FUEL AND POWER FOR DOMESTIC OR CHARITY USE

HC Deb 12 July 1993 vol 228 cc745-77

Mr. William Powell

I beg to move amendment No. 7, in page 24, leave out lines 3 to 26.

Mr. Deputy Speaker

With this we may take the following amendments.

No. 22, in page 24, line 6, leave out 'supply:.

No. 23, in page 24, line 6, leave out ', acquisition or importation' and insert 'or acquisition'.

No. 24, in page 24, line 6, leave out ', acquisition'.

No. 2, in page 24, line 7, after 'place', insert— '(a) in the case of a qualifying use within the meaning of Note (1)(a) of that Schedule (domestic use)'.

No. 1, in page 24, line 7, at end insert 'where the supply, acquisition or importation is for a qualifying use within the meaning of Note (1)(a) of that Schedule (domestic use)'.

No. 3, in page 24, line 7, at end insert 'and (b) in the case of a qualifying use within the meaning of Note (1)(b) of that Schedule (use by a charity), on or after 1st April 2004'.

No. 25, in page 24, line 7, at end insert 'and (b) in the case of a qualifying use within the meaning of Note (1)(b) of that Schedule (use by a charity), on or after 1st April 1988.'.

No. 5, in page 24, line 9, at end insert 'as respects supplies of the descriptions specified in Group 7 of Schedule 5 to that Act which are made for a qualifying use within the meaning of Note (1)(a) of that Schedule (domestic use)'.

Mr. Powell

One of the fascinations of Finance Bill Committee and Report stages is the huge variety of subjects that we manage to discuss in a comparatively short time. This afternoon, we have discussed home income plans, English wine, decommissioning of fishing vessels and other matters. Amendment No. 7, however, takes us to the heart of political controversy—a matter raised in the Budget speech of the then Chancellor of the Exchequer, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont). We discussed the matter fully in Committee, when I was lucky enough to catch the eye of the Chair: some of my speech caused some controversy.

Let me repeat the central assertions that I made then. My right hon. Friend the Member for Kingston upon Thames made a serious error of judgment in advancing this proposal in his Budget speech; moreover—as I said in May—I personally feel ashamed that my party could have introduced such a proposal.

A good many things have happened since May. Perhaps the smallest development is this: I have received hundreds of letters from all over the country about the justice of this proposal. I had received such letters before, of course, but I believe that the debate in May promoted much more discussion in the country. I have engaged in much debate with my right hon. and hon. Friends on the subject, and I am confident in asserting now that Ministers realise that the Budget proposal resulted from a serious error of judgment. I regret that, so far, we have seen no sign that they are prepared to accept that in public.

The truth is that all of us, from time to time, make errors—often serious ones. However, when we realise that we have made such errors—perhaps not at first, but on subsequent examination—the best course is not to persist, but to own up and withdraw what we said initially. I oppose clause 42, which my amendment would strike out lock, stock and barrel. If my amendment is carried, the proposal for VAT to be extended to heating and cooking, fuel and power would go. My right hon. Friend the Paymaster General is, I know, under no illusions whatsoever, but if any hon. Member imagines that at the end of the debate I shall ask for permission to withdraw the amendment. I must point out that I have no such intention.

I hope that my right hon. Friend intends to accept amendment No. 7. I shall have no hesitation in voting for it, just as I voted against clause 42. Although the Finance Bill contains many excellent provisions, I feel so strongly about this issue that it will not be possible for me to support my right hon. Friend in the Division Lobby in favour of giving the Bill a Third Reading if this provision remains in it.

8.30 pm

The reason for my strong opposition to clause 42 concerns social justice. The then Chancellor of the Exchequer was entirely within his rights to come forward in his Budget speech with proposals to raise taxes, if he felt that the public sector borrowing requirement made it necessary for him to include proposals to narrow the PSBR gap over a period of time. I understand that it was his hope to raise more than £2 billion a year when this tax is running at the full rate.

My right hon. Friend the Paymaster General may recall that when he said why the extra £2 billion had to be raised by extending VAT to heating and cooking, my right hon. Friend's answer included no justification whatsoever for it. Every hon. Member can identify other ways of raising £2 billion or more a year. Some of us might even be prepared, in certain circumstances, to allow the VAT base to be extended.

One of the proposals which I very much welcomed in the Budget was that changes should be made to the VAT rules to enable our bloodstock industry to overcome the terrifying fiscal disadvantages with which it was faced. A benefit was therefore given to racehorse owners in the Budget. I am a keen follower of the turf, as many of my right hon. and hon. Friends know. I welcome that provision. When it comes to social justice, however, the imposition of a £2 billion a year tax increase on heating and cooking while allowing a fiscal advantage to the owners of racehorses, not all of whom are British. is an extraordinary statement of social priorities.

If VAT has to be extended, I should find it much easier to justify extending it to newspapers and magazines. I enjoy reading Country Life, and I enjoy reading the articles by my hon. Friend the Member for Wolverhampton, South-West (M r. Budgen) in Horse and Hound, but it does not seem to me that there is a compelling reason for not imposing VAT on magazines. That would be preferable to imposing VAT on heating and cooking.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Does my hon. Friend agree that there is an overwhelming necessity to reduce public borrowing? Somebody has to pay for the enormous losses that were incurred on white Wednesday. My hon. Friend will recollect that Sir Samuel Brittan, as he has now to our great pleasure become, is a great supporter—though perhaps not so great a supporter as Mrs. Hogg—of the exchange rate mechanism. Sir Samuel estimates that the cost to the public finances of white Wednesday is £2.5 billion. We can therefore assume that it is at least that sum and that somebody has got to pay for it. It is not a matter of social justice. It is a matter of a near bankrupt Government trying to find somebody to pay for this appalling mistake of being in the exchange rate mechanism.

Mr. Powell

My hon. Friend makes his point in his own distinctive and interesting way, but he has not taken on board the central point that I am making: that he and the then Chancellor of the Exchequer were entitled to say that taxes should be increased by £2 billion, or whatever the sum is, but that to select heating and cooking as the essential and necessary way of imposing that tax increase was a most bizarre social judgment. I have already pointed out that if it has to be done through VAT, why not do it by means of Horse and Hound or by means of newspapers? If The Sun is so confident today about its market position that it can reduce its price to 20p on a daily basis, it may be able to absorb a 17.5 per cent. VAT imposition and still be able to reduce its price.

Sir Teddy Taylor (Southend, East)

Is my hon. Friend not forgetting his European obligations? Does he not recall that under the Single European Act, repeated at Maastricht, we have accepted an obligation to harmonise indirect taxation? Is he not aware that at the ECOFIN meeting that took place as recently as July 1992, we accepted the legal obligation to remove all zero rates by the end of 1996? Although I understand and fully appreciate the important point that my hon. Friend makes, does he not appreciate the Euro-obligation that he has taken on?

Mr. Powell

I was confident that my hon. Friend would raise that point before very long. I had hoped, however, that I might be able to deal with it in such a way as to make it unnecessary for him to intervene. His impatience was such, however—I do not blame him for this, for I have been on my feet for longer than I intended—that he felt that he had to raise the point in the way that he did. The European aspect is one of the most unfortunate and regrettable aspects of the issue. If the Bill contains this appalling clause 42 when it receives Royal Assent. I am afraid that it will be impossible for us to correct the error that was made by the then Chancellor of the Exchequer when he introduced the proposal in his Budget. This therefore, is our last opportunity to say no to it.

Mr. Budgen

Will my hon. Friend give way?

Mr. Powell

Perhaps my hon. Friend will contain himself for just a moment. I want to make progress, for other right hon. and hon. Members may wish to speak in the debate. There will be a terrifying finality about this proposal, if we allow clause 42 to reach the statute book. That is why we must take this opportunity to say no to it.

I am strongly opposed to the inclusion of clause 42 in the Bill on the ground of social justice. My right hon. Friend the Chancellor of the Exchequer has sought in the past to reassure the House that those who are most vulnerable will be compensated through the social security system for the increase in their tax, which is estimated to be £1 a week in the first full year of its operation and £2 a week in the second year, when the tax will be running at 17.5 per cent.

One of the most striking features of our community, however—every hon. Member has constituents who are in this position—is that many people with modest incomes are not in the social security system. They have modest savings. They may own their own homes. It is not enough to say that the housing benefit system will compensate them, or that they will receive council tax rebates, an argument upon which my right hon. Friend has sought to rely in the past.

Millions and millions of people of modest means have seen their incomes fall substantially in the past few years. Until fairly recently, people derived income from savings at the rate of 15 per cent., greatly to the regret of my hon. Friend the Member for Wolverhampton, South-West. Interest rates then fell to 6 per cent. and, like me, my hon. Friend wants them to come down further. However, people found that their income from their savings also fell. It is not a question of the increase in their incomes failing to meet inflation; it is a question of an absolute decline in income, and yet people have to pay their fuel and water bills and all the other essential bills for living.

Mr. Budgen

To do justice to his argument, which he is making with such force and eloquence, would my hon. Friend like to expand on what he said about the European element being one of the most unfortunate? All of us who have admired him and his tremendous support over the years for the President of the Board of Trade know of his tremendously progressive European idealism. It has generally been thought that the European ideal demanded a common system of taxation in all subordinate countries. I should have thought that my hon. Friend would have been grateful for the surveillance of the European superstate in ordering us to impose value added tax on some of the items that have hitherto passed unnoticed by our European masters. I hope that he is not saying someting inconsistent with the role that he has adopted so forcefully in the past.

Madam Deputy Speaker (Dame Janet Fookes)

The hon. Gentleman should be making not a speech but an intervention.

Mr. Powell

My hon. Friend has allowed himself to get into a little rut about this matter in recent months. He has had many opportunities to make that intervention and I shall not hold against him the fact that he has chosen me as his sacrificial victim. I enjoyed what he had to say about hunting in Horse and Hound much more than his repeating the point about VAT for the 200th time.

I was on the theme of social justice.

Mr. Graham

Up to now, I have thoroughly enjoyed the hon. Gentleman's speech and have agreed wholeheartedly with it. The people that I know who are on low pay have no savings and have never had any savings. Some of my constituents live from day to day. They receive their pay on Thursday or Friday, but use it to repay what they spent in the previous couple of weeks. The Government's proposal to increase VAT will drive these folk into an early grave.

Mr. Powell

The hon. Gentleman has a point, but I do not wish to take it up in great detail because my right hon. Friend will remind the House yet again how the social security system will help the hon. Gentleman's constituents to the most generous extent possible. We can all make up our minds as to how generous "generous" will be in those circumstances.

In dealing with social justice, one must also have regard to those who will undoubtedly be affected by the proposal but who will receive no assistance through the social security system. They will face the increase next year and the following year without the possibility of any reimbursement, compensation or whatever one likes to call it. Many such people have modest incomes; many are elderly, or widows. They feel strongly that the Government for whom many of them voted have let them down badly.

