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What is worse, as we have seen liberty in the mines eroded and the safety culture cast aside in the name of support for privatisation, we have seen damage to the employment prospects of many parts of our country. I have told the House before--it is a serious matter- -that just a few weeks ago I met a group of 15-year-old boys from my area. They were decent, normal boys. We are talking not about boys with academic potential or boys who would be high-flyers, but about boys who would be ordinary, decent citizens. They see no prospect for them ; they see no challenge ; they see no hope.What are we doing as a society to make 15-year-old young people see no prospect of economic viability or social success ? It is inevitable that at least some of those boys will become crime statistics. The very nature and character of societies in the British coalfields have been disfigured and corroded in recent times. Bills to provide temporary dollops of money to assist the restructuring that should never have been necessary will not provide the Government with any political satisfaction.
I accept that if men are to change jobs, as my hon. Friend the Member for Sherwood (Mr. Tipping) said, we ought to have a fair and equitable system. We do not have such a system. The Minister should understand that, while it is fair to pay men who have been forced into redundancy, it is also essential to sustain the communities. Even with the provision of city grant, which is of some assistance, the spending capacity of the Dearne valley area has been reduced. Therefore, it is vital that the Government not only accept that European aid must go into the coalfields but recognise that coalfield areas have substantial needs when they distribute grants to local authorities to reward councils such as Westminster and Wandsworth, which enjoy a far greater affluence than the areas in which pits are being closed.
The Government must also recognise that we shall have to have another coal debate soon, not necessarily about the financial restructuring, but to resolve the serious problems that, at least so far, have been ignored in the privatisation arrangements. Those problems are as yet unresolved. Perhaps the Minister would comment on the recent case in south Wales and the effect of the cessation of pumping at abandoned mines. The environmental consequences could be catastrophic.
Perhaps the Minister would also consider that the environmental consideration to which I have referred can be matched by our deep anxiety about the future of greenfield sites which are subject to the risk of opencast mining by private business, given the power of compulsory purchase by a Government who are supposed to be fundamentally opposed to such disfigurements and who seem predisposed to give planning permission where the local community would not wish it to be granted. The House will have to return to those issues and others.
Although I accept that my hon. Friend the Member for Clackmannan was right to advise us not to vote against the measure, I hope that when the debate is over the Minister will be under no illusion that he enjoys massive support for his policies. He has no support among Opposition Members for a policy which has destroyed jobs, made Britain likely to enter energy dependence at a very early stage and has brought a great deal of ruin, hopelessness and blight to areas which deserved a great deal better, not least in view of the massive and magnificent improvements in productivity, which are unmatched in other areas of British or European industry.
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5.49 pmMr. Michael Clapham (Barnsley, West and Penistone) : The order covers the British Coal financial year from 1 April 1994 to 31 March 1995. I note that, in paragraph 6, there is an increase from £2.5 billion to £3 billion. The items listed under headings 1, 2 and 5 in the schedule to the order are included in paragraph 5(2)(b), but I note that the item listed under heading 6 is not. Perhaps the Minister could tell us whether that is significant.
I raise that matter because, although British Coal Enterprise has not created many lasting jobs in my constituency, its endeavours have overall been helpful. The organisation has the potential to create jobs--and every little helps. The Coal Industry Bill, which is now in another place, does not have a great deal to say on the matter, and I hope that the omissions from paragraph 5(2)(b) are not an indication that the Government intend to wind up British Coal Enterprise or to cut it adrift from funding.
There is still a great deal to be done to assist miners who are made redundant, and their communities. The last colliery to close in Barnsley was Grimethorpe. It is in the constituency of my hon. Friend the Member for Barnsley, East (Mr. Patchett). Recently, research was carried out in the village of Grimethorpe by The Guardian . It was found that only 44 per cent. of men who had been made redundant had found other employment, and those miners who had managed to find employment were in low-paid jobs. Of course, that has dramatically affected the standard of living of miners and their families. Through the provision of grants, the Government also make resources available under the new pneumoconiosis compensation scheme. That no-faults liability scheme was introduced into the coal industry in 1974. Since its introduction, it has been widened to cover asbestosis, and in some cases it includes payments for men suffering from chronic bronchitis and emphysema. I should add that payments for the latter disease are made only in special circumstances, and I shall refer to them in a moment.
