Pearse Doherty (Sinn Fein)

Listening to the Minister's reply, I had a sense of déjÀ vu. When we were in here last year talking about the Government's over-reliance on the construction industry and the need to plan for the time when the bubble would burst, the Government sat on its hands. It only recently recognised how things are. When we talked about the need to do something with the banks, similar responses were given, and then finally there was action. When we said we were entering a recession the Government denied it and would not use the "R" word, but now, finally, we have some type of plan. We do not know whether it will be good enough — we all have different views on that. Belatedly, the Government came up with a package. Let there be no doubt: we are going to be back here. I hope it will not take seven, eight or nine months, but we will be back here with a plan to increase consumer spending. The Government will have to reverse some of these measures, including the increase in the higher rate of VAT.

The Minister gave out figures, which I am sure are right. I am not saying we should copy what is happening in Britain — we are our own State and we will decide our own policies — but we must take cognisance of what is happening in neighbouring countries and, particularly in view of the continued partition of our country, we need to take into account what is happening in the North, which is affected by the changes made in the House of Commons. The Chancellor of the Exchequer could have stood up and said that to reduce VAT in Britain would cost X billion pounds and he would have been right. However, there is a belief that by reducing it they can increase consumer spending. If we had the same argument about reducing corporation tax, every Minister for Finance would be able to come in here and say, based on the figures of the day, that reducing the tax would result in the loss of so much money. The Minister has not taken into account that reducing VAT to 19%, for which I am calling in this amendment, will increase consumer spending. Yes, there will be a loss, but the Government is not taking into account that confidence will be increased and more money will be put back into the pockets of consumers — in the region of €1 billion per year. People will be able to spend that money in the retail sector. Employment will increase and companies will be able to make profits, so the Government will still get its taxes through the profits of these companies. People will be taken off unemployment benefit and will pay taxes through PAYE. The money will come back to the Government eventually and it should come back in bucketfuls.

We are in a serious predicament in terms of retail spending. Christmas is buffering the figures because people are going out and spending money on Christmas presents and so on. However, after Christmas — I hope I am wrong about this — we are in for a serious wake-up call. I believe we will be back here debating a package of measures to help the retail sector. We can do it now. We know what is happening and we can prevent it. Reducing VAT to 19% is the right thing to do. It will not solve all the problems. Sterling at 95% and other currency fluctuations will always be a problem for us. However, we need to send out a signal, and the Government should be sending out a signal before Christmas that it intends to support small businesses and put more money back in people's pockets.