4.45pm update

Blair defends petrol price rises

The prime minister denied today that it had been a "mistake" to raise petrol duties in this year's budget, as he clashed with William Hague at the first prime minister's questions of the new session of parliament. The half-hour session was dominated by a battle over economic issues including the euro and tax, with each party leader accusing the other of presiding over a policy in disarray.

Beyond the squabbling, Tony Blair also gave a strong hint that former Japanese prisoners of war could be in line for extra compensation. Mr Blair twice told MPs that he had a good deal of sympathy with the campaign mounted by the Royal British Legion for additional monies to be paid to POWs. He stressed that Britain owed the POWs a "debt of honour" and pledged that "it won't be very much longer" before a decision is made. "The suffering that they endured was appalling. The nation owes them a particular debt of honour for the sacrifice they've made and the memories they have had to live with, literally, for the rest of their lives," the prime minister said.

On petrol, William Hague challenged Mr Blair to admit that tax increases in the last budget had been an error. "As first lord of the treasury you've given us the most expensive petrol in Europe and brought the country to a standstill," he said. "Will he now admit it was a mistake to increase petrol duties?"

The prime minister refused to do so. "I believe the position set out in the Budget was the right one," he told Mr Hague. "What is more, it was the position that you also supported.

"The truth is that your policy is a policy for boom and bust and instability. And it is a policy for £16bn worth of cuts in our public services."

In return the opposition leader accused Mr Blair of talking "unleaded nonsense". The prime minister "won't listen, won't learn and won't lead", he said.

Earlier, Mr Hague used three of his six questions to press the prime minister over the government's position on British membership of the single currency. In an exchange which brought routine responses from both leaders, he charged the prime minister with "jelly wobbling" back into question time after a week in which he had repeatedly altered his policy on the euro.

"On Thursday morning you said you were against the euro, at least for the rest of the day. By that afternoon, you were in favour of it again. On Friday, you were reported as cooling on it and on Monday Downing Street asserted you were still as enthusiastic as ever about preparing for it.

"On Tuesday, we learnt you told Paddy Ashdown that Europe is one of those issues where you have to mark your line and stick to it through thick and thin."

The prime minister's response was to cite long-established government policy. "We don't say we want to join the euro, but neither do we rule it out. "We keep the option open and the dividing line at the election will be between this party that says we keep the option open and give people choice in a referendum, and your position ... which was to rule it out for the next parliament."

This article was first published on guardian.co.uk on Wednesday October 25 2000. It was last updated at 16:42 on October 25 2000.

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