Clarke challenged on his VAT-cut history
By politics.co.uk staff
Ken Clarke is facing questions about his views on the VAT cut after he insisted during an interview yesterday that he had never promoted it.
Appearing on Channel 4 news last night, the shadow business secretary was told by Jon Snow that the “real cause of getting the 0.1% [GDP growth] was the cut in VAT which you agreed with”.
Mr Clarke insisted he did not agree with it. When pushed on the matter, he said: “No, I did not call for it.”
But this morning, the blog Left Foot Forward reprinted several statements from Mr Clarke suggesting he had backed a cut to VAT.
“It would have to be temporary because public finances could only take a short-term hit,” he is quoted as saying in the Nottingham Evening Post on November 11th 2008.
“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.”
The website also cites a Times article later in the same month in which he appears to reiterate the statement.
“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,” the newspaper quotes him as saying.
The Rushcliffe MP also apparently told the Commons: “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.”
Arguments over the effectiveness or otherwise of the government fiscal stimuli have raged since the Britain emerged tentatively from recession yesterday with GDP growth of just 0.1%.
The opposition claims the UK’s belated and vulnerable exit from recession shows the incompetence of the government’s response to the crisis, but on Newsnight last night chancellor Alistair Darling suggested the damage to the UK came predominantly because of the economy’s reliance on the banking sector.
