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To raise VAT or not to raise VAT

Nick Robinson | 09:02 UK time, Tuesday, 22 June 2010

One of the thorniest questions facing the coalition before this Budget has been whether to raise VAT. The Tories were keen to avoid it, aware that Labour will say "I told you so" and will claim that it is an unfair and regressive tax which hits the poorest - some pensioners and those living on benefits - who will not be helped by income tax cuts. Ironically, it was Vince Cable who when shadow chancellor argued in favour of raising taxes on expenditure (and housing - remember the mansion tax?) and cuts in income tax.

Danny Alexander, David Cameron, George Osborne and Nick Clegg

So, what were the arguments inside the coalition for and against a VAT rise?

For:
• A VAT rise produces a lot of cash fast
• Treasury officials like it - they advised Alistair Darling to put it up (and during the election he refused to rule it out)
• It gives you revenue to cut other taxes - just as Margaret Thatcher's first Chancellor, Geoffrey Howe did
• Vince Cable's in favour
• The coalition can claim that things were worse than expected when they looked at the books so they had no choice

Against:
• Labour will say "you were warned. The Tories always increase VAT"
• David Cameron said the Tories' plans did not require an increase in VAT
• Nick Clegg said the Lib Dems' plans did not require an increase in VAT
• Nick Clegg appeared in front of an election poster warning of a Tory VAT "bombshell"
• Some on the right - such as the Taxpayers' Alliance - are now campaigning against a rise

For weeks, my hunch was that the Tories would do all they could to avoid a rise in VAT but expensive promises to give poorer workers an income tax cut, plans to ameliorate today's bitter medicine with schemes designed to protect the elderly, poor and children and moves to cut corporation tax and cut the rise in National Insurance for businesses may mean they simply need the money.

If so, they are likely to defer the rise until next year in the hope of stimulating consumer demand whilst the recovery is still weak.

Comments

  • Comment number 1.

    Raise it. 20%. It would be round about the EU average then.

  • Comment number 2.

    This comment has been referred for further consideration. Explain.

  • Comment number 3.

    We've already seen that small VAT adjustments have minimal effect on the economy. The temporary VAT reduction had no impact at all on the economy, other then to inconvenient businesses who had to adjust, then adjust back. No-one rushed out to buy a jumper that fell in price from £25 to £24.47 and no-one will decide not to buy a jumper that's gone up from £25 to £25.53.

    Food is VAT free, utilities are on a lower VAT rate. Many other goods and services are either exempt or zero rated.

    VAT is hard to avoid, easy to collect, there's little in way of avoidance as with IT, CGT, IHT and other taxes. Those spedning the most and spending more on luxury items will pay more.

    I am prepared to pay that little bit extra when it comes to replacing my patio heater.

    Of course, it's natural for the Conservatives to avoid tax rises where they can. That they can't avoid them points towards the awful mess Labour got us in.

    The worse financial position the country has been in for 50 years. What an awful legacy.

  • Comment number 4.

    Any rise in VAT will result in a whole tranche of businesses at the lower end de-registering and providing an unintentional boost to the 'informal' economy.

    But no doubt that outcome has already been factored in.

  • Comment number 5.

    4 - "At 09:41am on 22 Jun 2010, JohnConstable wrote:
    Any rise in VAT will result in a whole tranche of businesses at the lower end de-registering and providing an unintentional boost to the 'informal' economy."

    I'm curious to know how you see that happening. Once HMRC are aware of a business, they can track individuals. Someone who previously was registered and filing returns (VAT and IT) and then suddenly seems to stop and be living in nothing is going to attract attention.

  • Comment number 6.

    Have to say that, as a kneejerk reaction, if the Taxpayers Alliance are against it then it must be a good thing.

    Those headbangers would have told Churchill he couldn't raise taxes to fight the Nazis in 1940.

    Have you noticed in that staged picture of four white, Oxbridge educated, males wearing white shirts sitting round a table, they all have their folders shut... Doesn't exactly instill confidence does it!

  • Comment number 7.

    The Coalition is trying to do what every government to do and that is encourage people back to work. I lost my job which i travelled 20 miles a day to do and within a week i had a new job on more money closer to home. I am a low earner and VAT does hit people bad but how else can this government reduce a deficit? It is a neccessary evil. Hopefully this government will finally do what every tory government has tried to do and stop people thinking there owed benefits. I have friends on job seekers who have been on them almost a year and spend all of it on booze/drugs. Slash benefits massively and force people to work. People need to realise a job in mcdonalds is better than JSA. Go into a fast food restaurant and try to figure out how many are not British? Half maybe? Why is this? People dont want to work anymore. It's disgusting. If i was a mananger of a company id rather hire a polish than a english worker as on average the polish person would work harder. I bet there are more people like myself who would rather clean toilets forever than claim any benefits. There needs to be more of us.

  • Comment number 8.

    This comment has been referred for further consideration. Explain.

  • Comment number 9.

    5#

    Agreed.

  • Comment number 10.

  • Comment number 11.

    One of the ways for an international business to make bigtime money/profits in Britain ... you need to control the entire supply line of e.g. a business in Asia with a logistical wholesale operation in Britain.

    These are the operations, very often owned and operated by 'non doms' that are flooding the UK with cheap foreign imports e.g. lightbulbs. and these are everyday items which the UK should be capable of manufacturing here in the UK and which can and have destroyed British jobs and industry.

    I hope that there will be some consideration of putting or increasing import tariffs on these kind of operations with the tax money raised being put into re-training and skills and hopefully development zones for UK workers?

    There is no need to raise VAT if this is done effectively and the result can help British jobs/industry recover towards full UK employment, for British workers.

    The budget needs to be radical besides being tough with a focus on British people getting jobs in the UK.

  • Comment number 12.

    7 - Amen.

    Simple points, well put and expressing how the average hard working person in this country feels far more accurately than the pontifications of the likes of Leftie10 and Sagamix. Most people want to work and resent people who don't want to work. That's about as far as many people's politics stretches and they'll have the luxury of time to think of grander things when the economy is back on its feet.

  • Comment number 13.

