HC Deb 12 June 1997 vol 295 cc1271-4
8. Mrs. Organ

To ask the Chancellor of the Exchequer if he will make a statement on his policy towards value added tax on domestic fuel. [1593]

12. Mr. Jim Cunningham

To ask the Chancellor of the Exchequer what plans he has to reduce VAT on domestic fuel. [1597]

14. Mr. Derek Twigg

To ask the Chancellor of the Exchequer, what recent representations he has received on the level of VAT on fuel. [1599]

16. Mr. Martyn Jones

To ask the Chancellor of the Exchequer, what plans he has to reduce VAT on domestic fuel. [1601]

Dawn Primarolo

The Government have a manifesto commitment to cut VAT on domestic fuel and power to 5 per cent., and we intend to keep that pledge.

Mrs. Organ

That is very good news. I am pleased to hear it. Members of the Lydney and district area pensioner forum will be particularly delighted with that excellent news. Does my hon. Friend remember the former Prime Minister making a pledge, before the 1992 election, that he would not put VAT on fuel? Does she also remember that, after the 1992 election, the Conservative party immediately broke that pledge and imposed VAT on fuel at 8 per cent? Will she confirm whether the Labour party will keep its election pledge on VAT? [Laughter.]

Dawn Primarolo

Madam Deputy Speaker—[HoN. MEMBERS: "Oh."] Madam Speaker, my apologies. I assume that Opposition Members are shocked at my hon. Friend's suggestion that 'a Government should keep their election pledge. As she has said, the previous Government gave pledges and broke them. Our pledge will be kept and pensioner households will be the better for it, and warmer in winter.

Mr. Cunningham

Is my hon. Friend aware that many pensioners regard the reduction of VAT on fuel as important, given that they have been neglected for the past 18 years?

Dawn Primarolo

The Government's promise to reduce VAT on fuel, particularly for pensioners, demonstrates clearly that we are committed to a fairness agenda and to assisting pensioners. Instead of sniggering at the questions, perhaps Opposition Members would consider assisting the Government in meeting that target.

Mr. Twigg

Does my hon. Friend recall the statement made by the former Chancellor before the last election in which he said that the challenge was to increase VAT on fuel to 17.5 per cent? Is my hon. Friend aware that that statement is of particular interest to my constituents who would pay significantly more for fuel under Conservative policies?

Dawn Primarolo

My hon. Friend is correct to remind the House that the Conservative Government imposed VAT on fuel and that the former Chancellor said that he was committed to raising VAT on fuel to 17.5 per cent. The Opposition should now withdraw that commitment and support our target of reducing VAT to 5 per cent.

Mr. Jones

Does my hon. Friend agree that, if the Conservative Government had not shamelessly broken their promises on VAT after the 1992 election, there might be a few more than 164 Conservative Members now?

Dawn Primarolo

Yes, I do agree. However, I believe that, even without that broken promise, there would be so few of them now as to put us in government.

Mr. Evans

Does the Minister agree that, when VAT on domestic fuel is reduced from 8 to 5 per cent., prices should come down? Does she agree also that, when the windfall tax on utilities is introduced, if any charge is passed on to consumers, prices from those utilities—particularly from the energy companies—will increase? Will the Minister give a guarantee that gas and electricity prices will not increase when the windfall tax is introduced? If she cannot do that, pensioners will be no better off, and Labour's election pledges will be revealed as a big con.

Dawn Primarolo

That is rich coming from an hon. Member who voted to impose VAT on fuel in the first place. He did not care then whether extra charges would be passed on to pensioners and the low-paid. I assure him that a cut in VAT on fuel will mean a reduction in fuel prices for pensioners, the low-paid and everyone else.

Mr. Evans

On a point of order, Madam Speaker. In view of the unsatisfactory nature of that answer, I give notice that I intend to raise the matter on the Adjournment.

Madam Speaker

It was not the hon. Gentleman's question, so he cannot make that point.

Mr. Heathcoat-Amory

Does the Financial Secretary recall that, on 27 March last year in this place, she supported a reduction in the rate of VAT on energy-saving materials, describing it as a matter of justice, jobs and democracy? Does she still support that policy?

Dawn Primarolo

Under the Finance Act 1997, a review is being conducted—[HON. MEMBERS: "Oh!"] The review is being conducted as a result of a Labour amendment to the legislation. We intend to pursue that review vigorously and report to the House. This Government keep their promises: the Conservatives did not.

Mr. Edward Davey

Can the hon. Lady confirm that the cut in VAT will benefit the poorest and the wealthiest in the land? What proposals does she have to target benefits on the real poorest in order to combat and cut fuel poverty?

Dawn Primarolo

The average household will benefit by £4.50 a quarter, and the poorest will benefit by even more as a proportion of their income. It is quite clear that our method is the most effective way of delivering that reduction. I impress upon the hon. Gentleman the fact that our commitment through the environmental task force and our strategy on energy efficiency will assist those households further and deliver real benefits to them instead of pious promises.

Mrs. Ewing

Does the hon. Lady remember back to 23 January 1995, when my party's amendment aimed at reducing VAT on domestic fuel to 5 per cent. was described as a cynical ploy no fewer than three times by the right hon. Member for Edinburgh, Central (Mr. Darling)? It was stated that there was never any chance of reducing VAT on domestic fuel to 5 per cent. What has happened to change the Minister's mind? What realistic promise is she now holding out? We do not want to take a cynical attitude—we want to be convinced that there will be genuine reductions.

Dawn Primarolo

There was a cynical ploy, which put at risk the reduction to 8 per cent. that we had already secured on the Floor of the House, thereby stopping the Conservative Government pushing ahead with a rise in VAT to 17.5 per cent.

The hon. Lady asked a rather convoluted question. My answer to her is that the difference is that Labour is now in government and we shall deliver our promises.