My concern is that the order does not provide more resources for the scheme so that the Minister can include in it the general disease of chronic bronchitis and emphysema. The pneumoconiosis scheme provides for the payment of a lump sum based on the assessed degree of disability and the age of the miner at the determined date of development. If the miner has attendant chronic bronchitis and emphysema and the medical authority contends that it has worsened as a result of pneumoconiosis, an additional award is made. That additional award will trigger off a further payment under the pneumoconiosis compensation scheme--and that is only right and proper.
The House will be aware that in September 1993 the Secretary of State for Social Security prescribed chronic bronchitis and emphysema as an industrial disease for coal miners. His decision to prescribe the disease was based on a report that he received in August 1992 from the Industrial Injuries Advisory Council, which clearly accepted that there was a connection between the disease and the inhalation of coal dust. The indication is that coal miners are subjected to precisely the same risk of contracting chronic bronchitis and emphysema as they are of contracting pneumoconiosis. I hope that the Minister will be able to tell the House that he is prepared, under the order, to make money available to the pneumoconiosis
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scheme to cover chronic bronchitis and emphysema. It is essential that that is done while the industry is still in the public sector, and before privatisation.Another omission from the order is grants to clean up pollution from abandoned mine workings. I raise that issue in the light of the assurance given in the House of Lords by Lord Strathclyde as reported in the Official Report of 26 April at column 539. He said that the prevention of pollution from abandoned mine workings must be a top priority. That assurance is relevant to the order because Lord Morris suggested, at column 1064 of the Official Report of 3 May, that pumping operations that had ceased since October 1992 should, where there were signs of pollution, be resumed. Can the Minister tell the House whether the order makes provision to cover such circumstances ?
Furthermore, can the hon. Gentleman tell us what action he intends to take to avert an environmental disaster building up at Worsborough reservoir in my constituency ? That has been brought about by a decision taken by British Coal in October 1993 to cease water pumping at nearby abandoned mine workings, thereby substantially reducing the flow of water to the reservoir. That is creating a threat to the wildlife--the flora and fauna-- around the river that runs towards the reservoir, as well as to the fish life in the reservoir.
As the Minister said, British Coal is seeking to buy out the terms and conditions of the remaining mineworkers for £6,000. That is a cynical ploy--and the Minister must be aware of it--to strip mineworkers of the protection that they have under current legislation, and to render them vulnerable to any terms and conditions that successor private owners may wish to impose. A much more honourable way of tackling the situation would have been to offer the remaining mineworkers a redundancy payment before the industry is privatised. Perhaps even at this late stage the Minister will consider doing that, as my hon. Friend the Member for Sherwood (Mr. Tipping) suggested. The miners have been given until tomorrow to make up their minds on the issue. I can see nothing whatever in the order to cover such payments.
It would be an enormous boost if the Minister could tell the House that he is prepared to make redundancy payments available to the remaining mineworkers before privatisation. The number of mineworkers in the industry who have not received redundancy payments cannot be more than between 7,000 and 8,000. If the Minister were prepared to make that announcement today, it would give an enormous boost to mineworkers and their families.
5.58 pm
Mr. Dennis Skinner (Bolsover) : I am pleased that my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) spoke of miners claiming for chronic bronchitis and emphysema. I asked various hon. Members who represent coalfield constituencies, but cannot find anyone who has won his case. I can see one or two of my hon. Friends nodding. There seems to have been a bit of Government trickery to prevent those miners from getting any payments.
One thing will emerge from this short debate. If it is not in the Minister's domain, I hope that he will impress on the various Government Departments and the Minister responsible--I do not know whether the matter cuts across
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social security--that the examinations are not being carried out properly and that miners cannot get through the net.British Coal Enterprise is another aspect of this package of recommendations that I must mention. We debated the matter during the Report stage of the Coal Industry Bill. We all know that British Coal Enterprise is one of the organisations with administrators roaming the coalfields purporting to provide jobs. They actually say "job opportunities" and that is how they get away with it--they are not real jobs.
