EC (Internal Market)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 14th January 1988.

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Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South 12:00 am, 14th January 1988

To ask the Chancellor of the Exchequer what assessment he has made of the feasibility of the internal market of the European Economic Community in the absence of the harmonisation of value added taxation rates.

Photo of Mr Peter Brooke Mr Peter Brooke Paymaster General (HM Treasury), Party Chair, Conservative Party

The Government strongly support the removal of barriers to trade within the Community, but they do not believe that approximation of VAT rates is a necessary part of this process.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

If the Minister takes that view, will he formally repudiate the views of the Conservative appointee on the EEC Commission, Lord Cockfield, who believes that harmonisation of VAT is necessary? If he repudiates Lord Cockfield's views — and he has the opportunity to do so now—will he also repudiate any attempt by the Government to put VAT on food, fuel and clothing, or on books and newspapers, which would be a tax on knowledge for the first time in our history?

Photo of Mr Peter Brooke Mr Peter Brooke Paymaster General (HM Treasury), Party Chair, Conservative Party

Lord Cockfield is in no sense answerable to the Government. It will not have escaped the hon. Member's attention that there have been disagreements between the Government and Lord Cockfield in the context of his proposals. In response to an earlier question I indicated that I will be making no further pledges during the afternoon beyond those already given.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

As the Government have made it clear that they propose to use their veto, if necessary, to defend the zero-rating concept, will my right hon. Friend make it absolutely clear to the Commission that there is no point in putting forward proposals which involve its abolition?

Photo of Mr Peter Brooke Mr Peter Brooke Paymaster General (HM Treasury), Party Chair, Conservative Party

My right hon. Friend is correct in stating the Government's position. The approximation proposals are unacceptable as drafted, but discussion between member states is at a very early stage and it would be wrong to anticipate the outcome. The United Kingdom is committed to completion of the single market, but how this is best achieved is a matter for discussion between member states. I repeat the pledges on zero-rating which have already been given by the Prime Minister.

Photo of Dr John Marek Dr John Marek , Wrexham

The country will wish to know that the Minister will resist the arguments for value added tax of the party or parties of whom two representatives sit below the Gangway. The Minister has said that the Government have made specific pledges about what they will do and what they will allow in regard to the introduction of VAT. In view of this important occasion, will he list those pledges specifically? Do they include books, periodicals and medicines?

Photo of Mr Peter Brooke Mr Peter Brooke Paymaster General (HM Treasury), Party Chair, Conservative Party

I share the hon. Gentleman's interest in the proposals that have emerged from the alliance Benches. But even into the life of the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) some pleasure must have entered yesterday when the hon. Member for Rochdale (Mr. Smith) issued a statement saying that he was opposed to VAT on food. As to the pledges, those that have been given by my right hon. Friend the Prime Minister relate to food, domestic fuel and children's clothing and footwear.