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Value Added Tax

Parliament has decided, in primary legislation, that a reduction to the VAT rate can be made before debate in Parliament, and that is what we have done. Our actions will be different from those of the Opposition when in government. We will bring forward £3 billion of capital investment from 2010-11 to this year and next to increase capacity in the rail network, with new carriages, and in the motorway network; to improve social housing and build new homes; to renew primary and secondary schools; and to increase energy efficiency. It will put people to work, it will renovate infrastructure and it will support jobs in key industries. It will also help to put money into the economy in the coming months. However, to prevent the recession from deepening, we need to do more to put money into the economy immediately. There is a widespread international consensus that a fiscal stimulus to help the economy is the right thing to do. It is backed by parties of both left and right on every continent, by the major countries of the world, by the international institutions such as the IMF—whose chief executive has been very forthright on the subject—by the business groups such as the CBI and the Institute of Directors, the Bank of England and many more.