The Tories, not the EU, are responsible for VAT on domestic fuel

So, the latest salvo from the Leave camp is an assertion that the EU is stopping us from cutting VAT on domestic fuel.

There is one man amongst the ranks of the Brexiters who knows all about VAT on domestic fuel. That’s right. Step forward former Chancellor Norman Lamont. It was he who decided to put VAT on domestic fuel at the rate of 8% from April 1 1994. The EU didn’t force him to do this. He was doing it to cut public spending, something Tories have a bit of an obsession with. Not only that, but he would have been quite happy to raise it to 17.5% the year after.

Here’s a story from the Independent at the time where Mr Lamont is doing his usual Je ne regrette rien line.

Fellow now Brexiteer Michael Portillo, then Chief Secretary to the Treasury, added his twopence worth:

And in an atmosphere of growing confusion, a damaging Commons row broke out last night after Michael Portillo, Chief Secretary to the Treasury, suggested that poorer people would not suffer too much because of the ‘swings and roundabouts’of the Income Support system.

A parliamentary briefing from 1997 gives more detail.

Member States are only permitted to charge zero rates which were in place on 1 January 1991. No Member State can introduce a new zero rate or reintroduce a zero rate once it has been abolished. Following the abolition of the zero rate on fuel & power on 1 April 1994, the UK may charge a rate as low as 5% on these supplies, but no lower.

Had Norman Lamont done the fair thing by the poorest households at the time, none of us would be paying any VAT on our fuel now. If people want someone to blame, he is your guy, not the EU. He knowingly introduced a tax that he knew could not be put back to zero because of a change in EU taxation law that the UK Government had agreed. If the Tory government had wanted to, it could have vetoed that clause. Did it? No.

This is not the only issue where Leave have tried to blame the EU for the Tories’ actions. Yesterday, Jo Swinson had to slap down Steve Hilton for saying that the EU tried to stop the coalition from offering extra parental leave. Jo was the minister who introduced shared parental leave, a key Liberal Democrat policy, and she says that it was the Tories who put paid to that idea. From the Independent:

Jo Swinson, a former business minister whose portfolio in the Coalition included women and equalities issues, told The Independent there was no “conceivable universe” in which the EU could prevent Britain from offering workers extra parental leave.

Ms Swinson said that far from campaigning for more time off for new mothers and fathers, the Conservatives actually “fought tooth and nail” against a Liberal Democrat initiative to extend parental leave.

She said her party, led by Nick Clegg, had wanted to follow a successful Scandinavian trial which saw men take up a fairer portion of paternal leave if a greater number of weeks were offered to the couple as a whole.

“Maybe he (Mr Hilton) was negotiating on his side and it was blocked by his Conservative colleagues,” she said.

“But in my time, it was very much the Conservatives who were fighting tooth and nail our attempts to make shared parental leave a success.

“The way EU directives work is that they set out a minimum number of weeks; if we wanted to offer more we would be able to,” she added.

“I was minister from 2012 and parental leave was in my portfolio. I do not understand in what conceivable universe it could be true that the EU ‘blocked’ plans here.”

We do know that the EU has done more to ensure workers’ rights than any Tory Government ever has, securing such things as maternity rights, paid holiday, and limiting the amount of hours you can be asked to work.

Do Labour voters interested in workers’ rights really trust the likes of Boris Johnson and Michael Gove with them? They have not been known for supporting them in the past. The EU, on the other hand, has a proven track record of delivery on that front.

The problem is that the Leave campaign secures huge publicity with their false claims and people don’t necessarily hear the rebuttal.

All we have is to get out there and talk to as many people as we can in the next 3 weeks. It’s conversations on doorsteps, in the streets, amongst our families and friends that really could make the difference. We can’t afford to duck this. We might be knackered after elections, but this matters. People might vote to leave an organisation that benefits every single one of us on the basis of a bunch of false claims from Leave – some of them, like the insinuation that 76 million Turkish people are headed for Scotland if we don’t vote to leave – containing more than a strong whiff of racism.

The Leave campaign is breaking just about every rule of decent campaigning that there is. It’s down to us to make sure they don’t get away with it.

* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings

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43 Comments

  • Lorenzo Cherin 31st May '16 - 1:25pm

    A very sensible article, that convinces me for staying in more than many .

