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Sir Wyn Roberts (Conwy): As I understand it, the Labour party is committed to reducing VAT on fuel to 5 per cent. That will cost between £450 million and £500 million. How will Labour finance that? I am told that Labour may well abolish the relief on private medical insurance, but that will produce only about £120 million. How will the gap be filled?

Mr. Darling: The right hon. Gentleman has not been present in the Chamber all evening, but he has an opportunity to join us in the Lobby in 40 minutes if he would like to do something for his constituents. I shall explain the point that he has raised later. The right hon. Gentleman is in no position to lecture us on tax until he answers the central charge against the Government: on all

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elements of taxation, they made promises in 1992 that they could not keep. We shall judge the Government on their record for the whole Parliament.

Mr. Kenneth Clarke rose--

Mr. Darling: If the right hon. and learned Gentleman will resume his seat, I shall certainly give way to him in a moment. When he stands up, perhaps he will explain why, as a member of the Cabinet in the previous Parliament and as a prominent member of the Conservative party, he promised the country that he would not extend the scope of value added tax. Why did the Conservatives make that promise and then break it immediately after the election?

Mr. Clarke: I like the way in which the hon. Gentleman promptly changes the subject to something that he has just thought of the moment that it looks like he is going to be intervened on. I personally have no recollection of giving a promise not to extend the scope of value added tax. That can be returned to in just a moment.

I intervene because I thought that I heard the hon. Gentleman say to my right hon. Friend the Member for Conwy (Sir W. Roberts) that it had been made clear where the shortfall of revenue would come from. I apologise to the hon. Gentleman for not having been here throughout the debate to hear the speeches, but I have not heard anybody make anything clear on that subject. Could he remind both my right hon. Friend and myself where the shortfall in revenue will come from? I see that he is asking his right hon. Friend the Member for Dunfermline, East (Mr. Brown). Could they between them answer that one question on calculation?

Mr. Darling: We have made clear that the shortfall will be met by removing the relief from private medical insurance, closing the loopholes on inheritance tax on chattels and making certain changes to the corporate tax regime.

People in this country will be staggered to hear that the Chancellor has no recollection of the promise on VAT. Was he not around for the last general election? Does he not remember the promises that were being made at the time? How on earth can the Chancellor stand at the Dispatch Box or speak in the coming election campaign and ask us to believe him on tax when he said that he has no recollection of the promises made in 1992?

Mr. Clarke rose--

Mr. Darling: I am going to make some progress, if the right hon. and learned Gentleman does not mind.

Mr. Clarke rose--

Mr. Deputy Speaker (Mr. Michael Morris): Order. The hon. Member for Edinburgh, Central (Mr. Darling) has the Floor.

Mr. Darling: The right hon. and learned Gentleman really must learn to contain himself. He said a few minutes ago that he had no recollection of the promise on VAT being made. If he stops trying to interrupt me, he will have ample opportunity in his winding-up speech to explain that away.

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Let us look at the Tory's record on income tax. The Prime Minister said in 1992--the Chancellor probably has no recollection of this either--that the Tories would reduce income tax year on year. The Prime Minister is saying on posters up and down the country--at least his glasses are saying it:

"As promised. Lower income tax."

What is the truth? The truth is that people pay more tax now as a proportion of their income than they did in 1979. We know that that is true from Treasury figures, which show that direct taxation--that includes income tax--has increased during this Parliament. We know that from the Red Book because we can see that the proportion of tax taken has risen not only since 1979 but throughout this Parliament. As if that was not enough, a report in today's edition of The Daily Telegraph says that the Prime Minister is angry because the Chief Secretary to the Treasury told the truth about tax on Sunday when he said that tax was going to go up.

I was not particularly enthusiastic when I was told that I had to appear on "Dimbleby" with the Chief Secretary on Sunday. It was a long way to go for 50 minutes--but it was 50 minutes well spent. Time and time again, as I shall show, the Chief Secretary shed some light on what the Tories have been doing and what they plan for the future.

