Comparison of Divisions: Reduction of VAT from 17.5% to 15% — 17 Dec 2008 at 16:05 with Division No. 104 on 29 Apr 2009 at 15:49

The majority of MPs voted in favour of reducing the VAT rate from 17.5% to 15%.

They did this by voting against the motion^[1] to annul the Order (Statutory Instrument) laid before the house for the reduction of the rate by fourteen and two sevenths of a percent (2.5 out of 17.5) which came into force on 1 December 2008.^[2]

The Order was made under the powers in Value Added Tax Act 1994^[3] where it says:

• The Treasury may by order increase or decrease the rate of VAT for the time being in force by such percentage thereof not exceeding 25 per cent. as may be specified in the order, but any such order shall cease to be in force at the expiration of a period of one year from the date on which it takes effect, unless continued in force by a further order under this subsection.

This explains the strange formulation of the tax change statement, as well as the reason varying the VAT was chosen -- the powers to do it require the minimum of Parliamentary hassle.

As part of the order, the VAT on imported works of art went up from 28.58% to 33.34%,^[4] which is compensatory increase by fourteen and two sevenths of a percent.

If I'm guessing right, this issue is going to be all over the next election about "How the Conservatives voted against a tax cut" in 2008, and it will go on and on and on to the point that nobody understands it and it doesn't matter.

• [1] Vince Cable MP, House of Commons, 17 December 2008
• [2] The Value Added Tax (Change of Rate) Order 2008, 24 November 2008
• [3] Section 2(2) (Rate of VAT), Value Added Tax Act 1994
• [4] Value on Imported Goods, Section 21, Value Added Tax Act 1994

The majority of MPs voted in favour of the motion:^[1]

• This House
• regrets the Government's recent statement^[2] outlining the eligibility criteria for Gurkhas to reside in the United Kingdom;
• recognises the contribution the Gurkhas have made to the safety and freedom of the United Kingdom for the past 200 years;
• notes that more Gurkhas have laid down their lives for the United Kingdom than are estimated to want to live here;
• believes that Gurkhas who retired before 1997 should be treated fairly and in the same way as those who have retired since;
• is concerned that the Government's new guidelines will permit only a small minority of Gurkhas and their families to settle whilst preventing the vast majority;
• further believes that people who are prepared to fight and die for the United Kingdom should be entitled to live in the country; and
• calls upon the Government to withdraw its new guidelines immediately and bring forward revised proposals that extend an equal right of residence to all Gurkhas.

As a consequence, the alternative Government motion, which read:^[3]

• This House
• recognises that this Government is the only one since the Second World War to allow Gurkhas and their families settlement rights to the United Kingdom;
• notes that in 2004 the Government permitted settlement rights to Gurkhas discharged since 1997, following the transfer of the Brigade HQ from Hong Kong to the United Kingdom;
• further notes that under these rules around 6,000 Gurkhas and family members have been welcomed to the UK;
• acknowledges that the court judgement of September 2008 determined that the 1997 cut-off date was fair and rational, while seeking clarification of the criteria for settlement rights for those who retired before 1997;
• further notes that on 24 April the Government published new and more generous guidelines for the settlement applications of Gurkhas who retired before 1997;
• supports this revised guidance, which will make around 10,000 Gurkhas and family members eligible to settle in the UK;
• further notes that the Government undertakes actively to inform those who may be eligible in Nepal of these changes and to review the impact of the new guidance within 12 months;
• further notes that the contribution Gurkhas have made is already recognised by pensions paid to around 25,000 Gurkhas or their widows in Nepal that allow for a good standard of living there; and
• further notes that in the year 2000 Gurkha pensions were doubled and that, earlier in April 2009, in addition to an inflationary uplift of 14 per cent., those over 80 years old received a 20 per cent. increase in their pension.

... was never voted upon.

Although this extremely rare Government defeat in an opposition day motion is not binding (has no legal force)^[4] a Government minister made a statement later in the day to bring "forward the date for the determination of the outstanding applications to the end of May."^[5]

• [1] Christopher Huhne MP, House of Commons, 29 April 2009
• [2] Phil Woollas MP, Written Ministerial Statement, 29 April 2009
• [3] Phil Woolas MP, House of Commons, 29 April 2009
• [4] Home Secretary Jacqui Smith blamed for humiliating Gurkhas defeat in the Commons, Daily Mail, 30 April 2009
• [5] Phil Woolas MP, House of Commons, 29 April 2009