Finance Bill

I would like to talk to amendment 47, which has not yet been mentioned. Certain issues have been ignored in this debate. The impact of VAT on expenditure deciles is an important matter. I think that the Opposition reject that analysis, but the size of the household budget is a key determinant. Many people with disabilities are on quite a low income, through no fault of their own. A better way to analyse their situation is therefore to look at those poorer households by expenditure decile. The Institute for Fiscal Studies accepts that, in its analysis of the Budget, it ignored the fact that a cost of living increase in benefits is brought in every April, calculated on the basis of either the consumer prices index or the retail prices index. We do not yet know what impact the VAT increase will have on the CPI or the RPI in January, but we do know that, the last time VAT was increased, the CPI went up by about 1.5%, and the RPI by about 1.1%. If we look at households by expenditure decile—that is, taking into account the budget of the household—we see that estimates show that the poorest households face an increase in costs of just under 0.5%. I believe that the expenditure decile is an entirely reasonable mechanism to use in this instance. So in January, we would expect them to see that increase, and in April they will have an increase of 1.5%, because they are on the CPI, rather than 1.1%. The poorer households will find themselves better-off on a cash basis after April. Amendment 47 raises an important issue.