Finance Bill

Nic Dakin Excerpts

Tuesday 28th June 2011 Commons Chamber

[Ian Swales]

I thank my right hon. and learned Friend for reminding me of that fact. One of the things that have been absent from Labour Members is alternative policies to those being pursued by the Government.

The week after VAT was reduced by 2.5%, Cristiano Ronaldo, the premiership footballer, saved £4,000 on the cost of his new Ferrari. He will also have made massive savings on many of his other purchases during that period. I doubt whether any constituent of mine saved £4,000 as a result of VAT being reduced.

VAT as applied in this country is a progressive tax on spending. The more people spend, the more they pay, so the inconvenient truth is that cuts in VAT benefit people in proportion to how wealthy they are.

[Nic Dakin (Scunthorpe) (Lab)]

Does the hon. Gentleman think that when Save the Children says that

“the discount rate and exemptions doesn’t take into account the incomes of people buying goods and services—so they are not enough to make VAT fairer”,

Save the Children has got it wrong?

--- Later in debate ---

[Mr Hanson]

Not just Labour MPs are concerned about this increase. The hon. Member for Colchester (Bob Russell), a Lib Dem MP, said in a debate last year that he wants to help charities that have been hit by this move.

We all accept that VAT is a difficult issue for charities, but it has been made more difficult by an extra 2.5% increase at a time of squeezed budgets, and when the Government are asking more of the charitable sector by cutting public sector spending generally. That issue of great concern was highlighted by my hon. Friend the Member for Wrexham (Ian Lucas).

[Nic Dakin]

Further education and sixth-form colleges will also be hit by that additional cost, but in this very Bill, the Government are taking measures to protect academies from the same sort of penalty. Does my right hon. Friend think that that is a little rich?

[Mr Hanson]

I do. My hon. Friend spent many a happy hour in Committee discussing those very issues.

If the Government are not interested in master builders and the voluntary sector, and if they are not interested in the impact on public sector operations such as hospitals, schools and universities, perhaps they will listen to the British Retail Consortium, which states:

“Increasing the VAT rate to 20 per cent would cost 163,000 jobs over four years and reduce consumer spending by £3.6 billion over the same period.”

Only today, there were job losses at Jane Norman. There have been job losses at Habitat, Focus DIY, HMV, Mothercare, Comet and HomeForm.