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Windfall Tax
7. Mr. Keith Simpson: To ask the Chancellor of the Exchequer if he will list the companies that will be liable for the windfall tax. [1591]
10. Mr. Nicholls:
To ask the Chancellor of the Exchequer what time span he will use to assess the excess profits on which he plans to levy a windfall tax. [1595]
17. Mr. Swayne:
To ask the Chancellor of the Exchequer over what time scale he will calculate the excess profits for the windfall tax. [1602]
20. Mr. Lansley:
To ask the Chancellor of the Exchequer on what measure of profits he will base his windfall tax. [1605]
Mr. Gordon Brown:
I will announce details of the windfall levy in the forthcoming Budget.
Mr. Simpson:
I am obliged to the Chancellor for that highly detailed answer.
Opposition Members would like some detailed information. May I return the Chancellor to the question of the windfall tax? Will he please confirm--yes or no--that it will be a one-off payment made in one year, and made only once?
Mr. Nicholls:
Despite what the Chancellor has said about the details being released in the Budget, he is surely aware that the Prime Minister admitted in the House yesterday that he knew which companies would be liable for the windfall tax. Bearing that in mind, will the Chancellor now say whether British Telecom is included? If it is included, will the right hon. Gentleman say in what years--if any--he regards British Telecom as having made an unfair and excessive profit as a return on capital?
Mr. Brown:
The hon. Gentleman ought to be patient and wait until the Budget statement. I should remind him that, when the Conservatives introduced their windfall levy on the banks, they did not even announce the names of the companies in the Budget statement. Of course, the information will become available at the time of the Budget.
The hon. Gentleman asks about excess profits. The report of the Public Accounts Committee, which appeared in March just before the general election and was signed by many Conservative Members, states:
Mr. Swayne:
Will the right hon. Gentleman tell the House how he intends to raise a windfall tax from owners of capital who have passed their ownership to subsequent shareholders since the industries were privatised?
Mr. Brown:
Unlike the Conservatives' windfall tax on the banks, we have made our determination to have the windfall levy known, not just for one or two years but over the past five years. People have been aware over that time of our intention to legislate in this way. Given what happened at the general election, I should have thought that Conservative Members would be better spending their time advancing the cause of the young and the long-term unemployed who will benefit from the measure than defending the excesses of the privatised utilities.
Mr. Lansley:
As the Chancellor is proposing a one-off levy, how can he fund a continuing public expenditure requirement on welfare-to-work? His sums simply do not add up.
Mr. Brown:
The one-off levy is to raise money for the Parliament; I made that clear before and during the general election campaign and I make it clear again. I know that the Conservative party is obsessively
Mr. Sheldon:
Is my right hon. Friend aware that, when he quoted from the report of the Public Accounts Committee, he could have gone much further? In a series of reports since 1983, the Committee has shown that each of the utilities was sold at a price which was less than could or should have been obtained. Is he further aware that these matters can be looked at clearly in the reports of the PAC and that they show that the windfall tax is entirely due to the previous Government's actions?
Mr. Brown:
I am grateful to my right hon. Friend, who has been Chairman of the Public Accounts Committee for a long time. The report of March 1997, which deserves wide publicity, stated:
Ms Hewitt:
Does my right hon. Friend agree that, as there are now 1 million fewer jobs than when the Leader of the Opposition first became Prime Minister, it is essential to introduce a windfall profits tax and use the revenue to help move 250,000 young people off welfare and into work?
Mr. Brown:
As a result of Labour's windfall levy proposals, there are fewer jobs in the House for Conservative Members as well. I direct the House's attention to this morning's report which states that half a million of our young and long-term unemployed are without the basic training skills necessary for them to get jobs. It is a scandal that, over the past 18 years, when the Conservative party could have taken action, it failed to do so. This Government will take action to help both the young and the long-term unemployed.
