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9.11 pm
Mrs. Ann Taylor (Dewsbury): Today's debate really started outside the House. It started this morning, on Radio 4, when the Chancellor demanded that the shadow Chancellor virtually make a full Budget statement today. Indeed, the Chancellor more or less repeated that request in his speech this afternoon.
I suppose that the Chancellor did that to deflect flak from the interest rate announcement that he made subsequently. Although he told the House--or tried to get the House to believe--that the fact that interest rates were going up was a sign of success, I feel that his statement to that effect carried little conviction.
Having heard the Chancellor's boast that the rise in interest rates was a sign of success, I looked up what he had said when they fell. Lo and behold, the Chancellor believes that when interest rates go down that, too, is a sign of success. He said then:
Interestingly, today's Evening Standard says that the rise in interest rates
I think that we all recall the last Budget before the 1992 election. In his Budget statement, the then Chancellor said:
We also remember the election campaign. We remember the daily press conferences, with the Deputy Prime Minister saying that the election was not about education, but about tax; that it was not about health, but about tax; and that it was not about crime, but about tax. In many ways, he was right. However, what he failed to mention was the list of 22 new taxes that the Government had in their back pocket, but which they simply failed to mention during the general election campaign. During those few days between the Tory election Budget and general election day, the economy boomed; afterwards, the country came back down to reality. Having listened to the Chancellor's equally complacent predictions today, I shudder to think what might be the 22 new taxes that the Tories might find, were they ever to be given the chance again.
I want to say a few words about one tax--value added tax. Before the last election, the Prime Minister said:
Mr. David Shaw:
Earlier today, I asked the right hon. Member for Dunfermline, East (Mr. Brown) to confirm that the price of Labour abolishing VAT on fuel is a windfall profits tax. A £3 billion windfall profits tax is equivalent to a 20 per cent. rate of VAT. Will the hon. Lady confirm that Labour wants to hit the pensioners of this country with a 20 per cent. tax where there is only an 8 per cent. tax now?
Mrs. Taylor:
I wish that the hon. Gentleman had listened to what I have said or to what my right hon. Friend the Member for Dunfermline, East said earlier. We are not able to abolish VAT on fuel because of the way in which the Government introduced it and because of the
I want to stay with the issue of VAT on fuel. We have made it clear that we will cut the rate to 5 per cent. Will the Government say that they are willing to match that promise? Will the Chancellor do it in the Budget? Or are the Government still harbouring the intention of actually doubling VAT on fuel after the next election? The choice is clear. Labour wants to cut VAT on fuel; the Government want to double it. Ministers should make their position clear this evening.
I hope that the Leader of the House will cast light on some VAT issues. This afternoon, the Chancellor did not deny the quotation used by my right hon. Friend the Member for Dunfermline, East, showing that the right hon. and learned Gentleman wants to extend the range of goods on which VAT is imposed, including food and children's clothes. The right hon. and learned Gentleman said one significant thing this afternoon, that he wants common minimum rates of VAT throughout the EU. In effect, that would mean giving up zero rating. I hope that the Leader of the House will confirm that and tell us when the Chancellor intends to spell out the time scale.
Mr. Kenneth Clarke:
Before any silly hares get running, I have always made it clear in all my discussions at the European Union and here that the right to retain the zero rates must remain a British option. I have always argued in Europe that we retain the right to decide whether or not we keep the zero option.
Mrs. Taylor:
We have got used to U-turns this week, and here is another one from the Chancellor--made between 4 o'clock this afternoon and now. If he agrees on the need to keep zero rating--[Interruption.]
Mr. Deputy Speaker:
Order. While I have been in the Chair every other Member has had a reasonable hearing. I hope that Conservative Members, not least those on the Front Bench, will give the hon. Lady a fair hearing.
Mrs. Taylor:
We welcome that U-turn as far as it goes, but we recall the Government's history on VAT. They denied that they would introduce VAT on fuel, but then did so, so I am not sure that the Chancellor's denial just now is worth a great deal.
Over the years, we have seen that the Government are willing to put up VAT for ordinary families and pensioners. We have also heard today, yet again, exactly what are the Government's priorities--the abolition of capital gains tax and inheritance tax, which will benefit a few. The abolition of capital gains tax will cost £3 billion a year and the abolition of inheritance tax will cost £1.5 billion a year, and yet half of the benefit of that £4.5 billion will go to just 5,000 people. That is an example of Tory priorities and I do not understand how the Chancellor can contemplate that and still refuse to cut VAT on fuel.
