Rebels fail to topple VAT hike

By Rebecca Burns

The controversial VAT increase has survived a vote in the Commons despite hostility from both government and opposition MPs.

MPs voted 321 to 246 in favour of increasing VAT to 20% from January 4th 2011, giving the government a healthy majority of 75.

But the government had to defeat 16 opposition amendments to the bill during last night’s debate, including government rebels.

Treasury exchequer secretary David Gauke said VAT was “one of the few levers available” to help reduce the deficit.

“Any sensible government would consider it. And, given the circumstances we’re in, any government would do it,” Mr Gauke said.

Five Liberal Democrats, led by the St Ives MP Andrew George, proposed a rise of just 0.5% to 18% but were defeated.

Liberal Democrat opposition follows on from a now-embarrassing election campaign pledge to oppose a Conservative ‘VAT bombshell’.

However, none of the three main parties entirely ruled out the prospect of a rise in VAT before the election.

The SNP attempted to scrap the rise altogether, in an amendment that was defeated by 295 votes.

Chancellor George Osborne hopes the increase will raise £13bn towards reducing the £155bn budget deficit.