A bid by the Scottish and Welsh nationalist parties to scrap the 2.5% increase in VAT announced by George Osborne in his emergency Budget was overwhelmingly defeated last night in the House of Commons.
In a major victory for the coalition, a proposed amendment to the Finance Bill by the SNP and Plaid Cymru, which would have prevented the increase, was defeated by a majority of 295.
Various proposed amendments from Labour were also voted down, including one designed to delay the rise while its impact on pensioners, children and low income families could be assessed.
The British Retail Consortium (BRC) has previously warned that a hike in VAT would reduce demand for goods and services and cost 163,000 jobs over four years while Osborne claims that it will raise an estimated £13 billion towards reducing the £155 billion deficit.
Treasury minister David Gauke said: “We had to raise VAT because there was no money left.”