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| Version 13 | Version 14 |
|---|---|
| MPs get emergency budget debate | MPs get emergency budget debate |
| (about 1 hour later) | |
| The shadow chancellor has secured the emergency House of Commons debate he had demanded into Chancellor Alistair Darling's "crisis" 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. |
| Speaker Michael Martin said it was an important enough issue to prompt a three-hour debate on Wednesday. | Speaker Michael Martin said it was an important enough issue to prompt a three-hour debate on Wednesday. |
| It comes as a draft Treasury document shows the government considered a VAT rise to 18.5% for 2011/12. | |
| The Treasury says that was rejected but Tory leader David Cameron said it was evidence of a "secret tax bombshell". | The Treasury says that was rejected but Tory leader David Cameron said it was evidence of a "secret tax bombshell". |
| Shadow chancellor George Osborne had said it was a "disgrace" there had been no debate planned into Mr Darling's "reckless gamble". | Shadow chancellor George Osborne had said it was a "disgrace" there had been no debate planned into Mr Darling's "reckless gamble". |
| 'Public scepticism' | '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. | 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. | 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 | 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". | 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. | "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. | 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. | The debate will start an hour after the weekly Prime Minister's Questions, likely to be dominated by economic arguments. |
| 'Tax bombshell' | '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. | 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. | 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." | 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 | 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". | 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. | 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. | 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. | 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". |
| Lion's share | Lion's share |
| In his report on Monday, the chancellor unveiled plans for record borrowing and the VAT cut. | In his report on Monday, the chancellor unveiled plans for record borrowing and the VAT cut. |
| 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. |
| Darling warns banks on lending | Darling warns banks on lending |
| 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. |
| 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 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. | 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. |
| HAVE YOUR SAYI believe the best help would be to cut public transport costs and fuel costs - then everyone benefitsRoy, CroydonSend us your comments | HAVE YOUR SAYI believe the best help would be to cut public transport costs and fuel costs - then everyone benefitsRoy, CroydonSend us your comments |
| 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". | 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. | 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. |