Biography Chronology Home Search Speeches/Statements

1994 - PMQT 25th 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.