'Cut VAT to save families in Medway £48,720,000' say local Lib Dems

The Liberal Democrats are proposing an emergency cut to VAT for one year - saving families an average of £600 each - as announced by Ed Davey at the opening of the Liberal Democrat Spring Conference.

Medway Liberal Democrats have demanded an emergency cut to VAT to protect local families from soaring bills and the Conservatives' worsening cost of living crisis.

The Liberal Democrats are calling for the standard rate of VAT to be reduced from 20% to 17.5% for one year, a move that would save households in Medway an average of around £600 each. This would mean putting around £48,720,000 back in the pockets of 81,200 families in Medway.

The plans were set out by Liberal Democrat Leader Ed Davey at the party's Spring Conference and have been backed by Medway Liberal Democrats.

It comes amid warnings that the war in Ukraine will worsen the cost of living pressures facing households, with energy, food and fuel bills all expected to rise. Inflation is also forecast to reach 8% in April, its highest level in decades.

The Lib Dem plans would support the economy by boosting spending at local high streets. The proposals would also be expected to keep inflation down by making the prices of everyday items lower than they would have been.

John Castle, Chair of Medway Liberal Democrats said: "The Conservative cost of living crisis is hitting families hard and it is about to get worse. People across our community are worried about how to make ends meet as bills go through the roof.

"An emergency cut to VAT would offer a massive boost to people in Medway feeling the pinch by putting £48,720,000 back into their pockets. It would also support our treasured shops, cafes and restaurants by boosting spending on the high street."

Liberal Democrat Leader Ed Davey said: "This is a once-in-a-generation crisis, and the government must step up to help struggling households and businesses on the brink."

ENDS

Notes to Editors

• The Liberal Democrats are calling for the standard rate of VAT to be reduced from 20% to 17.5% for one year. The party's analysis suggests this would save households around £600 on average. Full figures on estimated savings by local authority and constituency are available.

• Cutting VAT would help the retail industry, giving a much-needed boost to local high streets and increasing economic growth. A similar VAT cut in 2008 was found to boost retail sales by about 1%, increasing aggregate expenditure by around 0.4%. [IFS, 2014]

• A VAT cut will help to keep

• inflation lower than it otherwise would be. When the last VAT cut came in in December 2008, inflation fell from 4.1% to 3.1%.

• Reducing VAT to 17.5% would require a very short and simple statutory instrument. The standard VAT rate can be changed by up to 25% for up to a year through secondary legislation. This means no new primary legislation is required unless the cut needs to stay for longer than a year.