LABOUR will this week force a House of Commons vote on reversing the recent rise in VAT on fuel, in a bid to earn political capital from soaring fuel prices.
Shadow chancellor Ed Balls yesterday said the party will use an opposition day debate on Wednesday to call for an immediate reversal of the coalition’s rise in VAT on fuel.
He admitted the surge in fuel prices was happening because of unrest in the Middle East, which has pushed up the price of oil, but insisted the chancellor had scored an “own goal” by raising VAT in January.
Balls is only calling for a reversal of the rise in fuel VAT, which would cost the exchequer some £700m, but refused to say whether Labour would reverse the entire VAT hike were it in power.
The Labour party has warned of a “cost of living crisis” for middle England, as it seeks to capitalise on the biggest squeeze on real terms wages since 1920.
Chancellor George Osborne has dismissed Labour’s calls for a reversal in the rate of VAT on fuel, which rose from 17.5 per cent to 20 per cent in January, but Treasury insiders yesterday said there would be “help for hard-pressed motorists” in the Budget on 23 March.
Balls claims the government could fund the cost of reducing fuel VAT with some of the proceeds from the bank levy, which will raise an extra £800m after it was hiked last month.
But Tory MP Matt Hancock, formerly an adviser to Osborne, said Labour had already spent the bank levy proceeds “ten times” over through various unfunded spending commitments and tax cuts.
He said: “Ed Balls has missed yet another opportunity to bring any credibility to Labour’s economic policy.