The coalition faced its first rebellion last night, albeit small, when two Liberal Democrat MPs voted against a budget proposal to increase VAT to 20%. Bob Russell and Mike Hancock voted with Labour to oppose the increase, which has alarmed many Lib Dems who warned during the election of a Tory VAT "bombshell". To shouts of "shame" from the Labour benches, the 2.5% increase in VAT from January was backed by 346 votes to 270, a majority of 76. Russell, MP for Colchester, and Hancock, MP for Porstmouth South, had earlier supported a backbench Lib Dem motion demanding a Treasury investigation into the impact on the poor of the VAT rise.
The backbench amendment was not put to a vote. But the two MPs rebelled against the government when the VAT rise was put to a vote, highlighting unease in the party that the budget is not progressive. Russell and Hancock are long serving and respected MPs. Russell is known as "battling Bob" for his work campaigning on behalf of members of the armed forces stationed in his Colchester constituency. Hancock has a special status because he was a founding member of the SDP.
