The Rt. Hon. Sir John Major KG CH

Tag: VAT

  • PMQT – 25 January 1994

    Below is the text of Prime Minister’s Question Time from 25th January 1994.

    PRIME MINISTER:

     

    Engagements

    Q1. Mr. Beith : To ask the Prime Minister if he will list his official engagements for Tuesday 25 January.

    The Prime Minister (Mr. John Major) : This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

    Mr. Beith : Will the Prime Minister confirm that at the time of the general election, when he promised tax cuts, he knew that the Government were forecasting a public sector borrowing requirement of £28 billion and that tax increases would be a likely part of the Conservative strategy to deal with that? Surely he is not asking us to accept that the important fact escaped his notice and was not drawn to his attention.

    The Prime Minister : If I had expected to have to raise taxes after the election, I would not have expressed the contrary view. The right hon. Gentleman fails to take into account two prospects–first, the length of the recession and, secondly, demand-driven expenditure. It is an oddity for the right hon. Gentleman to say what he has said, because the right hon. Member for Yeovil (Mr. Ashdown) recently said :

    “We are going to have to find a new language which expresses taxation, not as a burden, but as an opportunity.”

     

    Q2. Mrs. Lait : To ask the Prime Minister if he will list his official engagements for Tuesday 25 January.

    The Prime Minister : I refer my hon. Friend to the reply I gave some moments ago.

    Mrs. Lait : Will my right hon. Friend join me in welcoming yesterday’s CBI survey, which shows that orders and output are growing at the strongest rate since 1989? Is that fact not exemplified by Long Products, a company in my constituency, which now exports 85 per cent. of its output and has recently won orders from countries as diverse as Indonesia and Kuwait? Does not that company’s success and the CBI survey show that, thanks to the Government’s sound economic policy, the United Kingdom economy is the motor leading to European recovery? [Interruption.]

    The Prime Minister : I am pleased to hear such a welcome for our recovery on both sides of the House. As my hon. Friend says, there is a remarkably encouraging set of results across the board. Those results tend to support the figures previously released, which show manufacturing output up by about 2 per cent. on a year earlier. Critically, the survey also sets out the expectation of a growth in output and orders in the months immediately ahead. Car output and retail sales are already rising quite sharply, and the EC, the Organisation for Economic Co-operation and Development and the International Monetary Fund all expect this country to have the fastest growth of any of the EC countries in 1993 and 1994.

    Mrs. Beckett : Will the Prime Minister now admit that all the promises that he made on taxation at the time of the last election were a total deception and that he should apologise to the British people?

    The Prime Minister : No. There was no deception in what I said at the time of the election. Events have forced us to raise taxes, and I regret that, but it has been necessary to raise taxes to ensure that we cut the borrowing requirement and provide the opportunity for sustained growth with low inflation over the medium term. I believe that we have to take the decisions that will safeguard the future of the British economy in the years immediately ahead. It was not an easy decision, not one which we would have wished to take, but it was the right decision and Governments cannot duck the right decision.

    Mrs. Beckett : But why should people take the Prime Minister’s word for any of those reasons, when the Conservatives claim to be the party of low crime and it is the party of high crime? They claim to be the party of low tax, when everybody now knows that it is the party of high tax. Why should the Prime Minister be believed when he makes excuses?

    The Prime Minister : I think that the right hon. Lady will have some difficulty in persuading the nation that, in any given circumstances, the Labour party, or indeed the Liberal Democrats, would have lower taxation than a Conservative Government. I invite the House to recall what has occurred in recent years to prove that point.

    We cut the basic rate of income tax from 33p to 25p, and the Labour party voted against it. We cut the top rate from 83p to 40p, and the Labour party voted against it. We lowered the starting rate to 20p, and the Labour party voted against it. We cut corporation tax, and the Labour party–[Hon. Members :– “Voted against it.”] It voted against it.

    Mrs. Beckett : The fact is that, after all those lines from the Prime Minister, people are still paying more tax. Everyone is paying more tax. What is the point of all that wriggling, when the figures that we have forced the Government to reveal tell the truth? The country now faces the biggest tax hike in British history and it is time for the Prime Minister to own up that, from April, the Government will squeeze every British family until the pips squeak.

