Quizzing Prime Minister on cutting VAT to stimulate growth
Today in the House of Commons, I reminded the Prime Minister of a pledge he made on Newsnight (23 April 2010) reported in the York Press on 24 April 2010: “We won’t bring in VAT increase”; and called on him to honour his pledge and cut VAT back down to the level it was at the election to stimulate growth and drag Britain back out of recession. Our exchange was as follows:
“Hugh Bayley (York Central) (Lab): Two years ago, during the general election, The Press in York reported the Prime Minister as promising, “We won’t bring in VAT increase”. Has he considered that if he were to honour that pledge and reverse the VAT increase that would put money in people’s pockets, stimulate the economy and get Britain out of a double-dip recession made in Downing Street?”
“David Cameron (Prime Minister): The reason we had to put up VAT is that we were left the biggest budget deficit anywhere in Europe. It was bigger than Greece’s, bigger than Spain’s, bigger than Portugal’s – the complete mess left by Labour. We now know from reading the former Chancellor’s memoirs that he was going to put up VAT too.”
Business leaders are now speaking out against the Government’s austerity drive. According to the Financial Times, on the day of the Queen’s speech last week, Sainsbury’s Chief Executive, Justin King, “launched a stinging attack on the government”. He said, “The most important thing for any retailer has got to be that consumers at large have money in their pockets”. The supermarket boss, who is one of the Prime Minister’s business advisors, criticised the government for changing tax rates, increasing business rates, delaying investment in rail, roads, airports, schools and hospitals, and making too many u-turns.
Newly elected French President, François Hollande, is calling for more emphasis on growth and less austerity. Turkey, which was in deeper recession than Britain in 2009, cut VAT from 18% to 8% and now enjoys 7% growth.
Only Britain is in recession. European countries are still growing, despite the Euro crisis. David Cameron and George Osborne pride themselves on making bigger cuts than other countries, but this has plunged Britain back into a double dip recession. The Prime Minister should take lessons from business leaders who are demanding less austerity, or politicians abroad whose countries are not in recession.