I represent very few people who are affluent and still fewer who are wealthy, but I represent many tens of thousands of people who will be severely affected by the proposal. Some are puzzled and some are deeply angry. Some, of course, have political motives for rejoicing at the large, deep hole that the Conservative party has dug for itself by making this proposal. Others who are and have always been Conservative voters remain puzzled as to how a Conservative Government could possibly make such a proposal which is not only unjust but, even more important, is perceived to be unjust.

You will be relieved to know, Madam Deputy Speaker, that I am drawing my remarks to a close, but I wish to make two further points. When we debated the issue before, there was no question but that the House was influenced by the result of the Newbury by-election and the county council elections. The Government's business managers confidently told us that the worst was behind us. Of course, I and many of my hon. Friends told them that they could not have been more wrong.

8.45 pm

One has only to consider how public opinion has changed in the past two months to realise that the Conservative mavericks—a word that many on the Treasury Bench are keen to use from time to time—are those who persist in pushing this proposal rather than recognising that they were wrong. Unwelcome though it will be to hundreds of my right hon. and hon. Friends, I make this confident assertion: because the Government will not withdraw this proposal, the Conservative party will lose the Christchurch by-election. One could not imagine a constituency—

Mr. Budgen

A very helpful speech.

Mr. Powell

My hon. Friend has a considerable imagination. One could not imagine a constituency with more voters who were likely to be adversely affected by the proposal than Christchurch. It is a misfortune that such a by-election has to be faced, but one of my hon. Friends was heard to use a phrase, which has been adopted—and I apologise for the fact that I am not its author—to the effect that the Government appear to have a death wish. This proposal comes closer to asserting the truth of that than anything else. It is a disgraceful proposal, but I add one gloss.

From time to time, I have mentioned the impact of VAT in the charitable sector as it will affect village halls. It is a subject close to my heart. Village halls will find raising money for voluntary associations—

Mr. Budgen

Now he will say that we are skint as well.

Mr. Powell

Well, they are and I can give my hon. Friend many examples, most of which are run by Conservative supporters who are simply aghast at the extra fund raising that they will have to do because of the proposal.

I have said enough. The proposal should never have been put before the House. Having been made, it should be withdrawn. I hope that my right hon. Friend can yet find the courage to withdraw it. The proposal has done, is doing and, if it remains, will continue to do enormous damage to the Conservative party. It should be, rejected.

Ms Harriet Harman (Peckham)

The House will recognise the truth behind the words of the hon. Member for Corby (Mr. Powell) when he said that the Tories' fortunes in Christchurch will hang on whether the Government press on with the vote on VAT on gas and electricity tonight. He addressed himself to Treasury Ministers. However, he should also address his comments to his fellow Back Benchers because they have an opportunity tonight to do what Government Front Bench Ministers do not have the honesty or courage to do and withdraw the proposal on VAT for gas and electricity.

When it was first announced in the Budget statement on 16 March that the Government planned to put tax of 8 per cent. and then 17.5 per cent. on gas and electricity bills, there was a sense of shock that the Prime Minister had felt able to break his promise not to put VAT on gas and electricity which was so clearly made in the general election campaign.

There was also dismay at how it would hit hardest those who could least afford it. There was incredulity that the Government should seek to justify it as a measure merely to help the environment. All that was nearly four months ago. Since then, it has become clear that the shock and dismay expressed in the House when that announcement was made is felt around the country.

The opposition to VAT on gas and electricity has grown. It was expressed in the Newbury by-election and it was one of the reasons why more than 400 Tory councillors lost their seats in the May county council elections. The Prime Minister said then that he would listen and learn and he brought in a new Chancellor of the Exchequer. However, VAT on gas and electricity is still in this Finance Bill.

The Labour party and the other Opposition parties have been clear and unequivocal in their opposition to this provision. It is now time for Tory Back Benchers to think again and to use their votes tonight to make their Government think again. I say to Conservative Members, "Remember the elderly in your constituencies. Remember those who are just above income support levels, but who will have to pay this tax in full. Remember what you said in your election address about cutting people's taxes. Listen to what people in this country are saying. Even Conservative councillors are voting against this measure at local level. They will not support it. Heed the warning today of the Social Security Advisory Committee, which has stated that to compensate the poorest, the Government will have to put an extra £400 million into benefits."

Tory Back Benchers must know that if they vote tonight to impose VAT on gas and electricity, they will be whistling in the wind for a compensation scheme. Can we not just hear the Chancellor saying, "Of course I planned a compensation scheme, but I didn't realise that growth would be so low. I didn't realise that the PSBR would carry on getting so big. My hands are tied." Do Tory Back Benchers really think that the Government, already looking for ways to slash the social security budget, will add another £400 million to it—the figure that the SSAC states is necessary just to protect the poorest?

Mr. David Winnick (Walsall, North)

Does my hon. Friend agree that the winter months are already a nightmare for so many pensioners on income support level and just above it? The cold weather payments are made only if the weather has been freezing for seven consecutive days. Is it not therefore obvious that for so many of our elderly constituents the situation is already a nightmare and tonight's proposal will simply make the situation worse?

Ms Harman

My hon. Friend is absolutely right and that point was reinforced in today's report by the SSAC.

Government Back Benchers may not always feel that they have much power. Indeed, they complain about that. However, public opinion will be firmly on their side if they vote tonight to tell their Government that they have got it wrong and that they must think again.

Mr. Jacques Arnold (Gravesham)

As the hon. Lady is speaking so eloquently about manifestos, how would she finance closing I he £50 billion deficit gap and then pay for all the promises made in the Labour party manifesto?

Ms Harman

We tabled 14 new clauses and amendments to the Finance Bill which would have closed tax loopholes and dealt with tax abuse. They would have raised more money than the VAT on gas and electricity. But the Government were not prepared to end tax relief for private health care—they would rather put VAT on gas and electricity. The Government were not prepared to make the privatised water, electricity and gas companies pay corporation tax—they would rather make the elderly and the poor pay tax on their electricity bills.

The simple fact is that the Government are not prepared to close the tax loopholes, which would bring in more income than the proposal would raise, because they would much rather protect the vested interests of their friends who donate to the Tory party and make the pensioners, poor, elderly and disabled pay the bill for the Government's economic incompetence.

The issue of VAT on gas and electricity is a question of the integrity of the Government. The Prime Minister promised in the clearest and most direct terms, using his familiar "honest John" style, that he would not put VAT on gas and electricity. During the election campaign, Labour's then shadow Chief Secretary to the Treasury, my right hon. Friend the Member for Derby, South (Mrs. Beckett), constantly warned that a Tory victory would mean the imposition of VAT on gas and electricity. That was brought to the public's attention through the "VATman" campaign.

Those suggestions were met with denials and injured outrage from Conservatives and with accusations of scaremongering. The Prime Minister was forced to respond and say, in his "honest John" style: I've made the pledge in the past, I've made it clear. We have no need and no plans to extend the scope of VAT. That in itself should be enough for Tory Members to vote against VAT on gas and electricity because it breaks such a clear promise.

Even if Conservative Members are not moved to vote against the measure because it breaks an election pledge, they should certainly vote against it because of its effect on the elderly, the poor and the disabled. Pensioners up and down the country have signed our petition against VAT because, as my hon. Friend the Member for Walsall, North (Mr. Winnick) said, they already struggle to pay their gas and electricity bills—[Interruption.]

Madam Deputy Speaker

Order. There are too many seated interventions and a few private conversations.

Ms Harman

For those who need extra heat, such as the housebound and the disabled, fuel bills are a major item of expenditure. Their health is at risk if they have to cut back on the heat that they need. The reason why people have queued to sign our petition against this tax on domestic fuel is that they know that it is unfair. The SSAC report published today bears out their concerns.

The facts are these: the poorest 20 per cent. of households spend more than three times the proportion of their income on fuel as the richest 20 per cent. spend. This tax will hit everyone, but it will hit the poorest hardest. Tory Members must not lull themselves into a false sense of security about compensation for those who will be hit by the tax. The Government have yet to make known what their compensation scheme will be. They have not revealed how much the compensation will be. The only thing that the Government have made clear is that even for the poorest, those on means-tested benefits, there will not be full compensation. Even the poorest will have to pay some of this tax from their benefits.

It is equally clear that those who are not on means-tested benefits will receive no help to pay the tax. I can tell Conservative Members that those with small occupational pensions, who are just above income support level, will be writing to them. They will attend Conservative Members' surgeries and ask how on earth they can manage to pay this tax. There will be 17.5 per cent. on heating and cooking bills for elderly people just above the income support level. Before voting tonight, Tory Members should think about what they will say to those people. They will not be able to sympathise with them because they will have done it to them. It is already clear that the compensation scheme will not reach some of the poorest—those who are entitled to income-related benefits but who' do not claim them.

Of course, it is not a green measure, either. Birmingham city council, when passing a resolution to write to the Chancellor asking him to think again, commented that it is not so much the Government turning green as the poor turning blue. It is important, of course, to reduce energy consumption and carbon dioxide emissions. The way to do that, however, is not to put up fuel prices so that more elderly people die of hypothermia but to have a comprehensive home insulation programme, as Labour has suggested.

VAT on gas and electricity will raise for the Treasury £950 million next year and £2.3 billion the year after, but all the VAT on gas and electricity will pay the unemployment bill for just six months for the south-east alone. The Government cannot turn to pensioners and expect them to rescue public finances from a problem created by the failure of the Government's economic policy. That is not fair and it will not work. VAT on heating is nothing more than an unfair way of trying to finance the growing dole queue. However much pensioners dip into their pockets to pay tax on basic essentials, public finances will simply get worse until the Government sort out the economy.

9 pm

The county council elections saw 472 Tory councillors lose their seats. They know that VAT on gas and electricity was one of the reasons why people simply would not vote for them. It is no wonder that the Tory councillors who are left will not support it. A survey that I did of some local councils shows that Tory councillors are voting against VAT on gas and electricity. Some examples are Sandwell borough council, Bedfordshire county council, Dover district council, Bath city council, Darlington borough council, Solihull borough council, Devon county council and Berkshire county council. In all those councils, and in numerous others, Tory councillors have voted against VAT on gas and electricity. In the city of Glasgow, Tory councillor Baillie Young described it as an iniquitous tax, and in North Kesteven a resolution to write to the Chancellor opposing VAT on gas and electricity was seconded by a Tory councillor.

Tomorrow, my hon. Friends and I will present to the Chancellor at No. 11 Downing street a petition containing tens of thousands of signatures. The Government have failed to make a case for VAT on gas and electricity, even among the Tory party's own members. It is not enough, of course, for the Prime Minister to say that he has listened and that he has learnt. It is not enough for him to change the Chancellor, either. The Government must do more than listen to people's concerns. They need to act on them, and they have failed to do that. Tory Back-Bench Members have a choice tonight: they can either stand up for their constituents or follow a discredited Government through the Division Lobby.

Sir Teddy Taylor

I accept absolutely that it would be very unpopular indeed to vote for VAT on gas and electricity. Some people would not vote for us and would condemn us—there is no question of that. However, hon. Members must appreciate when the Government are in an appalling financial situation for all kinds of reasons. The money has to come from somewhere. We would be running away from what I believe is a responsible attitude to say that it should not come from somewhere. The obvious alternative would be income tax, but, when we have more than 3 million people effectively unemployed, an increase in income tax would almost certainly prevent the recovery for which we hope.