    There are two very good reasons not to raise VAT, one moral and one political. The latter first; it would be smart politics by David Cameron to overturn the perception that this is the "tory tax" - an easy way to raise money off the poor. The moral reason is to do with honesty and integrity. They said in the election campaign they had "no plans" to raise VAT, we all remember that; if they now do so, just a few short weeks later, it will mean they were lying ... it'll be goodbye the New Politics before they'd even had the chance to say hello.

  • Comment number 14.

    2# & 8#

    Oh dear. Auntie's having a proper sense of humour failure.

  • Comment number 15.

    It's only a few hours until the Budget details are actually announced, so no point getting into a lather of speculation...

    I would have liked Brown and Darling to be honest enough to explain where they would have made the Labour cuts (which Darling said would be "savage")... You never know, if they'd had the courage to do that before the election, people would have appreciated the honesty.

    But, since they hid their intentions, we'll have years of "Oh, we wouldn't have cut this or that"....

  • Comment number 16.

    Darren Hann wrote:
    The Coalition is trying to do what every government to do and that is encourage people back to work. I lost my job which i travelled 20 miles a day to do and within a week i had a new job on more money closer to home. I am a low earner and VAT does hit people bad but how else can this government reduce a deficit? It is a neccessary evil. Hopefully this government will finally do what every tory government has tried to do and stop people thinking there owed benefits. I have friends on job seekers who have been on them almost a year and spend all of it on booze/drugs. Slash benefits massively and force people to work. People need to realise a job in mcdonalds is better than JSA. Go into a fast food restaurant and try to figure out how many are not British? Half maybe? Why is this? People dont want to work anymore. It's disgusting. If i was a mananger of a company id rather hire a polish than a english worker as on average the polish person would work harder. I bet there are more people like myself who would rather clean toilets forever than claim any benefits. There needs to be more of us.
    ----------------------------------------------------------------------
    Some people cant help being on benifits. single mums etc, child care is a big issue esp if they had been left by a partner and they dont pay towards any thing csa is usless. your friends may spend there money on booze/drugs but not every one does. some people have dissabilites, they cant help it. go to a fast food outlet yes they are mostly foreign people. if this is the case vot bnp and get them out of this country. they come here and get every thing accomodation money etc and jobs, we go to there country we get nothign at all, this is a big problem in the uk, if we threw all foreign people out of this country we would be in a good paid job. ime a chef and yes there is chef jobs out there but miles from where i live but i still go there to work and spend my money on places to stay. and it hits me hard but ime a worker. but a vry good friend is a sing mum who get's very little money she buy's very basic smart price food she has to do it all on her own. and this will hit her hard after the budget and will hit every one at some point. i can say this country will be back in to reccesion by christmas they may hike vat up we just wont spend there will be more rtikes and if petrol goes up more it is most certain that there will be a big up roar about it, and morejob losses to come. they want to calw money back. dont pay mp's so much. give them little privaliges, get rid of there cars,helicopters,get them to use busses etc, take away expensess, they dnt need them if we dont why do they give them pay cuts, this would almost save the goverment alot of money.

  • Comment number 17.

    15#

    Indeed.

    Labour are running round like headless chickens this morning. Alastair Darling has had a lie-in, attack dogs like Liam Byrne are nowhere to be seen, while Harman and the leadership candidates are all trying to get a look in.

    The airwaves have no-one of economic authority to hand from the opposition benches.

    Foolishly they are really overlooking one MP who could coordinate and streamline their attacks and message.

    Where is the man who “abolished boom and bust”?

    The “best man for the job”?

    The man who kept debt low, who invested for the future, who fought for fairness and Britain every day.

    The man who “made all the right calls”, the man of “substance”?

    Where is “the great clunking fist” and why isn’t he “getting on with the job” the taxpayers pay him to do?

    Will he even show up in the House today?

    After all, what are we still paying him 1246.00 quid a week for doing???

  • Comment number 18.

    AndyC555 @ 5

    For any business that is operating around the VAT threshold, it is a perfectly rational business decision for the owner to de-register if an increase in VAT is deemed to be causing customers to turn to businesses in the same sector who are not registered and therefore undercutting the registered business by whatever the VAT rate is.

    Once a business de-registers, it naturally finds that it now gets more 'cash' business and therefore there will be some 'leakage' into the informal economy.

  • Comment number 19.

    Sorry peoples of great Britain you have had a taste of the good life under a lab-our administration now its pay back time .
    The big plaza screens and the trainers plus being able to purchase foot ball match tickets at such high prices all now have to go .
    unfortunately the cash was squandered on-the likes of the above with out any thought of how it was come by.
    It wasn't Mr cl eggs fault hes trying to help you get some life back for a more formidable position so give the man a breather.

  • Comment number 20.

    "13. At 10:18am on 22 Jun 2010, sagamix wrote:
    There are two very good reasons not to raise VAT, one moral and one political. The latter first; it would be smart politics by David Cameron to overturn the perception that this is the "tory tax" - an easy way to raise money off the poor. The moral reason is to do with honesty and integrity. They said in the election campaign they had "no plans" to raise VAT, we all remember that; if they now do so, just a few short weeks later, it will mean they were lying ... it'll be goodbye the New Politics before they'd even had the chance to say hello."

    They probably didn't have plans to raise VAT but that was before they got the true UK finance figures. That sort of shock probably knocked all their plans awry.

    Besides, as you still seem not to have noticed, it's a coalition government. There are plans (such as the raising of personal tax thresholds) which the Tories weren't planning but which now the coalition is. The money to pay for this has to come from somewhere.

    They were no more lying about VAT than Labour were when they said they had no plans to raise income tax in te lifetime of the parliament and then, when things went pear shaped they introduced a top-rate of 50%. The only difference is that the coalition (shall we agree to call them that, as that's what they are?) is taking its measures wisely and not in a blind knee-jerk panic.

    it's all about balance, you know, money in, money out. It's something Labour never quite grasped.

  • Comment number 21.

    If the government wants to encourage debate around expenditure and where the government/private sector boundaries should be placed should we not have a discussion about modes of taxation too?

    VAT is a regressive tax. It would be better to reduce VAT and increase income tax rates. Won't increasing VAT lead to lower consumption and inhibit growth in the private sector?

  • Comment number 22.

    sagamix...

    I know your post was unlucky enough to be number 13, but this time you really are pushing the boundaries of credibility.