    The Prime Minister : The right hon. Lady disinters a few old cliches, but if she thinks that she can resurrect the tax record of that old rogue who was Chancellor of the Exchequer at the time she has a tough job. The right hon. Lady misses an essential point which is vital to the British taxpayer. Despite the tax increases, which I acknowledged a few moments ago, net take-home pay at all levels of income has risen substantially and the spending pattern and the living standards of everyone in the nation indicate that fact. Of course, we might, I suppose, have been able to keep taxes lower if there had been further reductions in expenditure. I would just like to know which reductions in expenditure that we have imposed have had support from a single Opposition Member in recent years.

    Mr. Lamont : Will the Prime Minister treat the posturing of the Labour party on taxes with the absolute contempt that it deserves? Is not it the case that taxes had to be increased to reduce borrowing, and that was responsible, whereas the Labour party wanted much higher taxes to finance much higher spending, which would have left borrowing at the same level and would have simply meant higher interest rates, more unemployment and no recovery?

    The Prime Minister : My right hon. Friend– [Interruption.]

    Madam Speaker : Order. Interruptions are very time consuming.

    The Prime Minister : My right hon. Friend is entirely right and I agree with every word he said.

     

    Q3. Ms Walley : To ask the Prime Minister if he will list his official engagements for Tuesday 25 January.

    The Prime Minister : I refer the hon. Lady to the reply I gave some moments ago.

    Ms Walley : What has the Prime Minister to say to one of my constituents in Stoke-on-Trent, North a woman of 71? She wrote to me saying that she has a heart condition and that her husband has had a colostomy. They are unable to go out and unable to afford to heat their home. As the Prime Minister thinks that he has a question about VAT on fuel and as he is raising these taxes at the moment, will he tell us why there is so much incompetence and bungling in his Government that he has failed to raise £1.5 billion from uncollected taxes? Why is he making my constituents pay in fuel bills for uncollected taxes? [Interruption.]

    Madam Speaker : Order. The hon. Lady must be heard; she must not be shouted down. Has the hon. Lady completed her question?

    Ms Walley : Yes, Madam Speaker.

    Madam Speaker : Did you hear the question, Prime Minister?

    The Prime Minister : I believe that I did hear the question, Madam Speaker. It was quite clear.

    On the hon. Lady’s first point on value added tax on fuel, as she knows, my right hon. and learned Friend the Chancellor has introduced a very generous package to help people who are in particular need. I strongly suspect, although I cannot be sure of all the details of the hon. Lady’s constituent without further information, that she would be a beneficiary of that. I certainly hope that that will prove to be the case. As for the collection of taxation, it is our policy to make sure that taxes right across the board are fully collected. I wish, in terms of taxes and rents, that that was also the position of some local authorities on which the hon. Lady has served.

    Mr. Barry Porter : When will my right hon. Friend be able to report to the House on his recent conversations with the President of the Republic of Lebanon? Is it not appropriate to congratulate the President on the period of peace and stability after years of difficulty? Will he also emphasise to British industry and commerce that there are now enormous opportunities in the Lebanon?

    The Prime Minister : My hon. Friend is entirely right about the record of President Hariri. I had the opportunity to have a conversation with him yesterday. I have no doubt from our conversation that there are significant business interests for this country in the Lebanon. In view of my hon. Friend’s remarks, I will arrange for a written answer to be tabled, setting out the details of our discussion.

     

    Q4. Mr. Byers : To ask the Prime Minister if he will list his official engagements for Tuesday 25 January.

    The Prime Minister : I refer the hon. Gentleman to the reply I gave some moments ago.

    Mr. Byers : Does the Prime Minister recall the 1992 Conservative election manifesto, which stated, “We are pledged to cut tax rates”? How does the right hon. Gentleman reconcile that promise to the electors with the freezing of personal allowances, the increase in national insurance contributions and the extension of VAT to domestic fuel? Does he accept that it is now becoming increasingly clear that the Conservative election victory was founded on deceit, distortion and misrepresentation?

