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winter deaths among the elderly already exceed deaths in the summer months by 40,000 a year, and where hundreds of pensioners' deaths are directly attributable to hypothermia.As my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche) said, there is also a massacre of the innocents, in the number of babies dying of the cold in this country. Against the background of the social conditions in Britain today for which the Government have been responsible, this measure is nothing short of obscene. The Government say--we have heard it again today--that they will compensate poor people for the effect of the increases. No one believes that they will compensate them adequately or in full because, when challenged by Opposition Members, Ministers have repeatedly refused point blank to give any assurance that there will be full compensation.
So even the poorest, even the most elderly, even the most disabled, will not be compensated in full. But the Government say that they will give those people something. Does it not occur to Ministers that, if they expected the people to be persuaded, reassured even, by that, they should have spelt out at the Dispatch Box before asking us to vote on the measure precisely how the compensation is to work? Do they not understand that their intentions will not, and after all that they have done simply cannot, be taken on trust?
The debate tonight could not be more timely. Time and time again in the past few days, we have heard Cabinet Ministers repeat the Prime Minister's claim that somehow the Conservatives will now start listening to what the electorate has been telling them. All that I can say is that they will be judged by their actions, not their words. It is no good Back Benchers voicing all the anxiety in the world tonight unless they are in the Lobby to vote against the measures which they rightly protest are doing so much damage. Conservative Members have the chance this evening in the Lobby to show how far they have heard and understood what the British people have been saying. They have the chance to show whether they will act on it. If the Government will not listen to us, they must surely listen to their own poor bloodied infantry, the ones who got the bloody noses on the doorsteps of the no longer Tory shires. They must surely listen to Essex Conservative Councillor Kevin Blake, who was quoted by my right hon. Friend the Member for Wythenshawe :
"We went into the last election telling people not to vote Labour because they would put up taxes and what happens--the government put up Vat. We need a leadership which does what it says and we need it badly. Otherwise what happened last week will just be the start." Of course it will just be the start. It will be the start of further political disaster and betrayal of the British people as the first instalment of the increase comes into effect next year, and the full double whammy of 17.5 per cent. comes in the year after. Conservative Members know from their party members, their hon. Friends and the hon. Member for Corby exactly what is going on. They should remember his words in the debate this evening. He said : "I personally feel ashamed that my party could bring such a proposal as this to the House."
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What a damning indictment from one of their own colleagues. Conservative Members know, as we know, that the electorate reject this punitive imposition of VAT. The measure is desperately unfair, has nothing to do with the environment, and is a betrayal of Conservative general election promises. I invite Conservative Members to keep faith with those who elected them, and join us tonight in voting down this despicable measure.The Paymaster General (Sir John Cope) : This has been an important and, indeed, a real debate. I shall do my best to respond to those who have taken the trouble to speak in the debate from my party as well as from other parties.
I say at the start, because it has not always been apparent from speeches by Opposition Members, that no one, either on the Government side of the House or on the Opposition side, likes increasing taxes. One of my most distinguished predecessors as Paymaster General, Edmund Burke, was quoted earlier by my hon. Friend the Member for Eastleigh (Mr. Milligan) as saying that to tax and to please is given to no man. His successor today certainly understands the force of that. Nobody likes the necessity--and it is a necessity--of raising more revenue. But it is a necessity, which we as the Government must face-- [Interruption.] Labour Members can dismiss it if they like and can sail over it, but we must face up to it in the interests of sound finance.
As the Committee knows and as the Chancellor spelled out at the start, the clause has two purposes, to raise
Mr. Graham rose --
Sir John Cope : I will not give way at this stage.
Mr. Graham : The right hon. Gentleman is scared.
9.45 pm
Sir John Cope : No, not of the hon. Gentleman.
As I was saying, it has two purposes--the raising of revenue and the reduction of the use of fuel. The clause helps us to achieve our objectives in both those areas.
Mr. Connarty rose--
Sir John Cope : No, I will not give way at the moment.
Anyone who wishes to oppose the clause--clearly, some do--must explain whether they disagree with the objectives ; few have done that, although some have skated over it. If they agree with the objectives, they must say how else they would achieve them. Mr. Barron rose--
Sir John Cope : No, I will not give way just now.
