Browne: Wasteful VAT cut only benefiting the rich

3.52.00pm BST (GMT +0100) Tue 7th Apr 2009

The Government’s VAT cut is benefiting the richest households the most, figures highlighted by the Liberal Democrats have revealed. The richest households will save around £1.2bn from the Government’s VAT cut, while the poorest 10% will only save an estimated £360m.

The savings work out at an average of over £9 a week for the richest households, while poorer households are saving less than £3, despite recent claims from Gordon Brown that families would save at least £5 a week.

Pensioners are among the worst hit by the cut, with the poorest households saving only £2 a week while the richest save almost £7.

Commenting, Liberal Democrat Shadow Chief Secretary to the Treasury, Jeremy Browne said:

"The Government's defence of its wasteful VAT cut continues to unravel.

"Its benefits have been overstated and most of the money is not helping the poorer households that are struggling in the recession.

"This ineffectual VAT cut is costing £1bn a month. Ministers should scrap it immediately and spend the money on transport and environmental projects which would boost the economy, create new jobs and leave a lasting green legacy for Britain."