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VAT cut mooted for recovery plan VAT 'to be cut in rescue package'
(about 3 hours later)
A VAT cut could be at the centre of the pre-Budget report on Monday, according to widespread speculation. The government is expected to cut VAT by up to 2.5% in Monday's pre-Budget report as part of an emergency package aimed at kick starting the economy.
Reports suggest VAT could drop by 2.5% to 15% as part of Alistair Darling's plan to revive the flagging economy. Lord Mandelson told BBC One's Andrew Marr show action was needed to prevent a "very deep recession".
Meanwhile, Gordon Brown, writing in the News Of The World, has pledged to help struggling families and insisted the government was "on their side". But he conceded it would mean higher taxes in the longer term to pay for it.
In the Sunday Mirror, Mr Darling said "every household" would be supported through the "difficult period ahead". Tory leader David Cameron said he was "sceptical" the plan would work. Vince Cable, for the Liberal Democrats, said any tax cuts should be permanent.
Press reports suggest VAT could drop by 2.5% to 15% as part of Alistair Darling's pre-Budget report plan to revive the flagging economy.
'Wide appeal''Wide appeal'
The specifics of Mr Darling's recovery plan will remain under wraps until Monday.The specifics of Mr Darling's recovery plan will remain under wraps until Monday.
It is understood that, as well as the VAT change, he may also announce further tax cuts targeted at poorer people, as well as big increases in public spending.It is understood that, as well as the VAT change, he may also announce further tax cuts targeted at poorer people, as well as big increases in public spending.
The BBC's political correspondent Jo Coburn said a VAT cut would have a wide appeal and could benefit a broader range of people than targeted tax cuts.
If we do not act now, the downturn will be longer and more severe Gordon BrownIf we do not act now, the downturn will be longer and more severe Gordon Brown
She said the government's priority was to get "any extra money in people's pockets as quickly as possible and to get them out there spending that money and so boosting the economy". Writing in the News Of The World, Prime Minister Gordon Brown said: "I know how worried many people are about their jobs, making ends meet at the moment and about the security of their homes.
Mr Brown writes in the News Of The World: "I know how worried many people are about their jobs, making ends meet at the moment and about the security of their homes.
"No politician can promise to stop the difficult times, but I can promise that we will do everything we can to help people get through them fairly."No politician can promise to stop the difficult times, but I can promise that we will do everything we can to help people get through them fairly.
"I want every household facing difficulty at this time to know we are ready to help and on their side.""I want every household facing difficulty at this time to know we are ready to help and on their side."
'Faint hope''Faint hope'
It is thought Mr Darling will say in the Commons on Monday that his recovery formula will leave Britain with a £100bn debt that the country will have to pay back later in the form of higher taxes.It is thought Mr Darling will say in the Commons on Monday that his recovery formula will leave Britain with a £100bn debt that the country will have to pay back later in the form of higher taxes.
I will not play down the economic difficulties but equally I am confident that with sensible and responsible measures they can be overcome Alistair Darling Other measures expected in the package are help for people in mortgage arrears and loans for small businesses.I will not play down the economic difficulties but equally I am confident that with sensible and responsible measures they can be overcome Alistair Darling Other measures expected in the package are help for people in mortgage arrears and loans for small businesses.
Tory leader David Cameron has opposed the plan, accusing the prime minister of planning to "throw money at the crisis in the faint hope that this will help recovery".Tory leader David Cameron has opposed the plan, accusing the prime minister of planning to "throw money at the crisis in the faint hope that this will help recovery".
But Mr Brown says failure to intervene will only prolong the pain of recession.But Mr Brown says failure to intervene will only prolong the pain of recession.
"If we do not act now, the downturn will be longer and more severe," he says in the article."If we do not act now, the downturn will be longer and more severe," he says in the article.
"A prolonged recession means people out of work for longer, more repossessions, and businesses taking longer to start growing again.""A prolonged recession means people out of work for longer, more repossessions, and businesses taking longer to start growing again."
Mr Brown also hints further government efficiency savings will be announced in the pre-Budget report.Mr Brown also hints further government efficiency savings will be announced in the pre-Budget report.
'Sensible and responsible''Sensible and responsible'
Mr Darling says in the Sunday Mirror that "every household" will get support to help them through the "difficult period ahead".Mr Darling says in the Sunday Mirror that "every household" will get support to help them through the "difficult period ahead".
HAVE YOUR SAY Alistair Darling has to realise whatever he does he can't win. If he cuts taxes it will be said he's storing up debt, if he doesn't cut taxes he's harming the economy, and so it goes on Lucy Clarke, UK Send us your comments"Worried mortgage holders will get help and I shall do what I can to help those who lose their jobs. HAVE YOUR SAY Alistair Darling has to realise whatever he does he can't win. If he cuts taxes it will be said he's storing up debt, if he doesn't cut taxes he's harming the economy, and so it goes on Lucy Clarke, UK Send us your comments "Worried mortgage holders will get help and I shall do what I can to help those who lose their jobs.
"And I will state exactly how we intend to pay for the help we are providing now," he writes."And I will state exactly how we intend to pay for the help we are providing now," he writes.
"Like every other country in the world hit by major economic shocks, we are in a difficult position. And we, like many advanced economies, are moving into a recession."Like every other country in the world hit by major economic shocks, we are in a difficult position. And we, like many advanced economies, are moving into a recession.
"I will not play down the economic difficulties but equally I am confident that with sensible and responsible measures they can be overcome.""I will not play down the economic difficulties but equally I am confident that with sensible and responsible measures they can be overcome."
Meanwhile, an ICM poll for the Sunday Mirror shows the Conservatives have maintained an 11 point lead over Labour.Meanwhile, an ICM poll for the Sunday Mirror shows the Conservatives have maintained an 11 point lead over Labour.
It put the Conservatives on 42% (down one since last month), Labour on 31% (up one) and the Liberal Democrats on 19% (also up one).It put the Conservatives on 42% (down one since last month), Labour on 31% (up one) and the Liberal Democrats on 19% (also up one).