    The Prime Minister : The hon. Gentleman is quite mistaken about that. The fundamental responsibility of any Government is to maintain sound money and the right conditions for a growing economy. That sometimes means that one has to raise taxes when one would prefer not to. We have had to do that, as I indicated to the right hon. Member for Derby, South (Mrs. Beckett) some moments ago. I do not suppose that we wished to raise taxes in 1981, but it led to years of sustained growth and improvement for the British economy, and I strongly suspect that the Budgets of 1993 will do precisely the same.

    Mrs. Browning : Given the encouraging signs from industry this week about recovery, particularly in manufacturing, will my right hon. Friend confirm that he will not seek an EC agreement for an energy tax to be imposed on industry, as advocated this morning on Radio 4 by the hon. Member for Southwark and Bermondsey (Mr. Hughes) on behalf of the Liberal Democrats?

    The Prime Minister : I can see that there is some purpose in listening to Radio 4. I am interested in that information. I find it extraordinary that the Liberal Democrats should have advocated VAT on fuel, opposed VAT on fuel, claimed to be environmentalists and claimed not to be dealing with the environment, and now this morning we apparently have the latest example of utter double-dealing from them. On doorstep after doorstep we are used to it, and clearly it is becoming more and more apparent to people across the country.

     

    Q5. Mr. Wigley : To ask the Prime Minister if he will list his official engagements for Tuesday 25 January.

    The Prime Minister : I refer the hon. Member to the answer I gave some moments ago.

    Mr. Wigley : May I ask the Prime Minister to look again at the impact of the imposition of VAT on fuel on the disabled, the chronically sick and many pensioners? Is he aware that, for many of those people, the bill for fuel each week may be £20 or £30 and that the effect of VAT may be an increase of £3, £4 or even £5? Is he further aware that the £1 compensation announced by the Chancellor does not go anywhere near towards meeting that? In those circumstances, will he please introduce a compensation package specifically for those people by way of a heating allowance?

    The Prime Minister : The hon. Gentleman, who is a tireless campaigner on behalf of the disabled, and has been for many years, will know that heating allowances in their original form were introduced by the Conservative Government to help people who were in difficulties. I agree with him about the need to help the most vulnerable people over higher fuel bills. That is why 5 million disabled people will get extra help with VAT on fuel and that extra help will arrive before their fuel bills arrive. I believe that that is a substantial amount of help which will be of great assistance.

  • PMQT – 25 November 1993

    Below is the text of Prime Minister’s Question Time from 25th November 1993. Tony Newton responded on behalf of John Major.

    PRIME MINISTER:

     

    Engagements

    Q1. Dr. Wright : To ask the Prime Minister if he will list his official engagements for Thursday 25 November.

    The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton) : I have been asked to reply.

    My right hon. Friend the Prime Minister is attending the Anglo-German summit in Cologne.

    Dr. Wright : What will the Lord President say to the 500 miners and their families at Littleton colliery in South Staffordshire? They were told a few months ago that Littleton was a core pit, and that was confirmed in the coal review, yet now they have been told that their pit is to close in a fortnight’s time. When the hon. Member for Staffordshire, South (Mr. Cormack), who cannot be here today, and I saw the chairman of British Coal this morning, he told us that Government action was the direct cause of the closure, and that only urgent Government action could stop it.

    Today, when the whole nation is in anguish following the events in Liverpool, I ask the Lord President : should not the Government do all that they can to strengthen families and communities, rather than destroying them?

    Mr. Newton : The whole House knows that the Government have put about £20 billion into helping the coal industry since we came to power and that we have offered additional assistance to help the industry to sell coal at world prices, but that, at the end of the day, we cannot insulate any industry in this country from the fact that people do not want to buy as much as is being produced.

     

    Q2. Mr. Sumberg : To ask the Prime Minister if he will list his official engagements for Thursday 25 November.

    Mr. Newton : I have been asked to reply.

    I refer my hon. Friend to the answer that I gave some moments ago.

