Isabel Hardman

The tricks being played over a VAT rise

The tricks being played over a VAT rise
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Today’s Treasury Questions was a bit odd, not least because neither George Osborne nor Ed Balls were there, so everyone seemed to be quite keen to get the thing over with. Labour’s latest line of attack is to force Treasury ministers into ruling out or obfuscating over whether or not a Tory government would put up VAT after the General Election.

Here is the first exchange, between Shabana Mahmood and David Gauke:

Shabana Mahmood:

'The Minister has failed to rule out another tax cut for the richest 1% of earners in our country. As he signalled in his answer, the Prime Minister has made £7 billion-worth of unfunded tax promises for the next Parliament. We did not find out in the autumn statement where the money is coming from to pay for these promises, so unless the Minister can stand at the Dispatch and categorically rule out raising VAT again, will not people just conclude that the only way the Chancellor can pay for his unfunded tax promises is with another Tory VAT rise?'

David Gauke:

'Our plans do not require us to raise taxes. The shadow Chief Secretary, the hon. Member for Nottingham East, is heckling, but I have to say that when he was asked that question on television last week, he refused to rule out raising VAT. Our plans do not require taxes to rise, unlike—I have to say—those of the Labour party.'

Labour’s Ian Lucas enjoyed a little more success with Danny Alexander:

Ian Lucas:

'Does the Chief Secretary agree that a further rise in VAT would be a hammer blow to small businesses in Wrexham and across the country? Does he also know that a Labour Government have never increased VAT?'

Danny Alexander:

'I am not sure that last fact is absolutely correct. The level of VAT we have at the moment I think is the right one for the country and I certainly would not advocate any further increases. The right measures for small businesses are the reductions in business rates that we have put in place, which I would hope the hon. Gentleman would welcome. The fundamental review of business rates that we are now undertaking is an opportunity for every Member of this House, and small business across the country, to make the argument on how they want this outdated and outmoded system to be reformed.'

Labourites liked that, and made ‘oooh’ noises. But Alexander wasn’t really saying anything as he could still end up supporting a VAT rise while not being an advocate of it.

This initially makes political sense, given George Osborne wants to go into the General Election promising spending cuts but not tax rises. So Labour trying to burrow away at a possible tax rise could help the party suggest that the Chancellor isn’t being entirely straight with the electorate. It’s also a trick that every political party and journalist tries before a General Election, which is to get someone to rule something out on the record before the election, only to have them do that very thing once polling day has passed. But it’s slightly more odd that Labour wants to make such a fuss about this, given its own Shadow Treasury frontbench doesn’t want to rule out such a rise either.

Written byIsabel Hardman

Isabel Hardman is assistant editor of The Spectator. She also presents Radio 4’s Week in Westminster and is author of Why We Get The Wrong Politicians.

Topics in this articlePoliticsdavid gaukegeorge osborne