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9.49 pm
The Financial Secretary to the Treasury (Dawn Primarolo): I thank hon. Members for their condolences to my right hon. Friend the Chancellor and his family on the sad death of his father. I am sure that all hon. Members will share those sentiments.
In addition to dwelling on phrases such as "weasel words" and "fudge", and every other catch-phrase that is in the Tory party's brief for today, the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) talked about illusion and isolation.
The illusion is that Conservative Members do not want to understand, and do not believe, what is going on both in the debate here in the United Kingdom and in Europe.
When the hon. Gentleman said that the Conservative party is happy to be isolated, we know that it is because it is completely isolated--isolated from the other place, from the electorate and from reality, it would appear from the contributions that we have heard today.
Let us be clear about the Government's position. Britain's way forward for Europe is the promotion of employment, economic reforms and competitive markets. The Government will not support any action that will threaten jobs or the competitive position of British business. That is nice and clear.
Tax matters coming before the Council, of course, require unanimous decisions. There is no question of tax changes being imposed on us, as was suggested by the right hon. Member for Fareham (Sir P. Lloyd). That suggestion is preposterous. Tax requires unanimity. Unanimity means all of the member states, including the United Kingdom.
If a proposal does not meet the test of national interest, we will oppose it and argue our case. If necessary, as my right hon. Friend the Chief Secretary said, and as my right hon. Friend the Chancellor has said before, we will be prepared to use the veto.
Mr. Swayne:
Will the hon. Lady give way?
Dawn Primarolo:
I shall not give way at this moment. I have only 10 minutes to answer all the accusations that have been made against the Government and, out of respect to the House, I should try to do that before any more accusations are made.
The Government believe that fair tax competition is a good thing. We support action to tackle unfair tax practices which distort competition in European economies.
I have the published conclusions from ECOFIN in November 1992, which met under the United Kingdom presidency with the then Chancellor of the Exchequer, now Lord Lamont, in the chair. It states:
Now I briefly remind the House how we will apply our principles as spelt out by my right hon. Friend the Chief Secretary to the three specific areas raised in today's debate by the Opposition.
All European VAT matters are subject to agreement by all member states.
Mr. Bruce Grocott (Telford):
Say it again, Dawn.
Dawn Primarolo:
All member states.
We will honour our manifesto pledge on VAT. VAT on food, children's clothes, books, newspapers and public transport fares will remain zero rated. I remind the House that it was the Conservative party that agreed to a minimum VAT rate of 15 per cent. and an illustrious cast of Conservative Members endorsed that. On 2 July 1992, the then Chancellor of the Exchequer said that the
Government were committed to the harmonisation of indirect taxes in as far as that was necessary for the internal market.
The right hon. Member for Hitchin and Harpenden(Mr. Lilley), that well-known pro-European, signed an explanatory memorandum to the House explaining why we should have the minimum rate--not a minimalist rate, or whatever it was the shadow Chancellor wanted to call it, not nearly a minimum rate, but a minimum rate. That, too, was endorsed by the right hon. Member for South-West Norfolk (Mrs. Shephard). That well-known champion of Europe, the right hon. Member for Wells (Mr. Heathcoat-Amory), also signed the same memorandum when it came before the House. The right hon. Member for Horsham (Mr. Maude) said, "Let's be minimalist about this." Conservative Members have been minimalist about the truth--nothing else.
There are no Community proposals on the table for corporation tax harmonisation. The Government will not sign up to anything that is not in Britain's national economic interest or that raises business costs and harms investment.
Dawn Primarolo:
I will not give way to the hon. Lady. As a Minister in the previous Government, she knows what their policy was, although she has amnesia now. She is suffering under the same illusion and has forgotten their policy.
There is no evidence that we need harmonisation, nor is it clear what would be the benefits of launching into such an enormous project. With such widely varying corporation tax rates across Europe, we believe that tax harmonisation is a non-starter. There have been many quotes--from the Italian and Finnish Finance Ministers, the Spanish Prime Minister and even the French Prime Minister--making it clear that harmonisation of corporation tax rates is not on the agenda.
