Pre-Budget Report

I am going to make some progress—[Interruption.] I have taken a lot of interventions; we shall see whether the Chancellor takes anything like as many. I turn to the tax changes in the Budget. First, there are the VAT changes—let me start with the temporary VAT reduction, before coming to the permanent VAT rise. The Government do not seem to realise that the stimulating effect of a temporary reduction when prices in shops are already falling is more than outweighed by the cost of a permanent rise in taxes on the incomes of those whom they expect to go shopping. This is what the senior tax partner at Grant Thornton said after the Chancellor spoke on Monday:"““It's the wrong time to cut VAT, as it's an inefficient use of taxpayers' money when you have a trade deficit. And it's an odd thing to do when inflation is falling and some fear we are heading for deflation.””—" [Interruption.] Labour Members do not like what the senior tax partner at Grant Thornton says. How about this, from President Sarkozy of France? He asked yesterday why"““Should we use up our available room for manoeuvre on reducing prices when prices are already falling?””" The German Chancellor has also ruled out a temporary reduction in VAT—[Interruption.] I am being asked whether we will vote against it, but the Government are not giving anyone a chance to vote on the reduction before it comes into force on Monday. It is only because we called for an emergency debate that we are even discussing it in the House of Commons. Far from rushing to support the move, retailers have been quick to point out the administrative nightmare of re-ticketing prices, reprinting catalogues and price lists and reprogramming cash tills, which will cost them tens of millions of pounds—[Interruption.] They talk about prices, and that brings me to the permanent VAT rise—