Skip to main content

Consumer Demand

Volume 487: debated on Thursday 5 February 2009

4. What recent assessment he has made of the effectiveness of his Department’s policies to encourage consumer demand. (254311)

The Government have a variety of measures in place to encourage consumer demand. Within the Department, among other measures, we are conducting a wide-ranging review of the effectiveness of the consumer protection regime. That is one of a number of measures that will assist in giving consumers renewed confidence. We will announce the outcomes of the review in due course.

With the economy in recession, it is important to do everything we can to improve demand for goods and services. Has the Department considered the impact that the cut in VAT has had on increasing demand and safeguarding jobs?

As my hon. Friend will recognise, the VAT cut, and other questions around taxation, are very much a matter for the Treasury, so the Treasury will review the effectiveness of that measure. However, it is interesting to note the support from several bodies that could in no way be described as friends of the Government all the time—the Institute for Fiscal Studies is one, and the Society of Motor Manufacturers and Traders is another—but that welcomed the impact of the cut in VAT, as indeed have a number of retailers. Perhaps that is because it represents the largest single tax cut for some 20 years. It is also just one of a number of areas about which the right hon. and learned Member for Rushcliffe (Mr. Clarke) disagrees with his shadow Chancellor.

Is the Minister aware of an example of a case in which the Government are actively suppressing demand—a case about which I wrote to the Secretary of State on 10 December? I have not had a reply, despite putting down parliamentary questions. Eighty jobs in my constituency are threatened because the Government have changed the regulations, making it more difficult for foreign airlines to have their pilots trained on simulator training equipment in a company in my constituency. Is not that an example of the Government speaking with one voice and acting in another way?

If the hon. Gentleman had written to me, I would, as he knows, have been very happy to reply. I do not know what has happened in the particular case that he refers to. He has clearly written to the Department, and I will chase up a response for him as a result of his question.

As my hon. Friend is aware, many scams are taking place—phishing expeditions, for example—on computers. What is the Department doing to protect consumers from those scams?

My hon. Friend is right to say that consumer demand can suffer when people are the victims of scams. He may not be aware that the Office of Fair Trading and the Trading Standards Institute have just launched an effort to make people aware of the risks of scams—scams awareness month. I pay tribute to the all-party group on consumer affairs and trading standards, which supported the OFT and the TSI in launching that month’s-worth of awareness-raising activities just this week. It is one of a number of measures, alongside investment in scam-buster teams and teams to deal with illegal money lending, through which we are seeking to crack down on the rogues who want to exploit vulnerable consumers at this time.

Given the universally held view at home and abroad that the VAT cut has been ineffective in stimulating demand, what assessment has the Department made of the effect of the VAT cut on slumping car sales in this country?

With all due respect to the hon. Gentleman, I do not think that his view of the VAT cut is shared abroad or at home. The only place where that view is held is among the ranks of the Opposition. He would do well to review what the Institute for Fiscal Studies said about the VAT cut, and the comments of the Society of Motor Manufacturers and Traders. He might also wish to review the comments that the shadow Business Secretary made before the VAT cut was introduced.

Has my hon. Friend seen the important article by Professor Thomas Piketty, France’s leading economist, praising the VAT cut as a way of increasing demand across the economy, and suggesting that it should be applied across Europe? It is only the economic illiterates surrounding the new shadow Business Secretary who believe the opposite. Will his Department look at the example of Germany and France, which are offering scrap-and-build incentives whereby people bring in their old polluting cars and buy new ones?

I hope that my right hon. Friend will forgive me if I concentrate on reading the Harrow Observer and the Harrow Times. I will, however, rush to dig out the article to which he refers. I suspect that the comments he mentions are just one indication of the considerable support that exists for the measures that my right hon. Friends the Chancellor, the Prime Minister and the Business Secretary have taken to restimulate demand in the UK economy and lead efforts to boost consumer demand. The VAT cut, the fiscal stimulus package and the increase in incomes that pensioners will see in their bank accounts are all examples of the measures that we have taken—measures that the Opposition continue to oppose.