HC Deb 12 February 1998 vol 306 cc545-6
10. Mr. Caplin

If he will make a statement concerning his policy to reduce VAT on fuel. [27210]

12. Mr. Barry Jones

What representations he has received from pensioners' organisations on his reduction in VAT on fuel.

The Paymaster General (Mr. Geoffrey Robinson)

rose—

Hon. Members

Hear, hear.

Mr. Robinson

I am pleased to tell my hon. Friends that we have reduced VAT on fuel to 5 per cent.—the lowest level permitted to us under European Community regulations. That reduction has been very well received throughout the country, in particular by pensioner communities.

Mr. Caplin

I was delighted to note that my hon. Friend was greeted so warmly by those on the Conservative Benches. The pensioners in my constituency of Hove greatly welcome the cut in VAT. Would he care to contrast the efforts made by the Government with those of the Opposition and the Liberal Democrats?

Mr. Robinson

In addition to the cut in VAT, other measures relating to the gas levy and the winter fuel payments paid by my right hon. Friend the Chancellor mean that pensioners are between £100 and £130 better off per year. All one can say about the Conservative party is that when in government it managed to introduce 22 tax increases. The only tax reduction was that introduced as a result of the actions of the Labour party in opposition and the Liberal Democrats, who fought against the Conservative Government increasing VAT on fuel to 17.5 per cent. What we need to know this afternoon is whether the Opposition are in favour of increasing it again to 17.5 per cent.—yes or no?

Mr. Barry Jones

Will my hon. Friend allow me to thank the Chancellor of the Exchequer for the action that he has taken in this sphere? He should know that pensioners in my constituency are glad of what he has done. Is it not a fact that the Labour Government keep their promises?

Mr. Robinson

The reduction in VAT on fuel was one of the five pledges in our manifesto, and it has been redeemed; we are in the course of fulfilling the other pledges. I am pleased to have my hon. Friend's confirmation that pensioners in his constituency appreciate that action while the Opposition hang their heads in shame at the fact that they took no action when in government.

Mr. Ian Bruce

Surely the hon. Gentleman will know that his Department has told me that the increases in VAT announced by the previous Government were fully or overcompensated to pensioner households. Surely what we need to do for pensioners is to keep tax rates down. Surely the best way to do so would be to makes sure that rich business men pay their taxes and do not keep the money offshore.

Mr. Robinson

The best thing we did was to get rid of the Tory Government. That was the first step. Next, we reduced VAT on fuel. We then made the winter fuel payments and introduced the rebate on the gas levy. Those practical measures have helped people who live in the real world. The hon. Gentleman should be ashamed of his question.

Rev. Martin Smyth

Although the reduction of VAT on domestic fuel for pensioners is welcome, will the hon. Gentleman bear it in mind that increasing taxes on diesel and other transport fuels will have an adverse effect on the peripheral regions, and especially on firms engaged in export?

Mr. Robinson

I welcome the first part of the hon. Gentleman's question. All the other matters are being considered by my right hon. Friend the Chancellor in the context of the Budget.

Dr. George Turner

The pensioners who are visiting the House today from my constituency are extremely pleased about the reduction in VAT on fuel, but tomorrow concerns them as much as yesterday. Many of them count the buses that pass their door by the number per week, not the number per day. Can my hon. Friend assure them that when the Chancellor draws up his Budget, he will take fully into account the distinctive needs of those who live in rural constituencies, now represented mainly by those on the Labour Benches?

Mr. Robinson

I should be pleased to meet my hon. Friend's pensioners with him. I assure them that all those matters are under consideration. In particular, he will be aware that a major review of pensions is under way. We hope to answer positively to his pensioners and his other constituents in due course.