It is high time that the Government understood what we are dealing with. People in pit villages in some coalfields did not fully appreciate what mass unemployment was all about. My hon. Friend the Member for Sherwood (Mr. Tipping) referred to that. He comes from a coalfield where people did not appreciate the scale of unemployment in the Scottish and Welsh coalfields and in parts of the Yorkshire coalfields for many years. In Nottinghamshire and the bordering parts of Derbyshire, the pits were closed suddenly, all at once. In a string of villages along that coalfield, including some in Bolsover, unemployment is more than 50 per cent.
Instead of giving the money to British Coal Enterprise, allowing whiz kids to roam about in flash cars, posh suits and Italian shoes and spend God knows how much on carpeting their floors, it is time that the money was used to get jobs back to those coalfield areas. I can think of no better way to do so than by telling local authorities to use that money to repair roads and schools and start building houses. They could get some of those miners back to work, instead of paying them on average £9,000 a year to keep idle. We are spending £30 billion a year so that mass unemployment can continue under this Government.
Some of the pit villages are like bombs waiting to explode. That is the truth. People talk about the social fabric breaking down in Britain and we have only to look at some of those pit villages where thousands of people have suddenly been chucked out of work to understand that.
That brings me to the question of the contract and the £6,000. It is true that the Union of Democratic Mineworkers has thrown the proposal out by a 93 per cent vote. Frankly, I was amazed that its members voted in those numbers. Why do the Government and British Coal not understand ? If 93 per cent. vote in a ballot against something, one would think that those in power would wake up to the idea that they do not want it, but they have blindly ignored the ballot and gone ahead.
What should be done about contracts and about unemployment in the coalfields and everywhere else ? We should be talking about a four-day week --not for Parliament, but for the people in general. There will be no better opportunity ; we should start it now, while we have mass unemployment.
I was looking at the contract the other week. Based on the number of hours that miners work now--the few that are left--they would have to work 51.5 weeks in the year under that contract, which means that they would have two or three days holiday instead of the normal holiday weeks and bank holidays. For surface workers, it would be 55 weeks, based on the hours that they work now. Imagine telling that to Members of Parliament. They have already
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gone. Members of Parliament and Ministers will finish next Wednesday or Thursday for another fortnight. They have met for about seven months in the past year, yet they are telling miners that under the contract they will have to work the equivalent of 51.5 weeks underground. What a scandal.Frankly, a lot of the things in this order want chucking out. We all know that a sum of money has to be paid to miners through various schemes and pensions and we know that that is necessary, otherwise we would vote against the order because of the parts about British Coal Enterprise, the contract and the £6,000.
Another thing that is not included, but ought to have been because we said it long and often enough during the Report stage of the Coal Industry Bill, and doubtless in the Standing Committee as well, is the Coal Industry Social Welfare Organisation--CISWO. Instead of giving the money to British Coal Enterprise, why was CISWO not given a sum equivalent to the amount that it fell short of when earlier measures were introduced ?
For all those reasons we are faced with a list of measures that none of us can stomach, yet the order also provides for the sum of money to fund pensions and other necessary entitlements. Just before the privatisation of the coal industry we are engaged in a mopping up operation that will make the lives of people in pit communities even worse than they were before.
The real problem that the Government will have to face--a Labour Government --is how we can best get people back to work in those communities. The order will not provide that work.
6.5 pm
Mr. Eggar : We have had a good and useful debate and I am sure that Opposition Members will not blame me for saying that at least some of the themes were familiar--some of the speeches were quite familiar too.
Mr. Skinner : The hon Gentleman's is familiar--he is always kicking people in the teeth.
Mr. Eggar : I am listening with my normal courtesy to the hon. Gentleman's sedentary contribution--if that is what it is. I much admire the anticipatory nature of his interventions.
The hon. Member for Clackmannan (Mr. O'Neill) was kind enough to draw our attention to the very satisfactory conclusion that has been reached with regard to the agreement with trustees on the pensions issue. I appreciated the constructive way in which hon. Members on both sides of the House handled the issue. Perhaps all of us could learn a lesson from the way in which the House can assist a genuine discussion and negotiation, rather than hinder it, and the debate is a good example.
