Finance Bill

Indeed; I have seen for myself the impact on those border areas. I am not sure that the Treasury, in applying its very blunt instrument approach to changing taxation, has given any serious consideration to these serious issues which will significantly affect communities, the retail industries and so forth. It is necessary to reflect on whether raising VAT is the most effective way of reducing the deficit. We know that the Government have an arbitrary strategy, which is partly driven by ideology and a desire to reduce public spending as a proportion of our economy per se —disconnected entirely from the deficit and debt. They have set an arbitrary time scale and are doing it so steeply that it will affect not only public services but the taxpayer in a very harmful way. We should not have a permanent imbalance between regressive and progressive taxation. I hope that when growth eventually returns to the economy, Treasury Ministers, Opposition spokespeople and others might be able to find better and fairer ways of raising revenue. The hon. Member for St Ives referred to the setting of the banking levy at a puny level and to giving corporation tax away to the banks. There are other sources of fairer revenue generation out there. It is not the case that Labour Members are saying no to all measures; there are alternatives, and it is crucial to bear that in mind. I am particularly worried about the inflationary impact of the proposed change. The Government are taking a big gamble in the choices that they are making. They must be seriously hoping that the economic cycle hits successfully by the time that we move into the next calendar year, because having such a big increase in taxation at that moment could jeopardise our already fragile growth record. More than that, we are already hearing from some members of the Monetary Policy Committee and others their worries and concerns about persistent inflation. VAT changes such as this will certainly do nothing to help. It would be good practice for Ministers generally to accept, or at least suggest, that reviews should be undertaken periodically. I shall be interested to hear what the Minister says on that point, particularly to his hon. Friend the Member for St Ives. The VAT increase is of such a scale that a re-authorisation request of some level should be part and parcel of the measure. Ministers should from time to time have to ask for that. I would not be surprised if the Government planned to ratchet up taxation early on in the Parliament to such a high degree—more than is necessary to satisfy the markets and so forth—so that in later years they can offer little tax give-aways and sprinkle a little bit of stardust on an unsuspecting electorate who will have forgotten about the VAT change. It is the Opposition's job to remind the general public that they will be paying through the nose for an ideologically oriented change. I therefore hope that hon. Members will see the spirit behind my amendment 22.