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Vat On Fuel

Volume 548: debated on Tuesday 20 July 1993

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3.13 p.m.

Whether the undertaking by the then Chancellor of the Exchequer on 1st April 1993, that "it is not our intention that poorer people should suffer" by the imposition of VAT on fuel still represents their policy, and whether they accept the finding of the Social Security Advisory Committee that the cost of that undertaking would be approximately £720 million per annum, or £400 million per annum more than the cost of uprating benefits in line with the Rossi index.

The Parliamentary Under-Secretary of State, Department of Social Security
(Lord Henley)

My Lords, our policy remains that extra help will be given to poorer pensioners and others on low incomes before VAT on fuel and power is reflected in bills. The form this help will take will be announced in the autumn, along with its cost.

My Lords, I thank my noble kinsman for that reply, but is he aware that it is not very informative? Does he accept that the words of the former Chancellor of the Exchequer constitute an undertaking? Does he accept the findings of the Social Security Advisory Committee that that undertaking will cost far more than a mere uprating according to the Rossi index? Is he aware that if he does not compensate to the extent recommended by the committee, the Government may be widely accused of a breach of faith?

My Lords, as I made clear, I do not believe that I can comment on the Social Security Advisory Committee's figures at this moment and I have no intention of doing so. As has been made perfectly clear on many occasions by my right honourable friend the Secretary of State for Social Security, by my right honourable friend the former Chancellor of the Exchequer and by my right honourable friend the Prime Minister, my right honourable friend the Secretary of State for Social Security will wish to consider all current information before taking the final decision. Therefore, he will make his judgment on costs in the autumn.

My Lords, although I generally agree with the noble Lord that it will be necessary eventually to target help on the poorest, will he not accept that the real problem will be where to draw the line? In this instance, where would he intend to draw the line?

My Lords, I am sorry, I missed one word of the noble Lord's question. He said that the real problem will be …?

My Lords, I said that I agree broadly with the Minister on the question of the need to target help on the poorest but in this instance, as in others, the question will be where to draw the line and how to define "the poorest". Where do the Government draw the line in that regard?

My Lords, that is always the problem. It is generally a problem with income related benefits as a whole. We have said that we shall target extra help on our poorer people and poorer pensioners. That implies that we shall have to look at the income related benefit schemes. Therefore, that implies that there will be some people just above the income related benefit ceiling who will not be included, but by increasing income related benefits some of those people will be included. Obviously a new line is then drawn at which other people are excluded. That is either the virtue or the vice of income related benefits, but I am afraid that there is no answer to that, as the SSAC saw.

My Lords, on the general issue, is it not grossly unfair that it should he the poor people who are targeted to pay for the Government's failures and inadequacies rather than those who have made great profits during the period when this Government have been in power?

My Lords, I reject completely what the noble Lord says. If he had taken the trouble to listen to the various answers that I have given and had seen the answers given in another place, he would know that we have said that we shall target help on poorer people to help them meet their bills and we shall announce that help well before the first bill ever hits their doorstep.

My Lords, is the Minister aware that 7 million families—the old, the disabled and the unemployed with young children—who most need warm homes cannot now afford to keep their homes warm? If benefits are not uprated to cover all the costs of full VAT, which will cost about £2 per week, where will such families find the money? Does the Minister suggest that they should cut back further on heat, go into debt or simply eat less?

My Lords, as always, the noble Baroness has asked more than two questions and I shall answer only her first two questions. I do not accept the first point which the noble Baroness made. As regards the second point, as I have made quite clear to her and to all other noble Lords, she will have to wait until the autumn when we shall announce our plans.

My Lords, before those on the Benches opposite disappear in a welter of self-righteousness, will my noble friend confirm that when the Liberal Democrats were in what I suspect will be called their "green mode" they produced a document called Costing the Earth which advocated a tax on energy? As far as I understand it, there were not too many qualifications about that advocacy.

My Lords, I can assist my noble friend. That document went on to say:

"We would … press forward … by ending the anomalous zero rate of VAT on fuel".

My Lords, does the noble Lord agree with one view expressed in the report referred to by my noble friend that one of the reasons for the excessively high expenditure on energy by people on low incomes is the poor state of insulation in the homes in which they live? Neighbourhood Energy Action has done a great deal to put that right, but will the Government consider giving it adequate resources to cope with that very serious problem?

My Lords, that is a matter which my right honourable friend will consider. He has made it clear in the past that he will consider that.

My Lords, will the department be prepared to consider the cases of those old age pensioners who suffer from industrial diseases; for example, miners who suffer from what is called "the dust"? It can be extremely expensive for them merely to ease their pain, let alone find a cure. Will such matters be taken into consideration?

My Lords, we shall consider all matters, but the commitment that we have given is to poorer people and poorer pensioners. I am here to repeat that commitment and to repeat the commitment made by my right honourable friend.

My Lords, did I hear the noble Lord correctly when he referred to his former right honourable friend the Chancellor of the Exchequer? I believe that he meant his right honourable friend the former Chancellor of the Exchequer. I may be wrong. Is there any significance in the fact that the statement was made by the former Chancellor of the Exchequer on 1st April?

My Lords, the noble Lord is wrong. If he checks in Hansard he will find that I referred to him as my right honourable friend the former Chancellor of the Exchequer. There is no significance in the date of that statement.

My Lords, is the Minister aware that the document Costing the Earth to which he referred was a Green Paper and is not party policy? Is he further aware that it committed us even then to full compensation of those on social security benefit? Why will he not join us?

My Lords, I am sure that the noble Earl will be all too happy to deny that that was a document that the Liberal Party was committed to, particularly when there is a by-election on.