Some hon. Members referred to the transfer package. As I made clear at the beginning of the debate, the order does not relate directly to the package because it and the lump sum--£6,000 was mentioned--are a matter for British Coal, subject to the overall authorisation of its external financing requirements.
British Coal's offer is generous and amounts to a cost of £100 million for the lump sum payments. I must inform the hon. Member for Sherwood (Mr. Tipping) that 10,000 times 25,000 is not 25 million, but 250 million. I understand that he enjoys the freedom of the Back Benches, but an error amounting to a multiple of 10 seems
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slightly cavalier, even from an Opposition Back-Bencher. I am delighted to see a glint in the eye of the hon. Member for Bolsover (Mr. Skinner), but I shall resist the temptation to retaliate in kind.I listened with care to the points made by the right hon. Member for Berwick-upon-Tweed (Mr. Beith), who is enjoying his conversation with the hon. Member for Bolsover. It is a matter for British Coal, but I shall make sure that the Hansard extract of his speech is brought to the attention of the chairman of British Coal because I am sure that the chairman would not want there to be any
misunderstanding and will doubtless want to consider carefully what the right hon. Gentleman said.
Mr. O'Neill : The Minister spoke about the generosity of the package. Is it really as generous as he claims ? It is £6,000, less tax which takes it down to a maximum of about £4,000. It involves two years without any pay rises and changes in working hours which will result in a reduction in the amount of money available from working overtime. Over four years the miners will be getting about £1,000 a year. Even making a generous estimate, £4,000 over two years is £48 a week. That is very little for changing their working hours, giving up the prospect of pay rises and losing overtime. It is not a generous offer by any stretch of the imagination.
Mr. Eggar : I assume that the hon. Member for Clackmannan has checked out his remarks with the hon. Member for Dunfermline, East (Mr. Brown), who presumably will agree that £100 million of additional public expenditure is not adequate, thereby committing the Labour party in opposition to going way beyond that.
It is easy for Opposition Members to spend money like confetti and to make all kinds of commitments, but it is highly irresponsible. I am sure that the hon. Gentleman would not make those observations if he were sitting on this side of the House.
Mr. Skinner : The Minister ought to understand that my hon. Friend is not asking for any more money. He is trying to tell the Minister that under a Labour Government there would not be such a package. We would not call upon miners to be blackmailed to the tune of less than £6,000 less tax and the rest of it in return for having to work longer hours and getting killed in the process. My hon. Friend the Member for Clackmannan (Mr. O'Neill) would say to my hon. Friend the Member for Dunfermline, East (Mr. Brown), "I have just taken part in a debate in which I have saved you £100 million.". We would use the money to build some council houses or to provide work in another fashion. That is what he is saying.
Mr. Eggar : I am sure that the hon. Member for Clackmannan is as grateful as the rest of the House for that contribution from the hon. Member for Bolsover. I always enjoy his efforts at riding to the rescue of Opposition Front-Bench spokesmen, but that one does not wash.
At the end of the day, what would those men be doing ? They would be producing coal which would be stockpiled because there is no market for it. What would the hon. Gentleman do with the stockpiles ? How would he finance them ?
Mr. Eggar : The hon. Gentleman really is tempting me to go way beyond the terms of the order, but he has not
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done his research. He should know perfectly well that steam coal imports that are suitable for electric generation have fallen by 25 per cent. this year on last year and that the bulk of imports into Britain comprise coking coal and other specialist coals, the bulk of which are not and, sadly, cannot be produced in this country. The hon. Gentleman should also know that one of the major aims of the private sector mining companies is to increase as far as possible anthracite production and other specialist coal production for niche markets. Sadly, he has not welcomed that, but he should do so. The hon. Member for Barnsley, West and Penistone (Mr. Clapham) caused me a certain amount of consternation. Normally, such matters are dealt with by the hon. Member for Sunderland, North (Mr. Etherington), but the hon. Gentleman seems to have taken over that mantle. He did some analysis of the order and compared paragraph 5(2)(b) with paragraph 6. The order is drafted in that way because if BCE were to make redundancies among its own employees, unless that drafting were followed it could benefit from the grant twice over, once under head 1 and once under head 6.The hon. Gentleman also referred to the funding for BCE. With the possible exception of the hon. Member for Bolsover, there is a general welcome for the work that BCE has done. The Government greatly value that work. We shall need to consider its longer-term future in the light of the overall employment position in the coalfields, and in the meantime the order would enable the funding of BCE to continue for a further year. In fact, we have received some suggestions from British Coal as to the future structure of BCE, which we are considering.
