Finance Bill

The hon. Lady is right about the size of the structural deficit. I have never disputed that. She is also right to suggest that the VAT increase will provide some £12 billion to £13 billion more for the Exchequer. That, too, is a matter of recorded fact. However, it does not justify a short-term, fixed attempt to tackle the deficit, leaving little flexibility. Indeed, the case that she makes—that there is a great deal of uncertainty, and things change—probably justifies our original intention to go for a medium-term deficit consolidation strategy in the first place. While, as I conceded on Second Reading, it is possible that, in cash terms at least, wealthier people will pay more VAT, it is equally clear that the poorest 10% will pay considerably more of their cash to the Government as a percentage of disposable income—three times more—than the richest 10%. All that is due to choices made by the Government. They have previously argued, and I am sure will argue again this evening, that the increase was unavoidable. However, there was nothing unavoidable about putting up VAT, nothing unavoidable about an accelerated attack on the structural deficit, nothing unavoidable about a deficit consolidation plan over a fixed term, nothing unavoidable about taking £32 billion more in public service cuts on top of the cuts bequeathed by the Labour party, and nothing unavoidable about £40 billion a year of extra fiscal tightening in addition to the £57 billion or so planned in the final year by the Labour party. So this coalition Government could have avoided raising the VAT bill for the poorest families to over £31 a week.