    A politician lie? Never in a month of Sundays. Surely not. How could that be? You mean lie about the state of the economy? Lie about evidence presented to parliament to go to war in Iraq? You mean lie about Bernie Ecclestone's doantion to the newlabour party? You mean lie about parliamentary expenses?

    We've had thirteen years of newlabour lies and you suggest the public will be outraged if the coalition turns out to have been lying about VAT? They haven't promised anything at all except to reduce the deficit.

    I venture to suggest a giant shrug will take place... 63% think there should be more cuts in spending than tax increases and that is waht people will be looking for; cuts.

    As for VAT hitting the poorest hardest, how do you work that one out? A vastly larger proportion of the income of the poor is spent on nil VAT items. There is nothing regressive about a VAT increase.

    it's a great time to be a tory...

  • Comment number 23.

    #11 a return to protectionism then ? thus allow the like of BL to continue without reform. (BTW I own many examples of britsh ironware)

    get those back to work that are on JSA and have a proper imigrationm policy not one that was design to "stick it to the right" as all that has done is fuel rascism and the BNP another fine ZaNU_Liebour legacy

  • Comment number 24.

    I never knew that Vince Cable favoured raising VAT, so at least he's gone up in my estimation (from a rather low base).

    Perhaps it's because most economists consider taxes on consumption less damaging for the economy than taxes on labour and capital.

    But Cable also favours taxes on capital. Maybe he's a little confused, but perhaps the assumption is that Capital Gains Tax can be increased on less productive uses of capital.

  • Comment number 25.

    18 - Cunning. I bet HMRC never thought of that.

    Except that you have to write to HMRC and give the business reasons you are deregistering. The reason you'd be giving is what? I expect my turnover to fall? 'operating around the VAT threshold' That's a turnover of £70k. So what's the scenario? Someone with a turnover of (say) £80k writes to HMRC and says things are bad, he anticipates turnover of £60k and wants to deregister? First up, he won't be able to reclaim VAT on purchases so his costs will go up. Secondly, his case is likely to be flagged. His next set of accounts looked at very closely. Unless he wants his accounts to look odd, he'll have to reduce the COSTS going through his accounts as well as the income. The marginal benefit will be minimal.

    Overall, you're confusing two things. being registered for VAT and accepting 'cash jobs'. The two are not mutually exclusive. Why would an unregistered business 'naturally' get more cash business? personally I've no idea whether the shop I go in or the man who fixes my boiler is VAT regsitered. Nor do I care. If he wants to give me a discount for cash, that's up to him. If he them chooses not to put that through his books, again that's up to him.

    Remember the VATman may not be interested in you until you have a turnover of £70k, the Income Tax man is interested in you if your turnover is £1.

  • Comment number 26.

    #17 the scarlet pimpernel , they seek him here there and everywhere

    Has he been in his beloved "ENGLAND" since the election ?

  • Comment number 27.

    As newlabour are relishing the opprobrium this morning... where is the man who abolished boom and bust?

    Wouldn't it be wise for newlabour to bring back the man who could wave a magic credit wand and abolish it all over again?

    Why has the man who abolished boom and bust gone to ground? his skills of abolition would be so useful to us now?

    It's a great time to be a tory...

  • Comment number 28.

    VAT apart – which if they’re smart and deeply cynical they won’t raise, pls see 13 - this is a big day, isn’t it? Yes, a very big day. Here’s where the reality of a tory government starts to dawn. Here's where it kicks in - with "kick" being the operative word. Up to now we’ve had plenty of David Cameron in olive green ties and artfully tousled hair saying no end of attractive sounding things; today we’ll see a tory chancellor announcing (in an offputting tory voice) stage one of The Plan. “Hard nosed deficit reduction” it’s called by some ... by the patio people ... but known in these parts as “make the public sector pay for feckless greed in the private sector”. Ashes to ashes, dust to dust - and no, we'll choose the music.

  • Comment number 29.

    andy @ 20

    "They probably didn't have plans to raise VAT but that was before they got the true UK finance figures."

    Don't be so gullible, Andy.

    Actually I have a hunch they won't raise it, for the "smart politics" reason I gave at post 13. Deeply cynical really, when you think about it, even though the right decision.

  • Comment number 30.

    Personally I am generally accepting of VAT

    Relatively easy to collect and more difficult (but not impossible) for the usual 'filthy rich but pay no tax' types to avoid.

    There is also a psychological aspect that if prices are higher, but you keep more of what you earn, then you will be motivated to work harder and earn more - perhaps psychologically different to having all your earnings disapear before you ever see them.

    Not too much though - he is taking billions out of a faltering economy with his 'public sector' spending cuts, lets try to limit the scale of the double dip.

  • Comment number 31.

    Now is the time perhaps to show real strengh and put VAT on newspapers/books etc; why are these VAT free anyway?

  • Comment number 32.

    #13 the TV licence fee tax is a very regressive redistribution of money to the very wealthy tax that should be immediatly CUT and CUT deep

  • Comment number 33.

    No two ways about it, we have to pay for this mess sooner or later, the country is in the same position as BP, not where we'd choose but it's where we are.

    VAT to rise to 20% may hit the poor hard, but it is a fair and a voluntary tax in many ways, we just have to be a little bit more discerning in the way we spend our money. Let's face it many people bout HD TVs for the World Cup and got some great bargains. A small increase in VAT on a £500 TV is hardly going to wreck your personal finances.

    We need to stop whinging about it and take the pill however bitter. I'm a public sector worker and my job isn't safe, I'm not far from retirement and I haven't accrued enough pension to retire early. The sad tuth is people are greedy, many got rich on property and by avoiding redundancy in previous recessions. Some of them have gone abroad to support the economies of Mediterranean countries. We all feel that bankers should take the biggest hit but that would inevitably put us all on a fatal course to economic ruin.

  • Comment number 34.

    fairly OM @ 15

    "It's only a few hours until the Budget details are actually announced, so no point getting into a lather of speculation ..."

    Oh come on, Fairly, don't be like that. Just as I was lathering up too - but okay I'll stop then, will wait for the butchery to be formally announced.

    VAT's a fascinating one, I must say.

    Will they? ...

    (a) Raise it - thus confirm that it's the "tory tax", that all the "progressive" talk was just talk, and that they were lying pre election;

    or will they?