Mr. Clapham : I raised the possibility of chronic bronchitis and emphysema being included in the pneumoconiosis compensation scheme. The Minister will be aware that chronic bronchitis and emphysema is now prescribed and clearly accepted to be dust-related. There is, therefore, no difference in the risk of pneumoconiosis and chronic bronchitis and emphysema and it is only right and proper that it should be included in the scheme so that a man suffering from the disease can be compensated. Is there provision under the grant to include chronic bronchitis and emphysema sufferers within the scheme ?
Mr. Eggar : There is no such provision. I congratulate the hon. Gentleman on his determination to raise the issue on every possible occasion, as he is fully entitled to do, but we cannot cover that particular area, which is why I did not pick up the points made by the hon. Member for Bolsover.
Mr. Hardy : It is a simple but serious question. The Minister appeared to be suggesting before he gave way to my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) that there was a reasonable amount of time and that the measure took us into 1995--the next financial year. There are only 10 months of this year left and the wheels of Government sometimes grind extremely slowly. There is currently a lot of anxiety about BCE. Without wishing to twist his arm excessively, will he consider that that anxiety deserves to be recognised and if he can reach a conclusion before March 1995, he should do so ? The House would be grateful for an early decision on the matter, which is of considerable significance to many people in the coalfield.
Mr. Skinner : Snap his arm off.
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Mr. Eggar : I am grateful to the hon. Member for his intervention and the way that he put it. He did not hear the sedentary intervention from the hon. Member for Bolsover suggesting that the hon. Gentleman should have snapped my arm off. Sometimes gentle persuasion is more effective. I listened carefully to what he said. I understand both the valuable work that BCE does and the inevitable uncertainty that exists at the moment and I shall certainly be considering the advice that we have received from British Coal as soon as I reasonably can, but I would not want to be constrained to any timetable.
Question put and agreed to.
Resolved,
That the draft Coal Industry (Restructuring Grants) Order 1994, which was laid before this House on 21st April, be approved.
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Value Added Tax (Education)
6.19 pm
The Paymaster General (Sir John Cope) : I beg to move,
That the Value Added Tax (Education) Order 1994 (S.I., 1994, No. 1188), a copy of which was laid before this House on 28th April, be approved.
The order will replace the existing VAT exemption for supplies of education, training and research. It will leave existing VAT liabilities largely unchanged but I hope that, in line with the Government's commitment to deregulation, it will greatly improve the clarity and consistency of VAT treatment in that sector.
The key change is that profitability and the subject matter of individual courses will no longer be factors in determining eligibility to VAT exemption in most cases. Applying such criteria has been at the root of many of the disputes and inconsistencies in that area in cases that have gone before VAT tribunals.
The proposal is that exemptions will depend predominantly on the type of provider. If the supplier is an eligible body as defined in the order, its educational and training courses will be exempt from VAT. Schools, universities and further education colleges will continue to enjoy VAT exemption but the exemption has been extended in some respects.
First, sporting and recreational courses are no longer excluded. There was a contentious area of overlap between taxable recreational courses and exempt vocational training. One man or woman's recreational course is another's vocational course. A favourite example was that of flower arranging, which could be learnt for recreational purposes but also to become a florist.
Secondly, a specific VAT exemption has been introduced for examinations, assessments and similar activities. The new exemption covers a broad range of suppliers of such services and should facilitate the developing of national vocational qualifications.
Mr. Andrew Smith (Oxford, East) : I welcome what the Paymaster General says about the exemption of courses that fell on the borderline between education and recreation, such as Women's Institute courses. But exactly where does the order make it clear that courses of that nature will be exempt from liability to VAT ?