    There are two compelling reasons why I am voting to stay in despite not remotely sharing the liking , let alone Europhilia some feel, for the EU.

    The argument from the centre left implicit in Caron and what is written above . That if we leave the EU, we actually have to trust the right wing Tories to protect our rights , and we do not !

    The argument , most recently put from the centre right by Neil Fergason , historian , often with different priorities , yet it works either way , that we as a country have far more clout than the Brexiters admit , to influence the EU.I do actually agree with his argument.

    Most of the so called debate ,so far, has been so off putting ,to any of us who are definitely EU pragmatists, not EUphobes or EUphiles, it almost makes me want to write in Jo Grimond or Roy Jenkins on my ballot , as a revival of a classier form of debate from before I was on the scene !

    So more substantive reasons with a subtle approach , as above , do more than the daily party e mail or the noise on the TV !

  • I agree, but the problem isn’t just the Tories. Successive governments have tried to avoid direct taxation as a way of raising revenue and seem intent on telling the electorate that you can have things like the NHS without paying for them and that direct tax will leave them poorer than indirect tax. This is why you end up low wage economies and much trumpeting about taking more people out of taxation.

  • The VAT issue is just one of many where the Leave campaign are leaving the rest of us standing. Irrelevant to blame the Tories, blame the wholly inadaquate campaigns run or not run by Labour and the Lib Dems. On the campaign alone we currently deserve to lose. The mood swing I pick up talking to people is currently definately for Leave. As a solid European I am very sad but not surprised.

  • So to be clear, the Leave assertion is correct: The EU is preventing the UK government from cutting VAT on domestic fuel, because of the EU rule the UK government signed up to. However, it was the (sovereign) UK government who (freely) abolished the zero rate on domestic fuel. Not a bad idea in itself – although perhaps with hindsight should have been a carbon/green levy) and thus would of stepped around the EU rule…

    As an aside: I’m finding much of the Leave/Remain debate having parallels to a debate about gym membership – focusing on the costs and monetary benefits of membership and missing the reason for joining in the first place was to improve your health and fitness. Whilst Remain are missing the reasons for being a member of EU, Leave are being your typical salesperson telling you how much money (and perhaps time) you will save by ceasing your lifetime membership and then giving lots of suggestions into what can be done with the money saved, knowing full well that the vast majority of people will do none of those things and so in a year or so will be in the market for a new gym membership…

  • Stevan Rose 31st May '16 - 6:40pm

    I swear I heard Gove, arch-Tory-in-chief, say this morning that VAT (not specifically on fuel) is a tax that hits the poorest and most vulnerable hardest. From the party that has relentlessly promoted indirect taxation on consumption rather than income. Does his sponsor know he’s off the lead? Oddly the rate of VAT on cake remains zero. Marie Antoinette would be so proud.

    I thought they’d already spent the £350m a day we don’t actually spend now on building hospitals. From the broadcast thus evening it looks like we’re all going to get BUPA Premium membership if we leave and can go up to A&E for instant chesty cough treatment with no paperwork. From the party that has done it’s utmost to starve the NHS of resources. Of course they’ve forgotten the cost of day passes to the free market steam room. Wouldn’t it be funny if that cost more than the all inclusive annual gym membership.

    The best thing about this referendum is that it will hopefully destroy forever the careers of Gove, Grayling, Fox, and Farage. Until they get on a party list for the Welsh Assembly that is. Not Boris though, he will switch sides as easily as the rest of us change our socks, saying he was never a really committed Brexiteer. You can see it coming now.

  • Please corrected if I am wrong, but I believe the vat rate is still 5 % on domestic fuel. In 2010 we campaigned against any increase in vat – but promptly voted for a rise to 20% from 17. 5. Holier than thou butters no parsnips I’m afraid. Yet another signed pledge not yet in the dustbin of history.

  • @Caron
    “We do know that the EU has done more to ensure workers’ rights than any Tory Government ever has, securing such things as maternity rights, paid holiday”

    While the EU minimum standards on workers’ rights are welcome – in fact they are just about the only thing nudging me towards Remain at the moment – in the interests of accuracy it should be pointed out that many of our maternity rights (in particular, the length of maternity leave) are much superior to the minimum demanded by the EU. Our legal holiday entitlement is also superior to the EU minimum. You can’t reasonably argue, therefore, that the EU is giving us better maternity or leave rights – though with Tory rule likely for 15-20 years, the EU guarantees are very desirable.

