Brown v Cameron: VAT rises?
Updated on 26 November 2008
The possibility of increasing VAT after the next election dominated today's exchange at prime minister's questions.
Leader of the opposition, David Cameron, kicked off his questions at PMQs by asking: "If the government doesn't have a secret plan to increase VAT, can the prime minister tell me why the treasury minister [Stephen Timms] put his signature to it?"
Gordon Brown responded by saying that "we looked at every option over the last few weeks, including options that were taken up by the last Conservative government, and we rejected the proposal to raise VAT in favour of a proposal to lower VAT."
His reasons? He refered to the points when VAT was raised under the Conservatives, including when David Cameron was adviser to the treasury, saying each time "hard-working families were hurt".
Cameron produced the document signed by Timms saying: "The prime minister cannot claim this is some mad-capped idea he immediately rejected."
After reading from the document, he went on to say "it is absolutely clear they are planning a VAT bombshell to hit every family in the country," before asking if there was a plan to increase VAT by more than 18.5 per cent.
Brown again insisted that they "considered all options but we rejected options," emphasising that they chose the options that "were fairest to ordinary and hard-working families" before reiterating the claim that the Conservatives are the "do-nothing party".
'But there is absolutely nothing stimulating about what the prime minister is proposing.'David Cameron, leader of the opposition
Cameron took that as confirmation that the idea of raising VAT was considered, before reeling of a list of their previously announced finance policies. "Instead of sitting in Downing Street making up nonsense about opposition plans, why doesn't he do something useful?" he said.
He then changed tack to focus on the "black hole at the heart of the public finances", asking Brown to "confirm that his plans will double the national debt".
Brown countered by saying that debt as a percentage of GDP would be lower than France, Germany, Italy, Japan and "almost certainly" America "even after the difficulties that we go through".
"We are not going to take the do-nothing road of the 80s and the 90s," he said. "We are going to give real help to families and businesses now."
"But there is absolutely nothing stimulating about what the prime minister is proposing," countered Cameron, adding that Brown would borrow to decrease prices that are already falling and increase taxes in two years time. "I don't know where the prime minister goes shopping," he said. "But the shops are discounting by 20 per cent, by 30 per cent already."
Cameron went on to quote from the pre-budget report before reiterating the question: "Does he admit his plans will double the national debt?"
'They have abandoned compassion in Conservatives, they are no longer a credible opposition. He is the do-nothing leader of a do-nothing party.'Gordon Brown, prime minister
Brown said that they had already published the figures and listed again the national debt of other countries. "The question is," he said "when you are faced with unique and unprecedented circumstances do you take the action that is necessary?"
He then threw back at Cameron the comments by Andrew Lansley, the shadow health spokesperson, that "recession can be good for us".
Cameron responded that "the difference between my honourable friend and the prime minister is he has apologised".
"The prime minister just quoted a very interesting figure," he went on to say. "He said that the ratio of debt to GDP is going to reach 58 per cent. Will he confirm that is exactly the same percentage it reached when Dennis Healey went to the IMF because the country was bust?"
"I'm sorry I have to give him an economic lecture every week," said Brown "because he doesn't seem to understand. This is what has to be done in a period when there's a downturn."
"The fact is this prime minister has given us the debt levels of Italy and the accounting practices of Enron," Cameron responded. "Isn't the real lesson from the PBR this - the country is going bankrupt, he's been found out and New Labour is dead?"
"The real lesson of this pre-budget report," Brown insisted "is that we are giving real help to families and businesses now."
"They have abandoned compassion in Conservatives, they are no longer a credible opposition. He is the do-nothing leader of a do-nothing party"