    (b) Not raise it - so as to overturn preconceptions about what tory governments do; will they place politics over economics in other words, and hence show that they are deeply cynical.

    Choices.

  • Comment number 35.

    There is a major problem with VAT and it’s always overlooked. I’ve not seen it mentioned once here or on the BBC website.

    It is that large companies, Amazon, Tescos, Play.com, Ebay and many others have set themselves up to sell products and services that would be VAT rated from outside the EEC (i.e. in Jersey, Guernsey or Switzerland). They very effectively avoid paying VAT.
    This ensures that the most powerful companies duck the tax and it gives them a huge trading advantage over smaller companies trading from the UK.

    Far from generating more revenue, an increase in the rate of VAT will simply persuade more companies to trade from outside the United Kingdom. Small companies will deregister and trade under the VAT limit if they can, and new companies will think longer and harder before registering for VAT.

    VAT is already too high for a bankrupt economy. To increase it further would be worse than useless.

  • Comment number 36.

    28 - "Here’s where the reality of a tory government starts to dawn."

    Stand in the corner, Sagamix, and say "coalition government" over and over again until it becomes natural.

    It'll get worse for you, I promise, so the sooner you start, the better. Soon you'll be having to say "popular coalition" and "successful coalition" and so-on.

    By the way, did you ever have the dignity to admit you'd made up the 'Enid Blyton' story?

  • Comment number 37.

    6. At 09:52am on 22 Jun 2010, MarkSOSH wrote:

    Have you noticed in that staged picture of four white, Oxbridge educated, males wearing white shirts sitting round a table, they all have their folders shut... Doesn't exactly instill confidence does it!


    Spotted that straight away, of course! The people who should be running the country are uneducated women from ethnic minorities, wearing jeans and tee shirts. No!... just kidding!
    We need a mixed bag of people with different levels of education wearing striped shirts. And for heaven's sake, open those folders, guys!

  • Comment number 38.

    #27 robin I would be grateful if you would send a copy of your hymn sheet as i seem to have mislaid mine.
    you've never seen a cleaner pair of heels in the history of mankind.
    altogether now
    its great to be a Tory.

  • Comment number 39.

    35 - It's because 'personal imports' valued below £17 do not attract VAT when imported into the EU. Basically would cost more to police then would be collected.

  • Comment number 40.

    I'm getting concerned....will sagamix:

    a) notice it's a coalition government

    or will he

    b) continue to chunter on about a Tory government thus revealling that he has't been paying much attention since election night.

  • Comment number 41.

    AndyC555 @ 25

    It is not just about the numbers.

    Organisations such as HMRC are essentially parasitical in nature and I believe that small businesses in general usually resent having anything to do with them.

    Even HMRC accept that businesses operating around the threshold may de-register, it is not a crime.

    I am not here to assist HMRC in any way, shape or form, believing that the less money Government gets, the less it has to waste.

  • Comment number 42.

    #7 Darren Hann said;

    ''I bet there is more people like myself who would clean toilets forever than claim any benefits. There needs to be more of us.''.

    You made that up didn't you ?
    You haven't been employed as a toilet cleaner for over 12 months.

  • Comment number 43.

    Oh do stop it, Robin. All that “where (?) is the man who ...” business at 27. You sound so vindictive and, what’s worse, backward looking. Truth is he’s probably doing a bit of charity work somewhere up in Scotland, thinking ruefully about not having the chance to implement his safe & sober fiscal recovery (from private sector greed and excess) plan. The more fool us.

    Any case, since you insist on harping on about ancient history, I have a question for you:

    Of the following New Labour achievements ...

    Schools.
    Hospitals.
    Working family tax credits.
    More diverse and tolerant society.

    ... which, in your own personal estimation, is the best? All achievements, yes, but which is the greater achievement, Robin?

    In your view.

  • Comment number 44.

    VAT rises would pass unnoticed as the Labour VAT cut did if it was not for the media constantly bringing it to the publics notice.

  • Comment number 45.

    If taxes need raising I'd rather tax the lazy consumer, than the working-hard class.
    VAT going up !!!

    [Wednesday's World Wise Words,

    ''...we are, we are...

    'Disorder'(Joy Divison),
    'The Launch' (DJ Jean),
    'An American Trilogy' (Elvis Presley),
    'Firestarter' (The Prodigy).

    If that can't get the team going....]

  • Comment number 46.

    VAT needn't be so regressive if it's banded. A low rate on processed and pre-packed food, leaving fresh food exempt - raise money and improve the nations health. A middle rate of 10% or so on stuff like clothes and toiletries, and a top rate on luxury goods, alcohol etc. of 20-25%.

  • Comment number 47.

    13. At 10:18am on 22 Jun 2010, sagamix wrote:
    "There are two very good reasons not to raise VAT, one moral and one political. The latter first; it would be smart politics by David Cameron to overturn the perception that this is the "tory tax" - an easy way to raise money off the poor. The moral reason is to do with honesty and integrity. They said in the election campaign they had "no plans" to raise VAT, we all remember that; if they now do so, just a few short weeks later, it will mean they were lying ... it'll be goodbye the New Politics before they'd even had the chance to say hello."

    saga,

    You know very well that VAT is a European Union Tax - it's a condition of membership that states have to apply this particular tax. It was certainly introduced in the UK when we joined the old EEC, but that hardly makes it a "Tory Tax"...

    I'm sure you'd agree with me that France retains great swathes of socially orientated laws and regulations (even under so-called right wing governments).
    But VAT represents more than 49% of total tax take by the French government... Very much more than the UK equivalent contribution.

    Since none of the major parties ruled out increases to VAT, it would hardly be "lying" if the Coalition did change the rates, would it?

    If I told my wife I had "No plans" to use my credit card (meaning I wouldn't use it for fags or booze or wild nights out in Swindon), but then I used it to pay for the repairs when HER car broke down, it hardly constitutes a lie, does it?
    Especially if I try and find a way to reduce the interest impact of that debt by restructuring my credit and paying off as soon as possible?

    Gazebo Gordon was using the nation's credit card for years. But he has no personal liability for the debts.
    Maybe that's a change that could be forced through, so politicians are obliged to accept some responsibility for any fiscal damage they do.
    At present, politicians retire (or are retired by electorates) and pick up rather nice pensions and, if they are senior enough, get pretty big expenses packages and security protection for years...

