VAT cut should be scrapped

10 September 2009

The VAT cut should be scrapped immediately, with more government money targeted at helping unemployed young people rather than the high street, according to the Liberal Democrat Party.

The government cut the rate of VAT from 17.5% to 15% from last December until the end of the current year in order to encourage consumer spending and ward off the impact of the recession on business.

However, Nick Clegg, head of the Liberal Democrat Party, says the cut should be scrapped at the end of September and the money instead used to provide apprenticeships and training for out-of-work 16 to 24-year-olds.

“There is a stark choice to make between giving people a few pence off shopping on the high street or offering a lifeline to the hundreds of thousands of unemployed young people,” Clegg will say in a speech later today. “It would be much better for our economy to use the £28 million that will be spent on the VAT cut every day until the year tackling youth unemployment.”

Clegg also calls for 10,000 more university places to be made available. He describes the rise in youth unemployment as a “national crisis”.

The Liberal Democrat Party warns that, without action, unemployment among 16 to 24-years-olds could climb to as high as 1.18 million by the end of 2011. “The longer these young people are locked out of work, the greater the risk that they will be trapped in long-term unemployment,” says Clegg.

As well as making university more accessible to more people, his party proposes creating 50,000 more college-based foundation degree places this year and introducing a new ‘90-day promise’ after three months' unemployment, instead of 10 months, to make available a place in work, training or education or an internship.

Other proposals include paid internship schemes until the end of 2010 for up to 800,000 young people. These schemes, which would last for three months, would see interns paid an allowance of £55 per week. There would be no cost to the employer.

The unemployment rate among young people has jumped from 7.8% to 17.2% over the past 12 months. If current trends continue, one-in-four of young people will be unemployed by the end of the year, the Liberal Democrat Party claims.

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