    Mr. Sumberg : Will my right hon. Friend confirm that the Government intend drastically to reduce the number of police cautions given to young offenders? People in my constituency are outraged at the fact that such people get away with it, and they demand a return to basics– [Interruption.] –to the basic principle of making the punishment fit the crime.

    Mr. Newton : My hon. Friend certainly may remind me of that fact, and I, in turn, remind him what the Home Secretary said a few days ago. My right hon. and learned Friend said that he believes that there is too much cautioning, and that too many young people have come to believe that they are virtually entitled to commit a crime and to receive nothing but a caution until something else happens. My right hon. and learned Friend believes that cautioning should be reduced, and his new guidance will reduce it.

    Mrs. Beckett : Returning to basics, does the Lord President agree with the Prime Minister that the national insurance Bill will mean that most wage earners will pay £3 to £4 more per week, and that the total effect of increases in value added tax and national insurance and of cuts in mortgage interest relief and tax allowances will be that a typical family will pay £8.50 more per week in tax from April?

    Mr. Newton : I should find a greater degree of credibility in the right hon. Lady if on this occasion–as on the previous occasion on which she and I had one of these exchanges–she showed the slightest understanding that increased funding of the national insurance fund is needed to ensure that we can continue to maintain our obligations to pensioners. As the right hon. Lady was for some years a senior Front-Bench spokesman on social security, I find it surprising that she does not understand that. Perhaps she needs to go back to basics.

    Mrs. Beckett : Is the Lord President saying that he does not support what the Prime Minister said last Tuesday?

    Mr. Newton : I am saying that the Government are taking–as they announced in the last Budget–and will continue to take in the forthcoming Budget responsible action to ensure the future of this country’s economy so that we can maintain our promises to Britain’s pensioners.

    Mrs. Beckett : Does the Lord President remember that the last Budget was the biggest tax hike in British history, and put the right hon. Member for Kingston upon Thames (Mr. Lamont) narrowly ahead of the former Chancellor of the Exchequer, Lord Howe, in the league table for increasing taxes? Would it not have been responsible of the Government to tell the British people that before the last election?

    Mr. Newton : What I remember about the last Budget was the Leader of the Opposition telling us that the judgment made in November would be whether the March Budget had brought down unemployment. He said : “If Conservative Members want that to be a test, we shall make it a test for the Government.”–[ Official Report, 16 March 1993 ; Vol. 221, c. 199.]

    The Government have passed that test, have they not?

    Mr. Heald : Can my right hon. Friend tell the House when Britain last had low inflation, low interest rates, falling unemployment and rising output? Does he agree that that is good news for Britain and for north Hertfordshire–and that good news is something which Opposition Members would not recognise if it jumped up and bopped them in the face?

    Mr. Newton : As I indicated in my previous reply to the right hon. Member for Derby, South (Mrs. Beckett), no doubt we shall soon have the right hon. and learned Member for Monklands, East (Mr. Smith) trying to pretend that the test that he put to the Government earlier this year was not what he meant at all. My hon. Friend is absolutely right. We have the lowest inflation for a quarter of a century and the lowest interest rates for more than 15 years. At a time when unemployment in this country is 10.2 per cent. and falling, in the rest of Europe it is an average of 10.6 per cent. and rising.

     

    Q3. Mr. Trimble : To ask the Prime Minister if he will list his official engagements for Thursday 25 November.

    Mr. Newton : I refer the hon. Gentleman to the answer that I gave some moments ago.

    Mr. Trimble : Recalling that we entered the talks process last year with the objective of replacing the Anglo-Irish Agreement and thus reducing Dublin’s role in our affairs, does the Leader of the House agree with recent editorials in The Times that the problem of disenchantment and militarisation of the Unionist community cannot be ended by the very diplomatic structures that created the problem? Does he agree that the only course that would command widespread acceptance in Northern Ireland would be to govern it fairly as part of the United Kingdom?

    Mr. Newton : The hon. Gentleman asked his question, as he always does, with genuine sincerity–and I hope that I will reply with equal responsibility by repeating what was said by my right hon. Friend the Prime Minister only last week :

    “Nor will we compromise on the vital principle that there can be no change in Northern Ireland’s status without the freely expressed consent of its people. It is for the people of Northern Ireland”– including the hon. Gentleman–

    “freely and democratically to determine their own constitutional future.”– [ Official Report, 18 November 1993 ; Vol. 233, c. 28.]

