Labour in disarray over VAT policy


Plaid Cymru has accused the UK Labour Party of being in disarray over their policy on Value Added Tax.

Prior to this Tuesday's Finance Bill debates in the House of Commons, Labour Shadow Chancellor Ed Balls had argued for a temporary reduction in VAT to help struggling families and small businesses. However instead of supporting an existing amendment to the Bill tabled by Plaid Cymru, which would bring VAT back down to 17.5%, Mr Balls has instead called for merely a review of the current rate.

This follows a similar u-turn last year when Labour claimed to be against the Conserative-Liberal Democrat VAT hike to 20% but abstained when the issue was voted on.

Plaid Cymru Treasury spokesperson Jonathan Edwards MP said:

“The Labour Party is in complete disarray on VAT.

“Last year they said they were against the ConDem's VAT hike to 20% but then abstained in the vote. This year, Ed Balls argues publically that we should have a temporary cut to help struggling families and small businesses - but in Parliament will only ask for a review rather than support our motion.

“VAT is a highly regressive tax which hurts those at the bottom of society most.

“With economic growth struggling, and VAT being a major factor in the well above target inflation, a temporary cut in VAT would help families under financial pressure.

“High inflation impacts strongly on those with a fixed income, such as pensioners and those on benefits, meaning that they have been doubly hit in the last year – and that’s before the cuts agenda kicks in.

“Last week, Labour's Shadow Minister for Wales Owen Smith called for such a temporary VAT cut. Will he have the courage of his convictions and support our motion or follow the Labour line as always?”

1. Owen Smith quote

2. 13 Jul 2022 – Vote to keep VAT at 17.5%
All bar 5 Labour MPs abstained