Raise VAT on childrens’ clothes and food say Tory MPs

A group of influential Conservative MPs want David Cameron to introduce VAT on food and children's clothes as part of a radical plan for the next general election.

The Free Enterprise group of Tory MPs are calling for a package of dramatic tax cuts for businesses and homebuyers, paid for by new taxes on essential goods and cuts to schools and hospitals.

Proposals raised at a meeting yesterday, included raising the threshold at which people pay high rate income tax, freezing business rates for three years and abolishing stamp duty on homes under £500,000.

The package of measures would cost around £15 billion and would be paid for by abolishing nine government departments and cutting £7 billion from health and education budgets.

Speaking at the Institute of Economic Affairs, Tory MP Kwasi Kwarteng acknowledged that charging a flat rate of 15% VAT on all essential goods would be "controversial" but insisted the money would "help poorer people very directly, because indirect taxes are very regressive".

His colleague Dominic Raab called for a dramatic cull of government departments, including the Ministry of Justice and the Department for International Development.

"You have got an overflowing bath which represents debt, and the taps and gushing water represents the deficit," he said.

"We've cut that gushing water by a third, but the bath is still overflowing."

The proposals are part of push by Tory MPs for David Cameron and George Osborne to take a more right-wing, conservative agenda into the next general election.

It also comes ahead of the autumn spending review, where Osborne is thought to be considering new tax cuts.

One MP at the meeting acknowledged that some of their policy suggestions may be "unsellable" to the public.

Conservative MP Brooks Newmark warned that any attempt to raise VAT on children's clothes and food would be "potentially toxic and dangerous" to their election chances.