    Mr. Butterfill : Does my right hon. Friend agree that the fact that the pound has risen on foreign exchanges at a time when we have reduced British interest rates to the lowest in Europe is a tribute to the management of the economy and, in particular, to the reductions that we have made in inflation? Does my right hon. Friend further agree that only by continuing to reduce inflation will we be able to reduce interest rates further, to the benefit of industry and of the British economy as a whole?

    Mr. Newton : The short answer to that question is yes. As a result of our success, which I outlined earlier, my right hon. and learned Friend the Chancellor has felt it possible to make a further reduction in interest rates. That is the background to the Budget and to the continuing policies that the Government will pursue to bear down on inflation and make further progress possible.

     

    Q4. Mr. Hanson : To ask the Prime Minister if he will list his official engagements for Thursday 25 November.

    Mr. Newton : I have been asked to reply.

    I refer the hon. Member to the answer I gave some moments ago.

    Mr. Hanson : Does the Leader of the House think that it is fair for the Government to have broken their election promises by raising national insurance contributions and VAT at the same time as refusing to raise taxes for those such as the chairman of Direct Line Insurance who paid himself £18 million this year?

    Mr. Newton : I have already dealt with the first part of the hon. Gentleman’s question. He will well know that my right hon. Friend the Prime Minister has frequently expressed the view that those responsible for determining rewards in the private sector should set a proper example to those in that sector. It is a matter for them to determine. I hope that the hon. Gentleman might have acknowledged the unusual background to this. Direct Line was started from scratch in 1985. It now employs 2,000 people, 900 of them taken on in the past year. It has 1.25 million customers and is growing at the rate of 25,000 customers a week. As a company, it has done a good job for consumers.

    Sir Teddy Taylor : What is the purpose of the Anglo-German summit that the Prime Minister is attending today?

    Mr. Newton : The purpose of the Anglo-German summit is to continue and develop co-operation between the two Governments on a wide variety of matters of great importance to everyone in Europe and in the House, including the advancement of the GATT negotiations.

     

    Q5. Mr. Robert Ainsworth : To ask the Prime Minister if he will list his official engagements for Thursday 25 November.

    Mr. Newton : I have been asked to reply.

    I refer the hon. Member to the answer I gave some moments ago.

    Mr. Ainsworth : Has the Leader of the House had time to see the report of the Public Accounts Committee into what it calls a catalogue of mismanagement at the West Midlands regional health authority? What will the Government do about the culpable individuals and what do they intend to do to restore the accountability of public officials to the communities whose moneys they spend?

    Mr. Newton : I am aware of the report and I hope that I need hardly assure the House that my right hon. Friend the Secretary of State for Health will consider it with great care. I wish that the hon. Gentleman had acknowledged that a great deal has already been done, nationally and in the west midlands, to address the problems raised by the report. The health authority already has a new chairman, a new chief executive, new senior managers and new non-executive members. None of the individuals criticised by the report is still with the authority.

    Mr. Peter Bottomley : May I invite my right hon. Friend to turn his mind to the issue of animal welfare in Europe? Will he tell the House whether the European Commission reports about relaxing the European ban on the import of seal pelts and other seal products are true? Will he try to ensure that we do nothing to relax the battle against unnecessary suffering of animals in this country and the rest of Europe?

    Mr. Newton : I can certainly assure my hon. Friend that the Government, who have taken a leading part in Europe in encouraging greater concern for animal welfare, will continue to ensure that those interests are properly represented in European discussions.

     

    Q6. Mr. Gerrard : To ask the Prime Minister if he will list his official engagements for Thursday 25 November.

    Mr. Newton : I have been asked to reply.

    I refer the hon. Member to the answer I gave some moments ago.