I wish to make four brief points. I advise members of the Labour and Conservative parties that nothing makes me more sick than hearing them talk about the problems of poor people when most of them have supported a policy which is forcing the average working-class family—the average family on low incomes—to spend an extra £20 a week on their food and which has forced the taxpayer to pay hundreds of millions for the dumping and destruction of foodstuffs. It would make me a lot happier if the people who were concerned about the poor and the underprivileged showed some concern for something over which we have some control.

Nothing sickens me more than hearing hon. Members complain bitterly of the consequences of policies that they have voted for. Why the blazes do we have VAT? It is not because it is a good idea. We know that VAT, compared with purchase tax, is cruel to poor people—inevitably it is. It is an across-the-board tax, but it was one of the necessary consequences of membership of the EC which some hon. Members have consistently voted against. Those who voted for the EC have no right to complain about VAT.

I remind hon. Members that it is pure hypocrisy to complain about VAT on gas and electricity when they voted for the Single European Act and for the Maastricht treaty which commits this country absolutely and completely to the harmonising of VAT in so far as is necessary to complete the internal market. That is clearly and precisely laid down.

Will the Government state the consequences of the ECOFIN meeting in July 1992? According to information provided by the Library that backs my own belief, we accepted an obligation—subject only to one definition—to remove our zero rate by the end of 1996. Either that is true or it is not.

Sir John Cope

My hon. Friend has misunderstood the July 1992 agreement. It did not oblige us to abolish our zero rate, as he suggests—on the contrary. We are of course committed to negotiations on moving on to the so-called origin system, hopefully by 31 December 1996. However, our zero rate is entirely preserved in the 1992 agreement, as it was in all previous agreements. Part of the July 1992 agreement was that our standard rate should not fall below 15 per cent. for four years from the time that it was made, but that is a different matter. In any case, that has nothing to do with the position after that.

Sir Teddy Taylor

I am grateful to my right hon. Friend for making that clear, but I assure him—having received clarification of the position in writing from the Library, but I will check this again—that under the July 1992 agreement, although it was accepted that the definition of origin had to be resolved, there was a clear obligation, subject to definition of the origin system, to remove the zero rate by the end of 1996, if not necessarily operate a rate of 17½ per cent.

Mr. Robert Ainsworth (Coventry, North-East)

Now that the hon. Gentleman has received the Minister's clarification, and given that he is totally opposed to the House of Commons giving any power away to Europe, how does he intend to vote tonight? There can be no doubt that, if zero rating is removed tonight, it can never be reintroduced.

Sir Teddy Taylor

The same as I voted before. If one's country is bust and it has a £50 billion deficit, that is partly because of exchange rate mechanism policies for which right hon. and hon. Members voted. I assure the hon. Gentleman that I have voted against every European treaty against three-line Whips. We are effectively handing over a power of this place. There is nothing more hypocritical than for Labour Members to go on platforms and to say, "We'll stop this dreadful tax" when it is clear that, once the decision has been made, they can do nothing.

There is no doubt that we have secured some reasonable concessions. We have received an assurance that every person on benefit will get something on l April next year, before the first bill arrives, and that pensioners will get something because the tax will be taken into account in the cost-of-living index.

As to the remarks of the hon. Member for Peckham (Ms Harman). mine was one of the few constituencies in England that held every one of its Conservative council seats with a good majority. I assure the hon. Lady that Conservative councillors did not lose everywhere.

It is nonsense to pretend that we can stop the march forward of VAT. Under the Single European Act and the Maastricht treaty, we have a clear and precise obligation to achieve harmonisation in so far as that is necessary to compete in the internal market—and that is impossible without total and complete harmonisation. The House is kidding itself. It is sad to hear people complain like mad when we come up against the consequences of our own decisions, in voting for measures wrongly and against the public interest.

Sadly, we have to accept that VAT is here to stay. There is no doubt at all that, effectively, VAT is to be part of our style of life. Unless we do something, and do something quickly, all such debates will be pointless, a waste of time and at best will buy us just a little more time before we are taken over by an unjust and unfair system that will hit the poor of this country. I hope that those who complain about the impact of VAT on the poor will ask themselves how they can justify the accursed, filthy system that puts £20 a week on the average family's food bill and spends hundreds of millions of pounds dumping and destroying food that should go to help the poor and to help those on low incomes.

Mr. Beith

The hon. Member for Southend, East (Sir. T. Taylor) is simply playing rotten in seeking to argue that the Government have been obliged to levy first 8 per cent. and then 17.5 per cent. VAT on fuel as a result of our membership of the European Community or our signature on the Maastricht treaty. If that was so, I am sure that the Government would be rushing to say that it was so. That would at least give them some sort of alibi to use in by-elections, county council elections and everywhere else.

However, as the Minster has already pointed out, that is simply not so. To start with, the Government are under no obligation t o levy 17.5 per cent. VAT at all. That figure arose from the Government's difficulties over the poll tax. It seems especially absurd that pensioners will now face 17.5 per cent. VAT on the standard charge on a gas bill when we had 17.5 per cent. VAT in the first place only as a consequence of the Government's poll tax chaos. There is no move whatever to advise the Government to levy more than 15 per cent. VAT, for example, or not to have a lower rate—for the first year there will be an 8 per cent. rate. Why not have a lower rate still? There is nothing to prevent the Government from abandoning the whole venture and retaining zero exemption.

Several hon. Members from different standpoints have been right to warn the Government that, if they give up the zero rate tonight, it will be gone for good. If the hon. Member for Southend, East had chosen to make that point, he would have been right. We should place ourselves under a European legal obligation not to reintroduce that rate.

That is what I find so surprising about the Government's supposedly sturdy defence of our standard rate. As the Minister pointed out, at every ministerial meeting the Government have stood up for zero rates and the right to retain those existing rates. Why has the Minister gone to such trouble if he is prepared to throw away the most important rate in terms of its impact on poor families and pensioners? The defence of that rate will seem a vain exercise—a battle fought for little purpose, when the Government have thrown away the use of that zero rate in an area in which it is most important and have done so permanently with no chance of ever reintroducing it.

The zero rate affects not just gas and electricity, but anything bought for use as a domestic fuel: gas, electricity, oil, wood, coal and even peat. Some consumers have relatively little choice over what fuel they use. For example, some consumers do not have access to gas for their domestic heating or cooking and often have to use more expensive means of providing heat for their homes. In parts of my constituency, some do not even have access to electricity.

Many of the families who are most likely to be adversely affected by the measure have no choice in the matter and no help with the energy efficiency of their homes. Any Government who sought to increase energy taxation on environmental grounds ought to ensure that those who have modest incomes and face an increase in fuel bills have access to help with making their home more energy efficient. So many of the people affected are either unable to command the resources to make their home more energy efficient or have no choice about the kind of home in which they live, whether it is a badly insulated council house or a privately rented house, because they have no means of moving into a better and more energy-efficient house. They may have bought their houses in the turbulent housing market of recent years. They now cannot sell those houses, so they cannot exchange them for more energy-efficient houses. They find it impossible to sell their houses at anything like the prices they paid for them. A lot of people are trapped, for one reason or another, in their houses. They do not command the resources to make those houses more energy efficient. They will be hit very hard by the measure, and they will be hit in two stages.

9.15 pm

The Government have already felt the wrath and anger of the people at Newbury and in the county council elections. That has happened before the bills have come in. The 8 per cent. and 17.5 per cent. stages are yet to come. The story will run and run, and it will not end with the Christchurch by-election, unless the policy ends at the time of that by-election, just as it did not end with the Newbury by-election. The policy will have to be changed if perceptions of the Government are to be changed.

The hon. Member for Corby (Mr. Powell), who moved the amendment so eloquently and in such a determined way, was right to stress that Governments should recognise when they have got it wrong, when they have made a mistake and when their policy is not only impossible to sell, but cannot be justified in its own terms.

If the Government try to justify the measure as an environmental tax, we must ask what changes in behaviour it will lead to. It will not lead to people at the poorest levels saving on energy consumption unless they do so at the risk of their own safety and health. We are talking about people who simply do not have the means with which to provide alternative forms of heat or with which to heat their homes more efficiently. We know that the disabled, the poorest and the unemployed spend a larger proportion of their time at home and that they are more dependent on the heating of their homes for their basic health. We know that families with young children are also in that position.

Ms Mildred Gordon (Bow and Poplar)

I agree very much with the right hon. Gentleman's point. However, it is a matter not just of heating, but of lighting. Elderly people whose eyesight is failing need a bright light to enable them to read, even in broad daylight. People whose memories are failing often leave the lights on because they have forgotten to turn them off. People may leave the lights on when they leave home to prevent the house from being robbed because they cannot afford burglar alarms and safety locks. Their energy consumption is much higher than that of people with greater means and with better health.

Mr. Beith

That is an important point which enables me to say how much better it would be if the Government said that they would make a scheme available under which elderly people could have access to low energy-consumption light bulbs at a cost far lower than the present high capital cost. If the Government wish to have an environmental policy based on tax, if would be better to have such a measure so that elderly people could reduce their energy consumption in a way that they are not able to do when they face the cost of £15 for a low energy-consumption bulb as opposed to the cost of .1 or so for an ordinary bulb. Such an option is not open to them out of their weekly pension.

I was referring to the groups of families who would be adversely affected. I asked what change in behaviour would be made. One thing that will not happen as a result of this form of taxation is that there will not be a switch from polluting and environmentally damaging sources of energy to less polluting or less environmentally damaging sources of energy because it makes no distinction between them. It does not separate wind power or tidal power from coal, from oil or from orimulsion. All fuels along the spectrum of pollution and resource depletion are treated identically under the measure. It is not an environmental tax measure in that sense. It is not an effective environmental tax measure in its focus because it will not lead to behavioural change.

A stronger argument is that behavioural change could be brought about by changes in petrol taxation. Such changes would have to be accompanied by compensating measures. We can see the prospect for behavioural change by people on reasonably adequate incomes in that area. I cannot see much prospect of change for some of those on modest incomes who will be so adversely affected by this tax.

The Government have not only made a mistake, but have put a lot of fear into the minds of many elderly people and of many families. Of all the issues about which we have received correspondence recently, this is the one about which people are, according to their letters, most filled with fear and anxiety. As the hon. Member for Corby pointed out, that is especially true of those who know that they are just above benefit levels. They do not see how they will meet the costs or how they will cut their energy consumption. They know that they will get no benefit. They already have to put up with the fact that alongside them are people who, for one reason or another, have no savings at all and who therefore get housing benefit and council tax benefit. They see themselves getting none of those benefits and facing extra costs while their income, if based on a little savings capital, is declining.

There is real fear in people's minds over the issue. This is the Government's last chance to put an end to that fear. They show no signs of doing so, so the House must take its last chance of putting an end to that fear and force the Government to drop the proposal.

Mr. Peter Fry (Wellingborough)

I had not intended to take part in the debate, but such is the extent of public feeling—certainly in my constituency as I know from having spent the morning speaking to a large number of pensioners—that I think that we must express much more vividly the great disillusionment that there is about the proposal.

