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Helen Dickinson, head of retail at KPMG, said:

Mr. Gauke: Does the Financial Secretary acknowledge that the BRC also stated that the April numbers should be treated with caution because of the weather and Easter?

Mr. Timms: Of course, but they are a data point in a growing and increasingly clear picture about what is happening to retail sales. That is in sharp contrast to what happened to retail sales in the 1990s recession, caused by the policies of the Conservative party, when there was a very different trajectory. In the first quarter of 2009, quarter-on-quarter GDP growth was minus 1.9 per cent., but retail sales growth was plus 0.9 per cent, which is a remarkable phenomenon. How is that remarkable performance to be explained? In part, of course, it is because of the cut in VAT.

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Those who argued when the announcement was made that it would have no effect on retail sales were clearly mistaken. The hon. Member for Henley (John Howell), whose contribution I enjoyed, took the view at the start of his speech that the VAT cut would have no effect. I say to him that if that is his view, he should simply examine the clear evidence from retail sales. To be fair to him, at the end of his speech he said that it was not possible to know whether the VAT cut had succeeded, so I suppose that that is at least progress in the right direction.

We can examine retail sales, and we can examine what Goldman Sachs said a couple of months ago about some earlier figures. It stated:

There is also the more recent report, which I am pleased that Conservative Members have now had the chance to have a look at, by the Centre for Economics and Business Research in the name of an adviser to the Conservative party—or a former adviser, I am not quite sure which—with the title, “Credit where credit’s due—the VAT cut is working”.

When the VAT cut was introduced, it was roundly condemned by the Opposition parties. But speaking of credit where credit is due, I pay tribute to the Liberal Democrats, who in their amendment at least acknowledge that it is right to look at the evidence before drawing a conclusion. I welcome that progress, and I hope that even the Conservative party might in the end not prove impervious to the evidence that is mounting, and will continue to mount, in the coming months. Today’s data are another significant piece of evidence.

To be fair to the Conservative party, the shadow Secretary of State for Business, Enterprise and Regulatory Reform always recognised the likely effectiveness of a VAT cut in boosting the economy. The hon. Member for South-West Hertfordshire (Mr. Gauke) declined to dissent from that view, so I take it that he agrees, although he was not able to say so. Certainly the hon. Members for Braintree (Mr. Newmark) and for Poole (Mr. Syms) both endorsed it in their remarks. I hope that in the end, other Opposition Members will come round.

Mr. Gauke: The point is that all of us on these Benches, and certainly the shadow business Secretary, made it very clear that we could not afford the VAT cut.

Mr. Timms: I hope that that shows the hon. Gentleman’s implicit acceptance that the VAT reduction has boosted retail sales, as the shadow business Secretary said that it would. If the hon. Gentleman can confirm that, I will be most grateful.

Mr. Gauke: I am explicitly saying that we could not afford it.

Mr. Timms: 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.

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9.45 pm

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.

Mr. Jeremy Browne: Thank you, Sir Michael, for giving me an opportunity to speak at the conclusion of this helpful debate. Many hon. Members will appreciate the modest but none the less welcome concession that the Financial Secretary made at the end of his remarks about the specific arrangements at the end of December and into 1 January. Never let it be said that we do not achieve anything through our endeavours on the Liberal Democrat Benches to put pressure on the Government.

My party has said all along that the VAT reduction has undoubtedly had an impact. It would be odd to maintain that the Government could spend £12 billion to £13 billion to no effect. The question is whether the impact is as profound as the Government wished for that amount of expenditure. We have had a useful discussion about that, but I hoped that the review that I envisaged, or any other review, could draw the matter out.

The timing, which is effectively the stand part dimension of the debate, is relevant. We should consider whether there needs to be an additional stimulus for consumers to go out and buy items in December, of all months. The VAT cut costs roughly £1 billion a month, but, in December, one would expect the cost to be much greater because expenditure is so much higher.

The amendment provided a useful opportunity to debate the subject in the round and, despite being urged by some hon. Members to press it to a Division, I will not. However, I will seek to vote on clause stand part. Therefore, I beg to ask leave to withdraw the amendment.

