Seizing on the imposition of VAT on domestic electricity and gas and the increase in National Insurance contributions, the Labour leader said that the Conservative Party had 'ruthlessly betrayed' its election promises to the nation. 'Those who listened to this debate will have been shocked beyond belief at the cynicism of the Conservative Party who went into the last election as the party committed to low taxation.'
Brushing aside the protests of Tory backbenchers, Mr Smith recalled the Prime Minister's assurance to the Commons in January 1992 that there would be no VAT increases. 'Unlike the Labour Party we have published our spending plans and there is no need to raise VAT to meet them,' Mr Major had said. The Conservative election campaign guide had confirmed this.
'To get precisely to the point, during the course of the general election campaign itself, at a press conference on 27 March 1992, Mr Tony Bevins, of the Independent, asked this: 'Can you give the same pledge that Mrs Thatcher gave in 1987 that you will not extend the scope of VAT to children's shoes and clothing, gas, electricity and food?'. The Prime Minister: 'I have made the pledge in the past. I have made it clear. We have no need and no plans to extend the scope of VAT'.'
As Labour MPs roared 'cheat, cheat' at Mr Major and the Chancellor, Mr Smith went on: 'I don't know how the Prime Minister can sit there as prime minister of a government that is capable of deceit on such a scale. They go into the election pressed day after day about increases in VAT and still come back the answers, 'lies and smears from the Labour Party. The Conservative Party wouldn't do anything like that'. These people make pledges as if they matter not a whit.'
Commitments had also been broken on National Insurance contributions with the rise of 1 per cent in the main rate for employees and the self-employed, Mr Smith said. The Prime Minister had told the Commons in January 1992 that there were 'no plans' to increase it.
While the Government would say it had not increased income tax, people were not so foolish and understood that 1p on National Insurance was, if anything, worse than 1p on income tax, the Labour leader went on. 'Apart from anything else, it bites further down the scale. So, on tax on income and tax on spending, the Conservative Party have cynically and ruthlessly betrayed the pledges which they gave to the people of this country. And they will not be forgiven for it.'
Mr Smith said that the Conservatives used to say that VAT was all right because people could choose the goods on which VAT was levied. 'Are they going to tell us now that people can choose whether or not to have gas or electricity in their houses?' A 17.5 per cent increase in fuel bills would cause despair to many families who were 'just on the edge', wondering whether they could manage.
Dismissing the intention to adjust Income Support levels to take account of the increase, he said that there were millions of people who were poor yet did not qualify for support. They would be 'hit savagely'.
Mr Smith claimed that the extension of the 20p income tax band amounted to 25p a week in the coming year and at best pounds 1 a week in future years. How was that going to meet the cost of tax increases and reductions in allowances? 'Taken together, the tax increases in this Budget must be one of the biggest hikes ever . . . All this from the party that said it was the party of low taxation and paraded that all over the country during the general election campaign.'
The Government should have been busy in the Budget closing massive loopholes where people were not paying the proper amount of tax, instead of putting an even heavier burden on ordinary people.
The public's conclusion on the Budget would be simple and clear, he said. 'The Conservative Party is a party without honour and a party without shame.'
Malcolm Bruce, the Liberal Democrats' trade and industry spokesman, denounced the Government as 'political cheats' who had got into power by sheer dishonesty.
'This is a tax-raising Budget. It is tax, tax and tax again,' he said. The widening of the 20 per cent band would be more than offset for most middle-income earners by the freeze on allowances. Most people will be pounds 1.50 a month worse off as a result . . . This is a Budget of despair, even a Budget of desparation,' Mr Bruce added.Reuse content