When I listened to the Budget speech by the previous Chancellor, I was appalled by the suggestion that we should apply VAT to domestic fuel. It is a great pity that the present Chancellor and the Government are now, in effect, laden with the decision of my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont).

The debate is useful in other respects. We must address ourselves to the reason why the large increase in tax, which is what it is, was decided. The answer is simple—the enormous borrowing requirement that the Government face.

Those of us who are honest must accept that there has to be a considerable increase in taxation of one form or another if the Government are to be credible in the eyes of those for whom the strength of sterling and our international financial situation depends. That is why the Chancellor effectively gave a future hostage. He did not increase taxation in the present Budget. He offered a considerable increase in the next year and the year after. In that sense, he was quite clever, because he put off paying the price for trying to keep international confidence in this country.

Unfortunately, clever though it was, as I have made abundantly clear, it was not a clever political choice, hence the speeches by my hon. Friend the Member for Corby (Mr. Powell) and one or two other of my hon. Friends and many Opposition Members.

I find myself in a tremendous dilemma. I do not like VAT on domestic fuel. I have said so publicly and refused to vote on the issue when it was last before the House. On the other hand, I hope that I am a realist and know that the Government have to do something about the enormous borrowing requirement.

What would happen if we voted against the increase and it did not go through? There would be a great hole in the Government's strategy to keep international confidence, because the increase in taxation, which the Bill contains, would be swept away. Therefore, we would put my right hon. Friend the Paymaster General in a situation where he would have to try desperately to fill that gap. That gap could not be filled at a moment's notice.

I do not like the proposals. On the other hand, I do not want the Government's credibility to be totally undermined.

Mr. Beith

If the amendment is carried, surely it is open to the Chancellor to announce tonight that he intends to ensure that the tax hole is filled and that he will announce in the November Budget the precise means by which that is to be done, but to leave no doubt about it. Because the tax does not come into force until next year, he has the opportunity to do that.

Mr. Fry

I take the right hon. Gentleman's point. However, to ask my right hon. and hon. Friends to come forward with an alternative strategy at a moment's notice is asking too much.

Let no one be under any illusion. This VAT application is a tax increase. It is an indirect tax increase but it is a tax increase. Therefore, we should move it a step away from the people who will be hurt most, or at least apply ourselves to the effect of that tax increase on various sectors of the community. I say bluntly that those of us who are on better incomes must accept that tax increase as part of the price of trying to get the Government's borrowing requirement down. Unlike some hon. Members, I also accept that those who are on related benefits will obtain substantial assistance. I am worried about a group that has already been mentioned—those who are just above the level of any income-related benefit, who will suffer tremendously. Already, they have seen their water rates soar out of comprehension. They are the ones who are most anxious.

I hope that I am not one of those people who just mentions a problem and does not offer any solutions. As with any taxation system, it is necessary to soften the effect on those who will be hit hardest and there is a solution that will enable the Government to get out of their dilemma. I do not honestly expect my right hon. Friend the Paymaster General to get up.at the end of the debate and say that he will not proceed with the implementation of VAT on fuel. Indeed, I would rather that he said that he would apply it to newspapers—I do not see why the Government are so terrified of doing that.

However, the Government could say that they will increase benefits to those who are worst off and, above that, they recognise the problem of many people—perhaps 3 million or 4 million—who have small occupational pensions or a few thousand pounds, usually in a building society, and who have seen their net incomes drop dramatically over recent months with the decrease in interest rates.

The Government should look closely in the autumn Budget at increasing the basic retirement pension by rather more than the retail prices index. I do not want that increase to be paid for out of the borrowing requirement. I want us to accept squarely that the only way to pay for it is through a higher contribution from the rest of the working population. I return to a point that I have made already. We are talking about a tax increase. In all justice, it should be borne by those who are still in a position to earn and are better able to afford such a tax increase.

If my right hon. Friend the Paymaster General will give me the assurance that the Government will look closely at the uprating of the basic retirement pension this autumn, above the RPI, he will get me into the Government's Lobby tonight. Without such a statement, the credibility of the Government and belief in what they say, certainly in my constituency, will be greatly undermined. I am not asking for specific promises about amounts of money. I am asking for consideration of that group of people who proudly say that they are not dependent on state handouts, who have saved a few thousand pounds and who, frankly, feel that they have been kicked in the teeth. We have expected them to support us as a political party, and they have been the bedrock of our society. To say to them and to future generations that the only way that they will avoid such an increase in the future is to fritter away their money so that they are totally dependent on state handouts gives the wrong message.

I understand the Government's dilemma. I have much sympathy over the need to provide funds to cover the borrowing requirement but a message needs to go from the House that we understand the problems and fears of a vulnerable section of our community.

Mrs. Anne Campbell (Cambridge)

The hon. Member for Wellingborough (Mr. Fry) referred to the public sector borrowing requirement. The Government should be under no illusion—our constituents see an incompetent Tory Government who have managed to run tip a PSBR of £50 billion and who now expect people on low incomes to pay for that deficit.

Like many other right hon. and hon. Members. I have been inundated with letters from constituents on this issue. I should like to quote from some of those letters which say it all much better than I can. I have questions like, "Why is it that the unskilled, low-waged manual work force bears the brunt of the tax burden to prop up the country?"

Another pensioner said, "I know that we have to set the country back on its feet, but do OAPs have to be hit so hard?" An old person aged 81 years wrote to me saying, "I shall have to cut off my central heating. I will not be able to pay for it. My gas bill last April was £133 and 1 cannot afford any more."

9.30 pm

An Age Concern report has found that 81 per cent. of the elderly people surveyed had a living room temperature below the World Health Organisation recommended level of 20 deg C. More than a third—34 per cent.—do not heat their bedrooms at all. Britain loses more old pensioners in winter than any other European country. That is not because our winters are colder, but because we pay the worst state pension in Europe. The Government are now telling those people who are struggling desperately that they must pay VAT on domestic fuel and power.

Mr. Rupert Allason (Torbay)

The hon. Lady provided statistics alleging that the United Kingdom pays the worst state pension in Europe. Does she agree that those statistics do not add up when contributions are considered or, in other words, when one compares like with like? Does she agree that when contributions are taken into account, the British pension is not the worst by any means? Does she further agree that, while the German state pension is larger, the German contributions are proportionately greater?

Mrs. Campbell

I know that my constituents who are existing on the ordinary state pension are badly off. Nowhere in Germany, France or any other European country do pensioners live in poverty as they do here.

I was visited recently by a constituent who was, until recently, a loyal Tory voter. He has now retired and manages a small charity trust for the company for which he used to work. He made the point—as did the hon. Member for Wellingborough—that those people who are just above the income support level will be hardest hit by the proposal. My constituent cited cases of pensioners who have written to him in utter desperation. Those included one who was already reduced to heating one room only. He said, "To meet current fuel bills and repairs to our boiler, my wife and I are now going short of food."

My constituent also said, "I have already had two old folk on the phone, both saying that they hope that they will die before the 17.5 per cent. increase comes in, as they fear the cold so much." It is a terrible indictment of the sort of society in which we are living when we cannot afford, as a society, to tell pensioners that they need not pay any more money.

Last week I visited three residential homes run by Mencap for the mentally and physically handicapped. Many of the residents of those homes have severely restricted mobility, and need consistently high levels to be maintained. The added burden of VAT on that vital provision cannot be accommodated by current care budgets that are already suffering at the hands of the Government.

I do not intend to detain the House for long. Much of what I wanted to say has been said by hon. Members on both sides. I would like briefly to draw attention to the position of Lupus sufferers. Lupus is a chronic, non-infectious, auto-immune disease, mainly affecting young women of child-bearing age—between 13 and 45. The symptoms of Lupus are many and varied, but one symptom is called Raynaud's Disease. Sufferers are, in general, extremely sensitive to changes in temperature. Those can affect the blood flow to fingers and toes and can cause constant pain in severe cases. There is great concern about the imposition of VAT on domestic fuel costs in view of the fact that, for those sufferers, heat is not a luxury but an essential commodity.

When these sufferers experience an attack due to the change of temperature, cumulative tissue damage may occur, and that in turn may lead to more severe forms of the condition—ulceration, gangrene and, at the very worst, an amputation may be required. It is important to minimise the number of attacks and to minimise the tissue damage and the resulting intense pain.

The problem is that many of these sufferers are not eligible for state benefits and will not benefit from any increase in them introduced as a result of the imposition of VAT. So the promised increase in benefits to counter balance the VAT increase will have no positive effect.

In the course of proceedings on this Bill we have been able to present Ministers with many ways in which they can close tax loopholes and raise the £2 billion which they say this measure will generate. They can raise the money in a much more humane way. I join Conservative Members who have promised the Government that if they carry this measure through they will almost certainly lose Christchurch and any other by-elections that take place in the next few months and years.

I sincerely hope that the Government will rethink their proposal, and that enough Conservative Members vote against it to defeat it.

Mr. Nicholas Winterton (Macclesfield)

I rise to support my hon. Friend the Member for Corby (Mr. Powell), who moved the amendment in his eloquent style. I endorse most of what he said, even though he and I find ourselves in different camps when it comes to Europe and the Maastricht treaty—fortunately, we are not debating that tonight, and I hope that you will ensure that we do not, Madam Deputy Speaker.

I commend the right hon. Member for Berwick-upon-Tweed (Mr. Beith). His speech was made in a non-partisan way; he merely presented the issues, and I am delighted to support what he said—not only because his family used to live in my constituency for many years but because he went to the famous King's school in Macclesfield.

I deeply regret the fact that the Government have gone back on many election pledges by widening the scope of VAT. I never thought to see a Conservative Government and Chancellor doing that. Over two years we are to introduce a tax at 17.5 per cent. on two essentials of life: heat and light. They are, of course, particularly essential to the vulnerable groups mentioned by other hon. Members this evening.

What is so grossly unfair is that this charge will be levied not only on the consumption of gas and electricity but on the standing charges for them. Many of us believe that those charges are already grotesque and appear to have been mainly used to increase the salaries of the directors, chairmen and senior executives of the public utilities that have been privatised.

I endorse the speech made by my hon. Friend the Member for Corby. This tax is perceived to be socially unjust, and it is quite wrong that the most vulnerable people should have to pay so much for mistakes made by the Government.

I believe that it would be far better, far more honest and far more honourable—we are all honourable men and women here—if Ministers were prepared to increase the standard rate of income tax to raise the necessary money: £950 million in the first year, and £2.3 billion in a full year when the rate is 17.5 per cent. I do not believe that we should seek to mislead people by saying that we are not increasing taxation. As has been said by my hon. Friend the Member for Wellingborough (Mr. Fry), we are increasing taxation, so why mess about as to whether it is indirect or direct?

The people of this country believe that the fairest and most appropriate way in which to help the Government balance their books and reduce the Budget deficit is to increase direct taxation. In November, I would, at a stroke, increase the 25 per cent. standard rate of tax to 28 per cent. for two years only. I would also increase the top rate of tax from 40 per cent. to 45 per cent. The people would then see that those who are in the best position and most able to pay would be making the major contribution to reducing the Budget deficit, which is causing the Government so much difficulty.