Mr. William Powell rose--
Sir John Cope : I am about to refer to my hon. Friend's speech. My hon. Friend the Member for Corby (Mr. Powell) recognised the dilemma and said that he would increase income tax. He is, of course, entitled to his opinion, but I must tell him that I do not agree with it. Nor does my hon. Friend the Member for Southend, East (Sir T. Taylor), and nor do the majority of my hon. Friends.
Mr. William Powell : Does my right hon. Friend understand that the issue in the debate is not whether taxes have to be raised--that is clear in the light of the PSBR requirement--but why the Government have chosen this
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particular tax, instead of all the other options, as the most appropriate one? Frankly, a convincing answer has not been given to that question.Sir John Cope : I was pointing out that my hon. Friend's alternative is income tax, and I do not agree with him, for the reasons to which I shall come.
Several hon. Members rose--
Sir John Cope : I will not give way at this stage, because I want to make progress with my speech. I shall not do that if I keep giving way.
Mr. Dicks rose--
Sir John Cope : I shall come shortly to the remarks of my hon. Friend the Member for Hayes and Harlington (Mr. Dicks).
It is important that, in raising this revenue, we do so without damaging--
Mr. Graham rose--
Sir John Cope : No, I told the hon. Gentleman a moment ago that I would not give way.
It is important that we do so without damaging incentives, and that is why I disagree with my hon. Friend the Member for Corby. It is also important that we do it without damaging the prospects for recovery--that is, without damaging industry and industrial competitiveness. That is not only important to industry--and, of course, it is important to industry--and it is not only important to the Government's finances, which it clearly is. It is also important to people because it is about employment, recovery and jobs. That is why we had to choose a way of raising revenue which did not damage industry and industrial competitiveness. To have done otherwise would have given away all those objectives.
Mr. Dicks : My right hon. Friend keeps saying that the only alternative would have been to have put up taxes. I gave an alternative in my speech. I said remove the subsidy to the arts, which is worth about £600 million, and stop overseas aid, which is running at £1.6 billion. That works out to exactly the figure that my right hon. Friend is trying to save by this silly move.
Sir John Cope : We shall certainly have to restrain spending as well as raise taxes. I would not agree with the aspects of public expenditure to which my hon. Friend drew attention in his speech and in that intervention. It would be difficult to detect any party in the House that disagrees with the Rio objectives, which are part of the reason for the introduction of clause 42.
At the time of the Rio summit, the then Labour spokesman on the environment, the hon. Member for Dewsbury (Mrs. Taylor) said : "more could have been achieved and British Ministers could have played a more positive role, particularly in respect of global warming"--[ Official Report, 25 June 1992 ; Vol. 210, c. 409.] I must tell the hon. Member for Peckham (Ms Harman) that that relates to greenhouse gases rather than the hole in the ozone layer. The main Labour document, "Agenda for Change", published since the election, contains the claim :
"The Conservatives dragged their feet in every way they could at the Rio summit."
The Opposition wanted us to go further on Rio and yet they oppose the extension of VAT, which will help to
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achieve one of the Rio targets. They should face up to those targets and accept the measures that are necessary to achieve them, if that is what they want.Mr. Marlow : Will my right hon. Friend give way?
Sir John Cope : Not for the moment.
In February, the hon. Member for Islington, South and Finsbury (Mr. Smith) told the House that Labour should consider increasing VAT on "environmentally unfriendly products". What on earth he meant by that, if not the type of measure that we have put before the House, I am not sure. The Liberal party is also keen on the Rio objectives.
Mrs. Ewing : Will the right hon. Gentleman give way?
Sir John Cope : Not at the moment. I shall come to the hon. Lady's speech later.
We are not suggesting that taxation should be the only weapon for the achievement of the Rio objectives. There are a range of such weapons, but, in common with the hon. Member for Islington, South and Finsbury, we believe that taxation is one part of the right strategy. If we are to avoid damaging industrial competitiveness, we must look to the domestic sector to conserve energy. There is no doubt that that is why Friends of the Earth, among others, welcomed our decision. It recognised that that decision represents a valid, green objective.
Mr. Marlow rose --
Sir John Cope : If my hon. Friend will forgive me, I must make more progress.
