The coalition rows back on the Budget’s VAT changes

No government likes to u-turn, and particularly not on a Budget measure. So, tonight’s changes to the VAT regime proposed by the Budget for Cornish pasties and static caravans are embarrassing for the coalition. It is also worth noting that they have come after they have taken most of the political heat they were likely to take for the changes, including in the House of Commons where there were decent-sized rebellions on both issues.

One of the lessons that I suspect that politicians, and particularly the coalition, will learn from this episode is: don’t try and deal with the anomalies in the VAT system. Voters, for obvious and understandable reasons, react particularly badly to taxes hitting products that were not taxed before. Indeed, the government took less political flak for putting up the overall rate of VAT than it has for these now scaled-back changes.