Osborne and Clarke at odds over VAT cut

Evidence of a split between the Shadow Chancellor and Shadow Business Secretary over the VAT cut.

George Osborne’s speech on curbing bankers’ bonuses today contained criticism of the VAT cut – a policy Ken Clarke once advocated.

Mr Osborne said:

“So what is left of this ‘massive fiscal stimulus’?

“A temporary VAT cut, which almost no retailer thinks has been effective, no other country considered copying, and which the Chief Economist of the IMF said with modest understatement ‘does not seem to me to be a good idea’.”

However, in an interview with The Times in November 2008 – on the eve of the announcement of the 2.5 per cent VAT cut – the Shadow Business Secretary had said:

“If it’s possible to afford a fiscal stimulus I would go for VAT because the only case for a fiscal stimulus is to stimulate spending and consumer demand, so the tax on spending is the one to go for. But it should be temporary.

“There’s no point in being ultra-orthodox. A lot of people are going to be hurt by a dreadful recession. If you think a fiscal stimulus is going to do any good then you could strive to see if you can afford it.”

Hat tip: Anthony Painter

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4 Responses to “Osborne and Clarke at odds over VAT cut”

  1. Shamik Das

    RT @leftfootforward: Osborne and Clarke at odds over VAT cut:- http://is.gd/4CDVk HT: @anthonypainter

  2. Anthony Painter

    RT @shamikdas: RT @leftfootforward: Osborne and Clarke at odds over VAT cut:- http://is.gd/4CDVk HT: @anthonypainter

  3. Stuart MacLennan

    What Boy George has consistently, fundamentally, failed to understand is that the benefits of the VAT cut go way beyond boosting consumer spending. For the vast majority of small businesses the cut in VAT was not passed on to the consumer but rather used to help improve their own cash-flow. Although I suppose Osborne and Little don’t quite fall into the category of ‘small’ businesses.

  4. Billy the Kid

    So you think it’s fair to rip off consumers to improve the business bottom line eh Stuart?

    And you want to be an MP – you’ve made the right choice with the Liebour Party then.

    After all it’s full of thieving, lying hypocrites like Mcnaulty, Balls, Harman, Smith, Brown and Bliar and co…

    …hey with the principals you show here of justifying dishonesty by UK businesses you should feel right at home.

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