Mr. Waldegrave: Will the hon. Gentleman give way?

Mr. Darling: I promise that I will in a minute. I have not finished referring to the right hon. Gentleman.

Mr. Dimbleby asked whether the tax taken on income tax meant that people were worse off than they were in 1992. The Chief Secretary said:

"I think that's broadly right."

He of course went on to mention national insurance contributions, which have been increased. Does he have no recollection of saying that? The transcript of the programme is available.

The Chief Secretary said more when it came to the subject of value added tax. He was asked whether the Tories had promised that they would not extend it. What did the right hon. Gentleman say? He said:

"Heh, well, the . . . what we're saying, and it's true, is that our first priority, as we can return overall to a . . . position where we can begin to look again at tax cuts, is to relieve the pressure on income tax. There's no secret that the Conservatives, right back to 1979, have always said, 'We prefer to take tax off, direct taxation off income tax and to put it--if you have to put it--on indirect . . . all the other taxes'".

In other words--here we have it--that is an admission not only that VAT has gone up but that the Conservative party's intention is to carry on transferring tax from income tax to value added tax.

Mr. Waldegrave: Will the hon. Gentleman give way?

Mr. Darling: By all means.

Mr. Waldegrave: That was feeble. Will the hon. Gentleman now acknowledge that his party's poster, which says that people are £2,000 worse off and about which he was cross-examined by Mr. Dimbleby but had no answer, is completely false because it is the language

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of living standards? The hon. Gentleman knows well that his bogus tax calculations still leave out the fact that people are better off by more than that, if all taxes are taken into account. That poster is therefore completely false.

Mr. Darling: If there is any judgment on what we both said on that programme, the right hon. Gentleman will find that he comes off slightly worse than anyone else who appeared. I have made my position clear and I stand by it--because of the taxes that the Government have put up, the typical family is £2,120 worse off. That is true. [Interruption.] Right hon. Members on the Treasury Bench may shout and bawl as much as they like, but people know that taxes have gone up under the Conservatives when they promised that they would not.

I return to the point about value added tax. We were told at the last election, despite the fact that the Chancellor does not recall it, that VAT would not be extended in scope. In 1979, the Tories said that they would not increase VAT, but in their first Budget the then Chancellor, Lord Howe, doubled VAT. In 1992, they said that they had no plans or need to extend the scope of VAT. What did they do? They put VAT on gas and electricity. The Chief Secretary, in his interview on Sunday, made it clear that the Conservatives' preferred option is to transfer taxes from direct income taxes to VAT. We will ask, just as Mr. Dimbleby asked, about the Government's intentions in the future. Will they give a similar undertaking on VAT? If they do, frankly no one will believe them.

The position on national insurance is the same. What did the Government say in 1992? They said that they would not increase national insurance, yet they did and national insurance went up to 10 per cent. They still say that we can trust them on tax. My right hon. Friend the Leader of the Opposition asked, on the day that the Budget statement was made, how we can trust the Conservative party when we see what it said during the general election in 1992. As my right hon. Friend pointed out, a year after the election the Prime Minister gave an interview in the Los Angeles Times. He was asked:

"a year later, you find yourself under fire. What happened?"

The Prime Minister said:

"I said . . . the day after we won the election, with a number of people around me: 'Within the next 12 months the government will be the most unpopular we have seen for a long time!'"--[Official Report, 26 November 1996; Vol. 286, c. 177.]

Mr. Forman: Will the hon. Gentleman give way?

Mr. Darling: The hon. Gentleman stood on the same manifesto as the Prime Minister. How was it that, the day after the election, when the recovery was supposed to be starting, the Prime Minister knew that the Conservative party would be unpopular, if not for the fact that he knew full well that taxes would have to go up and that the Tories would have to break every promise they had made on tax at the general election?

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