Business secretary Lord Mandelson has ruled out a delay in the planned VAT increase at the end of this year.

In a blow to store chiefs hoping the Government may put-off the increase, Mandelson said a delay of “just one day” would cost the Government too much money.

He told The Telegraph at Wednesday night’s British Retail Consortium annual dinner: “Do you realise how expensive it would be to delay the date? Just one day would cost millions of pounds. Just one day.”

The Government plans to increase VAT back to its normal level of 17.5% on January 1, after it cut it to 15% last November in order to increase consumer spending.

Retailers including Kingfisher’s group chief executive Ian Cheshire, Arcadia’s Sir Philip Green and Sainsbury’s Justin King have all criticised the timing of the increase, which falls on a Bank Holiday and at the busiest time of the year for retailers.

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