Value Added Tax (Hansard, 16 January 1997)
HC Deb 16 January 1997 vol 288 cc448-9
9. Mrs. Mahon

To ask the Chancellor of the Exchequer what additional sums have been paid as a result of changes in VAT since 1992. [9524]

Mr. Oppenheim

The net revenue effect of various changes to VAT coverage since 1992 is estimated to be £870 million in the current financial year.

Mrs. Mahon

Will the Minister confirm that, because of the Government's imposition of VAT on domestic fuel, many pensioners are forced to pay the highest premium to heat their homes? Has he calculated the cost of that in human terms and to the national health service, as many pensioners, especially in my constituency, are forced to cut back on heating in cold weather?

Mr. Oppenheim

The hon. Lady makes a point, but this could be a good moment gently to remind her and Opposition Members that, for many years, Labour's energy policy was to burn expensive and relatively dirty coal. Labour denigrated our policy of allowing cleaner, cheaper gas, which has resulted in falling energy costs and cleaner air. I am surprised that Labour Members are so shameless that they can come to the House, after pursuing that policy, and declare that they are worried about the cost of energy for the less well-off.

Mr. Lidington

Surely the impact of extending VAT to domestic fuel has been outweighed by the price cuts arising from the Government's policy of privatisation. Is it not also the case that the parties in the House that voted against privatisation were therefore voting in favour of dearer energy prices for pensioners and others, and that those who support a windfall tax would also bring about dearer fuel prices for pensioners and others?

Mr. Oppenheim

My hon. Friend is exactly right. Even including VAT, power prices are lower than they were. Gas prices alone have fallen by 19 per cent. in real terms. The less well-off have also been protected by compensating rises in benefits.

Mr. Darling

The House will have noted that the Chancellor has not answered any questions on VAT today. How can we believe a Chancellor who says that he never contemplated extending VAT to food when he specifically mentioned it in his 1993 Budget? How can we trust a Chancellor who says that somebody promised not to extend VAT in the 1992 election when not only was that somebody the Prime Minister, but we have film of the Chancellor of the Exchequer sitting next to the Prime Minister when he gave that commitment?

Mr. Oppenheim

How can the House and voters trust a shadow Chief Secretary who, in response to a Scottish nationalist amendment proposing a reduction in VAT on fuel from 8 per cent. to 5 per cent, said that it was a cynical ploy from a desperate party"—[Official Report, 23 January 1995; Vol. 253, c. 49.] yet only three months ago came to the House and proposed just such a cynical ploy—from another desperate party?