FINANCIAL BUSINESS LEADERS LOBBY CHANCELLOR

Chancellor of the Exchequer Alistair Darling discussed views with business leaders yesterday at a private meeting at the National Skills Academy for Financial Services organised by Shaping Norfolk’s Future.

EDP EXCLUSIVE - DARLING RESISTS VAT CUT CALL

Shoppers will be hit in the pocket by rising prices on the high street at the end of the year after chancellor Alistair Darling confirmed yesterday he will scrap the temporary cut in VAT.

Mr Darling admitted at a private meeting with business leaders in Norfolk there was no prospect of the government extending the temporary cut in VAT into next year - as it is costing the Treasury "£1bn a month".

Last night, retailers warned that increasing VAT in time for the January sales would be "like pouring a bucket of cold water over the economy" and risked stifling any chance of a recovery on the high street.

But with just two days to go before the Norwich North by-election, the state of the economy appears to have become the key battleground for the three main parties.

Following the chancellor's visit to Norwich yesterday, business secretary Lord Mandelson and his Tory shadow Ken Clarke are due in the city today, along with Lib Dem shadow chancellor Vince Cable.

Last night, both the Tories and Lib Dems branded the temporary VAT cut as a "waste of money" and said the government would have done better to invest the money elsewhere.

Mr Darling's move on VAT - which lowered the tax rate from 17.5pc to 15pc - was also roundly criticised by retailers as a political gimmick when it was introduced last December as a one-year-only cut. But calls have grown since then for the cut to be extended to next summer.

The chancellor was asked about VAT yesterday by Ian Russell, director of Wroxham Barns, at a behind-closed-doors meeting with an invited audience of business leaders at Norwich's National Skills Academy for Financial Services.

After the meeting, Mr Russell said that after initial doubts about the tax cut, he now believed it was having a positive effect on consumer confidence and had helped businesses to hold down prices.

"The chancellor should think again," said Mr Russell.

"Credit to him for taking the initiative and doing it in the first place - it has had a positive effect.

"But it would be terrible timing to hit the tourism and retail sectors with a 2.5pc price increase at the turn of the year - it would be very detrimental."

Chris Starkie, chief executive of Shaping Norfolk's Future, which organised the meeting with Mr Darling, said a number of issues had been raised by business leaders: from concerns whether or not plans to dual the A11 will survive public spending cuts, to the availability of broadband in Norfolk.

But Mr Starkie added: "We also made a plea for the reduction in VAT to be extended to support retail and tourism businesses in particular.

"He was sympathetic to our concerns, but clear the VAT reduction would not be extended."

Caroline Williams, chief executive at Norfolk Chamber of Commerce, said: "Consumer confidence is slowly returning to the retail market but it is still fragile.

"The confirmation from Alistair Darling that VAT rates will increase next year with all the on costs this will give to businesses shows how out of touch the government is.

"This VAT rise could be the catalyst which undermines the predicted growth in 2010."

After the meeting, Mr Darling said the government was still on track with dualling the A11 and he said that rail passengers would see better services on the Norwich to London line once Stratford station was fully operational and the Crossrail link was in place.

"In terms of the A11, there has been a long-running campaign there and I was able to say that's continuing, we are on track there," he said.

"Once Stratford station is fully operational and Crossrail is opened, that will take a lot of pressure off Liverpool Street. I think, in that particular case, there is light at the end of the tunnel."

Courtesy of the EDP

BIG BEASTS PROWL AROUND NORWICH

The final days of the Norwich North by-election campaign are coming to the boil with a parade of the big beasts and more accusations of dirty tricks.

Chancellor Alistair Darling joined the Labour campaign yesterday for a trip to the Financial Skills Academy first for a private meeting with Norfolk business leaders, followed by a chance to boost the campaign of the party's candidate Chris Ostrowski.

Conservative leader David Cameron made his fifth visit to the city in as many weeks, rallying the party faithful at a stop off at Drayton Village Hall and taking a first hand look at the Carrowbreck project in Hellesdon, a pioneering training scheme helping to steer youngsters away from crime and into skilled work.

Also on the campaign trail were the Greens, who took their eco-friendly 'battlebus' around the city, and UKIP, whose leader Nigel Farage took part in a public meeting last night.

Lord Mandelson and Lib Dem shadow chancellor are due in town today and the former Tory chancellor Ken Clarke is also visiting.

As the final days become increasingly fraught, Labour yesterday issued their own 10-page dossier attacking “Tory smears” during the campaign.

Labour's battle plan has been based around claims that the Tories spending plans would mean cuts in the number of Surestart centres and police officers in the city - which the Conservatives have dismissed as dishonest.

Yesterday the Lib Dems also tried to put Miss Smith, who is favourite to win, on the spot over her work on secondment for the Conservatives - insisting she was in a fact a Westminster insider.

Mr Darling said that voters needed to be aware of the clear differences between the two on the public spending issue.

“Everyone knows that the next few years are going to be tough, and all political parties are going to have to make difficult decisions,” he said. “What's important is that people understand where the parties' priorities lie. There is a clear difference. The Tories are using the current problems as cover for what they are going to cut. That's what people need to think about when they go to the polling booths on Thursday.

“People will want to know whether it's the Tories, Labour or the Liberal Democrats where you stand on the issues that make a difference to people's quality of life.”

Mr Cameron has accused the other parties of “desperate stuff” in their election literature and praised Miss Smith for fighting a positive campaign, suggesting it could prove a model for the next general election.

“For people who want change there is a chance in this by-election - and that's Chloe Smith and the Conservatives,” he said. “We've set out what our policies are.

“People are angry with all political parties and they are quite rightly making the people who want to get elected work hard. I'm not being complacent, we have to get out there and win every vote.”

Lib Dem MP Norman Lamb issued a letter he has sent to Miss Smith questioning her work on secondment for the Conservative Party in Westminster.

Conservative campaign manager Theresa May said the letter was a “stunt” and said the Lib Dems and Labour had only offered negative campaign instead of substantial policies. The Tories confirmed last week that the 27-year-old has been working for frontbench MPs and she was issued a parliamentary pass from shadow work and pensions minister James Clappison, who was forced to pay back some of his expenses in the wake of the recent scandal.

But Mr Lamb defended his letter.

“There is an issue of hypocrisy here,” he said. “She has been working for Bernard Jenkin and James Clappison, both of whom have had their expenses highlighted. I am asking if she believes these MPs should take the same course of action as Ian Gibson (and resign).”

Courtesy of the EDP