Sir John Cope : The whole order makes that clear. The new group 6 category says that the provision by an eligible body of education or vocational training will be brought into the exemption. It goes on to define "eligible body", and I assure the hon. Gentleman that the education branch of the Women's Institute to which he refers--he has written to me about that--is such an eligible body and therefore falls within the terms of the exemption provided in the order.
Thirdly, the exemption for private tuition has been broadened and will ensure that very few private tutors will be caught in the VAT net. It was previously limited to one-to-one tuition. I doubt whether many individuals will be affected because there is a £45,000 turnover limit to VAT, which excluded most such people from the VAT net and will continue to do so. Lastly, local authority adult education classes that are currently taxable will be brought within the exemption.
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Although the order is technical in nature, it is the result of a considerable consultation process. The House will know that the issues were discussed last year, with private notice questions in the House and correspondence, in the course of an internal review by Customs and Excise. That resulted in a consultation document being published last December, with press releases and so on. Although the issue was not front page material, its existence appeared in public print. In all, some 500 copies of the document were sent out, some to people whom we knew were interested and others to people who had seen the press release and were concerned about its ramifications, so had requested copies. Comments were invited by 28 February and those were carefully considered, as can be seen by the changes to the order between the December draft and the order before the House today. When the order was tabled, it received a certain amount of support from those who had made representations during the consultation period. However, in the past week there has been a flurry of representations from people who teach English as a foreign language and had not seen the order before. Some of them are concerned about the proposals because the order extends exemption to organisations that are accredited under the British Council recognition scheme for English language schools. But that does not cover everybody who teaches English as a second language in a commercial environment. Those who are not covered by the British Council scheme will, under the order, continue to pay VAT and they have complained that it discriminates against them by exempting some of those whom they regard as competitors.I have given no undertaking in response to those recent representations but have said that we shall consider them carefully and decide whether we should modify the arrangements in the order. It concerns a small part of the scheme of the order and I did not think that it would be right to hold up the whole order for that reason. It would, however, be right to give those who missed the earlier consultation process an opportunity to make proper representations. We may be able to achieve equitable operation leaving the order as it stands, with co-operation between the British Council and other representative organisations. The British Council has assured me that it will consider that. Alternatively, a brief amending order might be required. I am willing to consider representations from Members of the House in the course of this debate, which is part of the consultation process, and from others.
I believe that we should be justifiably proud of the English language. It is no longer ours alone but has become a world language, which is a great advantage to this nation and our daughter nations that also have English as their first language. I admit that I am not particularly good at foreign languages and take the view that, if foreigners could agree among themselves on one language, I would be prepared to make a greater effort to learn it. I have observed that when many foreigners from different countries wish to communicate with one another, they often use English. That is a great advantage to this country as well as to others who speak English as their first language. In those circumstances, I shall look favourably on the teaching of English as a foreign language. I am glad to be able to propose that favourable treatment be given to it in the order and will consider the further representations that may be made. At the same time, I recognise that, wherever we fix the boundaries, difficulties will arise.
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The order makes the application of VAT much clearer in the whole field of education and training, and I am happy to commend it to the House.6.28 pm
Mr. Andrew Smith : As the Paymaster General says, the order seeks to resolve the long-standing confusion, ambiguity and contradiction that have bedevilled the operation of the imposition of VAT on the education- recreation divide, which had become increasingly difficult to police.
The Labour party has campaigned long and hard for that to be sorted out. I welcome the fact that consultation took place. I shall point out later in my remarks where I feel that consultation was not wide enough. I also welcome the fact that the Government now appear to accept our argument that the benefits in terms of education and personal development, for example, of evening classes as a bridge to further education and training opportunities, are such that VAT should not be imposed on those courses. As the Paymaster General said, the progress of the campaign--with many millions of people throughout the country affected, directly or indirectly, and many making representations--has resulted in the welcome fact that VAT will not now be imposed. The National Institute of Adult Continuing Education has praised the campaign in that regard.
