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Finance Bill

I am grateful to be called to contribute to this debate, Sir Michael. I touched on the VAT cut in my contribution on Second Reading, so it is a pleasure to be able to join in the Committee deliberations from the Back Benches. Much of the debate, and indeed the Liberal Democrat amendment to the clause, is an attempt to estimate the impact of the VAT cut in relation to other stimulus measures that have been introduced. Much has been said this evening about the difficulty of measuring the extent to which the apparent increase in retail transactions is attributable to the VAT cut, as opposed to other things. I should like to give a bit of colour: now that we are in May, data have been published that tell us what has happened to different categories of retail sales since the VAT cut came into effect. In the first quarter of this year—from January to March—like-for-like sales in the food sector rose by 5.3 per cent., but like-for-like sales in the non-food sector fell by 2.9 per cent. That is according to the Monitor retail sales survey, which is one of the most widely respected retail sales measurements. That pattern was followed again in April, the figures for which came out very recently. In that month, like-for-like sales overall increased by 4.6 per cent. as against last April. At first sight, that would seem to suggest that the Government's VAT cut had had a positive impact on sales, but I have to inform the Minister that that may well be something of an illusion. The total spent on food during that period has risen by less than food inflation over the same period. That indicates that the volume of food sold over those four months is lower than it was a year ago; it is negative. It is therefore erroneous to suggest that there has been an increase in food sales by volume during the period. As I have already indicated, non-food sales have actually declined during that period, so it would be hard for any statistician to be able to determine that there had been an increase in retail sales as a result of the VAT cut.