The rationale behind the withholding tax is prevention of tax evasion. I hope that that is a principle with which all parties in the House, even the Conservatives, can agree. The Government are committed to effective international action to prevent tax evasion and to protecting the competitiveness of the United Kingdom and European financial services industries. In particular, we have said that any future directive must exclude the eurobond market. The proposals as currently drafted are unacceptable. Any decision requires unanimity. I remind hon. Members that that means that everybody must be in favour, so the proposals cannot be changed unless their present form is improved.
The code of conduct aims to tackle harmful tax competition and, by doing so, would create the preconditions for healthy competition. We are helping to protect British jobs which are threatened by unfair subsidies abroad. The code of conduct uses two specific key criteria to decide what is harmful. The first and most important is that a measure must significantly affect the location of business activities in the Community. The second specifies that the potentially harmful measure has an effective level of taxation lower than general levels of taxation in that member state.
Under the terms of the code--voted for in European Standing Committee B--five measures in the United Kingdom tax system are on the list of measures that could fall into that category. That does not mean that they are harmful, and the group has yet to reach its conclusions. We do not believe that those measures are harmful and we have submitted a robust defence of them to the group. We are confident that they do not constitute harmful tax measures because all five satisfy the criteria for not being harmful; they are proportionate in their target--[Interruption.]
Mr. Deputy Speaker:
Order. There is far too much conversation. It should be borne in mind that this is an Opposition Supply day.
Dawn Primarolo:
This is obviously too hard for Conservative Members to follow, because I am telling them what is really going on instead of talking about their illusions.
The Government are pursuing a clear agenda in Europe. It is about shaping a better Europe, engaging in debate and making sure that our best interests are represented--interests that Conservative Members cannot even recognise.
Question put, That the original words stand part of the Question:--
The House divided: Ayes 140, Noes 359.
Tellers for the Ayes:
Tellers for the Noes:
Question accordingly negatived.
"The Council endorses the concern expressed . . . about the effects of special tax arrangements designed to attract internationally mobile capital . . . resulting in the loss of revenue . . . and unfair competition; and believes that consideration is urgently needed of possible remedies to this problem".
Therefore, let us be clear tonight that it was the Conservative party that initiated the process that led to the code of conduct.
AYES
Ainsworth, Peter (E Surrey)
Amess, David
Ancram, Rt Hon Michael
Arbuthnot, Rt Hon James
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Bercow, John
Beresford, Sir Paul
Blunt, Crispin
Body, Sir Richard