    @Stevan Rose
    “I thought they’d already spent the £350m a day we don’t actually spend now on building hospitals.”

    This seems to be one of Remain campaign’s main lines of attack at the moment – that the Leave group have already promised to spend that money several times over.

    I’m not impressed. This is a referendum, not a general election. The Leave campaign are not vying to be the government and as such are not putting forward spending plans. All they are doing is suggesting things the saved money could be spent on, which is not the same thing.

    I’m afraid this is turning into a carbon copy of the AV referendum – both sides equally dishonest and competing to see who can shout “liar!” the loudest.

  • Peter Davies 31st May '16 - 8:08pm

    We didn’t campaign against any VAT rise. Vince Cable specifically stated that we would not rule out a rise though we had alternative ways of raising the money. The ‘Bombshell’ poster was pointing out that the Tory manifesto had a big hole in it which could only be filled by a VAT hike. We were absolutely right about that.

  • @ Peter Davies A tad disingenuous, Peter. That’s not how 48% of Lib Dem voters saw it at the time…… so would say they were misinformed or that it always pays to read the small print ?

    The Observer 27 June 2010 “Nick Clegg is suffering a fierce public backlash over the coalition’s VAT rise, with almost half of Liberal Democrat supporters saying the tax U-turn makes them more likely to desert the party.

    A YouGov/Brand Democracy survey, which will alarm already restive Lib Dem MPs, shows 48% of those who voted Lib Dem at the election are now less inclined to back them again as a direct result of the increase in VAT from 17.5% to 20%.

    Clegg campaigned vigorously against a VAT rise in the election campaign, warning of a Tory VAT “bombshell”. But since he signed off on Tuesday’s emergency budget which announced an increase from January next year, the Lib Dem leader has argued that a rise was “unavoidable” because the public finances were in a far worse state than the new government expected”.

  • Peter Davies 31st May '16 - 9:45pm

    We stated our position clearly. Our opponents weren’t in a position to make anything of it because they were both planning VAT rises.

  • That’s not what the electorate and a lot of our own supporters thought.

    Failure of communication… or are 48% of our supporters not terribly bright ? Do tell.

  • Please don’t derail this into a debate about VAT generally. It’s a post about the irony of Leave banging on about VAT on fuel like the Tories care about the poorest when we are in this situation because of things that several of the most prominent Leave campaigners did.

  • Richard Underhill 31st May '16 - 10:46pm

    Lorenzo Cherin: David Cameron was campaigning with Sadiq Khan and made Labour’s case about the EU protecting workers rights, maternity rights, etc. He presumably knows his colleagues better than we do.

  • @Caron
    “It’s a post about the irony of Leave banging on about VAT on fuel like the Tories care about the poorest…”

    I presume those in the Leave camp who are not Tories and who opposed VAT on fuel in the first place are entitled to complain that it’s the EU’s fault the VAT is irreversible?

  • @Stuart – You could complain that it’s the EU’s fault, but that is overlooking the fact that the sovereign UK government either didn’t read the rules or decided to use the rules to prevent a future (Labour) government from reversing the change…

  • David Evans 1st Jun '16 - 6:33am

    Peter Davies – It’s odd you say “we stated our position clearly” on VAT. I clearly remember the fuss our Campaign made about the Tory VAT Bombshell in the run up to the election. Can you tell us where we made our position clear, because like most of what happened over the period, with hindsight it seemed to me to be just a lot of smoke and mirrors.

  • @Stuart – the EU sets the minimum levels, we choose to “gold plate” them. The Tories / Leave are trying to claim that the EU blocked some parental leave, when in fact it was the Tories who blocked it, not the EU. That’s the lie, and I note that the Leavers have backtracked quietly on that point.

  • @ Caron. “Please don’t derail this…………”

    Sorry, Caron, ………. but it’s impossible to derail a train when the engine driver has driven it into the buffers and is fraternising with the self same said Tories in the staff canteen – like they care about the poorest. I’m afraid folk have long memories and the public aren’t daft.

  • Hands up all those who believe that, “IN” or “OUT”, the current government’s priority is cutting VAT on anything?

