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House of Lords

Wednesday, 2nd December 1998.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Lincoln.

Lord Morris--Took the Oath.

Lord Boston--Took the Oath.

European Union: Tax Harmonisation

Lord Waddington asked Her Majesty's Government:

    Whether they will use their veto to block moves to harmonise taxes in the European Union.

Lord McIntosh of Haringey: My Lords, I congratulate the noble Lord on the timing of his Question. He will have been reminded by today's news that decisions in this area are subject to unanimity. As we have made clear, we will not agree to any action at the European level which would raise business costs and harm investment and jobs in Britain or Europe.

Lord Waddington: My Lords, while I thank the Minister for his reply, can he assist me on the following matter? Having spent the weekend asserting that tax harmonisation was not a serious issue but was a scare story created by the press, following yesterday's events are the Government now taking seriously the real threat to our national interest posed by the determination of France and Germany in particular to get rid of the principle of unanimity in tax matters and press ahead with tax harmonisation as part of their plan for a more economically integrated Europe? While the Chancellor of the Exchequer blusters about using the veto, is it not plain that by signing the document The New European Way drafted by his adviser Ed Balls a few weeks ago he committed himself to deeper European integration, including more tax harmonisation, and put the issue of tax harmonisation firmly on the agenda?

Lord McIntosh of Haringey: My Lords, I simply do not accept the noble Lord's premise; nor do other noble Lords, judging by the reaction of the House. We have made it clear that tax proposals require unanimity. A change to that means a change in the treaty, which in turn requires unanimity, and that simply will not happen.

Lord Barnett: My Lords, does my noble friend find it as sad as I do that a serious and important topic such as this should be treated in this way? Does he accept that there is a great danger of using the veto for everything and throwing out the baby with the bath water? Does he also agree that currently the Germans are seeking to deal with what they describe as tax evasion--we call it tax avoidance, which is legal--and stop the use of the Channel Islands, for example, to

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establish trusteeships to save huge amounts of tax? Would we not support that? Perhaps even the noble Lord, Lord Waddington, would agree with that.

Lord McIntosh of Haringey: My Lords, I am not quite as good as my noble friend at righteous indignation. I agree that there are elements of European Commission proposals that may be helpful to this country and we will support those. If there is a proposal to reduce or eliminate harmful tax competition that is for the benefit of this country as well as others we shall support it. But the personal views of the German Finance Minister, which is what all this row is about, do not amount to European Commission proposals. They do not even amount to something that we have to veto, although we would do so if we had to.

Lord Taverne: My Lords, does the noble Lord accept that there is general agreement in this House that, for example, proposals on a universal withholding tax without exemptions are to be resisted? But will the Government continue to judge the matter on a case-by-case basis? Does the noble Lord agree that not only are there cases of tax harmonisation that may be beneficial to this country, but also other examples in the field of excise duties? In particular, does the Minister agree that there may be great advantage in the harmonisation of tax provisions to enable the promotion of pan-European pensions that will become increasingly important for a large number of people whose employment takes them to different countries within Europe?

Lord McIntosh of Haringey: My Lords, I agree with the noble Lord, Lord Taverne, that a withholding tax is not the Government's preferred solution to the problem that it is meant to address. We much prefer the exchange of information, as we have made very clear. I have also made clear that there are occasions when common action between member states is to the benefit of this country. We shall take advantage of that when appropriate.

Lord Lawson of Blaby: My Lords, while I welcome the assurance that the Minister has given the House that there is no way in which the Government will agree to any change in the unanimity rule governing fiscal decisions, is he aware that this is not a purely economic issue? Does he agree that not only would this be economically very damaging to this country but that, politically and historically, on many occasions the debate between the parties in this country has been about whether levels of public expenditure and taxation should be higher or lower and to remove that from this country would be a total denial of our democratic rights?

Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Lawson, for his reaction to what I, the Chancellor of the Exchequer and the Chief Secretary have said. An important reason why we are opposed to tax harmonisation is that it is bad for business and bad for competitiveness in the economy. However, I recognise the point that the noble Lord makes.

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Lord Shore of Stepney: My Lords, we are not dealing with an off-the-cuff remark by a German Finance Minister, as my noble friend suggested. Is he aware that the joint declaration signed by the German and French Governments and their Finance Ministers at Potsdam yesterday pledges both countries to the progressive and rapid harmonisation of taxation in the European Union? The matter has to be taken very seriously indeed. While we welcome the Minister's assurance that we shall exercise our veto to prevent these matters applying to us, what has my noble friend to say about the possibility under the enhanced co-operation procedures of the Amsterdam Treaty of the other European countries coming together to agree on tax harmonisation and then making that a condition of Britain's further move to entry into the single currency--if we were so foolish as to adopt that course?

Lord McIntosh of Haringey: My Lords, I do not know how I can make the Government's position clearer than I have. It is not just Britain which is opposed to tax harmonisation. A number of other European countries have expressed the same view. Some are going into the single currency on 1st January. After all, the United States, with 300 million people and 50 member states, has a high degree of federalism and no tax harmonisation.

Lord Peyton of Yeovil: My Lords, while we understand and appreciate the assurance given by the Minister, will the noble Lord accept that circumstances can change, and that the gathering strength of the Franco-German axis, changed as it has been by Mr. Lafontaine's arrival in high office in Germany, may well mean that the Government's position may not remain as strong as they now believe it is.

Lord McIntosh of Haringey: My Lords, I do not think that the noble Lord should get too excited. The Government's position is absolutely clear and unequivocal.

Mature Students: Admission to Higher Education

2.45 p.m.

Lord Dormand of Easington asked Her Majesty's Government:

    What action is being taken to increase the number of mature students at universities.

The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, we are focusing more than half of the expansion in higher education next year on part-timers who are mostly mature students.


Baroness Blackstone: We have also announced that tuition will be free next year for part-time students on benefits, as well as those who lose their job during their

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course. We have doubled access funds and asked universities and colleges to give priority consideration to mature students, whether they are studying full-time or part-time.

Lord Dormand of Easington: My Lords, the Minister will not be surprised that I did not hear much of what she said. I am sure that it is all good stuff.

Will my noble friend confirm that the Government are still as concerned about mature full-time education students as they are about students who enter university at about 18? Is she aware of the figures issued by the universities and colleges admission service? The number of students aged 21 and over has decreased by no fewer than 10,000 since the figures issued a year ago. In those circumstances, will she ensure that there is a thorough investigation into the reasons why that decline is taking place?

Baroness Blackstone: My Lords, I can confirm to my noble friend that what I said, which he did not hear, was all good stuff. Yes, the Government are committed to lifelong learning and to ensuring that we have the maximum number of mature students in our universities and colleges. In order to ensure that that happens, as I indicated earlier and perhaps should repeat, we have decided that we shall increase the number of places for part-time students--and 94 per cent. of part-time students are mature--and have made it clear that those part-time students who lose their jobs while they are studying will not have to pay tuition fees. Moreover, we shall also make it possible for all part-time students who are on benefits to have their fees remitted.

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