As my hon. Friends have rightly said, the present proposals are perceived to be grossly unfair and impinge mainly and most heavily on the most vulnerable groups—the elderly, those on low incomes and, as has been said by my hon. Friend the Member for Wellingborough, those who are just outside any form of state income-related benefit. My hon. Friend the Member for Wellingborough should note, however, that I do not think that giving an assurance that the old age pension will be increased by an amount above the retail prices index adequately reflects the concern that is felt in this country, nor will it provide the money that those in the vulnerable groups need for a reasonable quality of life.

My own women's association gave me 100 per cent. support in a motion that it submitted to the Conservative women's conference recently. It was not selected, of course—I do not think that the association expected that—but the grave and serious opposition to what the Government seek to do was reflected at national level on the agenda of the women's conference of the Conservative party. The one mistake that my women's association made was to ask the Government—if they were insistent on implementing the measure—whether, after the Budget deficit had been reduced, they were prepared to remove it. As has been said by my hon. Friends, however, once the zero-rated exemption has gone, we can never restore it.

It is wrong to extend a tax to the essentials of life such as heat and light. My hon. Friend the Member for Bury, North (Mr. Burt), the Parliamentary Under-Secretary of State for Social Security, is extremely assiduous and hard working and has had considerable responsibility for social security matters. He knows that the Government: have given no guarantee that the position of those on benefit, pensioners and those just above any form of income-related benefit will be fully protected by any steps that the Government may announce before the implementation of the VAT extension to heat and light.

The right hon. Member for Berwick-upon-Tweed is absolutely right; to make the excuse that this is being done as our contribution to improve the environment and reduce carbon dioxide emissions is an absolute nonsense. It will have absolutely no effect. It is extraordinary that no proposal has been made to introduce an ambitious and helpful home insulation scheme to go with the Government's announcement.

I will not make as many unhelpful remarks as my hon. Friend the Member for Corby about the political implications of what the Government are doing. All I can say to my right hon. and hon. Friends on the Front Bench is that I have not had a single letter from any person in favour of extending VAT to heat and light. I have received hundreds of letters from my constituents—my area is relatively well off compared to those of some of my hon. Friends and Opposition Members—who perceive the measure to be unacceptable.

9.45 pm

The Government would lose nothing by saying tonight, as the Prime Minister has said, "We have listened to the people of this country." He should go on to say, "Clearly, they are hostile and overwhelmingly opposed to what we seek to do. We will come back to the House in November"—as is absolutely possible—"with a proposal to plug the gap in the Budget to ensure that the Government's overall economic strategy is not undermined."

Like those of my hon. Friends who belong to the No Turning Back group, I want us to bring our budget into balance, but I do not want to do it on the hacks of the vulnerable, the elderly, the low-paid, the handicapped, the mentally ill and all those groups of people who will suffer as a result of that misguided measure. We have heard little about the impact that the measure will have on private residential establishments that cater for some of those people. They will have to increase their fees to meet that additional charge.

If my right hon. Friends want a further Conservative Government after the next election, they must listen not only to the people of this country but to Conservative Back Benchers because the measure is fundamentally flawed and extremely damaging and will hurt the most vulnerable groups in our society. My right hon. Friend the Paymaster General would receive immense support from the House—perhaps more than he thinks from Conservative Back Benchers—if he were prepared to think again about that measure.

Why are we so against increasing direct taxation? Why must we dishonestly say that we are not increasing taxation, when we are widening the scope of VAT and increasing contributions under national insurance, which is also something that we said we would never do? What is so sacrosanct about direct taxation? If we raised it for only two years, we would have to seek a renewal if the budget was not in balance. What is wrong with that?

The Under-Secretary of State for Social Security—my hon. Friend the Member for Bury, North—and I were with a group of members of the Confederation of British Industry on Friday. Surprisingly, many of those at that meeting would have been perfectly happy to see the Government increase the standard and 40 per cent. taxation rates to get the country's economy right.

I am honoured to have represented my constituency for 22 years in this place—rather longer than the overwhelming majority of the Cabinet—[Interruption.] When Disraeli was heckled during his maiden speech in the House, he said: There will come a time when you will listen to me. There will come a time when my right hon. Friends will listen to me.

Mr. Graham

I have never heard such a tremendous fighting speech from the hon. Member for Macclesfield (Mr. Winterton) and I am delighted to speak after him.

Time and again I have asked the Minister to tell us the price of a bottle of paraffin or a hundredweight of coal and how much it costs to heat a house, and he has never attempted to answer. How can the Government understand the suffering that they are inflicting on the good people of Britain—the people whom they expect to vote for them? Yet they put VAT on fuel. The people of this country know that the weather in Scotland is different from that in England. In recent months, the south has been sweltering in the heat, but in Scotland there have been various weather conditions. When I left home this morning, my wife had the fire on. I wonder how many elderly and disabled people in Scotland can afford to put on a fire in the morning—not very many.

One of the reasons for the fighting fury in Scotland—and, I am sure, in the rest of the country—is the Government's disgraceful commitment to putting 17.5 per cent. value added tax on fuel. One hon. Gentleman said that he would support the Government as they would otherwise lack credibility. That is nonsense—we have been elected to fight and campaign for our constituents, and to ensure that the Government run the country for the good of our constituents. We should not support bad government.

Mr. Fry

Will the hon. Gentleman give way?

Mr. Graham

I shall give way in a minute.

Hon. Members are here to represent our people on a burning issue. Many of our constituents will not be able to light fires or light their homes in winter when they are dark. Back Benchers on both sides of the House have a golden opportunity to join together to ensure that VAT of 17.5 per cent. is not imposed.

I have deliberately spoken to many of my pensioners about the issue. The Government have got away with plenty of things, but one thing that they will not get away with is the imposition of VAT on fuel. I have spoken to people on low pay and I remember the days when I was on low pay. I remember the difficulties that I faced in heating my house to ensure that my two sons went to school warm in the morning and came home at night to warm food and a warm house.

I had difficulties paying my fuel bills in Scotland. Some weeks, 25 per cent. of my income went straight into heating the house. Many hon. Members present tonight do not know the cost involved. I had to heat the house with paraffin as I could not afford the high cost of electricity. Ultimately, I had to use calor gas because paraffin was not good for my two children, who suffered from asthma.

Does the House realise that there are thousands and thousands of people who do not heat their houses as they would wish? They do not heat them to maintain their health because of the Government's mismanagement of the economy. When I look at the Government Front Bench team I do not see an ounce of compassion. I heard the hon. Member for Corby (Mr. Powell) make an impassioned plea, which I totally supported. I also heard the hon. Member for Macclesfield make a speech which was absolutely bang on the button.

Tonight, the Government have a chance to show some heart, but I am afraid that they will be hard-headed, and show a hard, cold face. The caring face of Government will be shown tonight as Government Members march through the Lobby and inflict damage and suffering on the elderly, unemployed, disabled and those on low pay. The Government do not have the guts to say that the previous Chancellor was wrong. They bumped him out into the cold, but at least he will be able to heat his house. Our folk, our constituents in Scotland and other regions will not be able to heat their houses.

Will the Minister find out the price of paraffin, calor gas and a bag of coal? Will he find out what it costs to heat a house in Glasgow, and what that costs a family in which one person is on low pay and the rest are unemployed? There is no benefit good enough for the dignity of mankind in Britain. We are all entitled to the dignity of having a warm house and hot food, and seeing in the dark. Let us give our folk their dignity, not impose VAT on fuel. I hope that many Conservative Back Benchers will support us tonight.

Mr.Geoffrey Dickens (Littleborough and Saddleworth)

I am one of the Conservative Members who has a reputation for being loyal to the Conservative party. That means that when I speak out against my Government it carries extra currency. When I first came to the House, I voted for tougher immigration controls and tougher trade union reforms, and in their little grimy books, which they are writing in at the moment, the Whips wrote one word about me—unpromotable. They were right, but by the time I have finished my speech perhaps they will wish that they had promoted me.

I support my hon. Friend the Member for Corby (Mr. Powell). Never in my experience have I seen such a politically naive, unfair and unjust measure. It is common knowledge that we have to find some money. The world recession has gone on for longer than all the industrialised nations had thought it would, but there is no disgrace in telling people the truth about that. If that causes us to break an election promise, it is not the end of the world, as long as we explain carefully to people why we are breaking that promise.

I guess that the Government thought that it was clever footwork to put VAT on fuel because they were not raising VAT but introducing another category. It was not a rise in direct tax and therefore did not place the Government in conflict with the electorate, as the Government did not have to say that they had broken a promise. If it is necesary to break a promise to straighten out the nation, the Government must do so, but people must be told why that is being done and it must be done fairly. To do it unfairly is inexcusable.

How will this affect young families? A young man who is a rising executive in his company may not have much money but may earn too much to qualify for income support. If he has a young wife and children, the washing machine will be on the go all day. Heating will also be on all day because the house must be kept warm for young children. The family is too rich to get benefit but too poor to pay ever-increasing costs, some of which we are inflicting on it.

Hon. Members have mentioned the elderly and people in other categories who are too rich to get benefit but too poor to pay ever-increasing costs. Many pensioners have had to take early retirement because of unemployment in their companies and have not even reached the state pension age. Out of the small amount of interest on their savings, which has been decreasing, they will have to pay extra fuel costs. That is inexcusable.

As hon. Members have said, there are other ways to raise money, and if hon. Members want me to list them, I shall do so. My hon. Friend the Member for Wellingborough (Mr. Fry) listed about four or five different ways and my hon. Friend the Member for Macclesfield (Mr. Winterton) suggested a basic tax rate of 28 per cent. and a higher rate of 45 per cent. That would be fairer than what the Government propose. VAT could be increased to 20 per cent. rather than nibbling at fuel costs. Many options are available to the Treasury, but I shall not detain the House by listing them further.

It is strange that in Tokyo we were able to offer President Yeltsin millions of pounds to help his country, but when we need money for our own country we cannot find it. We were able to find it to send an armada to the Falklands and we can send military aid to Bosnia and take part in the Gulf war, so there must be a contingency fund somewhere. We cannot be absolutely broke, because we seem to be able to find money from some source. Where is the money and how deep is the contingency fund purse?

I want the Government to withdraw the stupidity of VAT on fuel. It is unfair and unjust and we shall rue the day that we impose it. I did not go to university and I know that it sometimes shows. I did not rush out to advise Ministers with two firsts from university. I attended the university of life. The university of life does one thing above all else—it makes one streetwise. If only Ministers and civil servants had consulted a few streetwise Back Benchers, they would never have pursued such stupidity.

10 pm

Mrs. Margaret Ewing (Moray)

I support the amendment moved by the hon. Member for Corby (Mr. Powell). I am sure that he is aware that, as shown in the Order Paper last Thursday, I tabled an amendment along similar lines to his. I know that we share a deep concern about the issues at stake.

I am aware that there is no requirement for the House to vote at 10 o'clock. When hon. Memberrs want to register their views on an important issue, they should be prepared to stay in the building to enable all hon. Members to do so. In that way, our constituents can judge how we feel about the issue.