  • Still nothing from Labour or the Lib Dems, no loud strong voices statements in the media supportung Remain. The only voice on this morning is Gisella Stewart? Labour and the Lib Dems throwing this, deliberately? .
    On current form we deserve to lose this referendum.

  • heakes 1st Jun ’16 – 9:45am………….Still nothing from Labour or the Lib Dems, no loud strong voices statements in the media supportung Remain. The only voice on this morning is Gisella Stewart? Labour and the Lib Dems throwing this, deliberately? .
    On current form we deserve to lose this referendum………..

    Both us and Labour are making plenty of speeches/statements on the subject….The media is only interested in reporting the Cameron/Johnson hysterical quotes with a few from Osborne/Gove/Farage thrown in for good measure….

    Even the ‘Stayer’ Sadiq Khan has only made the news because of his ‘history’ with Dave…

  • Caron
    Not a “debate about VAT generally”, but about the (perhaps milder) hypocrisy of our party using VAT as a weapon to point out hypocrisy among Tories, when we have a lot of issues about it ourselves, ie replacing revenue that would have been drawn from direct taxation in supporting the 2010 rise in VAT, along with the raising of the income tax threshold. Yes, we have had this discussion here many times before, but that does not deprive it of its power.

  • Yes, even when the media invites Labour or Lib Dem spokespeople on, they very often cut short the points they are making, or divert them on to other questions. A good example was Emma Reynolds MP last night on Newsnight, cut off repeatedly by Evan Davies, while making good and drowned out arguments. One of his interruptions even featured him telling her “yes, we well know the shape of this discussion” (or some such), when the majority of people do NOT know arguments beyond the economy, immigration and regulation!

  • Peter Watson 1st Jun '16 - 1:07pm

    @Tim13 “A good example was Emma Reynolds MP last night on Newsnight, cut off repeatedly by Evan Davies”
    To be honest, I wasn’t very impressed with her. Evan Davies seemed to interrupt Chris Grayling a lot more and, although I’ve always thought Grayling was pretty useless, he came across much better. He seemed well-briefed and spoke in a measured way whereas Emma Reynolds sounded more muddled and keen to dismiss everything as an attempt to avoid talking about the economy which is the only (albeit very important) topic that the Remain campaign seems happy to discuss.
    I just wish the Remain campaign would find a better mix of positive messages instead of simply rolling out doom-laden warnings of economic apocalypse and ridiculing the Brexiters (who are mostly easy targets). In a parallel thread (https://www.libdemvoice.org/buy-the-brexit-pig-in-a-poke-50756.html#comment-404493), Stevan Rose makes an excellent, simple and convincing case for Remain, and I would like to see our politicians take a similar approach.

  • Peter Watson 1st Jun '16 - 1:16pm

    As far as I can tell, before the 2010 election the Tories said they had no plans to raise VAT and the Lib Dems did not rule it out.
    Weeks later, after discussions behind closed doors, VAT was raised by the Coalition government and defended by some on this website as being progressive.
    So how can we be sure that it was not the Lib Dems’ idea? 😉

  • Paul Holmes 1st Jun '16 - 2:19pm

    @Peter Watson: I disagree. I had never heard of Emma Reynolds until I saw her on Newsnight last night but I thought she gave a good performance. Perhaps there is hope yet for a generally dreadful Labour Party!

  • @ Simon Shaw You’re quite right, Simon, Vince did make the position quite clear …. on LDV … on 23 June, 2010….. a tad after the election.

    Unfortunately, a certain Stephen Tall (the future Lord Tall of the Skimpies ?) trumpeted Nick’s very explicit Press release on LDV on 8 April… a tad before the election.

    “Liberal Democrats have costed, in full, our proposals for tax cuts. We can tell you, penny for penny, pound for pound, who pays for them. WE WILL NOT HAVE TO RAISE VAT TO DELIVER OUR PROMISES. The Conservatives will. Let me repeat that: OUR PLANS DO NOT REQUIRE A RISE IN VAT. The Tory plans do”.

    I guess Vince must sing a bit more pianissimo.

    However, I’m surprised you go on to say “ it’s not Lib Dems who were “defending” it as being progressive”. Well, Vince was a bit less diminuendo on LDV on 23 June, 2010 when he wrote,

    “ VAT is often denounced as if it were the most regressive tax of all. However, the truth is more nuanced. As a proportion of expenditure, it is in fact mildly progressive”,

    How about that for a great slogan for Tim in 2020… “Vote Lib Dem for a rise in VAT… It’s mildly progressive ! Let me repeat…. It’s mildly progressive”.

