18/12/2008 - Move to block 2.5% VAT cut rejected
An attempt to block the Government's temporary 2.5% VAT cut has been rejected by 303 votes to 223, with a Government majority of 80.
Chancellor Alistair Darling announced the temporary cut in VAT from 17.5% to 15% in the pre-Budget report as part of the Government's economic rescue package.
It came into effect on December 1 at an expected cost of £12 billion - sparking complaints from critics that it would prove ineffective in stimulating consumer demand.
Liberal Democrat treasury spokesman Vince Cable told the Commons it was neither the best nor the fairest way to help people during the recession.
He said it was "seriously defective" as a way of getting money into the economy and amounted to "small change" when prices on the High Street were being slashed to attract customers.
Frank Field (Lab Birkenhead) warned that the reduction was like "spitting in the face of an economic hurricane". He said: "I fear we may be entering into a period of the most severe economic chaos that anyone alive can remember and we now need to judge whether this VAT decrease is in any way appropriate as the stimulus to try and counter that downward spiral."
Copyright © Press Association 2008
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