Tony Blair yesterday told the Parliamentary Labour Party: "It will mean they will stop at nothing. They will think there is nothing to stop them extending VAT. Last time, they said they would not put VAT on fuel ... But they did just that."
Today, Labour will spell out that warning with a new poster campaign. The poster shows a hand breaking an egg, accompanied by the message: " Next Tory tax? pounds 10.50 a week VAT on food. Enough is enough."
The Conservatives yesterday held a press conference heralding the latest fall in unemployment, warning that if Labour were elected it would threaten the increase in employment.
But the Labour attack on tax will be as potent, given the record of the last election campaign, when John Major said he had no plans to extend VAT coverage - before extending it to domestic fuel and power bills.
Labour will also be able to mobilise other precedents, such as the 1979 election campaign when the Tories denied an allegation that Margaret Thatcher planned to double VAT. In fact, it was increased from 8 per cent to 15 per cent for some items.
Today, Labour will produce a letter from the Chancellor, Kenneth Clarke, in which he said last month: "I can only reaffirm that I have never promised not to extend the scope of VAT."
The Chancellor moved swiftly to scotch Labour's claim last night. After discussing the matter with the Prime Minister, Mr Clarke accused Labour of a "deliberate lie".
He said: "Neither the Prime Minister or I have any intention of imposing VAT on food so long as we are in government.
"This deliberate lie shows Labour will say anything to get elected and do anything to avoid explaining where the money would come from to fund their pounds 30bn of spending pledges."
The Prime Minister also made it clear that he was furious over what he regards is a "disgraceful smear" by Labour.
The Government's Commons difficulties were aggravated last night when an all- party select committee broke up without reaching a decision on the balance of power in the committee that will scrutinise the Finance Bill.
Ministers have argued that in spite of the fact that the Government has no overall majority following the death of Barry Porter, the Tory MP for Wirral South, it should maintain a majority in the Finance Bill committee because Wirral South counts as a Tory seat until a by-election decides otherwise. That was not agreed by last night's meeting of the Committee of Selection, and the issue will have to be resolved by a vote of the whole House.
As it would not be in the interests of the Ulster Unionists to back the Government in that vote, the result could be touch-and-go.Reuse content