The VAT issue has been rumbling since 1979 when Labour claimed that the Tories would double it from eight per cent to 16 per cent.
The Tories then dismissed Labour's claims as "Labour's dirty dozen". But immediately after the election, Sir Geoffrey Howe raised VAT to 15 per cent.
It was therefore very nearly true. But the argument rumbled on. In March 1991 Norman Lamont increased the rate of VAT to 17.5 per cent in his Budget to pay for the poll tax to be abolished.
That fuelled Labour claims in the run-up to the 1992 general election that the Tories were planning to slap VAT on zero-rated goods, such as children's clothes, food, newspapers and books. The claims were denied by ministers: "There will be no VAT increase. Unlike the Labour Party we have published our spending plans and there is no need for us to raise VAT in order to meet them," John Major told Neil Kinnock in Prime Minister's questions on 28 January 1992.
"I've made the pledge in the past. I have made it clear. We have no plans and no need to extend the scope of VAT," Mr Major added on 27 March 1992.
But the assurance was not enough. VAT was imposed on domestic fuel, starting at eight per cent and rising to 17.5 per cent (later stopped), in the Budget in March 1993.
Kenneth Clarke has since reaffirmed his belief that the VAT base is too narrow. On 19 July 1994 he said in The Independent: "We exempt far too many goods and services from VAT in this country."
The Tories claim Labour is now lying. No one knows what will happen. But the Tories must rue the fact that Mr Clarke has been unusually candid.Reuse content