Prime Minister Cameron yesterday refused to rule out increases in fuel duty, and said the VAT increase to 20 per cent is here to stay, while he also lashed out at strikers.
Interviewed on the Andrew Marr Show, Cameron played down the possibility of a ‘fair fuel stabiliser’ as called for by the Federation of Small Businesses (see page 3).
He said there were ‘difficulties’ with a fair fuel stabiliser.
He continued: ‘I think it is worth looking at. I don’t want to raise people’s hopes too far because it is a difficult issue.’
This is despite the Tories’ manifesto pledge to look into a ‘fair fuel stabiliser, and Cameron’s claim only last week that he was considering ways to help cash-strapped motorists.
Asked about the increase in VAT from 17.5 per cent to 20 per cent, he said measures to tackle the budget deficit would have to be ‘pretty permanent’, but he hoped the 50p tax rate for top earners would be scrapped.
Cameron was asked about whether the VAT rise was a temporary measure, following comments from chancellor Osborne, who last week said he regarded it as ‘permanent’.
The prime minister told the Andrew Marr Show the government was trying to deal with the ‘structural budget deficit’, the gap between spending and taxes.
He said: ‘That is structural, that’s not going to go away because of the growth, so the changes we are making have to be pretty permanent too.’
He added: ‘If you didn’t do VAT, what tax would you do? The first category there would probably be National Insurance. That’s what Labour have committed to.
‘And putting up National Insurance when you’re trying to get the economy growing and jobs growing would be a perverse thing to do.’
Shadow chancellor Alan Johnson responded: ‘I now hear the prime minister has said, whereas the 50 per cent tax rate for the richest in our society would not be permanent, the VAT increase would.
‘Now that’s extraordinary given that it has twice the effect on the poorest in our society as on the richest.’
Asked how many jobs were predicted to be lost as a result of the VAT rise, Cameron said any tax rise would have an impact on the economy but added that if the budget deficit was not tackled Britain would be ‘in a hole like Ireland or Greece’ and confidence would ‘sap’ out of the economy.
He went on to warn: ‘Striking is not going to achieve anything and the trade unions need to know they’re not going to be able to push anyone around by holding this strike or that strike or even a whole lot of strikes together – they can forget it.’
He said that ‘we will not change course because one union or another union wants to kick off.’
