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Finance Bill

I am sorry that the hon. Gentleman has declined so pointedly to endorse his right hon. and learned Friend's viewpoint, but other Conservative Members agreed with it. I suspect that, over time, it will gain currency on the Conservative Benches, given the evidence that is becoming clearer and clearer. We can say with certainty that retail sales and the condition of the economy would be worse without the temporary reduction and that it is benefiting all businesses—large and small, VAT-registered or not—by supporting the whole economy and increasing demand to higher levels than would otherwise be experienced. Of course, the VAT cut is especially beneficial to those on low incomes because it is worth 1.6 per cent. of gross income to households in the lowest income decile, compared with 0.5 per cent. to those in the highest decile. To those who suggest that it would be a good idea if the change took place on 1 December, I emphasise that that date is immediately before the busiest retailing weekend of the year. It would be a much worse date on which to make the change—that was clear from our discussions with the British Retail Consortium. There is not much support for that. I want specifically to tackle one point, which was raised in today's debate and on Second Reading. Indeed, I was surprised that an amendment had not been tabled about the difficulty for the many businesses that will remain open beyond midnight on 31 December in coping with two different VAT rates in a single trading day. Her Majesty's Revenue and Customs will allow a few hours' grace for businesses such as pubs and clubs, which will serve customers over midnight on 31 December, to enable them to charge the same 15 per cent. for a session that goes beyond midnight into the early hours of 1 January. HMRC will work with businesses on the details, but I think that that will address the concern. I hope that I have reassured the hon. Member for Taunton that we have taken steps to secure the objectives that his amendment would deliver, in so far as they are achievable, and that he will feel able to withdraw the amendment.