Government refutes 20% claims

The government has refuted claims that it considered inflating the level of VAT before eventually deciding to reduce it.

Chancellor Alistair Darling announced on Monday (24 November) that VAT would be cut by 2.5% to 15% as part of his Pre-Budget Report.

Since then, though, it has come to light via a leaked document that the government was perhaps considering raising the indirect tax rate, which led Conservative leader David Cameron to confront the Prime Minister in parliament.

Gordon Brown replied: "I've said we considered all options, but we rejected options [as well]."

"We chose options that were the fairest to ordinary and hard-working families."

Stinging criticism was also levelled at the Prime Minister's fiscal strategy by Shadow Chancellor George Osborne, who accused of Labour of creating a "complete basket case of an economy".

Earlier this week, the head of the British Chambers of Commerce, David Kern, told SmallBusiness.co.uk that the reduction of VAT would not help the economy.