The Bickerstaffe Record

Being Labour, Cotterill on the Council

VAT speech

07.26.10 | 2 Comments

Below is a transcript of my speech to Full Council last week about the Coalition VAT hike, plus my summing up at the end of the debate.

The only things of note about it all is that I was so sure of the Tories’ response, and the kind of amendment they would put on the night (which I’ve copied below), that I was able both to script my summing up response in full, and to ‘spike their guns’ in my opening speech by arguing the detail of the Basic State Pension rise before they were able to use it in their defence. 

Although they left their nonsense about index-linking state pension in their amendment, they didn’t bother to try and defend it as I’d already taken it apart before they got there.  

The only bit of the whole thing I ad-libbed in my summing up was the first bit (which I’ve added in from memory of what I said) about the fact that not a single Tory mentioned the people of West Lancashire in their response.

I’ve put a few links in to my information sources.  You can see the blogging influence, and thanks to Sunny for the input.

Motion on the agenda

“Council notes:

That the increase in VAT from 17.5% to 20% announced in the Government’s June Budget will fall hardest on those least able to afford it.

That the increase in VAT will lead to higher prices for goods and services; will have a disproportionate impact on pensioners and other low income groups; and will have a severe impact on businesses, charities and community groups in West Lancashire.

That the effect of the increase in VAT, when taken with other measures in the Budget, will be unfair to pensioners, who have not had a compensatory increase in other benefits and allowances.

That the way the VAT increase will affect pensioners and other low income groups runs counter to the Government’s Coalition Agreement statement on 20 May 2010 that it would “ensure that fairness is at the heart of those decisions so that all those most in need are protected.”

That the Institute of Fiscal Studies has stated the VAT increase was not “unavoidable,” as the Chancellor of the Exchequer said in his Budget speech.

Council resolves:

To write directly to the Chancellor of the Exchequer raising concerns about the impact of the proposed VAT increase on pensioners, other vulnerable groups and businesses in West Lancashire.

To call on the Members of Parliament representing West Lancashire to stand up for West Lancashire pensioners, businesses and wider community, to voice their opposition to this unfair increase in VAT, and to vote against it in Parliament.”

My speech (max time allowed 5 minutes)

Why is this motion about VAT, a matter not under the direct control of the ruling administration?

We could have used the time available to address the council’s service cuts in light of the dire warnings we get from the previous warnings on the agenda tonight.

But we know that in many ways the group opposite are just the lapdogs of their new government.  

In terms of cuts, it is their government who’ll be slashing and burning, and we don’t realistically expect the Tory group here to be doing anything other than wringing their hands and say it’s all forced upon them. 

Resisting the cuts will be our job.

Councillor opposites:

This motion is aimed at giving you a chance to stand up for the people of West Lancashire over a matter under which you are under no particular duress, and about something your own party leadership gave you no inkling about before they took office.

You can, like your LibDem Warren Bradley down the road, speak out about the rise.  Yes, Warren Bradley, a LibDem, showing some spine! Even if what he says is about the LibDems electoral demise rather than how the VAT rise will hurt the people of Liverpool.

So, at the heart of the June Budget is a VAT rise for which neither the Tories nor the Lib Dems have any mandate – a VAT rise to 20% which will hit pensioners hardest. 

This is in contrast to Labour’s plan for halving the deficit in four years, which met the timetable set out by the G20 a month ago, without an unfair VAT rise, without putting the recovery at risk and without hitting peoples’ jobs. 

The VAT rise will cost each household in the country over £500, but it will hit the most vulnerable hardest.

Pensioners for example…..

Pensioners will have to pay the full cost of the VAT hike – but those over 65 will not receive any increase in their personal allowance to partially compensate.

The Government has tried to claim that they are helping pensioners by linking the Basic State Pension to earnings in 2011 rather than 2012. But because earnings are expected to be lower than prices that year, this is an empty promise that will not make one penny of difference to pensioners.  In addition the move to use CPI as the measure of inflation for uprating the Basic State Pension means that it will be £76 lower in 2013/14 than it would be if RPI were used. The Budget also announced that the additional state pension will in future be increased by CPI rather than RPI, meaning that by 2015 the state second pension will on average be £114 a year lower.

But I know you’re unlikely to believe me.  So let’s see what your very own Treasury Select Committee said in its report about the budget yesterday, when it comes to the VAt rise.  Your own report states:

‘We asked our expert witnesses whether the VAT increase was a ‘progressive’ or a ‘regressive’ measure. Robert Chote told us that the key issue when assessing this question was whether you looked at the impact of a VAT rise on people “according to their living standards in a particular snapshot as measured by income or over a lifetime period”. He explained that VAT looked particularly regressive when compared against income because “the poorest decile spend a relatively high amount relative to their income, you hit high spenders hardest and, therefore, not surprisingly that shows it to be regressive”.

That’s right.  VAT rises hit the poorest hardest, especially pensioners.

But again, why trust me?

Before the election, your new mates the Liberal Democrats warned that the Conservatives would raise VAT.   They were right.

During the election campaign, the Conservatives repeatedly denied that they had plans to raise VAT.

Here’s George Osborne in The Times, 10 April 2010

We have no plans to increase VAT.