Hon. Members will be aware of the discussions in the European Community about the possibility of imposing a carbon/energy tax. The United Kingdom is not yet convinced that such a tax is either necessary or appropriate. I know that the right hon. Member for Berwick-upon-Tweed (Mr. Beith) believes that we should agree only to a European tax--presumably he had the carbon/energy tax or some version of it in mind. A large part of the burden of that tax would fall on industry and, unless a great deal of care was taken, it would have an adverse effect on competitiveness, which is something we wish to avoid.
Mr. Andrew Smith : With all due respect to the right hon. Gentleman, I suspect that his hon. Friends, in common with mine, have heard all this before. If the Conservative party has listened to what the people said last Thursday, the Committee and the country want to know what has changed in terms of what the Government proposed in the Budget and what they are proposing today.
Sir John Cope : If the hon. Gentleman wants to hear more of what I have to say, he should not interrupt me with such a useless intervention.
We all understand that, when we introduce the tax, we must protect the most vulnerable. That was acknowledged by my right hon. Friend the Chancellor in his Budget speech and, since, by me and umpteen colleagues. That commitment was given from the start and has been mentioned many times in the debate.
Several hon. Members rose --
Sir John Cope : No, I shall not give way as I am about to turn to a subject about which I have been asked : the way in which we are to protect the most vulnerable. My right
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hon. Friend the Chancellor made it clear in his Budget speech--and the point has been repeated and expanded since--that extra help will be given to those on income-related benefits, including poorer pensioners. That extra help will be provided before April 1994 when we come to the first stage of the tax.Mr. Geoffrey Dickens (Littleborough and Saddleworth) rose -- Mr. Stern rose --
Sir John Cope : My hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens) did not speak in the debate, so I shall proceed with my remarks, and return to the issue raised by my hon. Friend the Member for Bristol, North-West (Mr. Stern) in a moment. The help will be given to 8 million households on income support, family credit, housing benefit and council tax benefit. Of course, we include in that list the cold weather payments.
Mrs. Ewing : Does the Paymaster General accept that, on the Department of Social Security's own figures, in 1989, 25 per cent. of people entitled to income support did not take it up and 43 per cent. of people entitled to other benefits did not take them up? The critical factor is ensuring that--in the Government's own words--we target the people who most need it. My next question is of paramount importance : what action are the Government taking to ensure that the people on the margins of poverty can be given assistance to deal with higher fuel bills which include VAT on standing charges?
Sir John Cope : I shall return later to cold weather payments and standing charges. The hon. Lady is right to say that many pensioners and others who are entitled to benefits do not take them up. However, the vast majority of benefits are received by the people who require them. It is extremely important that all of us encourage people to take up the benefits to which they are entitled--otherwise, how can we help them? If we make benefits available but people do not take them up, with the best will in the world, it is difficult to help those people.
Mr. Stern rose --
Mr. Graham rose --
Sir John Cope : I shall not give way, as I have reached a point in my speech about which many hon. Members have expressed opinions and I wish to be precise and careful. I have been asked : what about pensioners whose income is just above the income support levels? The hon. Member for Moray (Mrs. Ewing) asked me about that. I wish to make several points, particularly to my hon. Friends the Members for Hayes and Harlington, for Bristol, North-West and for Teignbridge (Mr. Nicholls).
The increases in income support rates that we have promised from April 1994 will also knock on to housing benefit, council tax benefits and other benefits available to people who are on low incomes, but live above the income support level. Increased benefit rates will bring more people into entitlement to income-related benefits. That fact, in itself, increases the numbers involved and is part of the reason why I could refer to as many households as I did.
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In addition, the normal annual increases in benefits will, as we made clear, reflect the impact of fuel bills on the retail prices index. Even those who are not involved with any of the income -related benefits will be affected by that part of the increase. Therefore, all pensioners will get RPI-related increases, and special help will also go, and earlier, to those on income support, housing benefit, council tax benefit and so on. Altogether, 1.5 million pensioners who are above the income support level will be helped by those means and that is extremely important.Mr. Barron rose --
Sir John Cope : Of course it is true that we have to, and we will, work on those problems between now and when the benefit ratings are announced in the usual way in the autumn.