Boswell, Tim
Bottomley, Peter (Worthing W)
Bottomley, Rt Hon Mrs Virginia
Brady, Graham
Brazier, Julian
Brooke, Rt Hon Peter
Browning, Mrs Angela
Burns, Simon
Butterfill, John
Cash, William
Chapman, Sir Sydney
(Chipping Barnet)
Chope, Christopher
Clappison, James
Clarke, Rt Hon Kenneth
(Rushcliffe)
Clifton-Brown, Geoffrey
Collins, Tim
Colvin, Michael
Cormack, Sir Patrick
Cran, James
Davies, Quentin (Grantham)
Davis, Rt Hon David (Haltemprice)
Donaldson, Jeffrey
Dorrell, Rt Hon Stephen
Duncan, Alan
Duncan Smith, Iain
Emery, Rt Hon Sir Peter
Evans, Nigel
Faber, David
Fabricant, Michael
Forth, Rt Hon Eric
Fowler, Rt Hon Sir Norman
Fox, Dr Liam
Fraser, Christopher
Gale, Roger
Garnier, Edward
Gibb, Nick
Gill, Christopher
Gillan, Mrs Cheryl
Gorman, Mrs Teresa
Gray, James
Green, Damian
Greenway, John
Grieve, Dominic
Gummer, Rt Hon John
Hague, Rt Hon William
Hamilton, Rt Hon Sir Archie
Hammond, Philip
Hawkins, Nick
Hayes, John
Heathcoat-Amory, Rt Hon David
Heseltine, Rt Hon Michael
Hogg, Rt Hon Douglas
Horam, John
Howard, Rt Hon Michael
Howarth, Gerald (Aldershot)
Hunter, Andrew
Jackson, Robert (Wantage)
Jenkin, Bernard
Key, Robert
King, Rt Hon Tom (Bridgwater)
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lansley, Andrew
Letwin, Oliver
Lewis, Dr Julian (New Forest E)
Lidington, David
Lilley, Rt Hon Peter
Lloyd, Rt Hon Sir Peter (Fareham)
Loughton, Tim
Lyell, Rt Hon Sir Nicholas
McIntosh, Miss Anne
MacKay, Rt Hon Andrew
Maclean, Rt Hon David
McLoughlin, Patrick
Major, Rt Hon John
Malins, Humfrey
Maples, John
Mates, Michael
Maude, Rt Hon Francis
Mawhinney, Rt Hon Sir Brian
May, Mrs Theresa
Moss, Malcolm
Norman, Archie
Ottaway, Richard
Page, Richard
Paice, James
Paterson, Owen
Pickles, Eric
Prior, David
Randall, John
Redwood, Rt Hon John
Robathan, Andrew
Robertson, Laurence (Tewk'b'ry)
Roe, Mrs Marion (Broxbourne)
Ross, William (E Lond'y)
Rowe, Andrew (Faversham)
Ruffley, David
St Aubyn, Nick
Shepherd, Richard
Simpson, Keith (Mid-Norfolk)
Soames, Nicholas
Spelman, Mrs Caroline
Spicer, Sir Michael
Spring, Richard
Stanley, Rt Hon Sir John
Steen, Anthony
Swayne, Desmond
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, Rt Hon John D (Strangford)
Taylor, John M (Solihull)
Taylor, Sir Teddy
Tredinnick, David
Trend, Michael
Tyrie, Andrew
Walter, Robert
Wardle, Charles
Wells, Bowen
Whitney, Sir Raymond
Whittingdale, John
Widdecombe, Rt Hon Miss Ann
Wilkinson, John
Willetts, David
Wilshire, David
Winterton, Mrs Ann (Congleton)
Winterton, Nicholas (Macclesfield)
Woodward, Shaun
Yeo, Tim
Young, Rt Hon Sir George
Mr. Stephen Day and
Mr. Nigel Waterson.
NOES
Abbott, Ms Diane
Adams, Mrs Irene (Paisley N)
Ainger, Nick
Ainsworth, Robert (Cov'try NE)
Allan, Richard
Anderson, Donald (Swansea E)
Armstrong, Ms Hilary
Ashdown, Rt Hon Paddy
Ashton, Joe
Atherton, Ms Candy
Atkins, Charlotte
Austin, John
Ballard, Jackie
Barnes, Harry
Barron, Kevin
Battle, John
Bayley, Hugh
Beard, Nigel
Begg, Miss Anne
Bell, Martin (Tatton)
Benn, Rt Hon Tony
Bennett, Andrew F
Benton, Joe
Bermingham, Gerald
Berry, Roger
Betts, Clive
Blackman, Liz
Blears, Ms Hazel
Blizzard, Bob
Blunkett, Rt Hon David
Boateng, Paul
Borrow, David
Bradley, Keith (Withington)