  • Peter Watson 1st Jun '16 - 2:57pm

    @Simon Shaw ‘“Behind closed doors”. You mean in contrast to Labour governments which always held their Cabinet meetings in public?’
    Sadly, it was not in contrast to the way any single party governments have operated.
    I believe that Coalition government should have looked different.

  • @Simon Shaw
    Have you not seen this?

    https://www.libdemvoice.org/nick-clegg-reveals-tories-13bn-vat-bombshell-18755.html

    Nick Clegg (in the context of a press release entirely about VAT): “So if you’re on an ordinary income, you have a choice. If you want your taxes to rise: vote Labour or Conservative. If you want your taxes to fall: choose the Liberal Democrats.”

    Can you understand – even a teeny bit – why a voter who read the above might have been disappointed in the Lib Dems for increasing VAT just a few weeks later?

  • Ah, Simon, good to hear from you…… and which bit of “WE WILL NOT HAVE TO RAISE VAT TO DELIVER OUR PROMISES” expresses any mights, maybe’s or caveats in our then leader’s statement ? I would have thought that was abundantly clear.

    I know if I was a genteel old gent (or lady) living on my own in Southport and contemplating voting for Dr Pugh I’d find that pretty reassuring and convincing. I’d be even more convinced when I heard young Nick repeat “OUR PLANS DO NOT REQUIRE A RISE IN VAT” almost in the same breath.

    If the worthy Vincent chose to dampen things down a bit later and to rain on Nick’s parade, don’t you think it would have been better if Nick had done it himself ?

    Singing from the same hymn sheet ? Mmm…….

  • @ Simon Shaw…… Simon, could I ask you – the master of asking questions but not answering them – are you happy that the party gave a mixed message to the electorate on VAT when the Leader issued a double ‘read my lips statement’ and the Economic spokesman then had to whistle a very different tune on discovering what young Sir Galahad had said ? Guaranteed to either confuse the electorate or make them distrust us, neither of which was helpful or astute IMHO.

    Reminds one of Ollie saying to Stan, “Well, here’s another nice mess you’ve gotten me into”… to which Stan no doubt replied, “It’s the Business Department rather than the Treasury for you, old chap”.

    Shame Vince didn’t want the leadership when he could have had it on a plate…. the party might have been in a totally different state today and we might not have been going through this nonsense of a referendum…..The rest, as they say is ………………………

  • @Simon Shaw
    Jon Swaine in the Telegraph, reporting on the launch of the infamous VAT Bombshell poster :-

    “When questioned, Mr Clegg himself repeatedly declined to promise explicitly that VAT would not rise under the Lib Dems, before eventually saying it would not.”

  • Nick Clegg……”Liberal Democrats have costed, in full, our proposals for tax cuts. We can tell you, penny for penny, pound for pound, who pays for them. We will not have to raise VAT to deliver our promises. The Conservatives will. Let me repeat that: Our plans do not require a rise in VAT. The Tory plans do.”…..

    To use Simon’s 8.42pm words…”Could it really be any clearer?”

    As far as I, most LibDems and the electorate were concerned; “NO!”..But, then, we thought the same over the NHS, tuition fee, etc. promises….

  • @ Simon Shaw “But neither am I happy when you and others misrepresent what actually happened”………

    Sorry, Simon, but if there was any misrepresentation it lay with the original perpetrator – and I don’t mean Vince. Unfortunately, I think you’ll find the mass of the electorate think the same. Sadly, every time anyone in the party goes anywhere near the subject of VAT it automatically triggers off memories in the public mind whether we like it or not. Some things never go away……. viz. Strubes’ cartoons of pheasants and mangold wurzels pursued LL.G. for the rest of his life..

    To be fair, defending the indefensible does you credit.

  • David Raw 2nd Jun ’16 – 10:27am………..To be fair, defending the indefensible does you credit…..

    Magnanimous but misguided. As along as we, as individuals and a party, continue to tell the electorate that ‘What they saw’ was not ‘What really happened’ we will neither regain their trust nor support…

  • The EU is planning to take ever more control of indirect and direct taxes and benefits – many are starting to wake up to this.

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