It is almost with a sense of despair that yet again i speak about fuel poverty. I have been in the House since 1974, albeit with an interim absence. In the 1970s, I raised the question of fuel poverty and the problems faced by many of the elderly, the disabled and those on fixed incomes. I watched the actions of the Labour party when it was in government and the actions of the Conservative party when it was in opposition. I do not say that with any sense of immodesty.

My concern is that the House has never objectively addressed the issue of fuel poverty, especially against the background of the wealth from North sea oil, Scottish oil and gas and all the natural resources throughout the United Kingdom. The House has never drawn up a strategy or a policy—[Interrruption]—to ensure that no one has to face the realities that were so eloquently described—[Interruption)—by the hon. Member for Renfrew, West and Inverclyde (Mr. Graham)—

Madam Deputy Speaker

Order. I am sorry to interrupt the hon. Lady, but there is now a general buzz of conversation such that it is not easy to hear her. That is extremely discourteous and I ask the House to be very much quieter.

Mrs. Ewing

I suspect, Madam Deputy Speaker, that hon. Members from the two main parties assumed that there would be a vote at 10'clock. They have come here specifically for the vote, rather than to listen to the arguments.

There has been a great deal of argument about the political implications of imposing VAT on domestic fuels. I have registered my view on that during previous debates on the Bill. It may be that fear has been struck in the hearts of many people, from Basildon to Brechin, from Newbury to New Pitsligo, from Christchurch to Cullen. The vote tonight should not be about votes for political parties: we are voting on something that will affect the lives of individuals, people who are citizens of our constituencies and of the United Kingdom. I urge all hon. Members to search their consciences before casting their votes.

The hon. Member for Renfrew, West and Inverclyde spoke about the need to define the cost of fuel for each and every individual. We have already done a great deal of research on that. I do not believe that it is an issue only of wealth; it is also an issue of climate. We must recognise the differentials in that regard between the north and the south of the United Kingdom; indeed, I have introduced several Bills to that effect.

Let me remind Ministers that it costs 36 per cent. more to heat a house in Dundee, Edinburgh or Glasgow than it costs to heat a house in Bristol. It costs 38 per cent. more to heat a house in Inverness and Stornoway, 48 per cent. more in Aberdeen, 60 per cent. more in Lerwick and 74 per cent. more in Braemar. Those statistics were produced by the Department of Energy, and they underpin the need to review our attitude to ensuring that those on low or fixed incomes—for instance, the disabled—can fulfil their requirement for a decent, warm house.

A dry, warm house is not a luxury; it is the right of every individual. Far too many of our people wake up to find condensation running down their windows—or, in winter, ice on the insides of their windows—and fungus creeping up their walls. This is not a commitment to Rio; it is a penalisation of the most vulnerable members of society. If the Government really want to meet the environmental requirements made at Rio, they should consider releasing the capital receipts of local authorities to ensure that they can implement the energy efficiency needs of our housing stock. They should ensure that all new build meets the requirements necessary to ensure decent insulation and heat conservation.

I believe that, if the Government proceed with their proposals, they will not only lose votes—possibly—in by-elections here and there; they will have on their conscience the lives and, ultimately, the deaths of many people in our society.

Mr. Alan Howarth (Stratford-on-Avon)

My purpose in tabling amendments Nos. 1, 2, 3 and 5—which are grouped with amendment No. 7—is much more limited than that of my hon. Friends the Members for Corby (Mr. Powell) and for Macclesfield (Mr. Winterton). Indeed, I differ from them. I accept, reluctantly—how could I do so other than reluctantly—the Government's main argument for the extension of VAT to domestic fuel and power; I recognise the need to reduce the public sector borrowing requirement and, indeed, the need to reduce global warming. My aim is to exclude charities from the requirement to pay VAT on fuel and power, and I have tabled a number of amendments that seek to approach that objective from different angles. I do not mind which my hon. Friend the Minister chooses, as long as he chooses one of them.

The Government have promised to protect the needy from the burden of the additional charge on heating and cooking. My right hon. Friend the former Chancellor of the Exchequer announced that in his Budget statement, and the Government were right to make the commitment. I simply ask the Government to be consistent. They intend to help the needy directly; correspondingly, they should help the charities whose purpose is to help the needy.

I am talking of charities whose role is supportive of the state, or complementary to the state; charities, for example, that care for the elderly and the disabled. These are among the areas of growth in social expenditure where the Government are particularly worried about how they are to finance meeting the need that they foresee. Charities operate in these fields sensitively, in two senses. They target need more accurately than state agencies commonly do; and they approach their human dealings in a sensitive manner. They are also cost effective, tending to have lower overheads than public agencies, and they mobilise voluntary energies.

In his excellent Mais lecture, my right hon. Friend the Secretary of State for Social Security set out some of the principles that he thought should govern the reform of social security. One was the principle that policy must harness popular energies. Charitable activity certainly does that, on an enormous scale.

Madam Deputy Speaker

Order. I remind those hon. Members who have just come into the Chamber that it is grossly discourteous to chatter away while somebody else is seeking to make points that are important to him.

Mr. Howarth

Those who give money to charities may ask why, if the Chancellor is to take away money from charities by extending the burden of VAT on them, they should give money. Those who work for charities may ask why they should work for charities if the Government make their task harder by increasing their costs.

I shall give one or two examples of what the costs to individual charities will be as a result of extending VAT to fuel and power. Methodist Homes for the Aged will have to pay an extra £143,000. Barnardos will have to pay an extra £122,500. The National Society for the Prevention of Cruelty to Children will have to pay another £31,000. The Royal National Institute for the Blind will have to pay another £126,500. Mencap will pay an extra £170,800. The National Children's Home will pay another £100,000. Those are significant additional burdens on charities that are acting in partnership with the state to provide very basic social support.

The Cancer Relief Macmillan Fund gives a third of its grants to sick people who face additional fuel costs. Applications to that fund and to other grant-giving charities will undoubtedly increase as people find it more difficult to cope with the increase in the cost of domestic fuel and power.

The Government have said that they want the needy to be helped. Why, then, do they intend to make it harder for charities to help those in need?

The Government increasingly want charities to do things. The problem with VAT is that it penalises charities that do indeed do things. The inequalities of the VAT system hit charities discriminatorily. It is a mistake to extend its scope. It would be much better to remove the existing £300 million burden of irrecoverable VAT that charities already carry. If the Government feel unable to exempt charities from having to pay VAT on their non-business activities, they should provide a VAT refund scheme.

It is important for the Government to think carefully about how to achieve a better balance in their fiscal policy relating to charities between relief on giving and relief on expenditure. I received a letter today from Mr. Peter Berresford of Mencap, who said: Assuming we receive tax relief on all our voluntary income, we actually receive tax relief on 7 per cent. of our activities! I can quote figures that have been supplied by other charities that face heavy VAT burdens on the activities which they undertake—activities which, surely, we all want them to undertake. The Royal National Institute for the Blind incurs £1.2 million of irrecoverable VAT. In its last financial year, the National Society for the Prevention of Cruelty to Children had to pay £615,000 of irrecoverable VAT. Methodist Homes for the Aged currently pays £405,000 worth of irrecoverable VAT.

The Government have not put forward strong arguments to support their case for extending the imposition of VAT on charities. They argue that charities should make their contribution to reducing global warming, but the charities most affected by this change would not be able to do so. They are already energy efficient. Those for whom they care—the old, the ill and the disabled—need more heating.

Charities have a duty of care to look after those who depend upon them. The Government require charities to do so—for example, under the Registered Homes Act 1984. The Act requires charities running residential homes to maintain temperatures at a certain level. It is inappropriate to tax charities for complying with the Government's legal requirements. It is also discriminatory to do so, because of their inability to recover VAT.

The Government argue that the extension of gift aid and payroll giving will provide compensation, but it will not compensate the same charities, nor will it do so to a sufficient extent. The National Children's Home tells me that at best it would gain £10,000 from the extension of gift aid and payroll giving that is provided for in the Finance Bill. At the same time it will have to pay an additional £100,000 in VAT on fuel and power.

The Government also argue that charities already pay VAT on their business use, but it is not a good idea to establish further precedents. If we remove this zero rate, for which the Government fought, we may well create a precedent and encourage the attitude that, if charities pay VAT on fuel and power, why should they not pay it on their new buildings or building alterations for disabled people?

It is estimated that the Exchequer will gain £27 million from this extension of VAT to charities, but the net benefit to public funds will be very much less because, on a reasonable estimate, about three quarters of that will come back as a charge on public funds through increased fees charged by charities. It is disproportionate to abolish the zero rate for such a token gain to the Exchequer. I therefore ask my right hon. Friend to exclude charities from this extension of VAT. If he feels unable to do so, I ask him to make a positive commitment to consider constructively the possibility of introducing a VAT refund scheme in the autumn Budget.

10.15 pm

Sir John Cope

We have today covered much of the ground that we covered in our debates on the Budget, on Second Reading and in Committee of the whole House when we debated the clause stand part motion to which the amendment relates. Very little that is new has been said today, and I do not suppose that my response will change much.

My hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) mentioned charities in which I know he takes a great interest. Other hon. Members, too, expressed concern about their charities under this legislation, especially those involved in residential care. I acknowledge at once that charities provide a valuable service and I pay tribute to them. Charities in general provide many useful services in the community, which is why we already grant them large tax reliefs—especially, as my hon. Friend said, on charitable giving. Tax reliefs have been increased elsewhere in the Bill. I regret, however, that we cannot exempt charities from the national need to conserve energy; nor can they be immune from the problems of national financing.

Besides, charities are not alone in providing residential care. The amendments would disadvantage commercial residential care., which also provides a valuable service. They would also disadvantage the elderly at home, thus cutting across the care in the community policy. I would not want to introduce a measure that would encourage people to put the elderly into homes. In addition, because of the way in which the amendments are drafted, they would make some difficult and probably unintended distinctions between individual charities that provide residential care. Of course, we keep all such matters under careful review and will be reviewing taxation of charities again, as we always do, before the next Budget.

Mrs. Ewing

rose—

Sir John Cope

I must make some progress in dealing with the general points which the hon. Lady and others have raised.

The House knows very well, because we have said it over and over again in the debates to which I have referred and elsewhere, that the clause was included for two reasons: first, to help to deal with the public sector financial deficit; and, secondly, to contribute towards meeting our Rio commitment. Both reasons remain valid and important.

Contrary to what has been said this evening, the clause is not the only way in which we are dealing with either of the problems, but it will make a contribution in both cases. From the Budget speech onwards, we have made it clear that we would make additional help available, through the benefits system, for those hardest hit. My right hon. Friend the Secretary of State will announce more details in the usual uprating statement in the autumn. That will allow increases to be put into effect when the VAT increases also come into effect.

There have been arguments, which I have observed today and on previous occasions, about whether we should tackle the public sector deficit by restraint on public spending or through tax increases. The fact is that we are tackling it by both methods and both are necessary given the scale of the deficit.