Mrs. Fyfe:
Does my right hon. Friend agree that, instead of the Opposition display of heart bleeding for the privatisation fat cats, it would be better to ask my right hon. Friend to list the constituencies in which young people who have long been out of work will benefit? Mine is one such constituency in which people are looking forward to the results of this action.
Mr. Brown:
I agree entirely. In some constituencies, 30 per cent. of working-age households or families have no one earning a wage. They include young people, the long-term unemployed and single-parent families. It is
Mr. MacShane:
I invite my right hon. Friend to ignore the bleatings of those on the Conservative Benches, the friends of the fat cats, and pay attention to Yorkshire. Is he aware of the anger there at the profits made by those privatised monopolies? People want that tax to be used to create jobs, and there will be considerable anger if there is any diminution of the well-flagged intention of the Labour party, now in government, to use the tax fairly and justly.
Mr. Brown:
I am grateful to my hon. Friend. When the country finds out that some of these water companies, despite six or seven years of privatisation and record profits, have paid not a penny in mainstream corporation tax, it will be annoyed. Ordinary men and women are paying 23p or 40p in the pound when many water companies have paid absolutely nothing. That is another reason why the action that we have had to take to help to tackle the problem of unemployment, because of the failure of the Conservative party, is both necessary and urgent.
Mr. William Ross:
Given that the programme on which the Chancellor is going to expend this money is unlikely to be completed in the time scale that the windfall taxation is available, how does he intend to fund that expenditure in future years?
Mr. Brown:
The one-off levy will be raised in the Budget and for a Parliament. The action that we take over the next few years will bring down unemployment, save on social security costs, and enable us to reduce social security bills so that we can meet our long-term objective, which is to transfer resources from social security and welfare to education and training. I want every young person to have the chance of proper training and education after the age of 16, so that we can have a nation at work, instead of many thousands of people on the dole.
8. Mrs. Organ:
To ask the Chancellor of the Exchequer if he will make a statement on his policy towards value added tax on domestic fuel. [1593]
12. Mr. Jim Cunningham:
To ask the Chancellor of the Exchequer what plans he has to reduce VAT on domestic fuel. [1597]
14. Mr. Derek Twigg:
To ask the Chancellor of the Exchequer, what recent representations he has received on the level of VAT on fuel. [1599]
16. Mr. Martyn Jones:
To ask the Chancellor of the Exchequer, what plans he has to reduce VAT on domestic fuel. [1601]
Dawn Primarolo:
The Government have a manifesto commitment to cut VAT on domestic fuel and power to 5 per cent., and we intend to keep that pledge.
Mrs. Organ:
That is very good news. I am pleased to hear it. Members of the Lydney and district area pensioner
Dawn Primarolo:
Madam Deputy Speaker--[Hon. Members: "Oh."] Madam Speaker, my apologies. I assume that Opposition Members are shocked at my hon. Friend's suggestion that a Government should keep their election pledge. As she has said, the previous Government gave pledges and broke them. Our pledge will be kept and pensioner households will be the better for it, and warmer in winter.
Mr. Cunningham:
Is my hon. Friend aware that many pensioners regard the reduction of VAT on fuel as important, given that they have been neglected for the past 18 years?
Dawn Primarolo:
The Government's promise to reduce VAT on fuel, particularly for pensioners, demonstrates clearly that we are committed to a fairness agenda and to assisting pensioners. Instead of sniggering at the questions, perhaps Opposition Members would consider assisting the Government in meeting that target.
Mr. Twigg:
Does my hon. Friend recall the statement made by the former Chancellor before the last election in which he said that the challenge was to increase VAT on fuel to 17.5 per cent? Is my hon. Friend aware that that statement is of particular interest to my constituents who would pay significantly more for fuel under Conservative policies?
Dawn Primarolo:
My hon. Friend is correct to remind the House that the Conservative Government imposed VAT on fuel and that the former Chancellor said that he was committed to raising VAT on fuel to 17.5 per cent. The Opposition should now withdraw that commitment and support our target of reducing VAT to 5 per cent.
