Page last updated at 10:58 GMT, Wednesday, 14 July 2010 11:58 UK

MPs debate effect of VAT rise on charities

Lib Dem MP Andrew George has urged the government to exempt the goods and services made by registered charities from the planned VAT rise.

During resumed debate on the Finance Bill, which enacts the Budget, on 13 July 2010, shadow chief secretary to the Treasury Liam Byrne backed the call, adding: "This VAT increase is going to cost Britain's charities something in the order of £140m to £150m.

"Because much of that VAT is not VAT that can be reclaimed, Britain's charities stand to lose something like £60m to £70m. That is a lot of money," he told MPs.

Mr George withdrew his amendment, but MPs then voted against two Labour amendments: number 35, which aimed to reduce the impact on charities of the VAT rise; and 41, which aimed to ensure that the he government could not raise VAT until it had published an assessment of the impact of the change.

Later, MPs voted on whether the clause containing the planned VAT rise should remain part of the bill, backing it by 321 to 246, a government majority of 755.

Watch part one of the debate here.

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