This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/uk_politics/7747197.stm

The article has changed 15 times. There is an RSS feed of changes available.

Version 12 Version 13
Tories attack 'reckless' Darling MPs get emergency budget debate
(about 5 hours later)
The Conservatives have accused Chancellor Alistair Darling of taking a "reckless" gamble with the UK's finances in his pre-Budget report. The shadow chancellor has secured the emergency House of Commons debate he had demanded into Chancellor Alistair Darling's "crisis" pre-Budget report.
Shadow chancellor George Osborne said the country faced "huge risks" and a "trillion-pound" public debt. Speaker Michael Martin said it was an important enough issue to prompt a three-hour debate on Wednesday.
The government says many people will gain from next week's VAT cut and that it will act as a boost to spending. It comes as a draft Treasury document shows the government considered a 18.5% VAT rise for 2011/12.
Mr Darling told the BBC he was not prepared simply to "let the recession take its course". The Treasury says that was rejected but Tory leader David Cameron said it was evidence of a "secret tax bombshell".
Lib Dem leader Nick Clegg said ministers needed to get "really tough" with banks to force them to increase business and personal lending or to "bypass" them by injecting money into the economy through other routes such as local authorities or the Post Office. Shadow chancellor George Osborne had said it was a "disgrace" there had been no debate planned into Mr Darling's "reckless gamble".
'Public scepticism'
Earlier Mr Darling said he would be happy for there to be a debate but said the Tories had only made the request on Tuesday.
Mr Osborne said there was an urgent need for a debate on key tax changes, such as the plan to reduce the rate of VAT from 17.5% to 15% for 13 months, to be introduced next week.
There are running away from the argument because they are losing the argument George Osborne Treasury 'eyed VAT hike to 18.5%'UK to suffer 'severe' recessionGovernor warns banks on lending
He said there was "widespread scepticism" among the public and retailers about the proposal's "merits".
"There are running away from the argument because they are losing the argument," he told MPs.
Unlike the Budget, the pre-Budget report (PBR) is not usually followed by a debate but the Tories argue this one was a Budget in all but name.
The debate will start an hour after the weekly Prime Minister's Questions, likely to be dominated by economic arguments.
'Tax bombshell'
Among them will be the proposal to increase VAT to 18.5% from 2011 - which was apparently mistakenly included in documents published alongside the PBR online.
Mr Cameron said the government had promised to show how they would pay for its plans but the document showed they were planning a VAT increase.
He told the BBC: "That's why the budget doesn't add up, that's why there's such a big black hole, that's why everyone is saying this budget isn't convincing and it isn't. There's a secret tax bombshell coming down the road at every family in the country."
KEY POINTS VAT cut by 2.5 percentage points45% tax rate on earnings over £150,000 from 2011All National Insurance to go up by 0.5% from 2011Economy to shrink by up to 1.25% next yearBorrowing to hit record £118bnPublic spending growth cut to 1.2%Phased increase in vehicle excise duty£60 Christmas gift for pensioners At-a-glance: Pre-Budget reportAnalysis: A political budgetLansley apology for blog entry
The Treasury says the proposal "was considered and rejected" and the chancellor always considered "a range of policy options, most of which are rejected".
A spokesman said the final decisions were clearly set out in Monday's PBR.
Earlier Mr Osborne has said the country was facing "huge risks" and a "trillion-pound" public debt from measures outlined in the PBR.
Lib Dem leader Nick Clegg has urged ministers to get "really tough" with banks to force them to increase business and personal lending or to "bypass" them by injecting money into the economy through other routes such as local authorities or the Post Office.
It comes as Bank of England Governor Mervyn King told MPs it was essential banks started lending again at normal rates and "in the last resort", the government may need to "intervene directly to ensure the flow of lending continues".It comes as Bank of England Governor Mervyn King told MPs it was essential banks started lending again at normal rates and "in the last resort", the government may need to "intervene directly to ensure the flow of lending continues".
Income tax Lion's share
In his report on Monday, the chancellor unveiled plans for record borrowing. In his report on Monday, the chancellor unveiled plans for record borrowing and the VAT cut.
He said VAT would be cut from 17.5% to 15% from next Monday for 13 months, to encourage spending.
To pay for that in future years Mr Darling said that from 2011 National Insurance would rise by 0.5% and there would be a new 45% tax rate for earnings above £150,000. There would also be a sharp slowdown in public spending growth.To pay for that in future years Mr Darling said that from 2011 National Insurance would rise by 0.5% and there would be a new 45% tax rate for earnings above £150,000. There would also be a sharp slowdown in public spending growth.