10 pm
Mr. Stern : Does my right hon. Friend agree that all his comments have been based on income levels and that he has said nothing about those people who are forced to live in houses that are hard to heat and who will have increased difficulties as a result of the measures, whatever their level of income?
Sir John Cope : As my hon. Friend said, the benefits are devoted to people. They are devoted to those who receive benefit now and in future and to whom the increases will be available. Perhaps my hon. Friend can suggest a method of helping people who do not collect the benefit to which they are entitled as that is very difficult. We shall pay extra benefit and extend it to a further 1.5 million pensioner households.
We shall continue to take account of those matters as we work towards the announcements on the benefit increases in the autumn. I was also asked about charities.
Mr. Marlow : Many people support and understand the logic of taxing fuel consumption, but what about the standing charge, which is purely about making available to people an essential service?
Sir John Cope : If my hon. Friend will forgive me, I shall deal with the standing charge. It has been suggested that we should not apply VAT to the standing charge, as that would somehow offer help to the most needy. Some of the least well-off gas consumers pay by token meters. Their standing charge is lower and their unit charge is higher. As a result, that suggestion would not help the most needy. They would benefit less than other consumers from zero-rated standing charges. In any case, it is difficult to see how one could divide up a fuel bill and avoid problems.
On charities, we believe that it is a better principle--as the Budget demonstrates--to give relief on what people give to charities rather than to give relief to charities on the basis of particular patterns of expenditure at home, overseas and on particular goods. However, we have given a large number of VAT reliefs, as hon. Members know, and we shall deal with gift aid and payroll giving improvements later in the Committee.
The hon. Member for Peckham urged the House to vote for amendment No. 5. Many charities run residential institutions which are businesses in VAT terms and currently benefit from the zero rating of fuel and power because they are domestic concerns and not because they
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are charities. The hon. Lady should notice that residential homes of that character would not benefit from amendment No. 5.Mr. Dickens : I have freely to confess that I am one of those wavering on my vote this evening. What will the Minister do about the great in-betweens--those who are considered too rich to receive any benefit yet who are too poor to pay ever-increasing costs?
Sir John Cope : I did my best to explain to my hon. Friend and to the Committee that, in arranging the benefits, which we must consider in the autumn, we are already committed to extending them to 1.5 million pensioners in addition to those getting income support. We will do that by means of the improvements in income support and by means of the council tax and other benefits, thereby extending the amount of benefits on offer. I am afraid that those who do not claim benefits or are not prepared to claim them are difficult to help. If my hon. Friend can think of a way of helping them, he will have to tell us about it, but he did not do so in the debate. It is extremely difficult to know how to arrive at a solution to this.
No one likes the necessity for this tax, but it is a necessity. We have to face up to the problems of increasing revenue and reducing energy use. The Liberals did not face up to that. They want a European tax : nothing else. The Labour party does not face up to it either : it has never faced up to the public sector borrowing requirement. Opposition Members have not even realised that their problem at the general election was their spending plans, from which they have not since resiled. That is why we said that they would need much higher taxes than we would. We were right. What is more, we were believed, because of Labour's spending plans.
We all know that our warnings would have been doubly fulfilled since the election, given the way in which the world and European economies have gone. The Conservatives stand above all for taking difficult decisions and protecting the weak from them. That is what we are doing tonight--the ladder and the safety net. Above all, Conservatives stand for sound finance. It is essential, and the clause will help to achieve it.
Ms Harman : I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.
Amendment proposed : No. 5, in page 23, line 40, after shall', insert
except for supplies for charity use'.-- [Mr. Andrew Smith.] Question put, That the amendment be made :--
The Committee divided : Ayes 286, Noes 297.
Division No. 259] [10.07 pm
AYES
Abbott, Ms Diane
Adams, Mrs Irene
Ainger, Nick
Ainsworth, Robert (Cov'try NE)
Allen, Graham
Alton, David
Anderson, Donald (Swansea E)
Anderson, Ms Janet (Ros'dale)
Armstrong, Hilary
Ashdown, Rt Hon Paddy
Ashton, Joe
Austin-Walker, John
Barnes, Harry
Barron, Kevin
Battle, John
Bayley, Hugh
Beckett, Rt Hon Marony
Blunkett, David
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