    Bit different nowadays. I've read that, when Harry S Truman left office as the President of the USA (a guy I came to admire through the literature) he was almost broke. Contrast and compare with some of our Prime Ministers...

  • Comment number 48.

    1. At 09:32am on 22 Jun 2010, AndyC555 wrote:
    Raise it. 20%. It would be round about the EU average then.


    --------------------------------------------------------------
    It's way too high at 15% (minimum EU approved/permitted level) for a recession. It should be about 2.5% now and 7.5% in the good times. Tax income not 'things', not consumption.

    Hey, let's be careful - very careful - out there today.

  • Comment number 49.

    Of the following New Labour achievements ...

    Schools.
    Hospitals.
    Working family tax credits.
    More diverse and tolerant society.

    ... which, in your own personal estimation....

    Hospitals.

    Spending on schools seems to have been wasted. We are falling as a nation in all recognised international achievement tables.

    Family tax credits were an idiocy the way brown implemented them. Families so 'rich' they paid 40% tax and so 'poor' they got tax rebates.

    Diverse and tolerant? I guess that explains the rise of the BNP?

    The pity of the hospitals is that the spending plans have been shown to be flawed. Too much done too quickly. borrowing and PFI burdoning us with debt. Instead of wisely saving up to pay for thinsg, we now know Brown borrowed like a madman.

    I'm shortly to be busy with the budget so haven't the time but if anyone else does, how about which of a list of Brown's fiscal insanities was the worst for the UK? Obviously there wil be far more than 4 items oon it.

  • Comment number 50.

    Truth is he’s probably doing a bit of charity work somewhere up in Scotland, thinking ruefully about not having the chance to implement his safe & sober fiscal recovery (from private sector greed and excess) plan. The more fool us.
    --------------------------------------------------------------------

    Pssst.

    Saga.....

    He's still being paid as a sitting MP. He OUGHT to be in the HoC. He's being paid 1200 quid A WEEK. If he doesnt want to do it anymore, he could always step down and force a by-election.
    -----------------------------------------------------------------------

    Any case, since you insist on harping on about ancient history, I have a question for you:

    Of the following New Labour achievements ...

    Schools.

    *** And their NEETS and watered down exam results and university entrants who cant spell****

    Hospitals.

    ***And you're more likely to come out more ill with MRSA and C-diff than when you went in, if NICE decides your life is worth the money, IF you can get an appointment at your GP to get referred to hospital in the first place. Unless they chuck you out of A&E thinking you're a drunk when in reality you've got a fractured skull - and then the cops who cant find their @rse with both hands let the guy off who did it, but can sure as hell find a Shadow Cabinet ministers office in the HoC....****

    Working family tax credits.
    ***Overcomplex, outsourced, overpaid. Hundreds of millions paid out that shouldnt be and vice versa. Yeah, great idea that.***

    ***More diverse and tolerant society***
    Hmm. In some cases true, in others, just more diverse. Islamophobia, Islamofascism, 1.5m new jobs created, over 875000 of them going to EU or non-EU nationals. 8.5m economically inactive at home.
    -------------------------------------------------------------------------
    ... which, in your own personal estimation, is the best? All achievements, yes, but which is the greater achievement, Robin?
    -----------------------------------------------------------------------

    The best achievement of all was kicking the unwanted, unelected, unstable, bullying monocular megalomaniac's butt all the way back to Fife from whence we can only hope that it never emerges again!!
    In your view.

  • Comment number 51.

    So will GO follow the GB positon of having the budget details released
    after the event with such classics as IR35.

    Or will be he Honest about what his budget is going to do ?

  • Comment number 52.

    40. At 11:47am on 22 Jun 2010, AndyC555 wrote:
    I'm getting concerned....will sagamix:

    a) notice it's a coalition government

    or will he

    b) continue to chunter on about a Tory government thus revealling that he has't been paying much attention since election night.

    -------------------------------------------------

    Is it because Labour are somewhat sidelined now, more so as an Opposition than normal? And is it because, if GO gets it right, and the Coalition get it right generally over the next few years, Labour may be facing oblivion?

    Labour have no real policies. All the current leadership candidates seem able to do is to try to tell us what we should be thinking. No policies on offer. No constructive criticism.

    The cliff edge is getting very near for Labour.

  • Comment number 53.

    "Deeply cynical really, when you think about it, even though the right decision."

    And there was nothing cynical in the New Labour cupboard in the last 13 years was there mate? Starting with the backtracking over the EU Referendum for a start....

  • Comment number 54.

    I read that a Tory commentator wants to ringfence Foreign Aid. Charity begins at home and should stay here during the current problems.
    If the Chancellor cuts Foreign Aid, could he save enough to avoid a V.A.T. increase? Very important as V.A.T. hits us all.

  • Comment number 55.

    "karl wrote:
    Some people cant help being on benifits. single mums etc, child care is a big issue esp if they had been left by a partner and they dont pay towards any thing csa is usless."

    I have a friend who took a couple of years off after the birth of her child but after splitting with her husband she was offered help with child care by the Government upon going back to work - if she got back with her ex she would lose the help with the child care and other back to work benefits. IMO this is what is unfair.

    "go to a fast food outlet yes they are mostly foreign people. if this is the case vot bnp and get them out of this country. they come here and get every thing accomodation money etc and jobs,"

    If you think that people who come to this country get provided with accomodation, free money and jobs than you are an idiot. People who come to this country have to work to get jobs the same as people in the UK have to - however many of them have the drive to actually work low paid roles (something that many people are lacking in the UK). Perhaps if benefits were cut people might no longer feel that McJobs are below them.

    "we go to there country we get nothign at all, this is a big problem in the uk, if we threw all foreign people out of this country we would be in a good paid job."

    Foreign people in low paid low skill jobs have no better chance of getting the job than UK workers - the UK workers just consider the jobs beneath them. The higher paid higher skilled jobs require people who are trained so many unemployed would not have the skills to do the job.

  • Comment number 56.

    #35

    As a UK based retailer of video games, hardware and accessories, we have long campaigned for this 'offshore loophole' to be closed, to allow UK based companies to be able to trade and compete on a level playing field.