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brand, Dr Peter
Breed, Colin
Brinton, Mrs Helen
Brown, Russell (Dumfries)
Browne, Desmond
Bruce, Malcolm (Gordon)
Burgon, Colin
Burnett, John
Burstow, Paul
Butler, Mrs Christine
Byers, Rt Hon Stephen
Cable, Dr Vincent
Caborn, Richard
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Menzies (NE Fife)
Campbell, Ronnie (Blyth V)
Campbell-Savours, Dale
Cann, Jamie
Caplin, Ivor
Casale, Roger
Chapman, Ben (Wirral S)
Chaytor, David
Chidgey, David
Chisholm, Malcolm
Clark, Rt Hon Dr David (S Shields)
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Charles (Norwich S)
Clarke, Eric (Midlothian)
Clarke, Rt Hon Tom (Coatbridge)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Cohen, Harry
Coleman, Iain
Colman, Tony
Connarty, Michael
Cook, Frank (Stockton N)
Cooper, Yvette
Corbyn, Jeremy
Corston, Ms Jean
Cranston, Ross
Cryer, Mrs Ann (Keighley)
Cryer, John (Hornchurch)
Cummings, John
Cunliffe, Lawrence
Cunningham, Jim (Cov'try S)
Curtis-Thomas, Mrs Claire
Darvill, Keith
Davey, Edward (Kingston)
Davey, Valerie (Bristol W)
Davies, Rt Hon Denzil (Llanelli)
Davis, Terry (B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Denham, John
Dewar, Rt Hon Donald
Dobbin, Jim
Donohoe, Brian H
Doran, Frank
Dowd, Jim
Drown, Ms Julia
Dunwoody, Mrs Gwyneth
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)
Edwards, Huw
Ellman, Mrs Louise
Ennis, Jeff
Etherington, Bill
Fearn, Ronnie
Fisher, Mark
Fitzpatrick, Jim
Flint, Caroline
Flynn, Paul
Follett, Barbara
Foster, Rt Hon Derek
Foster, Don (Bath)
Foster, Michael Jabez (Hastings)
Foster, Michael J (Worcester)
Fyfe, Maria
Gapes, Mike
George, Andrew (St Ives)
George, Bruce (Walsall S)
Gerrard, Neil
Gibson, Dr Ian
Gilroy, Mrs Linda
Godman, Dr Norman A
Godsiff, Roger
Goggins, Paul
Golding, Mrs Llin
Gorrie, Donald
Griffiths, Jane (Reading E)
Griffiths, Win (Bridgend)
Grocott, Bruce
Grogan, John
Gunnell, John
Hain, Peter
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, Fabian (Leeds NE)
Hancock, Mike
Hanson, David
Harris, Dr Evan
Harvey, Nick
Heal, Mrs Sylvia
Healey, John
Heath, David (Somerton & Frome)
Henderson, Ivan (Harwich)
Hepburn, Stephen
Heppell, John
Hesford, Stephen
Hewitt, Ms Patricia
Hill, Keith
Hinchliffe, David
Hodge, Ms Margaret
Hoey, Kate
Home Robertson, John
Hood, Jimmy
Hope, Phil
Hopkins, Kelvin
Howarth, Alan (Newport E)
Howells, Dr Kim
Hoyle, Lindsay
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hurst, Alan
Hutton, John
Illsley, Eric
Ingram, Adam
Jackson, Ms Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Johnson, Alan (Hull W & Hessle)
Johnson, Miss Melanie
(Welwyn Hatfield)
Jones, Barry (Alyn & Deeside)
Jones, Mrs Fiona (Newark)
Jones, Helen (Warrington N)
Jones, Ms Jenny
(Wolverh'ton SW)
Jones, Jon Owen (Cardiff C)
Jones, Dr Lynne (Selly Oak)
Kaufman, Rt Hon Gerald
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Keen, Ann (Brentford & Isleworth)
Keetch, Paul
Kemp, Fraser
Khabra, Piara S
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
King, Ms Oona (Bethnal Green)
Kumar, Dr Ashok
Ladyman, Dr Stephen
Lawrence, Ms Jackie
Laxton, Bob
Lepper, David
Leslie, Christopher
Levitt, Tom
Lewis, Ivan (Bury S)
Linton, Martin
Livingstone, Ken
