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POLITICS HOME   25.11.08
1.Treasury document shows VAT rise to 18.5% considered

The BBC's Nick Robinson reports that a treasury document released to 
the public shows that a rise in VAT to 18.5% was considered.

The document reveals that VAT was set to rise back to its original 
level of 17.5% on 1 January 2010.  But, in the fiscal year of 
2011-2012, this was set to rise to 18.5%.

The document was in the small print which accompanied the pre budget 
report.  It was subsequently decided to drop that proposal.

The document says: "the proposed changes will reduce VAT to 15% from 
1 December 2008 until the end of 2009.  The standard rate will then 
return to 17.5% from 1 January 2010, and subsequently increase to 
18.5% in 2011-12."

Responses:

The government has said that this document shows simply one course of 
action that was considered.  The Conservatives, on the other hand, 
say that this document shows that there is a "hidden tax bombshell" 
in the pre budget report.

The Shadow Chancellor, George Osborne has issued a statement saying: 
"This is Labour's secret tax bombshell. It explainswhy there is a 
black hole in the PBR. Because at the last minute Gordon Brown 
clearly decided to keep secret his plan to hit everyone with an extra 
tax rise to pay for his borrowing binge."
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BBC News at 19:51
Cameron: Treasury document shows "secret tax bombshell"

David Cameron, Leader of the Opposition

Mr. Cameron has responded to the treasury document which said that a 
rise in VAT was considered.  He said that it was a "secret tax 
bombshell."

He added: "They actually put this on the order they were putting in 
front of parliament.  They said no hidden manifestos and now we know 
they are planning this extra tax rise.  That's why the budget doen't 
add up.  It isn't. [sic]

"Now we know they are planning a VAT increase that would hit families."
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COMMENTS on Broadcast media
NB in reverse order of timing!!

BBC News at 1653
Darling: Top earners will pay "lions share" of tax rises

Alistair Darling, Chancellor of the Exchequer

Mr Darling said that despite the rises in national insurance, "the 
lion's share" of tax rises would be met by higher earners.

"In the next 3 years no one earning under £100,000 will be paying 
more tax a result of the changes I announced yesterday," he said.

He said that after that period "there will be a national insurance 
increase, the lion's share is met by people who are earning over 
£100,000 or £150,000".

He added: "No one under £40,000 will lose out because of the 
change"  [HE LIES!!! All coomentators have spotted how he tries to 
pretend this by not including social security levies -cs]

"I could have raised that elsewhere but what I wanted to do is try 
and ensure that people who don't earn incomes, like people who are 
retired don't pay more tax," he said.
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  The World at One, Radio 4 at 13:22
Minister: Consumers not retailers should benefit from VAT cut

Baroness Vadera, Treasury minister

Baroness Vadera said that the planned cut in VAT was intended for the 
benefit of consumers rather than retailers and that the cut must be 
passed on "in the round".

"I understand it will be difficult for retailers to change all their 
prices in the short term," she said.

She added: "It's not that single product would go down by certain 
percentage, just that we don't expect retailers in the main to 
benefit from this, we expect consumers to benefit from it."

She also said that retailers had been "amazingly constructive" in 
their reponse to the measure.

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The World at One, Radio 4 at 13:16
Duncan: "Failed fiscal stimlus" will dampen recovery

Alan Duncan, Shadow Business Secretary

Mr Duncan said that the measures announced in the pre-budget report 
would not help small businesses but lead to a "guaranteed dampening 
of the economy".

"It risks jeopardising the low interest rates which are of the utmost 
importance to them being able to pay their overdraft costs and get 
things going again," he said.

He added: "What the government did yesterday was have a failed fiscal 
stimulus followed by a guaranteed dampening of the economy".

He argued that rather than a fiscal stimulus the government should be 
focussing on increasing bank lending levels.

"They key thing is underpinning the lending system which at the 
moment is in a state of collapse," he said.

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BBC News at 12:32
Clarke: No credibility in Darling's repayment plan
12:32 | 25/11/2008

Ken Clarke, former Chancellor of the Exchequer

Mr Clarke accepted that taxes needed to increase to reduce the levels 
of government debt, saying the outlook for the economy was "pretty 
grim".

"The problem which we may see reflected in the value of Sterling and 
the interest rates you have to pay to sell all the government gilts 
is that he didn't set out credibility how it was going to be repaid," 
he said.

He added: "The fact is we probably face the prospect of taxes going 
up and public spending being cut before we get out of debt.

"We face a longer slower recovery because of the burden of all this debt
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Daily Politics, BBC 2 at 12:03
Hammond: Removing 45% income tax "not a priority"

Philip Hammond, Shadow Chief Secretary to the Treasury

Mr Hammond said that scrapping the planned 45% income tax rate "would 
not be a priority" for the Conservatives.

He called the tax rise a "red herring" and said: "The real story from 
yesterday is that anyone earning more than £19,000 is going to be 
worse off."

But he added that since the party would not know the state of public 
finances until it took office, it could not promise to lower taxes.

"We cannot rule out tax rises, and if tax rises are necessary our 
first priority must be to protect those on the lowest-incomes who are 
most vulnerable, that's the role of responsible government," he said.

He said that the Labour government, like its predecessors, had fallen 
into economic failure.

"It's the historic function of Conservative governments to clear up 
the mess that Labour have left them," he added.
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Daily Politics, BBC 2 at  12:03
New income tax rate "not a return to the left", says Hain

Peter Hain, Labour MP

Mr Hain, who in the past has called for higher earners to pay more 
tax, defended plans to raise the top rate of income tax to 45%.

"This is not about a return to the left, this is about dealing with a 
serious economic situation that the world over is doing," he said.

He added: "Our rates of tax paid by the highest paid are pretty low 
by international standards."

Mr Hain also backed the government's plans to raise borrowing to 
£118bn, the highest postwar level.

He said: "Either you use the power of government...or you just sit 
back and do what the Tories are doing...you don't use the power of 
government to help families, help businesses and create jobs."

He added: "All European governments, comparable governments, are 
using the power of government to invest, to recapitalise their banks, 
to increase spending."

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BBC News at 11:40

Clegg: The government should be working actively on a Plan B


Nick Clegg, Liberal Democrat leader

Mr Clegg said the banks had to begin lending again, and if they don't 
the government must develop a Plan B, involving either writing off 
bad debts or directly lending into the economy.

He said the banks have to start lending, and "if they fail to do so, 
the government must now work on Plan B on how to get money back into 
the hands of businesses.

"The government has got to get really tough with the bankers. It was 
part of the deal. They have to be forced to do so.

"If that doesn't work we need a Plan B to bypass the banks to get 
money into the economy.

"I think the government should be working actively on a Plan B.

"It should either take bad debts off the balance sheets or look at 
lending directly into the economy."