Finance Bill

Lilian Greenwood Excerpts

Tuesday 6th July 2010 Commons Chamber

[Mr Jones]

That is a very good point. The Budget offers no help whatsoever for the small businesses to which my hon. Friend referred. However, it is not just small businesses that are affected. Some supermarkets are very wary about the increase because of what they fear will happen to their businesses. The finance director of Tesco has called on the Government to freeze VAT at 17.5% because, he says, the economy is very fragile, saying:

“The recovery is happening but it’s fragile and therefore the balance is important”.

He says VAT

“is going to be part of the austerity package but it is a question of when you do it. The best thing would be to wait a bit.”

Let me also give Sainsbury’s a mention. According to Eye Spy MP, the Chief Secretary has been shopping there and buying Quavers. I am not sure whether they were intended to sustain him during tonight’s debate. Justin King, the chief executive of Sainsbury’s,

“warned the incoming UK government to refrain from increasing VAT amid speculation it could be an option considered by”

the coalition Government.

As has been pointed out, the VAT increase will have a real effect on retail business large and small. As for the consumer viewpoint, Mike O’Connor, chief executive of Consumer Focus, has said:

“Thousands of the things we buy every day are going to get more expensive. The VAT rise will hit the poorest consumers hardest as people who earn least already spend proportionately more of their income on VAT and it will be even more important for consumers to shop around for the best bargains.”

[Lilian Greenwood (Nottingham South) (Lab)]

Will not many of the poorest families be doubly hard hit? Not only will they face rising prices as a result of the VAT increase, but at the same time their benefits will be uprated in line with the consumer prices index rather than as previously with the retail prices index.

[Mr Jones]

There will indeed be a double effect on those families. It is all very well saying that people can shop around, but in my constituency—a rural constituency but, as I said in my maiden speech, one with urban problems—they cannot do that when they have no access to a car and the only option is public transport. Those are the communities who will be hit hardest, and I am sure that they exist in all constituencies. The new hon. Member for North East Cambridgeshire, for instance, spoke of the pockets of deprivation in his own constituency. Those rural poor families will be hit harder than most.

--- Later in debate ---

[Chris Williamson]

I am grateful to my hon. Friend. Certainly the increases will impoverish countless people living on modest incomes in my constituency. That is very clear. The point that I was trying to make, though, was that growth is the key to recovery, and by investing in our economy we can secure that growth.

[Lilian Greenwood]

Has the growth of the retail sector in Derby made a significant contribution to the city? I know that the Westfield centre there seems to have attracted many people. Does my hon. Friend share my concern that the increase in VAT will have—[Interruption.]

[Mr Speaker]

Order. Members are not helping the hon. Lady. May I say to her that it is entirely understandable that she looks behind her, but that she must face the House?

[Lilian Greenwood]

Does my hon. Friend share my concern about the impact that the VAT increase will have on the retail sector? I understand from a recent report that 77% of retailers felt that it would have a negative, quite negative or very negative impact on their sales, potentially leading to a 1.6% reduction in retail staff, 47,000 employees losing their jobs and more than 9,000 stores closing—

[Mr Speaker]

Order.