Chancellor George Osborne’s VAT hike was rubber-stamped last night as MPs in the House of Commons approved his plans by a margin of 346 to 270.
VAT will now increase from 17.5 per cent to 20 per cent on 4 January 2011.
Lib Dem chief secretary to the treasury Danny Alexander defended the budget, saying the VAT hike was a “Labour inheritance tax”.
The Treasury will be glad to put the vote behind it after it emerged a handful of Lib Dems planned to vote against the proposals.
Four Lib Dem MPs – out of a party total of 57 – signed an amendment to the rise which would have required an impact assessment on businesses, charities and households.
But fears of a revolt were unfounded as the vote was comfortably passed.