    Mr. Gerrard : Did the right hon. Gentleman see the report in Monday’s Daily Express that the Prime Minister is determined to provide nursery education for every three and four-year-old and recognises the value of such education in preventing juvenile crime and delinquency? Will he convey to the Prime Minister the fact that, assuming that the report is true, it represents a welcome change in Government policy? Will he ensure that the Secretary of State for Education knows about it, because it seems that he knew nothing about it on Tuesday? How much extra money will there be next year for new nursery schools?

    Mr. Newton : I did, indeed, see the report. I can tell the hon. Gentleman that in recent years there has been a substantial increase in the amount of provision of various kinds, both private and other, for children at school age. I also know that a crucial ingredient in countering the sort of argument that the hon. Gentleman seeks to advance is the fact that children start full-time school in this country earlier than in almost any other country in Europe.

    Mr. Allason : Following the conviction of Michael Smith last week, does my right hon. Friend agree that it is high time the Security Service took full responsibility for all aspects of positive vetting? Is he ready to tell the House whether a decision has been taken by the Government to pass this case to the Security Commission?

    Mr. Newton : I would not wish to comment on the specific case, but my hon. Friend will know that in the past two days the Government have put before Parliament the Intelligence Services Bill, which it is envisaged will increase the openness, transparency and accountability of the services to which he refers.

  • Mr Major’s Comments on the VAT Increase on Fuel – 24 March 1993

    Below is the text of Mr Major’s comments on the VAT increase on domestic fuel, made on 24th March 1993.

    QUESTION:

    [The Prime Minister was asked about the Government’s VAT increase on domestic fuel]

    PRIME MINISTER:

    I think you have to realise why it was done first. There were two reasons: we had to raise resources and also we have a commitment to get rid of carbon dioxide, a very important environmental commitment. This takes us a long way towards doing it and I have been speaking at a conference about that in Birmingham just this morning.

    We are the only European nation that doesn’t have VAT on fuel and power, many of them at far higher rates than 17.5%.

    Over the last few years, the real price of energy has fallen by about 9% as a result of privatisation. Each year, there is regulation on the price and the price is fixed by the Retail Price Index minus something. Whether the whole of that 17.5% in two years will have been put on the price of fuel is very debatable; it may be substantially less because the regulator will have reduced the price.

    For the average pensioner family, for example – I don’t mean the least well-off who I will come to in a minute but the average pensioner family – I use the estimate of the Opposition so you won’t think I am cooking the books: they estimated that it would add £2 a week to fuel prices. Of that, £l a week would be automatically recompensed through the Retail Price Index mechanism that uprates pensions. So the great fuss that is being made there is for the average person – I am not talking about people above income support but on pensions – that they would pay an extra £1 a week even assuming that the energy price did not fall further in the next two years as it has in the last two years.

    Against that, I think the proposition of people freezing is a difficult one to sustain.

    For people who are less well-off of course that sum and that help feed into the Retail Price Index but we have said there will be extra help as well for all people on income-related benefits – not just the pensioners on income-related benefits.

    There is another factor for pensioners which the Opposition and our critics happily ignore. A year or so ago when the Community Charge still existed, to help pensioners pay the Community Charge in the base of the pension for the poorest pensioners we increased the sum by £2.80 for a couple and I think £1.80 for a single person. When the Community Charge disappeared, we could have taken that away. We didn’t and so from 1 April for many relatively well-off pensioner couples there will be an extra £2.80 which exceeds by 80 pence the cost estimated by the Opposition if the full 17.5% was implemented two years on.

  • Mr Major’s Doorstep Comments on VAT – 28 July 1992

    Below is the text of Mr Major’s comments on VAT, made outside Lancaster House on 28th July 1992.

    PRIME MINISTER:

    The Chancellor reached a very good agreement yesterday on Value Added Tax. Valued Added Tax has been a Community tax since the Treaty of Rome. What happened yesterday was that the Chancellor secured our nil rates of VAT – that is vitally important. We secured a minimum rate of VAT which means we do not have to change our rates of tax at all – many other countries have to change their rates of tax. We also secured, as part of a general package, an extremely beneficial deal for Scotch whisky. It was a good day yesterday and I think it is a very satisfactory outcome from our point of view.