VAT hike will hurt poorer people: Durkan

Mr Durkan also said the full implications of public spending cuts in Northern Ireland will not be known until the Comprehensive Spending Review in October.

He said: "After the emergency budget, we still do not know the full cuts in public spending in Northern Ireland until a review later this year.

"The Chancellor announced a white paper in the autumn to examine the rebalancing of the economy in the North. This will look at options such as economic enterprise zones and a lower rate of corporation tax.

"However, we must remember that the Varney Review was set up to do something similar and it found reasons not to proceed.

"But if this review offers the possibility of a lower rate in corporation tax - it will in all likelihood be at a public expenditure price.

"The squeeze on welfare will hit the North where there is a high dependency, not only on social security payment relating to unemployment, but to illness and disability too.

"The SDLP welcomes the gradual lowering of corporation tax and the reduction of the smaller companies' tax rate. In fact, the SDLP voted against a rise in this tax rate in the previous parliament.

"We also welcome the restoration of the link between earnings and the state pension which has been a long-standing manifesto commitment from the SDLP

"However, we are very worried the rise in VAT will hurt many.

"Those who are less well off have less disposable income and fewer choices about spending.

"It is they who must spend what little they have on necessary goods and services and this increase in VAT will leave them struggling further. Moreover, the VAT increase will have a detrimental effect on cross-border trade.

"Furthermore, there are questions about proposals that will expect lone parents to look for work when their youngest child goes to school.

"Often the problem here is lack of work as opposed to lack of work ethic.

"Some of the measures announced by the Chancellor are made to sound neutral but in effect contain stealth cuts and these will hit individuals and in turn damage the regional economy."