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House of Commons Hansard
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08 March 2010
Volume 507
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To ask the Chancellor of the Exchequer what recent assessment has been made of the effect on the economy of the recent change to the rate of value added tax; what recent representations he has received on this issue; from whom; what response he gave in each case; and if he will make a statement. [320653]

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The annual rate of CPI inflation rose in January, partly due to the pre-announced reversal of the cut in the VAT rate back to 17.5 per cent. The 2009 pre-Budget report forecast assumes that businesses will smooth the pass-through of the reversal of the VAT rate cut, with inflation peaking in early 2010. It is assumed that households will have brought forward some consumption from 2010 to 2009 as a result of the lower relative prices associated with the reversion of the temporary cut in the standard rate of VAT. Consumer spending is forecast to grow over 2010 as a whole. The Government will set out their latest assessment of economic prospects at Budget.

The Government receive a wide range of representations on tax and other issues: which they seek to take account of in formulating economic policy.

As was the case with previous Administrations, it is not the Government’s practice to provide details of such representations.