Mr. Jones:
Does my hon. Friend agree that, if the Conservative Government had not shamelessly broken their promises on VAT after the 1992 election, there might be a few more than 164 Conservative Members now?
Dawn Primarolo:
Yes, I do agree. However, I believe that, even without that broken promise, there would be so few of them now as to put us in government.
Mr. Evans:
Does the Minister agree that, when VAT on domestic fuel is reduced from 8 to 5 per cent., prices should come down? Does she agree also that, when the windfall tax on utilities is introduced, if any charge is passed on to consumers, prices from those utilities--particularly from the energy companies--will increase? Will the Minister give a guarantee that gas and electricity prices will not increase when the windfall tax is introduced? If she cannot do that, pensioners will be no better off, and Labour's election pledges will be revealed as a big con.
Dawn Primarolo:
That is rich coming from an hon. Member who voted to impose VAT on fuel in the first
Mr. Evans:
On a point of order, Madam Speaker. In view of the unsatisfactory nature of that answer, I give notice that I intend to raise the matter on the Adjournment.
Madam Speaker:
It was not the hon. Gentleman's question, so he cannot make that point.
Mr. Heathcoat-Amory:
Does the Financial Secretary recall that, on 27 March last year in this place, she supported a reduction in the rate of VAT on energy-saving materials, describing it as a matter of justice, jobs and democracy? Does she still support that policy?
Dawn Primarolo:
Under the Finance Act 1997, a review is being conducted--[Hon. Members: "Oh!"] The review is being conducted as a result of a Labour amendment to the legislation. We intend to pursue that review vigorously and report to the House. This Government keep their promises: the Conservatives did not.
Mr. Edward Davey:
Can the hon. Lady confirm that the cut in VAT will benefit the poorest and the wealthiest in the land? What proposals does she have to target benefits on the real poorest in order to combat and cut fuel poverty?
Dawn Primarolo:
The average household will benefit by £4.50 a quarter, and the poorest will benefit by even more as a proportion of their income. It is quite clear that our method is the most effective way of delivering that reduction. I impress upon the hon. Gentleman the fact that our commitment through the environmental task force and our strategy on energy efficiency will assist those households further and deliver real benefits to them instead of pious promises.
Mrs. Ewing:
Does the hon. Lady remember back to 23 January 1995, when my party's amendment aimed at reducing VAT on domestic fuel to 5 per cent. was described as a cynical ploy no fewer than three times by the right hon. Member for Edinburgh, Central (Mr. Darling)? It was stated that there was never any chance of reducing VAT on domestic fuel to 5 per cent. What has happened to change the Minister's mind? What realistic promise is she now holding out? We do not want to take a cynical attitude--we want to be convinced that there will be genuine reductions.
Dawn Primarolo:
There was a cynical ploy, which put at risk the reduction to 8 per cent. that we had already secured on the Floor of the House, thereby stopping the Conservative Government pushing ahead with a rise in VAT to 17.5 per cent.
"We note that in the five years after privatisation the water companies made profits totalling £7.4 billion, and the regional electricity companies profits of £8.7 billion, and that in both cases the profits were in excess of the level that the respective Directors General had judged it reasonable to allow for in the future."
That report to the House was signed by hon. Members in all parts of the House.
"the replacement values of the assets of the water and sewerage companies are now estimated to be £138 billion, . . . sale proceeds were . . . £3.6 billion . . . we and our predecessors expressed concern that the shares in the companies have been underpriced."
If Conservative Members are not interested in the reports of the Public Accounts Committee, which are signed by Conservative Members, perhaps we should also look at the report of the Select Committee on Trade and Industry, which was published only a few days before the PAC report and refers to the dramatic profit increases of privatised utilities. It is about time the Conservative party came to terms with the fact that excess profits were made which were not justifiable, and that action in the public interest should now be taken.
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