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Government Economic and Social Policy

Part of Orders of the Day — Opposition Day – in the House of Commons at 4:33 pm on 9th June 1993.

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Photo of Mr John Major Mr John Major , Huntingdon 4:33 pm, 9th June 1993

I shall tell the hon. Gentleman directly: we have been presiding over a policy that brought inflation down to 1·3 per cent. and interest rates down to 6 per cent. so that this country is now poised for the largest growth in the European Community this year, next year and probably for the years beyond that. We have been taking the long-term view, not the short-term, option. That is what we have been doing-I am grateful to the hon. Gentleman for giving me the opportunity to point that out—while he has opposed every policy that has brought down inflation and interest rates.

The Opposition will be glad to know that our review of public spending will be careful and thorough. There will be two criteria: are any changes fair, and are vulnerable people protected? When the answer is no, we shall not make the changes. When the answer is yes, we shall set out to the House the implications of those changes. There are no soft options. The Government's duty is to examine them all and pick the right ones. We know that we need to reduce public borrowing, which is why, in the last Budget, we decided that some increase in revenue was necessary.

We decided to introduce value added tax on fuel and power, not least because it would help meet our Rio commitments, commitments that the Opposition urged us to extend. We had every reason to expect cross-party support. The liberal Democrats had stated in their green paper: Liberal Democrats advocate as a first priority the imposition of a tax on energy…The UK is unusual amongst EC members in not applying even standard rates of VAT on domestic fuels…we would press forward…by ending the anomalous zero rate of VAT on fuel". Where were those men of principle in the Division lobbies after the Budget?

What did the Labour party say? It said: Zero rating on items such as food, fares, books and children's clothing should remain as an essential part of the VAT system. That was quite clear. It continued: We will also use the tax system, as well as regulation, to help protect the environment. That can mean only one thing. In the list of zero-rated items, there is no reference to zero rating for domestic fuel. The Opposition intended to put it up, and they know it. If they did not, will they tell me now why it was not in their list of zero-rated items? The right hon. and learned Member for Monklands, East does not answer—no doubt, as a QC, he believes in the right to silence for an accused.

When we introduced VAT on fuel and power, we made it clear that there would be extra help for less well-off pensioners and others on low incomes. I am glad to repeat that commitment. In recent months, the right hon. and learned Gentleman has made a great deal of the VAT increase, as have his hon. Friends.