Ken Clarke backtracks on VAT

On Channel 4 News last night, Ken Clarke categorically denied that he had ever called for a VAT cut. In fact, he repeatedly called for a cut in November 2008.

On Channel 4 News last night, Ken Clarke categorically denied that he had ever called for a VAT cut. But Left Foot Forward can this morning reveal that in the autumn of 2008, Clarke called repeatedly for a VAT cut before and after it was announced in the pre-Budget report by Alistair Darling.

Last night in his TV debate with Business Secretary Peter Mandelson, Ken Clarke denied point blank that he had ever supported a cut in VAT.

SNOW: If we look into these figures, the real cause of getting the 0.1 per cent [growth] was the cut in VAT which you agreed with.

CLARKE: No I didn’t.

MANDELSON: You called for it before you were put into line by George Osborne.

CLARKE: No I did not call for it.

Watch it:

On November 11, 2008, following an interview on BBC News, Clarke was quoted in his local paper, the Nottingham Evening Post, in an article titled “Clarke suggests VAT cut”:

“It would have to be temporary because public finances could only take a short-term hit,” said the Rushcliffe MP.

“There is going to be a big drop in consumer spending, and a cut may encourage people to buy something which they otherwise wouldn’t have.”

Later that month in an interview to The Times, Clarke clearly calls for a VAT cut:

Despite his loyalty to the party leadership, he is not afraid to put forward his own ideas. The Government should, he says, consider cutting VAT to 15 per cent in the Pre-Budget Report on Monday – an idea that is certainly not Tory party policy. “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.”

Just two days later, Chancellor Alistair Darling announced the 2½ per cent cut VAT.

In the Commons on November 26, 2008, Clarke said:

“Everyone knows that my preference for fiscal stimulus, if we could afford it, would be a VAT reduction, but I do not have time to argue that case. All possible approaches have upsides and downsides, but VAT reductions have a bigger impact on big ticket items such as cars, furniture and carpets, particularly when we approach the magic period in which the temporary VAT reduction is about to go up again.”

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.