Inside Parliament: Labour leader finds the right prescription: Major gives tacit admission NHS charges to rise - Brown keeps up pressure over tax - Lords reject return of unions at GCHQ

John Smith, the Labour leader, yesterday steered John Major into a tacit admission that prescription charges are about to go up, probably by 50p to pounds 4.75.

Responding to a Question Time challenge, the Prime Minister said an announcement would be made 'in the normal fashion'. This parliamentary euphemism translates into the release of a written Commons reply at a time when it will do least political damage - late on a Friday afternoon, perhaps.

Mr Smith asked if it was correct that the Government intended to raise the charge - which would apply from April - from pounds 4.25 to pounds 4.75. It would be 'an increase of 11.6 per cent - more than six times the rate of inflation'.

After Mr Major sidestepped, the Labour leader said any increase would come on top of massive tax rises already being imposed on ordinary people. 'Given all that, for once could the Prime Minister not spare the sick?'

Mr Major said only those who could afford to pay prescription charges were asked to do so. About 80 per cent of prescribed items were free of charge, compared to 55 to 60 per cent in 1979. 'There is no firm evidence in any information we have that prescription charges deter patients from obtaining necessary medication,' he maintained. Opposition MPs loudly dissented.

'It is quite clear from that that prescription charges are going to go up,' Mr Smith said. 'Given that the Public Accounts Committee has identified millions upon millions of pounds wasted by the Government's health service quangos, would it not make much more sense to tackle that rather than to tax the sick?'

Mr Major said revenue from the charge was sufficient for 70,000 hip replacements or 45,000 coronary artery bypass grafts. Would Labour abolish the charge? 'If they would, who would pick up the bill of more than pounds 260m? Would it be the NHS with fewer people treated, or the taxpayer, or would they borrow more? Another example of Mr Smith saying he'll control expenditure and yet every opportunity he gets he asks for more expenditure to make cheap political points.'

Only opponents make 'cheap political points'. Labour believes it is reaping dividends from the Tories' vulnerability on tax and kept the pressure on all day. Harriet Harman, the shadow Chief Secretary, accused the Government in the first sitting of the Finance Bill committee of trying to stifle debate on tax increases. And during Treasury Questions, Gordon Brown, the shadow Chancellor, coined a pounds 64,000 soundbite.

He claimed the only people who had benefited directly from 15 years of the 'Tory tax regime' were those earning that amount or more a year. The burden of direct and general taxation on everybody else had increased. 'Is that not the pounds 64,000 question the Chancellor must answer? That his party is not merely the party of broken tax promises but the party of unfair taxation as well.'

Mr Clarke said the real income of the average earner was 40 per cent higher than in 1979 and more than 1 million more people would be paying tax if Britain still had Labour's tax regime. 'We have a better tax system with higher incentives and we are on the way to strong economic growth which Labour could never deliver.' The increasingly combative Financial Secretary, Stephen Dorrell, said Labour had a 'myopic obsession with redistribution' and was 'utterly disinterested' in wealth generation.

John Gummer, Secretary of State for the Environment, warned local councils that pay increases - including the 2.9 per cent recommended for teachers - would have to be paid for by improved efficiency and productivity. Opening a debate on local government finance, he said councils would be able to spend a total of pounds 42.7bn in 1994-95, an increase of 2.3 per cent. Central government's contribution to the total will be pounds 34.3bn, an increase of 1.7 per cent.

Earlier, on a point of order, a former local government leader had complained about the flying of the Japanese flag outside his old headquarters. Labour's Tony Banks said he found it 'offensive' to see the foreign flag flying at County Hall - home of the late Greater London Council. Mr Banks was its last chairman. The building, on the opposite bank of the Thames to the Commons, has been bought by the Shirayama Group for a hotel. Their national flag flies beneath a Union Jack so diplomatic niceties have been observed.

National loyalty was also an issue in the House of Lords where the Government assembled its 'backwoodsmen' to crush by 162 votes to 84 a Labour-Liberal Democrat move during the report stage of the Intelligence Services Bill to restore a minimal role for trade unions at the GCHQ listening centre at Cheltenham.

Smoothing the feathers of Lord Howell, 50 years a trade union member, Lord Mackay of Clashfern, the Lord Chancellor, said there was no suggestion that staff at GCHQ had been disloyal. But a 'question' could be put into the mind of a trade unionist on whether to obey a union instruction or the requirement to keep the monitoring operation going.

Lord Lester of Herne Hill, the human rights QC and Liberal Democrat frontbencher, said to continue the ban was 'a narrow- minded, mean piece of bullying' of dedicated public servants. He reminded peers of Isabella's warning in Shakespeare's Measure for Measure: 'Oh] It is excellent to have a giant's strength, but it is tyrannous to use it like a giant.'