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Mr. Owen Paterson (North Shropshire): Will the right hon. Gentleman give way?

Mr. Byers: In a second.

This Government, by contrast with the previous Government, can be trusted by the British people on tax. If we make manifesto commitments on tax, those commitments will be met. That contrasts starkly with the Conservative Government's approach. That is why we shall meet the pledge in our manifesto:

"We renew our pledge not to extend VAT to food, children's clothes, books and newspapers and public transport fares",

and why we shall deliver on that promise.

We made a further commitment on VAT at the last election:

"We will cut VAT on fuel to five per cent, the lowest level allowed."

In the very first Budget after the election, we moved immediately to do precisely that. That is why we shall take no lectures from the Conservative party on tax.

In the 1992 general election, the Tories promised time and again that they would cut taxes. After that election, they broke that promise 22 times. That is why the British people will never trust the Tories on tax again. There can be--

Mr. Paterson: Will the Minister give way?

Mr. Byers: I shall give way in a moment.

There can be no clearer demonstration than the Tories' approach to value added tax of the fact that they break their promises. In 1979, the Conservatives promised not to increase VAT. In the Budget following that promise, they doubled it. In 1991, the British people were made to suffer the consequences of the Tories' failure on the poll tax in an increase in VAT rates.

Mr. Paterson: We heard all this during the general election. Will the Minister address himself to the actions

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that he and the Government have taken since they came to power on one area of tax which it rests entirely in the Government's hands to decide--fuel duties and vehicle excise duty? In that area, we now have taxes so high that it costs £252 more to fill up a truck in Britain than in France, and VED is six times as high here as it is in France. What is that doing to jobs and prosperity in a strategic industry such as road haulage?

Mr. Byers: The hon. Gentleman's intervention came very close to an argument in favour of harmonisation of taxes with Europe. That is an interesting approach.

I can understand why Conservative Members feel uncomfortable about having their manifesto pledges broken time and time again. I understand that it is not pleasant for them to have those matters drawn to their attention. However, we continue to remind them because it is the truth and it is why the British people do not trust the Tories on taxes.

It is interesting to look through the record, including the record of the time when the shadow Chancellor of the Exchequer was a Treasury Minister. Many steps were taken then which led to the harmonisation of taxes. Which party justified a European directive stating

"we are committed to the harmonisation of indirect taxes"?

It was, of course, the Conservative party when in government. It was a former Chancellor of the Exchequer who said that in 1992. Which party signed at least 18 taxation directives while it was in government? Once again, it was the Conservative party.

That is the same Conservative party that now criticises and makes dire warnings about VAT being imposed from Europe and the same Conservative party that did not match our pledge on VAT. The Conservative party's manifesto did not even mention VAT. Let us not forget that the Conservative Government signed up to a minimum rate of VAT across Europe.

Mr. John Butterfill (Bournemouth, West): Will the Minister give way?

Mr. Byers: I want to make some progress.

It was the Conservative party that signed up to extending qualified majority voting into 42 new areas while it was in government. That was done in the Single European Act 1985 and during the Maastricht treaty.

Mr. Andrew Tyrie (Chichester): Will the Minister give way?

Mr. Byers: No. I should make some progress.

The Conservatives are the party that signed the Maastricht treaty, and the person who signed it was the present shadow Chancellor. That is the reality. The Conservatives attack what they once supported and deplore what they once agreed. They disown what they were once proud of and complain about promises when the fact is that we have kept ours and they have broken theirs.

Mr. Cash: Will the Minister give way?

Mr. Byers: As the shadow Chancellor would not give way to the hon. Gentleman, I am prepared to do so.

Mr. Cash: Does the Minister agree that, under the Maastricht treaty--under, I think, articles 103, 130 and

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various others--it is clear that it is intended to co-ordinate economic policy? How can the right hon. Gentleman deny--it is the burden of his argument, as far as I understand it--that the proposals for tax harmonisation do not flow from the Maastricht treaty? What will he do about it?

