Oral Answers to Questions

Debate between Mike Gapes and Danny Alexander

Tuesday 22nd March 2011 Commons Chamber

[Mike Gapes (Ilford South) (Lab/Co-op)]

8. What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax.

[The Chief Secretary to the Treasury (Danny Alexander)]

The Government have taken urgent and unavoidable action to tackle the deficit and to put the public finances on a sustainable footing. That is essential for jobs and growth. Raising the standard rate of VAT is an important element of the plan and, in November, the Office for Budget Responsibility’s forecast, which took full account of the VAT increase, was for total employment to rise by 1.1 million in 2015.

--- Later in debate ---

[Danny Alexander]

The VAT rise of course leads to increased prices in the shops, and that affects everyone in the House.

[Mike Gapes]

The Chief Secretary to the Treasury had a meeting—a crisis meeting, according to The Daily Telegraph—with senior retailers a few weeks ago. Was there any discussion of the impact of the VAT rise at that meeting?

[Danny Alexander]

I did indeed meet senior retailers from the British Retail Consortium and we discussed a whole range of issues in a private meeting. If the hon. Gentleman is interested in the consortium’s views, he should listen to what its director general said on 20 October, the day of the spending review. He said that delays in public expenditure cuts

“would just store up more pain for later, risking increased borrowing costs, higher taxes and more job losses.”