Finance Bill

I will be brief. This morning, I was in the Welsh Assembly in Cardiff bay and I had discussions with Jane Hutt, the Welsh Assembly Government Finance Minister. I was delighted that this afternoon, a statement was made in which the Welsh Assembly Government addressed the situation in which they find themselves in the light of the Budget. Jane Hutt made it clear that the Welsh Assembly Government intend to protect capital investment in Wales, because money is being brought forward from the Assembly Government's reserve fund. The result is that a number of capital projects that had been earmarked for being cut or delayed will now continue. The Welsh Government's economic rationale for taking that approach is that it allows effective support to be given to the construction sector and to the continuing efforts to lead Wales into economic recovery. I welcome that. Of course Labour is still in power in Wales, albeit in partnership. That approach is in stark contrast to what is happening in England, where the economic rationale is profoundly different—indeed, there is no rationale at all. This debate has been very interesting. A number of hon. Members have made the point that in the run-up to the general election both the Conservative party and the Liberal Democrats made a number of commitments about not having plans to introduce VAT increases. They recognised that VAT was regressive and that it hit the poorest the hardest—the words of the now Deputy Prime Minister. The biscuit was really taken by the poster to which a number of hon. Members have referred. We all remember that; indeed we will never forget it, and neither will the people of this country. I shall read out, by popular demand, what the Liberal Democrats poster said:""Tory VAT bombshell. You'd pay £389 more a year in VAT under the Conservatives"." They might have added that that would also be true under the Liberals. That sums up clearly the rank hypocrisy of many of the comments that we have heard today, particularly from Liberal Democrats. I wish to reinforce some of the comments that have been made about what the objective studies show, now that the dust has settled somewhat following the Budget. The Institute for Fiscal Studies has said clearly that the Budget, taken in the round, will hit Britain's poorest families six times harder than the richest. The rationale for that has been described by Howard Reed, the director of Landman Economics, who designed the model that is used for this research. He said that""a lot of public spending is 'pro-poor', with poorer households receiving a greater value of services to meet their extra welfare needs. Because of this, cuts in public spending…will tend to hit the poorest hardest."" That is a very important fact for us to bear in mind during this debate. It is also significant that Save the Children, in particular, has set out cogently and forcefully""Why the rise in VAT must be cancelled"." It points out:""Both the Conservatives and the Liberal Democrats had said in their election manifestos that they wanted to create a fairer society yet one of the first commitments of the new coalition government was to raise the rate of VAT. The 2.5% increase will mean families living in poverty will be put under even more pressure. Save the Children argues that the poorest should not pay the price for the economic crisis.""