Dan Neidle

So whenever you have a VAT cut in one service, the evidence suggests that it's the producer who gets it, not the consumer.

When VAT was abolished on e-books, that followed a long campaign by the publishing industry who promised it would reduce prices.

It didn't.

We couldn't see any change in prices at all.

All the benefit went to people selling e-books.

Same would happen here.

So, yes, that would help small, struggling family restaurants that are currently having difficulty.

But most of the money wouldn't go there.

Most of it would go to the really big guys, chain restaurants, large hotels.

Why are we giving money to the rich?

If you go to the man or woman in the street and say, hey, we're going to cut VAT on a product.

Do you think the person selling the product is going to pass on that benefit or are they going to keep it to themselves?

I think most people's intuition would be, well, of course, they'll keep it to themselves.

And the evidence across Europe studying over 100 VAT cuts has shown that's what happens.

You might think so, but the evidence suggests that in the main, in fact, almost entirely, that doesn't happen, that the difference is kept as additional profit.

Well, it's a very inefficient way to do it.

If you wanted something targeted at struggling small businesses, you could think about ways of doing that rather than a 10 billion VAT cut, most of which will not be going to those guys, but will go to large chains.

Well, I take the opposite view, which is that it's a bad feature of VAT systems to tax different things differently.

And when people laugh at disputes over Jaffa Cakes, disputes over whether rotisserie chicken is taxed or not, it's because we have a complicated VAT system which taxes lots of things differently.

We're much better off having a simpler system with a lower rate of VAT that applies to everything.