Ed Balls: I'd cut VAT by Monday

Shadow chancellor Ed Balls has stated that he would “cut VAT by Monday” if Labour were back in power.

Speaking in Kent as he tours local micro businesses, the Labour MP claimed that cutting VAT was the best solution to helping the economy grow.

Speaking to Kieran Watkins, Mr Balls said: “It is clear with the economy flat lining that we will lower VAT as soon as possible.

“If we were in government today, I would lower VAT by Monday.”

The declaration by Mr Balls comes after the latest GDP (Gross Domestic Profit) forecasts show the UK economy has shrunk by 0.3%, raising fears of a triple dip recession.

With major retailers like Jessops and HMV going under, Mr Balls warned that the future remained bleak for the UK’s economy.

“Times are really hard for every retailer at the moment, particularly hard for retailers on the High Street such as Jessops or HMV.”

Last year, more than 580 companies in England and Wales fell into administration in the last three months, with big names like Comet and Clinton Cards being the big fatalities of the High Street.

In total, 3,834 companies went into liquidation in 2012. 276 into receiverships and 151 entered into company voluntary arrangements.

But a local Conservative councilor in Medway dismissed Ed Balls’ plans to cut VAT.

Mike O’Brien, councilor for Rainham Central, said: “Having been part of a Labour Government that left the country almost bankrupt I would pay no heed to what he says.”

The Portfolio Holder for Community Safety and Customer Contact for Medway also said: “He is now in opposition and can make grand statements that he doesn't have to substantiate.

Economic advisor for the British Chamber of Commerce, Steve Hughes, explained how much it would cost the taxpayer to lower the VAT.

“Taking the fiscal credibility point first, the cost to the Exchequer of changing the standard rate of VAT by one per cent is approximately £5bn a year.

“In other words, reducing the rate from 20 per cent to its previous 17.5 per cent would cost in the region of £12.5bn.”

In a statement from the Treasury, the department insisted the 20% VAT was helping, rather than hindering the economy.

“The VAT increase raises a significant amount of revenue and is therefore an important part of the Government’s deficit reduction plan.

“Reducing the rate of VAT would undermine the Government’s fiscal strategy, risking a loss of credibility that could have a far larger negative impact on the economy than the positive economic impact that might otherwise be expected as a result of a VAT cut.”

Picture taken by Kieran Watkins

Shadow Chancellor Ed Balls comes to Medway

With our High Street’s disappearing and businesses going bust, business is far from usual in Kent, so can shadow chancellor Ed Balls save local retailers?  Kieran Watkins joins him on a tour of businesses in Kent

“Times are really hard for every retailer at the moment” was the warning from shadow chancellor Ed Balls yesterday, after visiting local businesses in Kent.

Meeting owners in The Vintage Dove ‘shabby chic’ store in Elm Court, Capstone Road, Gillingham, the Labour MP for Morley and Outwood stressed the importance of small, micro businesses in the current economic climate.

Mr Balls said: “The image of small businesses is not important enough. We need a different way of doing things to make things work for small businesses.”

Figures released by the Federation of Small Businesses (FSB) show that in 2012, small businesses accounted for 47% of private sector employment, and 34.4% of turnover.

But despite the promising figures, small business owners still feel under pressure, with no one to turn too.

“You feel like you’re on your own, you don’t have the support of the banks,” said Stephen Clarke, 44, owner of The Vintage Dove.

Mr Clarke set up his vintage gift and furniture business from his home, with help from business partner Stephanie Nicolson, 35.

The business started as an internet retailer, and has since expanded, moving into its first business premises on December 1, 2012.

But despite their success, the couple said: “Small businesses are the backbone of the country, yet we need support and help from local government and the banks to survive.”

By his own admission, the shadow chancellor agreed that banks were not doing enough to help small businesses.

“Twenty years ago people thought about going to the bank for help an support on lending.”

“But times have changed, we [businesses] would not go to them now,” Mr Balls admitted.

Labour councilor Tristan Osborne, of the Luton and Wayfield ward, attacked Medway council for not assisting local businesses more.

“Micro businesses are an example of a business which has built up from nothing. But these businesses need more support.

“Medway needs to improve; local councilors do have a responsibility to help.”

Listening to the concerns of Vintage Dove and others, Mr Balls suggested that farmers markets and community projects would lead to more customers heading to the High Street.

“Farmers markets and community projects are not just a shopping experience,” he said in front of business leaders from companies including Produced in Kent.

“Making families comfortable and putting them at ease is the way to building a service and gaining customer loyalty.”

The shadow chancellor praised the work of Produced in Kent, jokily saying that “produced in Surrey or produced in Hertfordshire isn’t quite the same as produced in Kent.”

“Produced in Kent is a big opportunity, it says a big thing about the quality of goods.”

Produced in Kent was formed in 2005, and was formerly known as the Kentish Fare. A not-for-profit organisation, the project is run by Hadlow School and Kent County Council, and aims to “champion and support the growth, development and future of the food and drink sector in Kent.”

 In an unprecedented move, Ed Balls praised the work of Conservative-controlled Kent County Council, stating that KCC have “always been innovative” when it comes to business.

“They have always believed in business and believed in public service.”

Other points raised by business owners included the growing problem with trying to employ members of staff.

One business owner said it was a “minefield to employ”, as businesses struggle to understand the complicated rules and guidelines surrounding wages, taxes and legislation.

Other ideas raised to promote local businesses included internet advertising, with businesses calling for the government to launch specialist websites dedicated to promoting local shops.

Mr Clarke said: “It would be great if the government had a website supporting and advertising local businesses.”

Mr Balls backed the idea, stating that social networking and online advertising was “just as important” as setting up shop on the High Street.

“The internet has led to shops moving off the High Street.

“Being based on the High Street is not as important anymore.”

With the meeting coming to and end, Labour’s Vince Maple, Chatham Central councillor, praised the meeting for “making the voices of small businesses in Kent heard”.

“It is clear that we want to see the economy growing, and micro businesses will make the economy grow.”

By Kieran Watkins

Pictures taken by Kieran Watkins