12 May 2009 : Column 774

Amendment, by leave, withdrawn.

Question put, That the clause stand part of the Bill.

The Committee proceeded to a Division.

The Second Deputy Chairman: I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.

The Committee having divided: Ayes 318, Noes 194.
Division No. 119]
[9.49 pm


Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Alexander, rh Mr. Douglas
Anderson, Mr. David
Anderson, Janet
Armstrong, rh Hilary
Atkins, Charlotte
Austin, Mr. Ian
Austin, John
Bailey, Mr. Adrian
Baird, Vera
Balls, rh Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Beckett, rh Margaret
Begg, Miss Anne
Benn, rh Hilary
Benton, Mr. Joe
Berry, Roger
Betts, Mr. Clive
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blears, rh Hazel
Blizzard, Mr. Bob
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Butler, Ms Dawn
Byers, rh Mr. Stephen
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Challen, Colin
Chapman, Ben
Clapham, Mr. Michael
Clark, Paul
Clarke, rh Mr. Charles
Clarke, rh Mr. Tom
Clelland, Mr. David
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cook, Frank
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Cousins, Jim
Crausby, Mr. David
Creagh, Mary
Cruddas, Jon
Cryer, Mrs. Ann
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
David, Mr. Wayne
Davidson, Mr. Ian
Davies, Mr. Dai
Davies, Mr. Quentin
Dean, Mrs. Janet
Denham, rh Mr. John
Devine, Mr. Jim
Dhanda, Mr. Parmjit
Dismore, Mr. Andrew
Dobbin, Jim
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Durkan, Mark
Eagle, Angela
Eagle, Maria
Efford, Clive
Ellman, Mrs. Louise
Engel, Natascha
Ennis, Jeff
Etherington, Bill
Farrelly, Paul
Field, rh Mr. Frank
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, rh Caroline
Flynn, Paul
Follett, Barbara
Foster, Mr. Michael (Worcester)
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Goggins, Paul
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hain, rh Mr. Peter
Hall, Mr. Mike
Hall, Patrick

Hamilton, Mr. David
Hamilton, Mr. Fabian
Hanson, rh Mr. David
Harman, rh Ms Harriet
Harris, Mr. Tom
Havard, Mr. Dai
Healey, rh John
Hendrick, Mr. Mark
Hepburn, Mr. Stephen
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, rh Keith
Hodgson, Mrs. Sharon
Hoey, Kate
Hoon, rh Mr. Geoffrey
Hope, Phil
Hopkins, Kelvin
Howarth, rh Mr. George
Howells, rh Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Ann
Kelly, rh Ruth
Kemp, Mr. Fraser
Kennedy, rh Jane
Khan, Mr. Sadiq
Kidney, Mr. David
Kilfoyle, Mr. Peter
Knight, rh Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, rh Mr. David
Laxton, Mr. Bob
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Mackinlay, Andrew
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Marshall-Andrews, Mr. Robert
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McDonnell, John
McFadden, rh Mr. Pat
McFall, rh John
McGrady, Mr. Eddie
McGuire, rh Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
McNulty, rh Mr. Tony
Meacher, rh Mr. Michael
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh Edward
Miller, Andrew
Mitchell, Mr. Austin
Moffat, Anne
Moffatt, Laura
Mole, Chris
Morden, Jessica
Morgan, Julie
Morley, rh Mr. Elliot
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, rh Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
O'Brien, Mr. Mike
O'Hara, Mr. Edward
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Mr. Gordon
Prescott, rh Mr. John
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, rh James
Rammell, Bill
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Riordan, Mrs. Linda
Robertson, John
Robinson, Mr. Geoffrey
Roy, Mr. Frank
Roy, Lindsay
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, rh Joan
Salter, Martin
Seabeck, Alison
Sharma, Mr. Virendra
Shaw, Jonathan
Sheridan, Jim
Simon, Mr. Siôn
Simpson, Alan
Singh, Mr. Marsha

Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Angela E. (Basildon)
Smith, Geraldine
Smith, rh Jacqui
Snelgrove, Anne
Soulsby, Sir Peter
Southworth, Helen
Spellar, rh Mr. John
Spink, Bob
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Straw, rh Mr. Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Taylor, Dr. Richard
Thomas, Mr. Gareth
Thornberry, Emily
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Ussher, Kitty
Vis, Dr. Rudi
Walley, Joan
Waltho, Lynda
Ward, Claire
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, rh Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, rh Mr. Michael
Wilson, Phil
Winnick, Mr. David
Winterton, rh Ms Rosie
Wood, Mike
Woodward, rh Mr. Shaun
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Ayes:

Ian Lucas and
Helen Goodman

Afriyie, Adam
Alexander, Danny
Amess, Mr. David
Ancram, rh Mr. Michael
Arbuthnot, rh Mr. James
Baldry, Tony
Barker, Gregory
Barrett, John
Beith, rh Sir Alan
Bellingham, Mr. Henry
Benyon, Mr. Richard
Bercow, John
Binley, Mr. Brian
Bone, Mr. Peter
Boswell, Mr. Tim
Bottomley, Peter
Brady, Mr. Graham
Brake, Tom
Brazier, Mr. Julian
Brokenshire, James
Browne, Mr. Jeremy
Browning, Angela
Bruce, rh Malcolm
Burns, Mr. Simon
Burstow, Mr. Paul
Burt, Alistair
Burt, Lorely
Carmichael, Mr. Alistair
Cash, Mr. William
Chope, Mr. Christopher
Clappison, Mr. James
Clark, Greg
Clifton-Brown, Mr. Geoffrey
Curry, rh Mr. David
Davies, David T.C. (Monmouth)
Davies, Philip
Djanogly, Mr. Jonathan
Dodds, Mr. Nigel
Dorrell, rh Mr. Stephen
Dorries, Nadine
Duddridge, James
Duncan Smith, rh Mr. Iain
Dunne, Mr. Philip
Ellwood, Mr. Tobias
Evans, Mr. Nigel
Evennett, Mr. David
Fabricant, Michael
Fallon, Mr. Michael
Field, Mr. Mark
Foster, Mr. Don
Fraser, Christopher
Gale, Mr. Roger
Garnier, Mr. Edward
Gauke, Mr. David
George, Andrew
Gibb, Mr. Nick
Gidley, Sandra
Gillan, Mrs. Cheryl
Goldsworthy, Julia
Goodman, Mr. Paul
Goodwill, Mr. Robert
Gray, Mr. James
Grayling, Chris
Green, Damian
Greening, Justine
Grieve, Mr. Dominic
Hague, rh Mr. William
Hammond, Mr. Philip
Hancock, Mr. Mike
Hands, Mr. Greg
Harper, Mr. Mark
Harris, Dr. Evan
Hayes, Mr. John
Heald, Mr. Oliver
Heath, Mr. David
Heathcoat-Amory, rh Mr. David