    The current situation as I understand it, is whilst import VAT is still technically liable, that UK HMRC 'doesn't bother' to ask for VAT on anything below £18, (you'll find Play.com for example selling many games at £17.99), as it's 'not worth the hassle' of collecting it.

    Obviously, from our point of view and perhaps the country as a whole, they should reconsider this stance, especially if VAT is raised.

  • Comment number 57.

    To increase a sales tax when demand is still too low, is a singularly inappropriate thing to do. On the other hand, a cunning move would be to announce an increase in say 6 months time, causing people to dash out and buy things.

  • Comment number 58.

    I think newlabour's greatest achievement was to abolish boom and bust and replace it with super boom and bankrupt.

    It's a great time to be a tory...

  • Comment number 59.

    #43 ZaNU_LIEBour achievements ?

    Schools.
    NOT IF YOU ARE THE NONE RESIDANT PARENT-FATHER

    Hospitals.
    NOT IF YOU ARE THE NONE RESIDANT PARENT-FATHER

    Working family tax credits.
    NOT IF YOU ARE THE NONE RESIDANT PARENT-FATHER

    More diverse and tolerant society.
    NOT IF YOU ARE THE NONE RESIDANT PARENT-FATHER

    infact if you are a NONE RESIDANT PARENT-FATHER you have been total disadvantaged and discriminated against

  • Comment number 60.

    43 sagamix

    What a wit you are today! Did your "keep you on the straight and narrow" pills land on their sides this morning?

    Good to see you acknowledge that the former PM is not doing his job of representing his constituents in Parliament. He probably shouldn't be drawing that great big salary, and "bed-blocking" his constituency from a more able and willing candidate, should he?

    I'm amused by your list, by the way.

    Schools? New Labour have presided over a complete collapse in national and international confidence in the schools qualification system.

    Hospitals? Hospital-acquired infections brought to a higher level than during the Second World War.

    Working family tax credits? Interesting one. Were you listening to Today this morning? Take-up rate on WFTC is remarkably low (probably less than 40% of entitlement), because of the utterly arcane application and means-testing process. Hardly a successful, delivered policy, I would suggest.

    More diverse and tolerant society? Just how do you regard this as a "New Labour achievement?" Name a few policies that have been successfully enacted and delivered by Labour, that have led to this "more diverse and tolerant society". Next thing, you'll be claiming credit for the sunrise.


  • Comment number 61.

    Saga -

    Schools

    As parents we are told that time, attention, and the opportunity to play and explore are more important than shiny new equipment (esp. technology).

    Shame no-one told the education authorities then. KS1 children in particular get such a restricted amount of time to learn through play that sets their education back for the rest of their school life.

    Hospitals

    The decline in local maternity services between my first child being born in 2002 and my last in 2006 is terrifying (genuinely - I feared for the health of some of the babies I saw being sent home too early) and I am glad that I'm not having any more children. Ward closures, fewer midwives, booming population. Not good.

    Elsewhere I know that 'new' hospitals have come at the expense of closing local hospitals and 'centralising' services. Where I used to live they refurbed the local A&E, within six months it was closed and a PFI hospital built some 8 miles away.

    Child tax credits.

    Too complicated for many to claim. Too many peopel forced to pay back money they can't afford because of errors. Why not just reduce the tax take from working families?

    Tolerant and Diverse Society

    Love to see the change in gay rights, but otherwise we seem to have a society that likes to flag up its differences every five minutes rather than its similarities.

  • Comment number 62.

    Well Osborne did very well. An excellent budget.

    Something odd has happened on the radio. There's a high pitched whining shreiking screeching noise coming from it. oh, it's Harman.

  • Comment number 63.

    For those unable to listen, here's Harman as reported by Hansard:

    Harman: Screeeeeee, skraaaaaaw, Screeeeeeeeeeeeek, Shreeeeeeeeeeeeek, Caaaaaaaaaaack, vraaaaaaaaaaaaaaack, screeeeeeeeeee.

  • Comment number 64.

    Poor stats on here by the Socialist poster earlier:
    Here's the truth:
    VAT isn’t the regressive tax that Socialist posters are trying to paint it as.

    The March edition of the ELMR, page 25, VAT as a percentage of expenditure.

    Bottom quintile: 4.2%
    Top quintile: 8.7%

    [Unsuitable/Broken URL removed by Moderator]

  • Comment number 65.

    Please try and control your sexism, Andy, (62/63). Harman spoke well and in a perfectly normal tenor and modularity of voice.

  • Comment number 66.

    62#

    LMAO.

    You noticed then?

    Full on shriek mode. What they should have done is given vuvuzelas to the Coalition benches. She's a witch, I tell you, burn her! Her reply to the budget had more holes in it than a 10 kilo truckle of Emmenthal.

  • Comment number 67.

    ARHReading said:

    "VAT is a regressive tax. It would be better to reduce VAT and increase income tax rates. Won't increasing VAT lead to lower consumption and inhibit growth in the private sector?"

    Nope. It'll nudge the economy a smidge further than present in favour of export production over internal consumption.

  • Comment number 68.

    Up2snuff @ 52

    You say the cliif edge is very near for Labour.

    On the contrary, Labour could hardly be in a better position, considering.

    They are not in Government and therefore not now responsible for the unpleasantness which follows.

    Furthermore, they have somehow came through a General Election more-or-less intact with around 280 MP's.

    Labour (in England) now have plenty of time to reflect and redefine themselves for buggins turn again, as there is no reason to think that in the intervening period, the English electorate will fundamentally change the (bad) voting habits of several decades.

  • Comment number 69.

    "65. At 1:56pm on 22 Jun 2010, sagamix wrote:
    Please try and control your sexism, Andy, (62/63). Harman spoke well and in a perfectly normal tenor and modularity of voice."

    Oh dear. It would be sexist to say all women had a shrill, screechy way of talking. To say that Harman sounded like a banshee on steroids who has just found out their boyfriend has spilt coffee on their carpet would simply be fair comment.

    It's the left's inability to tell the difference between talking about one person and catagorising an entire sex that is part of the reason they are no longer in office.

  • Comment number 70.

    66 - "She's a witch, I tell you, burn her!"

    Give over, she probably wouldn't burn.

    I like the idea of Vuvuzelas as a counter-measure to her shrieking though.

