Finance Bill

Well, I think we have all heard what the hon. Gentleman has said. I shall move on to an amendment that I would not wish to move. Amendment 54 was tabled deliberately to encourage a debate on the different levels of VAT rise that might be considered. The thinking behind it is that, if a VAT rise is unavoidable, perhaps it could be done in such a way as to involve a basket of taxes, including the bank levy, capital gains tax and corporation tax. In that way, we might have ended up having to nudge up VAT by 0.5%. When I tabled the amendment, I had not read The Times this morning. If I had added the words, "or 19%", I might have been able to persuade the shadow Chancellor to sign my amendment as well. I do not need to rehearse all the arguments behind this proposal, but I hope the House will reflect on it. I asked a parliamentary question about the anticipated yield from raising VAT by various percentage points, and I received a kind response from the Exchequer Secretary on 8 July, in which he explained that a table in""HMRC's published tax ready reckoner tables…released at the time of the Budget,"—" I have to admit that I had not seen them at that point—""shows the effects of illustrative tax changes, including the effect of changing the standard rate of VAT by 1 percentage point in each of the years 2010-11 to 2012-13. Estimates of the effect of changing the rate by different amounts can be calculated by scaling the effect of a 1 percentage point change accordingly."—[Official Report, 8 July 2010; Vol. 513, c. 414W.]" I am surprised that it is as simple as that, because I would have thought that at some point a VAT rise would have an impact on the yield as people purchased less. I did some quick calculations on this. Actually, I got some assistants who are rather better than I am with these new-fangled devices called fingers to do those calculations. An increase of half a percentage point would yield £2.425 billion in 2011-12, and £2.5 billion in 2012-13. That is clearly way below the Government's estimate of the impact of the VAT rise. The ready reckoner gives figures of £12.125 billion and £12.5 billion, which suggests that it agrees with the Chancellor's estimates. I look forward to hearing the Exchequer Secretary's views on these issues. The shadow Chief Secretary mentioned impact assessments. As he knows, I raised that issue in a previous amendment at the time of the Budget. A more thoroughgoing impact assessment than has been available thus far would be enormously helpful, and I believe that a Government should carry out such an assessment in any case when a measure is going to have a significant impact on the country as a whole. Given that the increase will not be implemented until 4 January next year, perhaps the Exchequer Secretary will agree to do some further work on this. There is a balance of opinion that suggests that the VAT increase will be more regressive than progressive. That has been debated in the Red Book and by the Institute for Fiscal Studies, as well as by other well-informed, independent organisations. I hope that the Minister will address the issue of impact assessments that the shadow Chief Secretary has quite rightly raised.