HC Deb 10 July 1997 vol 297 cc1064-6
11. Mr. Bayley

To ask the Chancellor of the Exchequer if he will meet representatives of pensioners to discuss the impact of his fiscal policy. [6188]

Mr. Darling

We are always keen to know the views of representative bodies and are happy to meet those that wish to make representations to us on an appropriate basis.

Mr. Bayley

Is my right hon. Friend aware that the provision in the Labour Government's first Budget to cut the Tories' hated VAT on fuel was widely welcomed by pensioners in York? Does he agree that that shows that Labour's tax promises can be trusted? Will he confirm that the poorest households, including pensioners, will gain the most in proportion to their incomes, from this Labour tax cut?

Mr. Darling

My hon. Friend is right. I am sure that he owes a large part of his very large majority at the general election to the fact that the Conservatives wanted to raise VAT on fuel to the full 17.5 per cent. We kept our promise to reduce VAT on domestic fuel to 5 per cent., just as we have kept every other manifesto promise.

Mr. Page

Does the right hon. Gentleman have any plans to meet representatives of the secretaries to Members of Parliament to discuss the impact on their pensions of the changes to ACT? Has he any plans to increase non-contributory payments so that they can enjoy the same pensions to which they looked forward just before the infamous Budget?

Mr. Darling

I am not aware of any representations. I caution the hon. Gentleman and many of those who sit on the Benches alongside him: they do no one any good by creating false scares that have no justification.

Mr. Lilley

Yesterday, the Chief Secretary to the Treasury conspicuously failed to defend the Financial Secretary's claim that the £5 billion extra tax on pension funds was good for pensions and pensioners, not had for them … People should understand that our reforms will benefit pension funds."—[Official Report, 3 July 1997: Vol. 297. c. 507] Will he, today, defend that remark? If this damaging measure is good for pension funds, why is it necessary to protect charities and other funds from its impact?

Mr. Darling

As the right hon. Gentleman knows, I spoke for some 45 minutes yesterday—perhaps too long—during which I defended the Government's policy to the hilt because the position is correct. We have removed a distortion in the tax system. It should be for managers and businesses to decide what to do with their profits. The tax system should not decide whether they are reinvested or distributed. The decision will be good for pension funds because it will enable companies to grow. The stock market has risen not only since the election but since the Budget announcement because people realise that the decisions that we have made will add to the wealth of companies and, therefore, to the wealth of pension funds.

The right hon. Gentleman should think twice about attacking us because in 1993 the Government of which he was a member embarked on a bare-faced raid on pension funds because, as the right hon. Member for Charnwood (Mr. Dorrell) admitted at the time, they saw it as a soft touch for raising money. We have reduced corporation taxes. That will benefit companies and, therefore, pensions.