Mr. Byers: I must begin by thanking the hon. Gentleman for all the support that he gave us during the general election campaign, which was gratefully received. I am coming on, in literally 30 seconds, to address the issues relating to Europe in which I know the hon. Gentleman so likes to engage.

I move on to taxation in Europe. The arguments on issues concerning Europe should be based on common sense and not on narrow partisan politics. I want to take up some of the issues that have been raised concerning tax harmonisation. There has been a good deal of scaremongering, which we have heard this evening and over the past few weeks. I want to set out the principles that underpin the Government's approach. Our way forward for Europe is the promotion of employment, economic reforms and competitive markets, not tax harmonisation. The Government have made it clear that we shall not support any action at European level that will threaten jobs or the competitive position of British business. So any tax proposals will need to pass that fundamental test.

Mr. Tyrie rose--

Mr. Byers: No. I want to make some progress.

Questions of tax require a unanimous decision, so there is no question of tax changes that we do not support being imposed on us from Brussels. We are in favour of tax competition. We are in favour also of national Governments retaining control of taxation. Let us be clear: for the United Kingdom, that means taxation being decided when a British Chancellor of the Exchequer presents a Budget to this House.

Mr. John Bercow (Buckingham) rose--

Mr. Byers: No. I want to make some progress.

We are also in favour of concerted action at European level to deal with unfair tax practices that distort real competition, to close tax loopholes and to cease unfair state aids and unfair tax breaks. The test always has to be whether in a particular instance the proposal delivers economic or financial benefits for the United Kingdom. If it does not, we shall oppose it and argue our case. The United Kingdom will not sign up to anything that is not in the national interest, that raises business costs, that harms investment and jobs or damages the competitive position of Europe.

I must give way to the hon. Member for Buckingham (Mr. Bercow) because I did not do so last time.

Mr. Bercow: If the right hon. Gentleman is in favour of tax competition, will he explain to the House why the Financial Secretary is prepared to relinquish up to 10 tax reliefs which work to the competitive advantage of the United Kingdom?

Mr. Byers: We certainly will not be doing that. I shall talk shortly about the group on the code of conduct. There

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has been much play about the 10 directives that will affect people in Britain. These are the 10 issues that are being discussed within the group. To give right hon. and hon. Members a taste of what is to come, of the 10 directives, five refer specifically to Gibraltar. They come to us as a member state of the European Union. I shall deal with the relevant five directives in the relevant part of my speech.

We shall retain the veto on tax issues. If necessary, we shall be prepared to use our veto to protect the national interest. The Government are clear that decisions on tax will remain subject to the agreement of all member states.

The shadow Chancellor referred to the position of the Finnish presidency and said that it would want to raise the question of all-state agreement. I should draw to the right hon. Gentleman's attention the statement made on 4 December by the Finnish tax Minister, who said that Finland's position

"is that unanimous decisions will make sure a small country can get its voice heard. Our position has not changed on that."

I think that we can see that Finland will not use its presidency to argue that what is at present a requirement for all member states to agree will be changed. So we shall retain the veto on tax issues. If necessary, we shall be prepared to use that veto in the national interest.

The Government's approach to Europe is clear. It is far better to be there shaping and engaging in the debates than sitting powerless on the sidelines. If and when draft Commission proposals come forward, the Government will discuss them constructively. However, we shall always judge them by what is in Britain's national economic interest.

In our discussions on tax in Europe, it is important to remember that we are not alone in our approach. Not only Britain but many other member states oppose the harmonisation of tax rates. Last Wednesday the Italian Finance Minister told the Financial Times that harmonisation of corporation tax would be

"untimely, questionable and, above all, hardly feasible"

and that it would be

"wrong in any event."

On the same day the Prime Minister of Spain spoke out against what he called the "dumbing down" of tax harmonisation and opposed a single rate of direct tax because it would be a recipe for inefficiency. There is no majority for the harmonisation of tax rates in Europe, never mind the unanimous agreement that would be required for action. Nor will the need for all-member agreement change. That would require all states of the EU to agree on a change to qualified majority voting on tax, and most member states will not agree to that.

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