Drivers and drinkers pay for VAT defeat

Drivers, smokers and drinkers will bear the main burden of the emergency mini-Budget unveiled by Kenneth Clarke yesterday to meet the pounds 1bn cost of the Government's defeat over VAT by the House of Commons on Tuesday.

In a Commons statement which made minimal concessions to right-wing pressure for deeper cuts in public spending, Mr Clarke announced new rises in duty from 31 December of 1p on a litre of petrol, 6p on 20 cigarettes, 1p on a pint of beer, 5p on a bottle of wine and 26p on a bottle of spirits.

As Government instability over the last fortnight was reflected in a new poll showing Labour's support at an all-time high of 61 per cent, Mr Clarke blamed the ''disadvantages'' of the new taxes on the Opposition and rebel Tory MPs who combined to halt the second stage increase in VAT on domestic fuel.

Despite some discontent on Thatcherite wing that savings had not been achieved through spending cuts, Mr Clarke's statement was greeted with relief by the majority of Tory backbenchers.

There were some differences at the Cabinet meeting before Mr Clarke's statement, with a right-wing minority suggesting more of the fiscal gap should have been bridged by spending cuts beyond the pounds 6.9bn already planned for 1995-96 in the Budget 10 days ago.

But the whole Cabinet accepted John Major's summing up that a clear majority favoured Mr Clarke's recommendations.

Mr Clarke told the Commons yesterday he had seen no reason to revise his judgement on the balance between tax increases and reductions in what he said had been an ''extremely tight'' spending round.

Right-wing ministers were partially mollified that the rest of the savings - beside the pounds 200m social security compensation cancelled because VAT on fuel will not rise in April - will be found by cutting the spending control totals by pounds 300m for 1996-97 and the next year.

Mr Clarke denied last night he had deliberately chosen headline-making indirect taxes which punished the public for the Government's defeat. The duty rises had been his ''second choice'' for the Budget, he said, adding: ''I did not allow the circumstances of the defeat to influence my choice.''

The Chancellor declared that Gordon Brown, the shadow Chancellor, had a ''nerve'' to protest about them and that he should explain to the drinks industry - protected by last wek's budget because of competition from cross channel liquor sales - and rural motorists why they had been necessary.

But Mr Brown said that while the Commons were relieved at the cancellation of the VAT increase ''they will now ask why it had to take 18 months and four Budgets to bring forward the alternative measures that the Government could have proposed in the first place''. Mr Brown warned the new taxes would cost the ''typical taxpayer'' another 43p for week, and said Labour would only support the tobacco tax.

Asked, in a reference to his role as the Tory right's latest fall guy for the Government's misfortunes, whether he thought the ''right was out to get him'', the Chancellor said: ''You can't be in politics as long as I have without having a few people who are out to get you.'' And the right-left tensions between backbenchers resurfaced dramatically last night when Terry Dicks, a Major loyalist turned on George Gardiner, Thatcherite MP for Reigate, and accused right-wingers of ''conspiring'' against the Prime Minister.

Today's Gallup poll in the Daily Telegraph makes grim reading for Mr Major as he joins his fellow heads of government at the EU summit in Germany today. It shows Labour with a record lead of 39.5 points. Even with the figures adjusted to take account of Tory reluctance to confess allegiance, the poll shows Labour at 50.5 per cent, the Tories at 28.6 and the Liberal Democrats at 15.2.

(Graphic omitted)

Reports, pages 2, 3

Leading article, page 17

News
people'It can last and it's terrifying'
News
people Emma Watson addresses celebrity nude photo leak
Arts and Entertainment
tv
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
footballRadamel Falcao and Diego Costa head record £835m influx
News
i100
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Arts and Entertainment
Danish director Lars von Trier
tvEnglish-language series with 'huge' international cast set for 2016
Life and Style
tech
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

HR Generalist (standalone) - Tunbridge Wells - £32,000

£30000 - £32000 per annum: Ashdown Group: HR Generalist (standalone) - Tunbrid...

Year 3 Teacher Plymouth

£23500 - £40000 per annum: Randstad Education Plymouth: Year 3 Primary Teacher...

Junior Software Developer - Newcastle, Tyne & Wear - £30,000

£25000 - £30000 per annum + benefits: Ashdown Group: Junior Web Developer / J...

Systems Administrator (SharePoint) - Central London - £36,500

£35000 - £36500 per annum: Ashdown Group: Systems Administrator (SharePoint) -...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering