MPs' bid to block VAT rise fails

A cross-party bid to stop a hike in VAT to 20 per cent next year has failed in Parliament. A proposed amendment to the Budget-enabling Finance Bill...

A cross-party bid to stop a hike in VAT to 20 per cent next year has failed in Parliament.

A proposed amendment to the Budget-enabling Finance Bill by Scottish and Welsh nationalists to halt the rise was rejected by a majority of 295.

In another vote on an increase in VAT by 2.5 per cent to come in on January 4, 2011, the government secured a majority of 75, with 321 voting for and 246 against.

Treasury minister David Gauke said the rise was "unavoidable" to help tackle the deficit.

However SNP MP Stewart Hosie called the VAT hike "regressive, socially damaging and economically dangerous".

Lib Dem MP Andrew George, backed by four other Lib Dem backbenchers, also tabled an amendment to limit the VAT rise to 18 per cent.

But Gauke added: "We had to raise VAT because there was no money left."

Pub industry experts expect the price of a pint to rise by around 6p when the increase comes in next year.