HC Deb 13 February 1997 vol 290 cc454-5
6. Mr. Alan W. Williams

To ask the Chancellor of the Exchequer if he will make a statement on the total revenue raised from value added tax in (a) 1978–79 and (b) 1995–96. [14176]

Mr. Jack

In constant 1995–96 prices, the receipts were £14.1 billion and £43.1 billion respectively.

Mr. Williams

Can the Minister say what the Chancellor meant when he said in the Budget statement on 30 November 1993 that one of his options must be to extend the VAT base. The main candidates are food, children's clothes, transport, sewerage and newspapers"? Is it not clear that, if we had another Conservative Government, just as the last one put VAT on heating, the next one would put VAT on food?

Mr. Jack

I am intrigued that the hon. Gentleman has chosen to ask me that question, when he could have asked my right hon. and learned Friend the Chancellor a little earlier. I also notice that he was reading in order to get accuracy. If he had read my right hon. and learned Friend's Budget speech in 1993, he would have seen that it is perfectly true that, in that context, my right hon. and learned Friend rather teased the House of Commons when he talked about his views on how we should have a broader tax base. He reviewed a number of possibilities and then went on to describe his own solution to broaden the tax base at that time. He introduced the House to the concept of the insurance premium tax and the air passenger duty. At the end of his speech, he said to the House of Commons: I can now confirm that I have no need this year to propose any changes to the VAT base."—[Official Report, 30 November 1993; Vol. 233, c. 940.] The hon. Gentleman asked the question. He read his question for accuracy and I read the reply for accuracy.

Mr. Stephen

Does my right hon. Friend recall that, when we increased VAT to 17.5 per cent., the amount of that extra tax was refunded by way of subsidy to council tax payers? Does he also recall that, when we put tax on domestic gas and electricity, we fully compensated pensioners and people on low earnings by increasing their pensions and social security? Is he aware of any plans to compensate pensioners and people on low earnings for the consequences of a windfall tax?

Mr. Jack

My hon. Friend is entirely right to remind the House of the steps that we took to protect the interests of pensioners when we had to take difficult economic decisions as we were recovering from a very deep recession. We have now got the economy on track—we have the fastest-growing major western economy—and it is doing extremely well. That would be damaged by the arrival of the tax to which my hon. Friend refers and, as far as I am aware, we have heard nothing from the right hon. Member for Dunfermline, East (Mr. Brown) to tell us anything about the windfall tax, never mind about compensating pensioners.

Ms Primarolo

Does the Financial Secretary remember the Prime Minister's promise at the last election not to extend the scope of VAT? Does he also remember that, in his Government's pre-election Budget, the then Chancellor promised not to put VAT on fuel? Can he explain to the House why his Government broke those promises and why the electorate should trust them at all on any tax issue, particularly VAT?

Mr. Jack

My right hon. and learned Friend dealt very adequately with the question of VAT and the last election in his own very clear answer. However, I shall tell the hon. Lady because, when it comes to the economy, people should judge a Government not only on an individual item, but on whether they actually deliver. We have never hidden from the fact that putting VAT on fuel and power was a very difficult decision but, as my hon. Friend the Member for Shoreham (Mr. Stephen) reminded the House moments ago, we did help those who were most harshly hit, either through social security benefits or through direct help to pensioners. We have now delivered an economy that is the fastest-growing in western Europe, rapidly falling unemployment, the best inflation record for 50 years and the lowest mortgage rates for nearly 30 years. That is why people will believe us and not the Opposition.