§ 3.18 p.m.
Lord Bruce of DoningtonMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether, in the light of the Prime Minister's pledge to resist the abolition of the VAT zero-rating presently in force as regards a series of goods and services, including food, they will confirm their intention to vote in the Council of Ministers of the European Communities against the Commission proposals for a Council Directive COM(87) 321 Final, 2 of 21st August 1987.
§ Lord Young of GraffhamMy Lords, my right honourable friend the Prime Minister has made it clear that the Government will not accept proposals which restrict our ability to use zero-rating. I can confirm that this remains the policy of the Government.
Lord Bruce of DoningtonMy Lords, is the noble Lord aware that we on this side of the House accept with the utmost pleasure the assurance of the noble Lord? In these circumstances, would it not be wise if we now gave notice to the Commission that we have no intention whatsoever of eliminating the zero rate as laid down in the Value Added Tax Act 1983, and that therefore we have no intention of doing anything else but zero-rate food, children's clothing, fuel, light, heat and so on? Would it not be best if it were made abundantly clear that the British people will not stand for Commission dictation in this matter?
§ Lord Young of GraffhamMy Lords, I am grateful to the noble Lord, Lord Bruce of Donington, and even more grateful that he now accepts our assurances, although I must confess to a little surprise that anyone in your Lordships' House, or anyone in the country outside, should have been unaware of the policy of the Government and of the Prime Minister in regard to this matter.
§ Lord GladwynMy Lords, is it not evident that if we are to proceed on the general lines laid down in the Single European Act, we shall before long be obliged to agree that all matters concerning VAT policy shall be decided in the Council of Ministers by means of a qualified majority vote?
§ Lord Young of GraffhamNo, my Lords. This is not a matter which is subject to the Single European Act. It is not subject to qualified majority voting.
§ Lord BarnettMy Lords, will the Minister say whether the Government are still committed at least in principle to the internal market proposals put forward by their former colleague Lord Cockfield? If so, how does the Minister expect that to have a chance of succeeding without some degree of flexibility in the Government's policies in those matters?
§ Lord Young of GraffhamMy Lords, I am very grateful to the noble Lord for his question. Had he watched the BBC news programmes at the time of the party conference he would have heard me say that I was in the middle of leading a crusade into Europe to ensure that the single market would become an effective market which would have a place for British goods and British services. That is a very different matter from the desire to unify all VAT rates in Europe, which has very little to do with the free supply of goods and services across trade barriers.
§ Lord StrabolgiMy Lords, while I welcome the Minister's answer and find myself on the same side as him, probably for the first time, I wish to ask him whether he will confirm that books will continue to be zero-rated as they always have been, including all through the last war.
§ Lord Young of GraffhamMy Lords, I am grateful to the noble Lord and pleased about his somewhat late conversion to our side. I hope that that continues very much in the future. The Prime Minister has given very clear guidance as to those areas where we shall not depart from zero-rating. She has also said that it is not right that anyone should tie the hands of Chancellors of the Exchequer for an indefinite period. Therefore she has confined her requirement to food, gas, electricity and children's clothing. There are no present plans for making any changes.
Lord Bruce of DoningtonMy Lords, in the light of the noble Lord's constructive reply perhaps he can now give the unequivocal assurance asked for in the Question that Her Majesty's Government will vote against this directive.
§ Lord Young of GraffhamMy Lords, the noble Lord can rest easy. The conduct of our negotiations in Europe are in safe hands and we shall take the steps as and when they are necessary.