BBC poll reveals shoppers' muted response to VAT cut

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Simon Gompertz looks at ways that you can take advantage of the VAT cut.

Shoppers have given a muted response to the lower rate of VAT, although most want it extended, a BBC poll has found.

Some 23% of people said they had spent money they would not otherwise have done to take advantage of the 15% VAT rate.

Meanwhile, 27% said they would bring forward their spending before the sales tax increased to 17.5% in January.

The survey, for the BBC's Working Lunch programme, found that 73% wanted the lower rate to be extended.

VAT will return to 17.5% on 1 January, up from the current level of 15%, where it has been since 1 December 2008.

Findings

The BBC commissioned the ComRes poll of 1,002 adults in Britain to assess the impact of the VAT changes on shopping habits.

Shoppers face a VAT rise in the New Year

Almost one-third, 32%, of respondents said their spending would decrease after the VAT rate is increased in January.

More men (27%) than women (19%) said that they had spent money they would not otherwise have done to take advantage of the lower rate.

People in lower income groups changed their behaviour the most, or planned to change their behaviour most, in response to the rate changes, the poll found.

Extra cash

Treasury minister Stephen Timms told Working Lunch that the idea of the cut was to give people a little extra money in their pockets.

However, he added that there would be no extension of the 15% rate into January and "no plans" of other future changes.

He said that sales in the shops had been "remarkably resilient".

The latest UK retail sales figures showed that sales in October rose at the fastest annual pace since May 2008. Data from the Office for National Statistics (ONS) showed October sales were up 3.4% from a year ago, driven by clothing and footwear.

Andy Street, managing director of John Lewis, said that its stores across the UK would not be increasing prices until at least the end of January.

This would cost the group "millions of pounds" because it would have to absorb the increase in VAT.