Inside Parliament: Smith tripped up by Major over Labour taxation policy

With the polling booths still open in the Newbury and county council elections at Question Time yesterday, John Smith, the Labour leader, tried to sweep up floating voters by attacking the Government's 'worthless' promises on taxation.

John Major countered with evidence of splits in Labour's Treasury team and economic statistics of the sort summed up by one Tory MP as 'more good news for the Martyn Lewis school of broadcasters'.

Norman Lamont, Chancellor of the Exchequer, paved the way, telling the House that retail sales had been rising for a year, car registrations had risen in each of the last six months and manufacturing production in the first three months of 1993 was 1.5 per cent up on a year ago.

'This poses extraordinary difficulties for the Labour Party, as is revealed in this morning's edition of that well-known Tory newspaper, Tribune, which has an article by their noble and candid spokesman (Lord Desai) in the House of Lords which says: 'How should Labour supporters react to the news that unemployment has fallen for two successive months. . . It is much easier to be negative when the economy is in trouble, but what does one say when the economy starts bouncing back?'

'That is the dilemma of the Labour Party.' Positively bouncing himself, Mr Lamont challenged the shadow Chancellor, Gordon Brown, to comment on Lord Desai's statement in the article: 'I would remove zero rating for VAT on all items.'

Mr Lamont was somewhat selective with the quote, omitting that ending the zero rate was Lord Desai's recommendation 'failing' implementation of Labour's 1992 shadow Budget proposal for a higher income tax band and removal of the ceiling on National Insurance contributions.

But the tactic worked and Mr Brown rose to gleeful shouts of 'answer, answer' from the Tory benches. He asked: 'Given that the Labour Party is opposed to the extension of VAT on food, on children's clothes, on transport; will the Chancellor give exactly the same assurance?' All Mr Brown got was more mockery. The Chancellor replied: 'I think the whole country and the House will have observed that the Labour Party seem to have one policy in the House of Commons and another policy in the House of Lords.' Lord Desai is a professor at the London School of Economics and author of publications on Marxian economics. But somehow word of his Tribune article and the Lamont-Brown exchanges could not have reached John Smith.

The Labour leader asked Mr Major why in a speech to the Newspaper Society on Wednesday, 'boasting' of the number of manifesto pledges he had carried out, there had been no mention of taxation. 'The real reason why the Prime Minister forgot to mention taxation is that he wants the voters in the election today to forget that his government's VAT and National Insurance increases will cost the typical family another pounds 8.50 every week.'

Mr Major began: 'Well how interesting the Right Honourable Gentleman should say that, because I have in front of me a quote that I will read to him. . .' And so Lord Desai's words were trotted out again, with Tory backbenchers lapping it up. Standing on his dignity, Mr Smith came back: 'The Prime Minister knows, because he has been written to by the noble lord, that he was on the backbenches when he said what he said. . .He also knows, and he can't run away from this, that in the election he made clear and specific promises not to increase VAT and not to increase National Insurance. Surely the last thing he wants them to remember today is that his promises and Tory promises are worthless.'

But Mr Major was the better prepared. He said the Labour leader had 'clearly lost touch with his own party. The quote that I used, far from being elderly, is in Tribune today'. If the Question Time electioneering had secured any late votes, it was probably for the Liberal Democrats, who kept well out of it.

The Prime Minister made plain that, despite Wednesday's climbdown in the Commons, he remained as opposed as ever to the Social Chapter agreed by the other 11 EC states at Maastricht. Peter Shore, a former Labour Cabinet minister and arch-critic of European union, asked Mr Major whether his respect for the views of the House was such that he would not now pursue his goal of ratification of the treaty. If not, would he at least let the people of this country have the chance to vote on their future?

Mr Major replied: 'We are a parliamentary democracy and I am not in favour of referendums.' The sole effect of the amendment to the European Communities (Amendment) Bill was to prevent the incorporation of the Social Protocol into UK law. 'The opt-out remains part of the treaty. We shall ratify the treaty which I signed at Maastricht. No change, no Social Chapter, no back- door socialism.'

The main Commons business was a debate on the Royal Navy, where backbenchers criticised backdoor cuts in manpower and in the size of the fleet. Jonathan Aitken, Minister for Defence Procurement, defended cuts in manpower. 'We are moving to a fleet of younger, more efficient and less manpower-intensive ships,' he said. But Sir Nicholas Bonsor, Conservative chairman of the Defence Select Committee, feared the Navy could soon be left with just 12 submarines, 'wholly inadequate to secure the safety of the sea lanes', and just 35 frigates and destroyers - down from 40.

Sir Edward Heath, the former prime minister, earlier repeated his warning against Britain being 'dragged step by step into a bloody civil war' as MPs voiced concern at the deteriorating situation in Bosnia.

Tristan Garel-Jones, Minister of State at the Foreign Office, assured him that the use of British troops in a combat role on the ground had been ruled out, though the option of 'selective bombing' remained. The distinctly unhawkish mood among MPs was caught by John Reid, a Labour defence spokesman, who spoke of the 'horrific scenes' he and three other MPs witnessed at Bosanski Brod in northern Bosnia five days ago. 'We stood at the edge of a mass grave as they exhumed the bodies of civilians, some of them aged 75 and female, all of them probably Serbs, all probably massacred by Croats.' The fact that it was an area to be handed over to the Croats under the Vance-Owen plan, underlined the difficulties of making it work. He urged the Government to maintain its even-handed approach and to resist media pressure 'to turn this into a holy war against the Serbs, which will only result in a holocaust even greater than anything we have seen so far'.