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Value Added Tax
9. Mrs. Mahon: To ask the Chancellor of the Exchequer what additional sums have been paid as a result of changes in VAT since 1992. [9524]
Mr. Oppenheim: The net revenue effect of various changes to VAT coverage since 1992 is estimated to be £870 million in the current financial year.
Mrs. Mahon: Will the Minister confirm that, because of the Government's imposition of VAT on domestic fuel, many pensioners are forced to pay the highest premium to heat their homes? Has he calculated the cost of that in human terms and to the national health service, as many pensioners, especially in my constituency, are forced to cut back on heating in cold weather?
Mr. Oppenheim: The hon. Lady makes a point, but this could be a good moment gently to remind her and Opposition Members that, for many years, Labour's energy policy was to burn expensive and relatively dirty coal. Labour denigrated our policy of allowing cleaner, cheaper gas, which has resulted in falling energy costs and cleaner air. I am surprised that Labour Members are so shameless that they can come to the House, after pursuing that policy, and declare that they are worried about the cost of energy for the less well-off.
Mr. Lidington: Surely the impact of extending VAT to domestic fuel has been outweighed by the price cuts arising from the Government's policy of privatisation. Is it not also the case that the parties in the House that voted against privatisation were therefore voting in favour of dearer energy prices for pensioners and others, and that those who support a windfall tax would also bring about dearer fuel prices for pensioners and others?
Mr. Oppenheim: My hon. Friend is exactly right. Even including VAT, power prices are lower than they were. Gas prices alone have fallen by 19 per cent. in real terms. The less well-off have also been protected by compensating rises in benefits.
Mr. Darling: The House will have noted that the Chancellor has not answered any questions on VAT today. How can we believe a Chancellor who says that he never contemplated extending VAT to food when he specifically mentioned it in his 1993 Budget? How can we trust a Chancellor who says that somebody promised not to extend VAT in the 1992 election when not only was that somebody the Prime Minister, but we have film of the Chancellor of the Exchequer sitting next to the Prime Minister when he gave that commitment?
Mr. Oppenheim: How can the House and voters trust a shadow Chief Secretary who, in response to a Scottish nationalist amendment proposing a reduction in VAT on fuel from 8 per cent. to 5 per cent, said that it was a
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- "cynical ploy from a desperate party"--[Official Report, 23 January 1995; Vol. 253, c. 49.]
Company Cars
12. Mr. Robathan: To ask the Chancellor of the Exchequer what steps he intends to take to deter company car users from driving unnecessary miles to obtain tax advantage. [9527]
Mr. Jack: It is for employers to ensure that unnecessary business mileage expenses are not incurred. However, the needs of the genuine high-mileage business traveller are recognised in the current company car tax regime.
Mr. Robathan: I congratulate the Government on their very sensible policies on reducing unnecessary car usage, but is my hon. Friend aware that independent tax advisers tell their clients with company cars to contrive to drive more than 18,000 miles a year, even if that is unnecessary mileage, because they will thereby benefit from the discount at 18,000 miles? Will my hon. Friend reconsider the policy with a view to finding a better way of allowing heavy usage--necessary mileage--while not encouraging unnecessary driving?
Mr. Jack: My hon. Friend makes an important point. We have no plans substantially to change the current taxation regime for company cars. Transport 2000 raised the matter with us, questioning whether unnecessary business mileage was in sum being increased to achieve tax breaks. No evidence of such usage could be found. There is anecdotal evidence, but overall I do not believe that there is widespread abuse.
PRIME MINISTER
Engagements
Q1. Mr. William O'Brien: To ask the Prime Minister if he will list his official engagements for Thursday 16 January. [9545]
The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
Mr. O'Brien: Will the Prime Minister explain why tens of thousands of my constituents are finding it extremely difficult to pay their energy bills this winter? Why did he impose value added tax on their fuel bills when he promised the nation that there would be no increase in VAT? Will he explain why people should suffer from cold this winter because of his imposition of VAT on their fuel bills?
The Prime Minister: The hon. Gentleman should know that, during the past few years, the price of fuel has been steady at the worst. The real price of some fuels has
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fallen as a result of the privatisation of the energy industries. The hon. Gentleman will recall, when last there was a Labour Government, that the price of fuel was rising at a rate of 30 per cent. a year.
Mr. Legg: May I thank my right hon. Friend for his support for my private Member's Bill, which is aimed at countering drug abuse in clubs, and is to have its Second Reading tomorrow? Did he manage to make any further progress in the war on drugs during his visit to the Indian sub-continent? What is his reaction to the comments made today by Brian Harvey of East 17, who says that Ecstasy makes people feel better and that he takes up to 12 tablets a day?
