Alistair Darling should be wary about announcing new tax holidays in April’s budget, but he should not make the mistake of canceling the current ones because they are not working. And he should not make the mistake of extending them.

The temporary stamp-duty cuts instigated in September 2008 clearly failed to reverse the fall in house purchasing and prices and December’s Vat reduction has not caused a retail boom. How much worse housing and consumption would be without them we cannot know, but Darling should stick with them. If they are to work it will be at the end of the holidays.

No homebuyer rushed to save 1 per cent on stamp duty last autumn when they could see their new property could fall by 10 or 20 per cent in the next year. But if there are any signs of the property market bottoming by the summer, then hurrying to buy before the one-year tax holiday ends may well encourage more buyers into the market to grab the tax saving while they can.

The cost of the scheme now looks like being just a quarter of the £615m originally mooted, not least because sales volumes are so low. So if it is a flop, at least it’s not an expensive flop. But because house prices have continued falling, a scheme designed to help people paying less than the average price of £175,000 now means that people paying significantly above average will gain.

The Vat cut from 17.5 to 15 per cent was never going to generate huge sales either: if retailers’ own 20 per cent price cuts do not entice shoppers, the government’s 2 per cent reduction would do nothing.

Ideally the cut would have stimulated sufficient extra demand for the 15 per cent tax on the new sales to finance the 2.5 per cent cut on goods that would have been bought anyway. It didn’t. But the £12bn is not wasted: they may not appreciate it but it has put the £12bn into the pockets of ordinary people (the same ordinary people whose taxes will have to pay for it).

However, apart from the squeals of retailers who opposed the Vat cut but who now oppose its ending, it would be wrong to curtail the tax holiday abruptly. It ends at the end of the year, just after the Christmas season that accounts for so much of most shops’ turnover. So if shoppers know that taxes will increase again in January they should spend extra before it rises.

Perhaps the stamp duty and Vat money could have been spent better but it has not been spent badly. The mistake would be to extend the holidays - until the general election, for instance. That would allow buyers to postpone their purchases further, especially at a time when deflation is cutting prices. The knowledge that an offer is due to end does concentrate shoppers’ minds.

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