The row erupted after the Chancellor confirmed that the 17.5 per cent VAT rate imposed in the Budget on domestic fuel bills would also apply to standing charges. That was disclosed by Mr Lamont after a challenge by Mr Brown. But the row grew last night after the Chancellor taunted Mr Brown that the shadow Chancellor had been informed at a private briefing with British Gas officials at the Commons on Wednesday.
Mr Brown's colleagues said they were 'appalled' that British Gas had broken a confidence. One said: 'They have been pressing Gordon for weeks for the meeting, and then they break the confidence. It proves what we have been saying about the vested interests of the Government and ministers being in league with the privatised utilities.'
After being challenged by Mr Brown, Mr Lamont said: 'He had a briefing and a lunch with British Gas. As a result of it, he was informed that VAT did apply to standing charges.'
Mr Brown's aides confirmed the meeting took place but said there was no lunch. Mr Brown sought an explanation from the officials he had met over why the confidential talks had been disclosed to the Chancellor.
Harriet Harman, a Labour frontbench spokeswoman, said the Government could no longer claim that it was imposing VAT at 17.5 per cent as a 'green' tax, if it was levied on the standing charge.
The decision to extend VAT to domestic fuel was announced in the Budget last month.
Stephen Dorrell, the Financial Secretary to the Treasury, said VAT would be applied to standing charges 'because to levy VAT without levying it on the standing charge would be establishing an easy and obvious avoidance loophole'.
Mr Dorrell said Labour had proposed environmental taxes. 'He is pressing upon us a blatant tax loophole. We will resist it.'
Mr Brown said VAT would cost the average family pounds 15 a week, compared with pounds 1.50 a week under Labour and the biggest element - pounds 2 a week - was for gas and electricity. He later warned that VAT on gas and electricity standing charges would cost the average family an extra pounds 14 a year.
'There will be anger throughout the country, especially among pensioners, that every promise has been broken, including now imposing VAT on standing charges paid by pensioners and others on low incomes for gas and electricity,' Mr Brown said.
Paul Flynn, (Lab Newport W), said: 'Is it sensible to tackle global warming by increasing the numbers of deaths by hypothermia?'
The Government announced it would be providing relief for those on income support for the VAT charges to quell a Tory outcry at the time of the Budget.
'It is not our intention that poor people should suffer,' the Chancellor assured Sir Terence Higgins (Con Worthing), who asked that pensioners should not be penalised if the price of fuel fell during the year.
Mr Lamont said the extra help would be available from April 1994, when the bills arrived.
Reinforcing the message, Mr Dorrell told MPs: 'We have said absolutely clearly that we intend to provide extra help in advance of the price increase coming into effect.' It would be targeted at those on income-related benefits that were now paid to 8 million households.
A third of Tory voters are unhappy with the way John Major is doing his job, according to a Times/Mori poll today, while more than four- fifths of all voters are dissatisfied with the way the Conservatives are running the country. Voting intentions put Labour at 47 per cent, 15 points ahead of the Tories at 34 per cent and the Liberal Democrats 17.Reuse content