    In case you didn't know, saga has a bit of a 'thing' for Harriet. I expect the reason he took 20 minutes to respond to my post was that he couldn't stop trembling after listen to her shrill, acidic cacophony*. Takes all sorts, I suppose.

    *Hi, everyone out there in LabourLand. I'd just like to clarify that I don't think ALL women bellow and screech like Ms Harpie. That would be sexist. No, my remarks are purely personal.

  • Comment number 71.

    Still laughing at all the Tory fanboys trotting out the party line about how things are worse than the Tories feared. Utter nonsense, a myth well and truly debunked by the Office for Budget Responsibility that Osborne set up.

    But don't let facts get in the way of a good soundbite.

  • Comment number 72.

    68. At 2:19pm on 22 Jun 2010, JohnConstable wrote:
    Up2snuff @ 52

    You say the cliif edge is very near for Labour.

    On the contrary, Labour could hardly be in a better position, considering.

    They are not in Government and therefore not now responsible for the unpleasantness which follows.

    Furthermore, they have somehow came through a General Election more-or-less intact with around 280 MP's.

    Labour (in England) now have plenty of time to reflect and redefine themselves for buggins turn again, as there is no reason to think that in the intervening period, the English electorate will fundamentally change the (bad) voting habits of several decades.
    --------------------------------------------------
    But where is the unpleasantness in this Budget? Increase in VAT for sure. But that's it, pretty much.

    If GO & Co get the UK sorted out, how many of the committed 28% of Labour voters will vote Labour next time? And that assumes Labour under a new leader, come up with attractive policies, provide substantial positive opposition to the Government and make no mistakes. They have to spend up to five years being perfect without any guarantee of garnering more than a quarter of the votes at the next Election. Hhmmmn. Labour will have to be really careful out there for the next 1826 days.

    Suppose the next election has no Conservative Party and no Liberal Democrat Party on the ballot paper and instead Labour have to take on the United Coalition Party plus the smaller parties? I don't think that will actually happen (although it could) but the effect of five years success in this particular LibDem voter's head will be 'More of the same, please'.

  • Comment number 73.

    There is one good thing about the unedited, unrestrained Tory gloating here on Nick's blog. It gives a good indication of what those Tory MPs are really thinking behind that glum, pious exterior. In fact, they're probably even happier than AndyC555, who really could do with some kind of tranquilising injection.

  • Comment number 74.

    George Osborne delivered an outstanding budget

    We had been told that CGT was a hot potato....result 28% for HR tax payers, fair, and they pay more

    HR tax relief on pension contributions...Osborne has listened and said, I need £3.5bn a year revenue, happy to consult as long as I raise that

    VAT....not increased until the 15% to 17.5% rise is out of the inflation snake...(as I hoped)

    Public sector pay freeze...2 years...those below £21K given a rise (as I hoped)

    Child benefit frozen....to means test would cost more than it saved..COMMON SENSE and fairness

    Capital allowance for business...fairness..

    Corporation Tax reforms...Fair, sensible, and gradual

    Housing benefit...reform...DLA...reform...

    Ending children's tax credits for those earning more than £40K..sensible and fair

    Cider tax...CANCELLED

    Capital programmes PROTECTED

    ALL VERY FAIR AND SENSIBLE

    Back into surplus by reducing expenditure over the 5 years of this parliament

    Saving huge amounts on debt interest payments

    Encouragement for the UK outside of the sensible and prosperous SE and E, to set up businesses

    WELL DONE GEORGE

    Response from Harwitch?

    Pathetic....When will Gordon Brown turn-up? He is currently drawing an MPs salary on false pretences

    To say that this budget is regressive is absurd

    Labour are a lost party after the lost decade of their government

  • Comment number 75.

    62. At 1:32pm on 22 Jun 2010, AndyC555 wrote:
    Well Osborne did very well. An excellent budget.

    Something odd has happened on the radio. There's a high pitched whining shreiking screeching noise coming from it. oh, it's Harman.

    ---------------------------------------------------------

    Not sure it's an excellent Budget. Would have done things differently. But there's still scope for that in the future. It could have been worse. A lot worse.

    Have to say, Dave & Co in Government sound heaps better than they did in opposition. And there seems to be slightly more solidity to the sound of the LibDems as well.

    The Harridan gives me eerie impressions of speakers at Nuremberg rallies. Chilling. Millipede Minor and EdSphericals are empty vessels who can only spout rubbish about what we should be thinking about the Coalition or the LibDems.

  • Comment number 76.

    65. At 1:56pm on 22 Jun 2010, sagamix wrote:
    Please try and control your sexism, Andy, (62/63). Harman spoke well and in a perfectly normal tenor and modularity of voice.

    She still talked utter tripe

    If it wasn't for the innumeracy of the government she was part of, we wouldn't need these cuts!!

  • Comment number 77.

    68

    Why would anyone vote labour in 5 years time, when we will back in surplus with tax cuts and a growing economy?

    Do you propose Labour becoming very left wing?

    They have lost the centre ground

  • Comment number 78.

    69

    I hope you will be calling the Banshee Society to apologise

    They don't sound that bad

  • Comment number 79.

    Mmm. I see. Read those (69/70) back to yourself, Andy, and you'll feel a little bit embarrassed. Or you should do.

  • Comment number 80.

    Increasing VAT will bring in some extra money but it's going to reduce the amount of items bought as many peoples disposable income is going to fall.

    There are quite a few people here saying that the increase is not going to affect their finances that much. Good for them, they obviously are not one the millions who live from week to week struggling to cope. It is these people that are going to be hugely affected.

    If you already spend every penny of your income an increase in VAT means you can't buy as much, those who already can't manage or just managing are going to have to struggle more. True essentials like food have no VAT, but there are plenty of real essentials that do.

    The only real fair tax based on income, whether due to employment, investments or inheritance. A VAT increase is not going to affect those who earn above average who do not spend all of there income, true they can afford the increase but most of their cash is going to be saved/invested, tax their income and you'll raise more.

  • Comment number 81.

    "79. At 3:51pm on 22 Jun 2010, sagamix wrote:
    Mmm. I see. Read those (69/70) back to yourself, Andy, and you'll feel a little bit embarrassed. Or you should do."

    Not in the least.