My hon. Friend the Member for Macclesfield (Mr. Winterton) seemed to think that we were somehow denying that this was a tax increase. We are not: it is a tax increase and we accept that. We have been asked to choose between direct taxes and indirect taxes. We are increasing both in the Bill. My hon. Friend the Member for Macclesfield quoted Disraeli's maiden speech. My hon. Friend should note that Disraeli said those words in his maiden speech and not after he had been a Member for a very long time—longer than I have been here, and I have been a Member for only 19 years.

My hon. Friend the Member for Corby (Mr. Powell), who moved the amendment, said that it was a matter of judgment and responsibility. I accept that. My right hon. Friends and I have not claimed that this is the only option. Of course it is riot. My hon. Friend the Member for Corby seemed to think that it is, but, as I have made clear, we had to choose and this is the way in which we have decided to make a contribution in both cases about which I have spoken. During this debate, we have been urged constantly by my hon. Friends, and even those who have spoken against the amendment, to tackle the deficit and that is what we are doing. That involves difficult decisions. We realise that those decisions are difficult; nevertheless, they are necessary.

We have been reminded again this evening that it has become a sackable offence on the Labour party Front Bench to say anything in favour of a tax on fuel. Lord Desai discovered that the other day. Perhaps his real offence was embarrassing the Leader of the Opposition during Question Time. That is, after all, quite a recent position for the Opposition. The Opposition's policy document of May 1990 entitled "Looking to the Future" contains the heading "Value Added Tax". They promised to keep many of the zero rates, but they did not promise to keep this one. That document states: We will also use the tax system… to help protect the environment. Exactly so, and that is what we are doing. The present leader of the Labour party made environmental taxes part of his leadership platform.

The Liberal Democrats have, in their time, also spoken in favour of taxes of this kind. In one of their policy documents in August 1991, they said: The UK is unusual amongst EC members in not applying even standard rates of VAT on domestic fuels. Of course the Liberal Democrats say different things now—that is politics. We must take the difficult decisions and that is what we have done. That is why I commend clause 42 to the House.

Mr. William Powell

This has been, to say the least, a lively debate. None of us who listened to it will forget the way in which my hon. Friend the Member for Macclesfield (Mr. Winterton) stimulated the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) in his contribution.

I want to make two very brief points. First, there is absolutely no doubt that the Conservative party and our leader gave an unequivocal promise to the electorate during the election campaign that we would not extend VAT in this way. I also gave that promise to my constituents. I meant it and I propose to keep it.

Secondly, this debate is not about whether there should be a tax rise. It is quite obvious that, in the proposals which were made, the Government accepted that there would be a tax rise. The question is, what is the priority in imposing that tax rise? I opened the debate by saying that the chief criticism which could be made was that it was socially extremely harmful. I have to say that, after all the hours of discussion on different occasions, I remain absolutely perplexed as to how anybody could select this as the socially most just way of raising tax. It is the most bizarre decision that could be made. I know that, although many of my right hon. and hon. Friends will join the Government in the Division Lobby, they, too, are thoroughly perplexed as to how this selection came to be made.

I note also that, although my right hon. Friend the Paymaster General justified the rise in tax—I do not criticise him for that, and I praise the way in which he faced that matter absolutely directly—he made no attempt whatsoever to justify to the House why this method had been selected, in terms of where the increase should fall, and not some other option. Quite obviously, every hon. Member could put forward two dozen options that would raise the same amount of tax and would be perceived by our constituents to be socially far more justifiable than the option that is presently before the House.

As my right hon. Friend said, we have not made much progress. The House has debated this matter fully. I simply ask right hon. and hon. Members to join me in the Division Lobby in supporting the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 299, Noes 307.

Division No. 327]	[10.25 pm
AYES
Abbott, Ms Diane	Cousins, Jim
Adams, Mrs Irene	Cox, Tom
Ainger, Nick	Cryer, Bob
Ainsworth, Robert (Cov'try NE)	Cummings, John
Allen, Graham	Cunliffe, Lawrence
Alton, David	Cunningham, Jim (Covy SE)
Anderson, Donald (Swansea E)	Cunningham, Rt Hon Dr John
Anderson, Ms Janet (Ros'dale)	Dafis, Cynog
Armstrong, Hilary	Dalyell, Tam
Ashdown, Rt Hon Paddy	Darling, Alistair
Ashton, Joe	Davidson, Ian
Austin-Walker, John	Davies, Bryan (Oldham C'tral)
Banks, Tony (Newham NW)	Davies, Rt Hon Denzil (Llanelli)
Barnes, Harry	Davies, Ron (Caerphilly)
Barron, Kevin	Davis, Terry (B'ham, H'dge H'I)
Battle, John	Denham, John
Bayley, Hugh	Dewar, Donald
Beckett, Rt Hon Margaret	Dickens, Geoffrey
Beggs, Roy	Dixon, Don
Beith, Rt Hon A. J.	Dobson, Frank
Bell, Stuart	Donohoe, Brian H.
Benn, Rt Hon Tony	Dowd, Jim
Bennett, Andrew F.	Dunnachie, Jimmy
Benton, Joe	Dun woody, Mrs Gwyneth
Bermingham, Gerald	Eagle, Ms Angela
Berry, Dr. Roger	Eastham, Ken
Betts, Clive	Enright, Derek
Blair, Tony	Etherington, Bill
Boateng, Paul	Evans, John (St Helens N)
Boyce, Jimmy	Ewing, Mrs Margaret
Boyes, Roland	Fatchett, Derek
Bradley, Keith	Field, Frank (Birkenhead)
Bray, Dr Jeremy	Fisher, Mark
Brown, Gordon (Dunfermline E)	Flynn, Paul
Brown, N. (N'c'tle upon Tyne E)	Forsythe, Clifford (Antrim S)
Bruce, Malcolm (Gordon)	Foster, Rt Hon Derek
Burden, Richard	Foster, Don (Bath)
Byers, Stephen	Foulkes, George
Caborn, Richard	Fraser, John
Callaghan, Jim	Fyfe, Maria
Campbell, Mrs Anne (C'bridge)	Galbraith, Sam
Campbell, Menzies (Fife NE)	Galloway, George
Campbell, Ronnie (Blyth V)	Gapes, Mike
Campbell-Savours, D. N.	Garrett, John
Canavan, Dennis	George, Bruce
Cann, Jamie	Gerrard, Neil
Chisholm, Malcolm	Gilbert, Rt Hon Dr John
Clapham, Michael	Godman, Dr Norman A.
Clark, Dr David (South Shields)	Godsiff, Roger
Clarke, Eric (Midlothian)	Golding, Mrs Llin
Clarke, Tom (Monklands W)	Gordon, Mildred
Clelland, David	Gould, Bryan
Clwyd, Mrs Ann	Graham, Thomas
Coffey, Ann	Grant, Bernie (Tottenham)
Cohen, Harry	Griffiths, Nigel (Edinburgh S)
Connarty, Michael	Griffiths, Win (Bridgend)
Cook, Frank (Stockton N)	Grocott, Bruce
Cook, Robin (Livingston)	Gunnell, John
Corbett, Robin	Hain, Peter
Corbyn, Jeremy	Hall, Mike
Corston, Ms Jean	Hanson, David

Hardy, Peter	Morris, Rt Hon A. (Wy'nshawe)
Harman, Ms Harriet	Morris, Estelle (B'ham Yardley)
Harvey, Nick	Morris, Rt Hon J. (Aberavon)
Hattersley, Rt Hon Roy	Mowlam, Marjorie
Henderson, Doug	Mudie, George
Heppell, John	Mullin, Chris
Hill, Keith (Streatham)	Murphy, Paul
Hinchliffe, David	Oakes, Rt Hon Gordon
Hoey, Kate	O'Brien, Michael (N W'kshire)
Hogg, Norman (Cumbernauld)	O'Brien, William (Normanton)
Home Robertson, John	O'Hara, Edward
Hood, Jimmy	Olner, William
Hoon, Geoffrey	O'Neill, Martin
Howarth, George (Knowsley N)	Orme, Rt Hon Stanley
Howells, Dr. Kim (Pontypridd)	Paisley, Rev Ian
Hoyle, Doug	Patchett, Terry
Hughes, Kevin (Doncaster N)	Pendry, Tom
Hughes, Robert (Aberdeen N)	Pickthall, Colin
Hughes, Roy (Newport E)	Pike, Peter L.
Hughes, Simon (Southwark)	Pope, Greg
Hutton, John	Powell, Ray (Ogmore)
Illsley, Eric	Powell, William (Corby)
Ingram, Adam	Prentice, Ms Bridget (Lew'm E)
Jackson, Glenda (H'stead)	Prentice, Gordon (Pendle)
Jackson, Helen (Shef'ld, H)	Prescott, John
Jamieson, David	Primarolo, Dawn
Janner, Greville	Purchase, Ken
Johnston, Sir Russell	Quin, Ms Joyce
Jones, Barry (Alyn and D'side)	Radice, Giles
Jones, Jon Owen (Cardiff C)	Randall, Stuart
Jones, Lynne (B'ham S O)	Raynsford, Nick
Jones, Martyn (Clwyd, SW)	Redmond, Martin
Jones, Nigel (Cheltenham)	Reid, Dr John
Jowell, Tessa	Rendel, David
Kaufman, Rt Hon Gerald	Richardson, Jo
Keen, Alan	Robertson, George (Hamilton)
Kennedy, Charles (Ross,C&S)	Robinson, Geoffrey (Co'try NW)
Kennedy, Jane (Lpool Brdgn)	Robinson, Peter (Belfast E)
Khabra, Piara S.	Roche, Mrs. Barbara
Kilfedder, Sir James	Rogers, Allan
Kilfoyle, Peter	Rooker, Jeff
Kinnock, Rt Hon Neil (Islwyn)	Rooney, Terry
Kirkwood, Archy	Ross, Ernie (Dundee W)
Leighton, Ron	Ross, William (E Londonderry)
Lestor, Joan (Eccles)	Rowlands, Ted
Lewis, Terry	Ruddock, Joan
Litherland, Robert	Salmond, Alex
Livingstone, Ken	Sedgemore, Brian
Lloyd, Tony (Stretford)	Sheerman, Barry
Llwyd, Elfyn	Sheldon, Rt Hon Robert
Loyden, Eddie	Shore, Rt Hon Peter
Lynne, Ms Liz	Short, Clare
McAllion, John	Simpson, Alan
McAvoy, Thomas	Skinner, Dennis
McCartney, Ian	Smith, Andrew (Oxford E)
Macdonald, Calum	Smith, C. (Isl'ton S & F'sbury)
McKelvey, William	Smith, Rt Hon John (M'kl'ds E)
McLeish, Henry	Smith, Llew (Blaenau Gwent)
McMaster, Gordon	Smyth, Rev Martin (Belfast S)
McNamara, Kevin	Snape, Peter
Madden, Max	Soley, Clive
Mahon, Alice	Spearing, Nigel
Mandelson, Peter	Steel, Rt Hon Sir David
Marek, Dr John	Steinberg, Gerry
Marshall, David (Shettleston)	Stevenson, George
Marshall, Jim (Leicester, S)	Stott, Roger
Martlew, Eric	Strang, Dr. Gavin
Maxton, John	Straw, Jack
Meacher, Michael	Taylor, Mrs Ann (Dewsbury)
Meale, Alan	Taylor, Rt Hon John D. (Strgfd)
Michael, Alun	Taylor, Matthew (Truro)
Michie, Bill (Sheffield Heeley)	Thompson, Jack (Wansbeck)
Michie, Mrs Ray (Argyll Bute)	Tipping, Paddy
Milburn, Alan	Trimble, David
Miller, Andrew	Turner, Dennis
Mitchell, Austin (Gt Grimsby)	Tyler, Paul
Molyneaux, Rt Hon James	Vaz, Keith
Moonie, Dr Lewis	Walker, A. Cecil (Belfast N)
Morgan, Rhodri	Walker, Rt Hon Sir Harold
Morley, Elliot	Wallace, James