KEY POINTS VAT cut by 2.5 percentage points45% tax rate on earnings over £150,000 from 2011All National Insurance to go up by 0.5% from 2011Economy to shrink by up to 1.25% next yearBorrowing to hit record £118bnPublic spending growth cut to 1.2%Phased increase in vehicle excise duty£60 Christmas gift for pensioners class="" href="/1/hi/uk_politics/7746188.stm">At-a-glance: Pre-Budget report class="" href="/1/hi/uk_politics/7746912.stm">Analysis: A political budget class="" href="/1/hi/uk_politics/7748085.stm">Lansley apology for blog entry Darling warns banks on lending
The Conservatives are demanding a full parliamentary debate on the measures in the pre-Budget report.
They argue that, given its importance, it deserves the same level of scrutiny as a full Budget.
Mr Osborne told BBC Radio 4's Today programme that making banks pass on interest rate cuts to firms was more important than a temporary VAT reduction.
He said: "I think you could directly insure - for a premium to protect the taxpayers' interest - lending from banks to businesses to get credit flowing, to keep people in work, to stop businesses folding.
"These measures would do far more than a 2.5% cut in VAT - a temporary cut which would be paid for later with massive tax rises coming down the track."
'Intake of breath'
Mr Osborne added that he would help families by freezing council tax - paid for by savings within government.
He also said: "They [the government] are taking a huge risk with the public finances."
Mr Osborne added: "I don't believe that the way through this recession is to tell people there is a massive tax bombshell coming down the track.
People earning less than £40,000 won't be paying more. The burden really is falling on people on higher incomes Alistair Darling
"I think that will have an effect on behaviour. It will make a recovery more difficult... We can see what a mess they have left this country in."
The Tories say people earning £20,000 and above will be worse off partly as a result of the National Insurance increase, but the government argues only those on incomes of £40,000 and above will lose out - due to the £145 rebate offered to basic rate taxpayers.
Mr Darling is gambling that an increase in borrowing will diminish the downturn.Mr Darling is gambling that an increase in borrowing will diminish the downturn.
'Prepared to help'
He denied that the New Labour project - which ruled out raising income tax rates - was dead.He denied that the New Labour project - which ruled out raising income tax rates - was dead.
Mr Darling told Today: "All governments, including the New Labour government of the last 10 years, redistribute money by definition." Mr Darling told the BBC's political editor Nick Robinson that people earning more than £150,000 would shoulder the "lion's share" of the tax increases from 2011 onwards.
He said: "People earning less than £40,000 won't be paying more. The burden really is falling on people on higher incomes."
Mr Darling added: "What matters more to people at the moment is are we prepared to help them and their businesses and the country as a whole get through this difficult period.
"Or do we simply say we are not prepared to do that and let the recession take its course?"
Later on BBC Radio 4's World at One programme Business Minister Lady Vadera said she recognised that the temporary VAT cut would be "difficult" for some small retailers in the short term - because of the need to change prices.
But she said she expected cuts to be passed on to consumers as "soon as practical".
Asked about Mervyn King's comments about intervening to force banks to lend, she said the government would do "everything that it takes and it would be unwise to be talking about things that may happen in the future".
HAVE YOUR SAYI believe the best help would be to cut public transport costs and fuel costs - then everyone benefitsRoy, CroydonSend us your commentsHAVE YOUR SAYI believe the best help would be to cut public transport costs and fuel costs - then everyone benefitsRoy, CroydonSend us your comments
But she said there would be a new scheme to guarantee some lending to small businesses from the banks and said the government would be monitoring banks' lending practices and putting pressure on them to support "viable businesses". He also defended the decision to sharply raise borrowing levels to help the economy through the recession saying it would make the "pain shorter and make sure we get through this quicker than would otherwise be the case".
Liberal Democrat Treasury spokesman Vince Cable said the pre-Budget report measures did not go far enough and that he doubted that the VAT cut - which will cost £12.5bn - would be sufficient to give the economy a boost.Liberal Democrat Treasury spokesman Vince Cable said the pre-Budget report measures did not go far enough and that he doubted that the VAT cut - which will cost £12.5bn - would be sufficient to give the economy a boost.
He said the government "had to do something", but added: "Our criticism is about the way they did it.He said the government "had to do something", but added: "Our criticism is about the way they did it.
"We think the tax cuts should have been concentrated on low-paid workers, people on low, middle incomes, cutting their income tax on a permanent basis and financing it from the top end of the scale.""We think the tax cuts should have been concentrated on low-paid workers, people on low, middle incomes, cutting their income tax on a permanent basis and financing it from the top end of the scale."
The Lib Dems have tabled a motion calling for the VAT cut to be dropped although there is little chance of it going to a vote.