Livsey, Richard
Lock, David
Love, Andrew
McAllion, John
McAvoy, Thomas
McCabe, Steve
McCafferty, Ms Chris
McCartney, Ian (Makerfield)
McDonnell, John
McFall, John
McGuire, Mrs Anne
McIsaac, Shona
McKenna, Mrs Rosemary
Mackinlay, Andrew
McNulty, Tony
MacShane, Denis
Mactaggart, Fiona
McWalter, Tony
McWilliam, John
Mahon, Mrs Alice
Mallaber, Judy
Marsden, Gordon (Blackpool S)
Marsden, Paul (Shrewsbury)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Martlew, Eric
Maxton, John
Meacher, Rt Hon Michael
Merron, Gillian
Michael, Alun
Michie, Bill (Shef'ld Heeley)
Michie, Mrs Ray (Argyll & Bute)
Milburn, Alan
Miller, Andrew
Mitchell, Austin
Moffatt, Laura
Moore, Michael
Moran, Ms Margaret
Morgan, Ms Julie (Cardiff N)
Morgan, Rhodri (Cardiff W)
Morley, Elliot
Morris, Ms Estelle (B'ham Yardley)
Morris, Rt Hon John (Aberavon)
Mudie, George
Mullin, Chris
Murphy, Denis (Wansbeck)
Naysmith, Dr Doug
Norris, Dan
Oaten, Mark
O'Brien, Bill (Normanton)
O'Brien, Mike (N Warks)
O'Hara, Eddie
Olner, Bill
O'Neill, Martin
Öpik, Lembit
Organ, Mrs Diana
Osborne, Ms Sandra
Palmer, Dr Nick
Pearson, Ian
Pendry, Tom
Perham, Ms Linda
Pickthall, Colin
Pike, Peter L
Plaskitt, James
Pollard, Kerry
Pope, Greg
Pound, Stephen
Powell, Sir Raymond
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Prescott, Rt Hon John
Primarolo, Dawn
Quin, Ms Joyce
Quinn, Lawrie
Radice, Giles
Rammell, Bill
Rapson, Syd
Raynsford, Nick
Reed, Andrew (Loughborough)
Rendel, David
Robertson, Rt Hon George
(Hamilton S)
Robinson, Geoffrey (Cov'try NW)
Rooney, Terry
Ross, Ernie (Dundee W)
Rowlands, Ted
Ruane, Chris
Ruddock, Ms Joan
Russell, Bob (Colchester)
Russell, Ms Christine (Chester)
Salter, Martin
Sanders, Adrian
Sarwar, Mohammad
Savidge, Malcolm
Shaw, Jonathan
Sheerman, Barry
Sheldon, Rt Hon Robert
Shipley, Ms Debra
Simpson, Alan (Nottingham S)
Singh, Marsha
Skinner, Dennis
Smith, Angela (Basildon)
Smith, Rt Hon Chris (Islington S)
Smith, Jacqui (Redditch)
Smith, John (Glamorgan)
Smith, Llew (Blaenau Gwent)
Smith, Sir Robert (W Ab'd'ns)
Snape, Peter
Soley, Clive
Southworth, Ms Helen
Starkey, Dr Phyllis
Steinberg, Gerry
Stevenson, George
Stewart, David (Inverness E)
Stinchcombe, Paul
Stoate, Dr Howard
Stott, Roger
Strang, Rt Hon Dr Gavin
Stringer, Graham
Stuart, Ms Gisela
Stunell, Andrew
Sutcliffe, Gerry
Taylor, Rt Hon Mrs Ann
(Dewsbury)
Taylor, Ms Dari (Stockton S)
Taylor, David (NW Leics)
Taylor, Matthew (Truro)
Temple-Morris, Peter
Thomas, Gareth (Clwyd W)
Thomas, Gareth R (Harrow W)
Timms, Stephen
Tipping, Paddy
Todd, Mark
Tonge, Dr Jenny
Touhig, Don
Trickett, Jon
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Turner, Dr George (NW Norfolk)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Tyler, Paul
Vaz, Keith
Wallace, James
Walley, Ms Joan
Ward, Ms Claire
Wareing, Robert N
Watts, David
Webb, Steve
White, Brian
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Rt Hon Alan
(Swansea W)
Williams, Alan W (E Carmarthen)
Wills, Michael
Winnick, David
Winterton, Ms Rosie (Doncaster C)
Wise, Audrey
Wood, Mike
Wray, James
Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)
Wyatt, Derek
Mr. David Jamieson and
Jane Kennedy.
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