Party Leaders Clash Over 18.5 Percent VAT Plan

Brown accused Cameron of being a `do-nothing leader` who would leave families without support in an economic downturn.

 Gordon Brown and David Cameron clashed in the Commons on Wednesday over the revelation the government had considered raising Value Added Tax to 18.5 percent after the next election.

Conservative leader Cameron said the inadvertent publication of a pre-budget report document detailing the rise showed Prime Minister Brown was planning a "VAT bombshell".

Brown confirmed the rise was one of a number of options studied but said the government had rejected the idea because it would have hit hard-pressed families.

He accused Cameron of being a "do-nothing leader" who would leave families without support in an economic downturn.

On Monday, Chancellor Alistair Darling announced a 2.5 percent point cut in VAT to 15 percent as part of his pre-budget plans to pump 20 billion pounds into the economy to avoid a steep recession.

Printed notes accompanying the announcement confirmed that the standard VAT rate would return to 17.5 percent from January 2010.

But an electronic version of the notes published on the Internet added that the rate would "subsequently rise to 18.5 percent in 2011-12."

The Treasury said the Internet publication was an administrative error and did not reflect government plans.

Cameron, keen to dent the positive reception given to the budget measures, rejected the explanation.

"It is absolutely clear they are planning a VAT bombshell to hit every family in the country," he said.

"Everyone knows Labour are putting up taxes because there is a black hole at the heart of the public finances."

He said Darling's new economic measures were the consequences of a decade of economic incompetence under Brown when he was Chancellor.

"The country is going bankrupt, he's been found out and New Labour is dead," Cameron said.

But Brown said Cameron was prepared to let the recession take its course and take no action to ease its effects.

"The Conservatives would refuse to give real help to families and businesses ... They have abandoned compassion.

"He is the do-nothing leader of a do-nothing party."

The Commons clash came as an opinion poll showed Labour has narrowed the Conservative lead to just four points.

The YouGov survey for the Daily Telegraph was the latest to show how Brown's ratings are recovering as the economic crisis deepens.

Barely three months ago, Brown's leadership was being openly questioned by members of his own party as Labour lost a string of by-elections.

The next general election must be called by mid-2010.