PBR debate

The Government rejected the idea of raising VAT because "hard pressed families were hurt" by such a measure taken by Conservative administrations during previous recessions, Gordon Brown has told MPs. In a stormy Prime Minister's Questions, Mr Brown and Conservative leader David Cameron clashed over claims that VAT may go up to 18.5 per cent in 2011. It comes after a document was published on the Treasury website suggesting Labour had considered increasing the rate in three years time to compensate for a 2.5 per cent cut which comes in on December 1. The Government insisted the idea had been rejected and that the draft document was published in error. But Mr Cameron accused Mr Brown of planning a secret "tax bombshell" and told the Commons he could not dismiss it as "some mad cap idea" as it had been signed off by a Treasury minister. He said: "I've got the document right here. You can get it on the internet. It says: ministerial sign-off 'I've read the impact assessment and I'm satisfied it represents a fair and reasonable view of the expected costs, benefits and impact of the policy' signed by the responsible minister Stephen Timms on November 24. "It's absolutely clear you are planning a VAT bombshell to hit every family in the country. Was there a plan to raise VAT even further than 18.5 per cent?" Mr Brown replied: "I've said we considered all options but we rejected options. We rejected it because as the Chancellor said on Monday we chose the options that were fairest to ordinary and hard working families. "Do you now support cutting VAT from 17.5 per cent or are they simply the do nothing party that would not help people in times of real need?" Mr Cameron said: "So there we have it from you. This plan was considered - even higher VAT. "You ask what we would do. We would freeze council tax by cutting wasteful spending. We'd cut small businesses' VAT bills by £10 billion by allowing them to delay payments. "We'd make sure that the loans got out from the banks by giving Government insurance to those loans to get small business working again. "Instead of sitting in Downing Street making up nonsense about the Opposition plans why don't you do something useful?"

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ITN | November 26, 2008

Tags:. .signoff. .ministerial. .timms. .vat. .pbr