We have heard a great deal in this debate about the economy and no doubt it will dominate much of the political discussion in the next few weeks, but other important issues have been mentioned today. We have heard a number of well-informed contributions from Members on both sides of the House. For the most part this has been a serious debate, and for Tory Members an often sombre debate, perhaps because of the announcement of the increases in interest rates.
I should like to comment on many of the well-informed contributions that we have heard, but I will confine my remarks to a few of them. I welcomed very much the speech of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). In the past, his sentiments were often echoed on the Conservative Benches, but not in recent years. I welcomed in particular his clear statement and acknowledgement of the connection between unemployment and social unease. I thought that his contribution on that should have been listened to carefully by all hon. Members, especially those on the Conservative Benches.
I also welcome some, although not all, of the comments of the right hon. Member for Worthing (Sir T. Higgins). I cannot say that I agreed with his economic analysis, but I appreciate what he said about the difficulties that business managers may have in the future because the Budget debate and the debate on the Queen's Speech are often so close together and cause significant congestion to parliamentary business. He made a measured contribution, as he often does on such occasions. We shall miss him in future debates, and we shall particularly miss his contributions on House of Commons matters, which have been greatly valued. [Hon. Members: "Hear, hear."]
The contribution of my hon. Friend the Member for Dudley, West (Mr. Pearson) revealed how difficult it is and how long it takes to get the Government to close even glaring tax loopholes. I thought his example was pertinent and useful to all of us. My hon. Friends the Members for Dundee, East (Mr. McAllion), for South-East Staffordshire (Mr. Jenkins) and for Renfrew, West and Inverclyde (Mr. Graham) made much of a basic fact which cannot be denied: after 17 years in government this Government are running out of excuses. They highlighted extremely well the legacy of a fractured society that will be our inheritance from the Government when the election comes.
I wish that Conservative Members had taken up that theme of the Father of the House. While so many of them ignore it we shall not make real progress in mending some of the fractures and resolving the difficulties that have been caused by those who believe that there is no such thing as society. Over the past few days there have been salutary warnings that every hon. Member should bear in mind.
Many hon. Members may feel, as I do, that it is difficult to believe that this Session is only a week old. We used to be told that a week is a long time in politics. On Wednesday four hours was a long time--long enough for what the Daily Mail called a precipitate U-turn. As The Times put it, four hours after the Queen outlined the final pre-election parliamentary programme of 13 Bills the Prime Minister, at a stroke, increased it to 15. Since then, the week has hardly got better for the Prime Minister. Following his concessions on the stalking Bill and the paedophile register, concessions and U-turns have come thick and fast.
At the end of the week, the Home Secretary consented to look at the banning of combat knives--a measure that we have been demanding for some years. The Home Secretary was still using the excuse that there were problems of definition. I have a suggestion for the Home Secretary and it is appropriate that the Chancellor is still in his place. If the Home Secretary has a problem trying to define combat knives, he should go to the Chancellor and suggest a tax on them. The Treasury will quickly come up with a definition which could be used to ban the sale of such knives.
"Interest rates going down reflects our success in creating a prosperous economy."
The Chancellor's attitude in the House today contrasts markedly with his attitude when interest rates have been cut. Certainly, his attitude in the House is not in line with comments that have been made outside the House, even today.
"awoke Tory fears that it marked a critical upward turning point which could cost the Government dear in the run-up to the General Election."
Of course we expect Tory Chancellors to tell us that all is well in the run-up to the general election. That is one regard in which they are consistent--telling us that all is well before an election. What the Chancellor said today, and what he will doubtless repeat on Budget day, exactly parallels what happened before the 1992 election.
"The Government know and have done what is required to build a strong economy."--[Official Report, 12 March 1992; Vol. 205, c. 1063.]
The Prime Minister said that the country had steady, sustainable growth.
"I have made it clear we have no plans and no need to extend the scope of VAT."
Yet the very year after the election, the Prime Minister and his Tory Government introduced VAT on domestic power and fuel. The Opposition take a wholly different approach from the Government on that issue. As my right hon. Friend the Member for Dunfermline, East (Mr. Brown) repeated this afternoon, Labour will reduce the rate of VAT on fuel to 5 per cent.--the minimum possible. In contrast, the Tory Government not only introduced that new tax, they tried to double it. Only the actions of the Opposition stopped that. We have been specific about our proposals. We will cut VAT on fuel.
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