VAT rises are unfair and regressive – and both David Cameron and Nick Clegg know it.

Here’s David Cameron:

You could try as you say put it on VAT, sales tax, but again if you look at the effect of sales tax, it’s very regressive, it hits the poorest the hardest. It does, I absolutely promise you. Any sales tax, anything that goes on purchases that you make in shops tends to… if you look at it, where VAT goes now it doesn’t go on food obviously but it goes very very widely and VAT is a more regressive tax than income tax or council tax. (Cameron Direct, Exeter, 8 May 2009)  

Here’s his mate Nick Clegg (though after the Prime Minister Questions ‘personal capacity’ debacle today, it’s unclear whether he is part of the government or not):

Well you clearly can’t write budgets in the future but what you can say is that the only way you can avoid a huge hike in VAT, which let’s remember is a regressive tax, is by making sure that you take some of the decisions that we’ve done. (Nick Clegg, BBC Today Programme, 7 April 2010 )

Here’s another one of your government lot, Simon Hughes, just days before the budget:

 I hope we don’t have a VAT increase because it is the most regressive form of tax, it penalises the poor at the same rate as the rich (BBC Daily Politics, 15 June 2010).

This is what your own leaders said.

But don’t trust them.  Who would?  Here’s some independent expert opinion:

The independent National Institute of Economic and Social Research (NIESR) says VAT tax rises do more harm than other tax rises would  in its report of 21 June 2010.

The independent Institute for Fiscal Studies (IFS) says a VAT rise will have most impact on those with the least money.  The poorest 10% of households would lose twice as much as a percentage of their income as the highest 10% because what they spend represents a higher proportion of what they earn.

You are within your right, I submit, even in your own party’s terms, to stand up against a tax which hits the poorest hardest, by backing this motion, perhaps also with appropriate amendments that this can support about ways in which this council might alleviate at least a little of the hurt that the VAT rise will bring, assuming its introduction.  Such steps might entail, for example, looking properly at off-peak concessionary travel for older people rather than simply pretending to have done so.

Tory amendment put on the night

Council notes:

That the increase in VAT from 17.5% to 20% announced in the Government’s June Budget was a tax rise made necessary by the appalling deficit created by the previous government. 

That the Labour former Chief Secretary to the Treasury confirmed this when he left a note for his successor saying  ‘I’m sorry but there’s no money left’.

That the rise in VAT will not apply to essentials such as food, children’s clothes or domestic fuel and that the increase in the personal tax threshold of £1,000 will especially benefit people on lower household incomes.

That the restoration of the earnings link for state pensions is something which the previous government merely talked about for 13 years but which the current government will implement from next April for the benefit of every pensioner in West Lancashire.

Council resolves:

To write directly to the Chancellor of the Exchequer acknowledging the strong start that he has made in addressing the budget deficit and deploring the actions of the Labour government in running up debts which will have to be paid by future generations.

My summing up and reponse to the Tories (max allowed 3 mins)

What strikes me most is that not a single one of the councillors opposite has bothered to mention the impact of the VAT rise on residents.  They simply don’t seem to care. 

Instead they’re happy to wave their hands in the air and talk nonsense about the ‘debt crisis’.

So let’s address this head on.

It is simply nonsense to talk of Labour’s debt crisis.

Discretionary spend (QE) helped get us through the worst into which we’re now being cast but was still only 15% of the overall additional spend, most of which came from ‘cyclical adjustments’ of decreased tax revenue and increased welfare expenditure because of the related recession.

And it is ridiculous to claim that we have to reduce the deficit at the speed your government is proposing, with the wholly fallacious claim that if we don’t it will increase borrowing costs and hurt business confidence.

Look at Ireland, which has followed the path your government now wishes to follow.  A massive austerity package.  The reward?  On Monday its credit rating was cut again, and borrowing may become more costly.  So much for your economic vandalism reassuring the markets.

And reassuring business? Stimulating growth? Really, through these narrow minded, economically illiterate methods?  

Utter rubbish.

While the Tory media is breathlessly repeating the Tory line that our deficit is unmanageable, we get this extraordinary stuff from the latest Markit/ CIPS UK (PMI) survey about the fall in confidence related to the Conservative budget.

The survey showed that business confidence for future activity suffered its greatest monthly drop in its 14-year history, with the CEO saying:

June’s data painted a worrying picture for the UK services sector as confidence suffered a serious blow following the government’s emergency spending cuts. Purchasing managers voiced grave concerns that budget cuts and VAT rises will tip the scales and amplify the likelihood of the UK slipping back into recession.

The Financial Times have reported that the fall in business confidence was bigger than either after 9/11 or the Lehman brothers bank crash.

And people are noticing. That’s why Francis Maude was booed when he talked stupidly of government bankruptcy on Newsnight the other week – people are starting to find you out.  That’s why David Cameron’s popularity in his traditional honeymoon period has fallen in three months by the level it took Tony Blair’s popularity to fall.

So don’t talk to me about responsible financial management until you’ve read some basic financial literacy primers. 

Then get real, get honest, and get responsible.

You have a final chance to show that you have some mettle, to show that you care about your citizenry, to show some sense of responsibility.

That’s by supporting this motion.


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