The Prime Minister: I have not read the comments about Ecstasy, but I regard any comments of that sort as wholly wrong. Drug taking, whatever the drug may be, tends to lead on to hard drugs. We have seen often enough the tragedy that then occurs.
As for my visit to the Indian sub-continent, in Pakistan especially, I looked at one of the most important drug routes along which a very large amount of hard drugs comes from Afghanistan, through Pakistan, to northern Europe. I spent some time discussing with the Pakistan Government and others what measures we may take to assist them to ensure that drugs are caught at source and do not reach either Pakistan or northern Europe.
Mr. Blair:
Does the Prime Minister accept that, before the last general election, he gave a categorical pledge not to extend value added tax, and that after the election, in the first Budget, he did indeed extend VAT? Is that true or false?
The Prime Minister:
I think that we all know what the right hon. Gentleman is saying. The right hon. Gentleman is seeking to justify the crude and untruthful campaign that was launched this morning--a campaign that he knows is simply scaremongering and which will not persuade the British people. We now know very clearly where the negative campaigning comes from and who encourages it.
Mr. Blair:
Perhaps we can return to the question and see whether we can have an answer. I think that we are entitled to draw attention to the Prime Minister's record and to draw an inference from it. Did he stand at that Dispatch Box and promise not to extend VAT--yes or no--and did he then extend it in the first Budget after the general election, yes or no?
The Prime Minister:
The right hon. Gentleman is mistaken in the imputations he is trying to make. It is the Labour party--not the Government--that has made £30 billion of spending commitments, and it is the Labour party that would need to raise tax or break the promises that it has made to the people. The Government have set out our tax proposals, our expenditure plans and our declining borrowing requirement. It is the right hon. Gentleman--not the Government--who has questions to answer.
Mr. Blair:
If the Prime Minister is so confident in his denials, after 22 Tory tax rises since the general election, and if, as he constantly tells us, he is raring to go in an
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The Prime Minister:
That campaign will come, and I look forward to it, but if the right hon. Gentleman is so concerned about tax levels and wants to cut them, perhaps he will tell us which of his spending commitments he would cut.
Mr. Faulds:
On a point of order, Madam Speaker.
The Prime Minister:
What public expenditure would be reduced under a Labour Government? What expenditure has the Labour party opposed? Which of our tax reductions has it supported? The right hon. Gentleman says one thing, but his entire record shows that he does another.
Madam Speaker:
Points of order come after Question Time.
Mr. Clifton-Brown:
If my right hon. Friend wanted to raise a substantial amount of money in the next tax year, would he tax savings by restricting personal equity plans and tax-exempt special savings accounts, tax pensions by taxing pension funds and increase pensioners' electricity and gas bills with a windfall tax? Is not the truth that the Chancellor has published his tax proposals in public, whereas the Labour party is considering proposals in private?
The Prime Minister:
My hon. Friend makes his points extremely clearly. We know that the windfall tax would pay, were Labour given the opportunity, for all sorts of goodies--there is a larger number of them every day. We now hear rumours that the windfall tax would be illegal. If, as has been said, the Labour party has legal advice to the contrary, let it publish that legal advice. What did the right hon. Gentleman say when asked about the windfall tax? He stated:
Mr. Faulds:
On a point of order, Madam Speaker.
Madam Speaker:
I think that I can anticipate the hon. Gentleman's point of order.
Madam Speaker:
I shall hear the hon. Gentleman after the statement. I ask him to resume his seat.
Mr. Ashdown:
Will the Prime Minister confirm that it is Government policy to be ready to join a single currency on 1 January 1999, and that they are willing to do so if it is in the nation's interest?
The Prime Minister:
We will keep our options open, which is the entire purpose of the opt-out. We will make preparatory plans--which has been our position since, at Maastricht, some time ago, we established the opt-out.
Mr. Tracey:
Is my right hon. Friend aware of widespread support among the British public for more
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The Prime Minister:
I am shocked by that rare difference between the would-be coalition partners on this subject. Not just on this Bill, but on a series of recent law and order Bills, the Opposition, despite what they have said, have voted against the Government's tougher law and order measures. By their votes they should be judged.
Q2. Mr. McAvoy:
To ask the Prime Minister if he will list his official engagements for Thursday 16 January. [9546]
The Prime Minister:
I refer the hon. Member to the answer I gave some moments ago.
Mr. McAvoy:
The Prime Minister has stoutly refused to own up to his 1992 pledge not to extend VAT to fuel. Conservative Members may not like it, but the Prime Minister is demeaning his office by repeatedly refusing to answer the question. Bearing in mind his shifty performance this afternoon, does he understand that the British people simply do not believe his promises on VAT?