Walley, Joan	Winterton, Nicholas (Macc'f'ld)
Wardell, Gareth (Gower)	Wise, Audrey
Wareing, Robert N	Worthington, Tony
Watson, Mike	Wray, Jimmy
Welsh, Andrew	Wright, Dr Tony
Wicks, Malcolm	Young, David (Bolton SE)
Wigley, Dafydd
Williams, Rt Hon Alan (Sw'n W)	Tellers for the Ayes:
Williams, Alan W (Carmarthen)	Mr. John Spellar and Mr. Andrew Mackinlay.
Wilson, Brian
Winnick, David

NOES
Ainsworth, Peter (East Surrey)	Currie, Mrs Edwina (S D'by'ire)
Aitken, Jonathan	Curry, David (Skipton & Ripon)
Alexander, Richard	Davies, Quentin (Stamford)
Alison, Rt Hon Michael (Selby)	Davis, David (Boothferry)
Allason, Rupert (Torbay)	Day, Stephen
Amess, David	Deva, Nirj Joseph
Ancram, Michael	Devlin, Tim
Arbuthnot, James	Dicks, Terry
Arnold, Jacques (Gravesham)	Dorrell, Stephen
Arnold, Sir Thomas (Hazel Grv)	Douglas-Hamilton, Lord James
Ashby, David	Dover, Den
Aspinwall, Jack	Duncan, Alan
Atkinson, David (Bour'mouth E)	Duncan-Smith, Iain
Atkinson, Peter (Hexham)	Dunn, Bob
Baker, Rt Hon K. (Mole Valley)	Durant, Sir Anthony
Baker, Nicholas (Dorset North)	Dykes, Hugh
Baldry, Tony	Eggar, Tim
Banks, Matthew (Southport)	Elletson, Harold
Banks, Robert (Harrogate)	Evans, David (Welwyn Hatfield)
Bates, Michael	Evans, Jonathan (Brecon)
Batiste, Spencer	Evans, Nigel (Ribble Valley)
Bellingham, Henry	Evans, Roger (Monmouth)
Bendall, Vivian	Evennett, David
Beresford, Sir Paul	Faber, David
Blackburn, Dr John G.	Fabricant, Michael
Body, Sir Richard	Fenner, Dame Peggy
Bonsor, Sir Nicholas	Field, Barry (Isle of Wight)
Booth, Hartley	Fishburn, Dudley
Boswell, Tim	Forman, Nigel
Bottomley, Peter (Eltham)	Forsyth, Michael (Stirling)
Bottomley, Rt Hon Virginia	Forth, Eric
Bowden, Andrew	Fowler, Rt Hon Sir Norman
Bowis, John	Fox, Dr Liam (Woodspring)
Boyson, Rt Hon Sir Rhodes	Fox, Sir Marcus (Shipley)
Brandreth, Gyles	Freeman, Rt Hon Roger
Brazier, Julian	French, Douglas
Bright, Graham	Gale, Roger
Brooke, Rt Hon Peter	Gallie, Phil
Brown, M. (Brigg & Cl'thorpes)	Gardiner, Sir George
Browning, Mrs. Angela	Garnier, Edward
Bruce, Ian (S Dorset)	Gill, Christopher
Budgen, Nicholas	Gillan, Cheryl
Burns, Simon	Goodlad, Rt Hon Alastair
Burt, Alistair	Goodson-Wickes, Dr Charles
Butcher, John	Gorman, Mrs Teresa
Butler, Peter	Gorst, John
Butterfill, John	Grant, Sir Anthony (Cambs SW)
Carlisle, John (Luton North)	Greenway, Harry (Ealing N)
Carlisle, Kenneth (Lincoln)	Greenway, John (Ryedale)
Carrington, Matthew	Griffiths, Peter (Portsmouth, N)
Carttiss, Michael	Grylls, Sir Michael
Cash, William	Hague, William
Channon, Rt Hon Paul	Hamilton, Rt Hon Archie (Epsom)
Churchill, Mr	Hamilton, Neil (Tatton)
Clappison, James	Hampson, Dr Keith
Clark, Dr Michael (Rochford)	Hanley, Jeremy
Clarke, Rt Hon Kenneth (Ruclif)	Hannam, Sir John
Clifton-Brown, Geoffrey	Hargreaves, Andrew
Coe, Sebastian	Harris, David
Colvin, Michael	Haselhurst, Alan
Congdon, David	Hawkins, Nick
Conway, Derek	Hawksley, Warren
Coombs, Anthony (Wyre For'st)	Hayes, Jerry
Coombs, Simon (Swindon)	Heald, Oliver
Cope, Rt Hon Sir John	Heath, Rt Hon Sir Edward
Couchman, James	Heathcoat-Amory, David
Cran, James	Hendry, Charles

Hicks, Robert	Ottaway, Richard
Higgins, Rt Hon Sir Terence L.	Page, Richard
Hill, James (Southampton Test)	Paice, James
Hogg, Rt Hon Douglas (G'tham)	Patnick, Irvine
Horam, John	Pattie, Rt Hon Sir Geoffrey
Hordern, Rt Hon Sir Peter	Pawsey, James
Howard, Rt Hon Michael	Peacock, Mrs Elizabeth
Howarth, Alan (Strat'rd-on-A)	Pickles, Eric
Howell, Rt Hon David (G'dford)	Porter, Barry (Wirral S)
Howell, Sir Ralph (N Norfolk)	Porter, David (Waveney)
Hughes Robert G. (Harrow W)	Portillo, Rt Hon Michael
Hunt, Rt Hon David (Wirral W)	Rathbone, Tim
Hunt, Sir John (Ravensbourne)	Redwood, Rt Hon John
Hunter, Andrew	Renton, Rt Hon Tim
Hurd, Rt Hon Douglas	Richards, Rod
Jack, Michael	Riddick, Graham
Jackson, Robert (Wantage)	Rifkind, Rt Hon. Malcolm
Jenkin, Bernard	Robathan, Andrew
Jessel, Toby	Roberts, Rt Hon Sir Wyn
Johnson Smith, Sir Geoffrey	Robertson, Raymond (Ab'd'n S)
Jones, Gwilym (Cardiff N)	Robinson, Mark (Somerton)
Jones, Robert B. (W Hertfdshr)	Roe, Mrs Marion (Broxbourne)
Jopling, Rt Hon Michael	Rowe, Andrew (Mid Kent)
Kellett-Bowman, Dame Elaine	Rumbold, Rt Hon Dame Angela
Key, Robert	Ryder, Rt Hon Richard
King, Rt Hon Tom	Sackville, Tom
Kirkhope, Timothy	Sainsbury, Rt Hon Tim
Knapman, Roger	Scott, Rt Hon Nicholas
Knight, Mrs Angela (Erewash)	Shaw, David (Dover)
Knight, Greg (Derby N)	Shaw, Sir Giles (Pudsey)
Knight, Dame Jill (Bir'm E'st'n)	Shephard, Rt Hon Gillian
Kynoch, George (Kincardine)	Shepherd, Colin (Hereford)
Lait, Mrs Jacqui	Shepherd, Richard (Aldridge)
Lang, Rt Hon Ian	Shersby, Michael
Lawrence, Sir Ivan	Sims, Roger
Legg, Barry	Skeet, Sir Trevor
Leigh, Edward	Smith, Sir Dudley (Warwick)
Lennox-Boyd, Mark	Smith, Tim (Beaconsfield)
Lester, Jim (Broxtowe)	Speed, Sir Keith
Lidington, David	Spencer, Sir Derek
Lightbown, David	Spicer, Sir James (W Dorset)
Lilley, Rt Hon Peter	Spicer, Michael (S Worcs)
Lloyd, Peter (Fareham)	Spink, Dr Robert
Luff, Peter	Spring, Richard
Lyell, Rt Hon Sir Nicholas	Sproat, Iain
MacGregor, Rt Hon John	Squire, Robin (Hornchurch)
MacKay, Andrew	Stanley, Rt Hon Sir John
Maclean, David	Steen, Anthony
McLoughlin, Patrick	Stephen, Michael
McNair-Wilson, Sir Patrick	Stern, Michael
Madel, David	Stewart, Allan
Maitland, Lady Olga	Streeter, Gary
Major, Rt Hon John	Sumberg, David
Malone, Gerald	Sweeney, Walter
Mans, Keith	Sykes, John
Marland, Paul	Tapsell, Sir Peter
Marshall, John (Hendon S)	Taylor, Ian (Esher)
Marshall, Sir Michael (Arundel)	Taylor, John M. (Solihull)
Martin, David (Portsmouth S)	Taylor, Sir Teddy (Southend, E)
Mates, Michael	Temple-Morris, Peter
Mawhinney, Dr Brian	Thomason, Roy
Mellor, Rt Hon David	Thompson, Sir Donald (C'er V)
Merchant, Piers	Thompson, Patrick (Norwich N)
Milligan, Stephen	Thornton, Sir Malcolm
Mills, Iain	Thurnham, Peter
Mitchell, Sir David (Hants NW)	Townend, John (Bridlington)
Moate, Sir Roger	Townsend, Cyril D. (Bexl'yh'th)
Monro, Sir Hector	Tracey, Richard
Montgomery, Sir Fergus	Tredinnick, David
Moss, Malcolm	Trend, Michael
Needham, Richard	Trotter, Neville
Nelson, Anthony	Twinn, Dr Ian
Neubert, Sir Michael	Vaughan, Sir Gerard
Newton, Rt Hon Tony	Viggers, Peter
Nicholls, Patrick	Waldegrave, Rt Hon William
Nicholson, David (Taunton)	Walden, George
Nicholson, Emma (Devon West)	Waller, Gary
Norris, Steve	Ward, John
Onslow, Rt Hon Sir Cranley	Wardle, Charles (Bexhill)
Oppenheim, Phillip	Waterson, Nigel

Watts, John	Wolfson, Mark
Wells, Bowen	Wood, Timothy
Whitney, Ray	Yeo, Tim
Whittingdale, John	Young, Rt Hon Sir George
Widdecombe, Ann
Wiggin, Sir Jerry	Tellers for the Noes:
Wilkinson, John	Mr. Sydney Chapman and Mr. Andrew Mitchell.
Willetts, David
Wilshire, David

Question accordingly negatived.