detailed terms of specific employment contracts rests with the parties themselves.