The Prime Minister:
I wonder what makes me suspect a degree of co-ordination in Labour questions. Is it perhaps the guilty look on the hon. Gentleman's face? The Labour party is seeking to smear in a crude campaign about the Government's plans for the next Parliament. It simply will not wash.
Mr. Wilkinson:
Can my right hon. Friend find time today to study the statement by Commissioner van Miert on the proposed alliance between British Airways and American Airlines and the threat--implicit threat perhaps--of fining the United Kingdom Government if they permit that alliance to go ahead? Surely it is a fundamental freedom for a national airline to decide in its commercial interests with whom it may or may not have an alliance anywhere in the world.
The Prime Minister:
I am aware of the Commissioner's comments on the alliance, which were made within the framework of the existing structure of air services. I find them very strange when it has been made clear that the British Airways-American Airlines alliance can go ahead only if airline services are liberalised. The present position is that the Director General of Fair Trading will consider the Commission's views with any other views that he has received when he prepares his
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Q3. Mr. Jim Cunningham:
To ask the Prime Minister if he will list his official engagements for Thursday 16 January. [9547]
The Prime Minister:
I refer the hon. Member to the answer I gave some moments ago.
Mr. Cunningham:
Can I now have a straight answer from the Prime Minister? Does he recall saying before the last general election that he had no plans to extend the impact of VAT? Why should anyone believe him now?
The Prime Minister:
I refer the hon. Gentleman to several of my earlier answers.
Q4. Mr. Nigel Evans:
To ask the Prime Minister if he will list his official engagements for Thursday 16 January. [9548]
The Prime Minister:
I refer my hon. Friend to the answer I gave some moments ago.
Mr. Evans:
This question is not about VAT. I have not been included in the Opposition's little scheme. I should like the Prime Minister immediately to introduce compulsory homework on basic economics for Labour politicians. They believe that they can spend £30 billion without there being massive tax increases or massive increases in borrowing. Does he agree that the electorate will not want to risk trading an improving economy and shrinking unemployment for the economic paralysis and tax hikes that will certainly come about if the nightmare happens and a Labour Government are elected?
The Prime Minister:
My hon. Friend has hit on an extremely good idea. If Labour Members did their homework--particularly the shadow Chancellor--they would learn that Labour's sums do not add up. They cannot promise £30 billion of expenditure and at the same time say that they will not increase taxation.
Mr. David Shaw:
It will end in tears.
The Prime Minister:
What an excellent expression. It will end in tears. I strongly suspect that it will. The reality is that people will rumble the fact that Labour Members cannot keep those promises without putting up taxes.
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Mrs. Jane Kennedy:
Will the Prime Minister acknowledge the depths of dismay being felt on Merseyside as 1,300 Ford workers face redundancy, despite having won for their plant the company's in-house award for achievement and quality of production just a few months ago? Does he accept that his Chancellor's comments this afternoon that
"Well, we haven't given a figure on that because we said that's something that has to be and should be, I mean this would be . . . ".
That is the gobbledegook we heard from the right hon. Gentleman. Labour does not know how it would pay for its programme, but we know--it would put up taxes.
"You can't win them all"
have worsened that sense of dismay and make it look as though the Government do not care? Will he tell the House what action he and his Ministers are taking to secure the future of Ford Halewood and to find work for those who are facing redundancy?
The Prime Minister:
My right hon. and learned Friend said--if the hon. Lady had quoted him fully--how much he regretted that decision, and so do I. It is surprising that Ford has decided to move; it flies in the face of most investment decisions, which are moving to the United Kingdom. That should not hide the fact that Ford's new investment in Jaguar is worth 5,000 jobs and that it plans a further £2.6 billion of investment by 2000 and a lot of other investments.
I understand entirely that that is no comfort to the workers in Halewood and I hope that it will be possible for them to find alternative employment, for example with other inward investors. The hon. Lady sniggers. When has she ever know inward investment like this coming into England? When has she ever known a time when the output of cars was at such a high level? As usual, the hon. Lady--I do not mean the hon. Member for Liverpool, Broadgreen (Mrs. Kennedy), who asked the question; I mean the hon. Member for Wallasey (Ms Eagle)--sits there assuming that she would be able to put things right. The policies that she advocates led the British car industry to ruin. The British car industry is more successful today than it has been since the hon. Lady was born.
Mr. Faulds:
On a point of order, Madam Speaker.
Madam Speaker:
I am sorry to repeat for the third time that, under our procedures, I can take points of order only after private notice questions, statements and applications under Standing Order No. 20. There is a statement, and I have to hear a Standing Order No. 20 application. Perhaps the hon. Gentleman will wait his time.
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