Hemming, John
Hendry, Charles
Herbert, Nick
Hoban, Mr. Mark
Hollobone, Mr. Philip
Horam, Mr. John
Horwood, Martin
Hosie, Stewart
Howarth, David
Howarth, Mr. Gerald
Howell, John
Huhne, Chris
Hunt, Mr. Jeremy
Hunter, Mark
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Kawczynski, Daniel
Kennedy, rh Mr. Charles
Key, Robert
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Kramer, Susan
Lamb, Norman
Lansley, Mr. Andrew
Laws, Mr. David
Lewis, Dr. Julian
Liddell-Grainger, Mr. Ian
Lidington, Mr. David
Lilley, rh Mr. Peter
Llwyd, Mr. Elfyn
Loughton, Tim
Luff, Peter
Mackay, rh Mr. Andrew
MacNeil, Mr. Angus
Main, Anne
Malins, Mr. Humfrey
Maples, Mr. John
Mason, John
Mates, rh Mr. Michael
Maude, rh Mr. Francis
McIntosh, Miss Anne
McLoughlin, rh Mr. Patrick
Mercer, Patrick
Miller, Mrs. Maria
Moore, Mr. Michael
Moss, Mr. Malcolm
Mulholland, Greg
Mundell, David
Murrison, Dr. Andrew
Neill, Robert
Newmark, Mr. Brooks
O'Brien, Mr. Stephen
Öpik, Lembit
Paice, Mr. James
Paterson, Mr. Owen
Penning, Mike
Penrose, John
Pickles, Mr. Eric
Pritchard, Mark
Pugh, Dr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Rennie, Willie
Rifkind, rh Sir Malcolm
Robathan, Mr. Andrew
Robertson, Angus
Robertson, Hugh
Robertson, Mr. Laurence
Robinson, rh Mr. Peter
Rosindell, Andrew
Rowen, Paul
Russell, Bob
Sanders, Mr. Adrian
Scott, Mr. Lee
Selous, Andrew
Shepherd, Mr. Richard
Simmonds, Mark
Simpson, David
Simpson, Mr. Keith
Smith, Sir Robert
Soames, Mr. Nicholas
Spelman, Mrs. Caroline
Spicer, Sir Michael
Spring, Mr. Richard
Stanley, rh Sir John
Steen, Mr. Anthony
Streeter, Mr. Gary
Stunell, Andrew
Swayne, Mr. Desmond
Swinson, Jo
Syms, Mr. Robert
Tapsell, Sir Peter
Taylor, Matthew
Timpson, Mr. Edward
Tredinnick, David
Turner, Mr. Andrew
Tyrie, Mr. Andrew
Vara, Mr. Shailesh
Wallace, Mr. Ben
Waterson, Mr. Nigel
Watkinson, Angela
Webb, Steve
Weir, Mr. Mike
Whittingdale, Mr. John
Widdecombe, rh Miss Ann
Wiggin, Bill
Willetts, Mr. David
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Williams, Stephen
Willis, Mr. Phil
Wilson, Mr. Rob
Wilson, Sammy
Wishart, Pete
Yeo, Mr. Tim
Younger-Ross, Richard
Tellers for the Noes:

Dan Rogerson and
Jeremy Wright
Question accordingly agreed to.
12 May 2009 : Column 775

12 May 2009 : Column 776

12 May 2009 : Column 777

Clause 9 ordered to stand part of the Bill.

Clause 11

Rates of alcoholic liquor duty

Mr. Jeremy Browne: I beg to move amendment 10, page 5, line 35, at end insert—

12 May 2009 : Column 778

‘(6A) No further amendment may be made to section 5 of ALDA 1979 within three years of the commencement of this section, unless the condition set out in subsection (6B) has been satisfied.

(6B) The condition referred to in subsection (6A) is that the Chancellor of the Exchequer shall have compiled and laid before the House of Commons a report containing an assessment of the impact of the increases in alcohol liquor duty on—

(a) the competitiveness of licenses premises, and

(b) the level of employment in alcohol-related industry,

and the House of Commons shall, by resolution, have approved that report.’.

The Second Deputy Chairman: With this it will be convenient to discuss amendment 12, page 5, line 37, at end insert—

‘(8) The Treasury will, prior to the 2009 Pre-budget statement—

(a) publish an assessment of the level of revenue yield anticipated from alcohol liquor duty based on it being levied on the rates of duty in this section, and

(b) publish an assessment of the level of alcohol liquor duty required to be levied on each type of drink on an equitable basis based on the alcohol content to generate the same level of revenue yield.’.

Mr. Browne: Amendment 10, which has been tabled by me and by some of my hon. Friends, seeks to prevent increases in alcohol duty for three years unless or until a report on its impact on the pubs and industry sector is undertaken and approved by the House in the meantime.

Mr. Greg Hands (Hammersmith and Fulham) (Con): Will the hon. Gentleman give way?

Mr. Browne: I will, although I have hardly started.

Mr. Hands: I am slightly confused by the amendment. It states

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