Inside Parliament: Grey and green issues colour Question Time: Bill to harmonise retirement age - Labour challenged on fuel tax

In what might seem a blatant attempt to curry favour with the ageing voters of Christchurch, the Commons yesterday gave a first reading to a Bill to harmonise the retirement age at 60 and restore the link between pensions and average earnings.

Pensioners and their concerns are riding high in the minds of politicians. On Monday night, during debate on the Budget legislation, William Powell, Conservative MP for Corby, predicted that his party would lose the by-election in the Dorset town because of the imposition of VAT on fuel bills.

Despite a mini-rebellion by Mr Powell and two colleagues, the Government won a vote on the tax, handing John Smith, the Labour leader, a chance of reheating the issue at Question Time yesterday. Stressing the impact on pensioners, he said the Prime Minister should apologise to the British people for betraying election pledges. But Downing Street staff had been busy priming their chief. John Major said he was surprised the Labour leader had raised the issue, because an article in this week's edition of Labour Party News invited comments to be sent to Chris Smith, the party's green spokesman, on ways of developing economic policy to encourage environmental protection. 'You might consider taxation policy - eg an energy tax,' Mr Major quoted, to a roar from his backbenchers.

Amid shouts of 'answer, answer]', Mr Smith said: 'Let me remind the Prime Minister what he said in the Conservative Campaign Guide. I know you don't want to hear it - it attacked the Labour Party for what it called 'irresponsible scares' about VAT and said, 'the Prime Minister has confirmed the Government has no intention of raising VAT'. Why was that said in the election?'

Tossing the Labour Party News cutting to Mr Smith, Mr Major replied: 'The Labour leader clearly does not know his own policy and I offer that to him.' His VAT comments had been made in response to a Labour charge that the rate would rise to 22 per cent.

'The Leader of the Opposition is not being remotely open about his own position. Quite apart from this week's admission that they were looking at VAT on fuel, and still are; in their policy review document Looking to the Future, Labour stated: 'Zero-rating should remain on fares, books, food and children's clothing'. They specifically excluded fuel.'

Nor was Mr Major going to waste that bit of his brief prepared in case the issue was raised by Paddy Ashdown. To Tory cheers, he added: 'Before the Liberal leader looks too smug, in his own document Costing the Earth, the Liberal Democrats advocated a tax on energy. And failing that, he said, 'We would press forward by ending the anomalous zero VAT on fuel'. Perhaps Mr Ash down will go back to Christ church and tell them that.'

Perhaps he won't, but it is certain the voters there will get to hear every damning admission any party has ever made on VAT and fuel bills. The one in three who are pensioners, and men aged 60 to 65, might be more interested in the private member's Bill introduced by Jeremy Corbyn, Labour MP for Islington N. Had the measure any chance of becoming law - which is does not - it would certainly galvanise the by-election.

The left-wing MP complained that the debate on pensions was being conducted by people who fundamentally agreed there should be a reduction in state expenditure and increased private provision.

He said Peter Lilley, the Secretary of State for Social Security, had waxed eloquently about the problem of the ageing population and growing burden of these people on those at work. 'He doesn't seem to understand that the word 'burden' and the way he describes the growing problem of the elderly, causes fear among many ordinary pensioners who are forced to live, or try to live, on the state pension.'

Equalising the retirement age at 60 would 'bring a great deal of happiness and not a little civilisation to our society', Mr Corbyn said. Restoring the link between pensions and earnings, 'brutally' broken in 1980, would make every pensioner pounds 19 a week better off. To pay for it all, he would tax earnings over pounds 40,000 more heavily, cut payments to the EC and reduce arms spending.

The whole idea is the antithesis of what Michael Portillo, Chief Secretary to the Treasury, had in mind when he later re-emphasised the need to curb public spending. Moving the Third Reading of the Finance (No2) Bill, which implements the March Budget, he highlighted the need to reduce the rate of growth of social security spending - growing by 3 per cent a year.

He acknowledged that some of the measures in the Bill were 'very unpopular' among Tory MPs and in the country, but said care had been taken care to ensure that the extra tax fell proportionately across income groups.

The changes would raise pounds 10.5bn in a full year and of that only pounds 2.3bn came from the extension of VAT to fuel.

Trying to inject a bit of humour in the final skirmishes on the Bill, Mr Portillo said the ideal chief secretary should be 'flinty-faced, stone-hearted and odious'.

He fitted the bill, but his Labour shadow, Harriet Harman, was 'radiant-faced, open- hearted and 'fragrant'. She is generous to a fault. Any good cause that is put her way she wants to spend money on.'

Ms Harman's generosity, however, does not extend to any faults of the Government. The Bill dealt with the consequences of economic failure and was a prelude to dismantling the welfare state, she said.

The Conservatives were now the party of high taxation, high borrowing and high unemployment. 'Although the rhetoric is still there, it is wholly separate from the reality.'