    How high and mighty, pompous and hypocritical you've become. Only weeks after postings full of 'tory-boy' and 'clown' jibes from you, all of a sudden you've gone po-faced. Why's that? Surely not sour grapes at an election loss and a new coalition government that seems to be doing the right things against all your predictions?

    You're starting to remind me of the Enid Blyton story of the Labour supporting blogger who went into a massive sulk when it began to dawn on him that he's been wrong about just about everything and that no-one was listening to him seriously any more. You remember THAT Enid Blyton story, surely?

  • Comment number 82.

    81

    Absolutely spot-on

    Sagamix has transmogrified into sadamix, rather like the change in Doctor Who

    He was happy to dish it out, yet can't take it

    New Labour all over

  • Comment number 83.

    If "po faced" (81) is treating this blog with the gravity it deserves - we are on the BBC, you know, and I no longer post the sort of thing you refer to - then fine, guilty as charged. Others could take a leaf. That's you, Andy, but not it's just you, not by a long chalk; kevin, mandering, jrp ... all have let themselves down today.

  • Comment number 84.

    82 "Sadamix and The Harpie"

    It does have a ring to it. A TV series for children, full of fantasy and tall tales.

  • Comment number 85.

    "83. At 5:53pm on 22 Jun 2010, sagamix wrote:
    If "po faced" (81) is treating this blog with the gravity it deserves - we are on the BBC, you know, and I no longer post the sort of thing you refer to......"

    Sorry, Saga, you're going to have to resubmit the rest of that post. When my computer got to downloading "...I no longer post the sort of thing you refer to......" the pomposity meter exploded and my computer went up in a shower of sparks and smoke.

  • Comment number 86.

    83. At 5:53pm on 22 Jun 2010, sagamix wrote:
    If "po faced" (81) is treating this blog with the gravity it deserves - we are on the BBC, you know, and I no longer post the sort of thing you refer to - then fine, guilty as charged. Others could take a leaf. That's you, Andy, but not it's just you, not by a long chalk; kevin, mandering, jrp ... all have let themselves down today.

    What a load of piffle....

  • Comment number 87.

    sagamix 83

    "...but not it's just you, not by a long chalk; kevin, mandering, jrp ... all have let themselves down today."

    Having had the dubious pleasure of seeing some of Harman's budget response live, and having just seen some expurgated highlights on the news, it is a fair opinion (which I am sure will be repeated in the quality press tomorrow) that it was composed entirely of loud, high-pitched, incoherent shrieking. My summary of it as fish-wifery is, likewise, fair comment. The same can be said of the alternatively worded summaries from the other posters.

    Your retort of "sexism", and now this pathetic "let themselves down" (from you, of all people!), is nothing but propagandist piffle in an unseccessful attempt to distract from Harman's poor performance. The thing is, no-one would expect any better of you, these days.

    As I asked you on Sunday, do you really think your current standard of posting is doing any good for the causes you are trying to support?

  • Comment number 88.

    why is there no talk of the huge affect this budget will have on banks, first huge recession and now huge deficit...should we put faith back in market and back laissez-faire...my analysis here: https://bit.ly/cyHP0y

  • Comment number 89.

    Okay JR, let's see what, say, the Indy and the Times et al do say about H's performance. Be surprised if they liken it to a "fish wife" - be surprised if they don't judge it as what it was; a fairly decent commons performance with some good lines well delivered. Your comments (and those of andy and fubar and kevin) are inaccurate and sexist. As for the standard of my posting, it just gets better and better as far as I can see. Surprise myself a lot of the time.

  • Comment number 90.

    89 - "Your comments (and those of andy and fubar and kevin) are inaccurate and sexist."

    Tut tut. You MUST learn to tell the difference between a personal attack and sexism. Suppose a female poster on here said you had the intellect of an ardvark and the economic understanding of the ardvark's droppings. Would you claim she was being sexist? Of course you wouldn't.

    When you criticise Cameron for being a "Tory Posh-Boy", are you being sexist? No.

    In leaping to the defence of Ms Harpy, using the accusation of 'sexism' as an attack, it seems to me that you are applying different standards to the Harpy BECAUSE she is a woman than you would to a personal attack on a male politician. You seem to be saying that poor old Harriet needs protecting when rough tough Cameron can stand on his own two feet.

    Do you know what that is, when you apply different standards to a woman than a man? That's sexism, that is.

  • Comment number 91.

    89. At 10:37pm on 22 Jun 2010, sagamix wrote:
    Okay JR, let's see what, say, the Indy and the Times et al do say about H's performance. Be surprised if they liken it to a "fish wife" - be surprised if they don't judge it as what it was; a fairly decent commons performance with some good lines well delivered. Your comments (and those of andy and fubar and kevin) are inaccurate and sexist. As for the standard of my posting, it just gets better and better as far as I can see. Surprise myself a lot of the time.

    Don't be surprised when you get some back, with comments like that

    By the way, I am not sexist.

    Brown...gave him some stick...MAN

    Harwitch......gave her some stick WOMAN

    Just let me know if there are any hermaphrodites on the Labour front bench, and I will be only too pleased to even it up

    Your insults are as tired as your politics...the only thing you are progressing towards is the exit

  • Comment number 92.

    sorry Saga, she lost control and went into full on shriek mode. I appreciate that for a leader of the opposition, one of the most tricky things to do is deliver an accurate, robust rebuttal of the budget, because you dont get much in the way of intel as to whats going to be in the fine print of it. But, getting back to the point.

    Had that been your wife and you'd been sat next to her being on the receiving end of that you'd have lasted five minutes before getting up and going down the pub.

    Unless you've got a bristly brown forehead with the words "Please Wipe Feet Here" written on it.

    Thats not sexist, its just a fact.

  • Comment number 93.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 94.

    No guys. Your criticisms - fish wife (she didn't sound like whatever that is), shrieking (she wasn't), like a mad missus (ditto) - et al et reprehensible al - are all bound up not in what she said, or how she said it, but with the fact she's a woman. Exactly the same performance by a male politician you would not have painted up in that way. Sexist, a clear case of. Bang to rights. That one criticises men too, btw, doesn't mean one is incapable of being sexist. Any case - come on - I'm right (and I'm guessing that deep down you know it), but it's not the most terrible of sins, a bit of light sexism - makes the world go round. Some worlds anyway - the ones that are a bit dodgy.

 

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