Member News
The government's decision to cut VAT by 2.5 per cent has not boosted consumer spending, the head of a High Street giant has claimed.
Chief executive of fashion retailer Next, Simon Wolfson, claimed that the VAT cut was "a missed opportunity" by government.
He claimed that the £12.5bn initiative has had "no effect whatsoever" in boosting expenditure.
Wolfson told the BBC that tax cuts would have been a more efficient way to increase consumer confidence.
He argued: "I think that if it was designed to make sure that prices don't go up in the year ahead, it will have some effect."
But he added: "If it was designed to boost expenditure, then it really has had no effect whatsoever."
Wolfson claimed that a "big hole" in the government's argument was that they needed to save money as well.
"There is a false argument here - that the only way that government can save money is by cutting services," he said.
"Every business in this country over the last year will have saved money without harming their services."
He added: "It is simply not good enough for government to say that in order to save money we have to cut services. Actually they, like the rest of us, can save money by being more efficient."
Chancellor Alistair Darling announced the 13-month VAT cut in his pre-Budget report in November. It was part of a government fiscal stimulus packaged designed to inject capital back into the British economy.
Wolfson told the BBC Radio 4 Today programme that it was a priority to get banks lending again. But he argued that it was not the banks fault that they were not doing so.
"Funnily enough, I don't think that is the banks fault," he stated.
"I think that they are being put in a very difficult position by a government that is putting capital in at very expensive prices and then asking the banks to lend at very low prices."
Dods Parliamentary Communications Ltd
Have your say...
Please enter your comments below.