Lest the Paymaster General be tempted to relax under the weight of plaudits, I have some questions to ask and some important reservations to express. First, I should like the right hon. Gentleman to confirm once again that the order does what we think it does. He referred to flower arranging. Other courses that often come up are those in cake decoration that do not lead to a qualification, as well as those in assertiveness, self-defence and other areas of adult education previously categorised as recreational. I should like the right hon. Gentleman to confirm that these will not be liable to VAT.
Secondly, I want to press the Paymaster General on whether the Government are convinced that it is consistent with good taxation principles to mix-- as the order does--liability to tax, as defined by the nature of the supplying institution, with the nature of the supply. Is it not more generally the case that, with the exception of public bodies, the nature of the supply defines liability for VAT, for reasons of consistency but also in the interests of fair competition ? As the Paymaster General has explained, the problem arises most acutely, in relation to the order, in the case of schools teaching English as a foreign language. In choosing to extend exemption to British Council-recognised schools, to which the right hon. Gentleman has referred, the Government are making provision for 250 accredited institutions. But these are a minority of the estimated 1,200 schools--a fact that understandably gives rise to enormous concern among those to whom the exemption is not extended. It seems to me that there is something of an inconsistency between the Government's treatment of language schools for taxation purposes and their categorisation of those schools for educational purposes. Liability to VAT is being tied to a particular voluntary accreditation scheme in a sector where the Government have refused to acknowledge, for educational purposes, the need for any official distinction, in a regulatory framework, between schools. I have advocated a common registration
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system. The British Council system, good though it is--as many in the industry will have pointed out to the Paymaster General--does not provide such comprehensive oversight of the industry.I should like to know what the Government say to the Association of British Language Schools when it points out that the order confronts its members with unfair discrimination. The discrimination is referred to in the association's briefing :
"We are the only accrediting body for all types of EFL service, whereas the British Council is more restrictive in the types of school or college it will inspect. Our inspections are yearly, not three yearly, employ a highly qualified inspectorate, and are part of a Trade Association which is rapidly gaining respect for realism as well as reasonable costs. British Council charges are far beyond the means of many schools. . . .
If the order does go through as it is, the legislation will be seen as flawed from the outset and will have a divisive and distorting effect upon the market."
As I have said, there is a good argument for regulation. It can be argued that the contents of the order provide a form of regulation, the need for which many non-British Council schools acknowledge. But this is regulation on the hoof. It is discriminatory and has been brought in without adequate consultation with those whom it affects. I understand that the English language division of the British Council did not know anything about the order until April, when the customs authorities asked it about the finer points of drafting. The Oxford Language Forum was not consulted, nor was the Cambridge Language Forum, the Association of British Language Schools or the language schools information service. The Paymaster General says that he is willing to listen to further representations and, if necessary, produce an amending order. Fairness and natural justice demand that this process be taken very seriously in the interests of providers. The order will raise serious issues for the British Council itself. The council has said that it supports the principle and will try to help in its implementation--for example, by accommodating providers of distance learning and of one-to-one home tuition who are not currently eligible for accreditation. However, this will cost money and will take time, yet the order is due to come into effect within a couple of months.
I understand that the British Council currently inspects about one in four centres run by an organisation. That is the sample that it believes is necessary for the assessment of quality. Clearly, this will present problems in the case of distance learning or lots of individual tutors, where there will have to be individual rather than sample inspections. Thus, there will be resource implications for the British Council if the order is to be workable.
At the moment the financial year accreditation fees are £620 for members of the Association of Recognised English Language Services and £704 for non-ARELS schools. Reinspection costs another £800 to £900 every three years. These fees are supposed to cover the costs of assessment, monitoring and inspection, but in the past the British Council has ended up subsidising the process. It has been trying to phase out the subsidy, and future schemes will be expected to pay for themselves. This may well have implications for membership and accreditation fees. In the light of the extra responsibility being imposed by the Government, the British Council will have to review its own operations, and this will possibly have resource
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implications. Clearly, it is very important that accreditation criteria be made as objective and defensible as possible. Bearing in mind the significant amounts of business that are at stake and the substantial sums of money that are involved, it is not fanciful to imagine that litigation will arise if a school which believes that it is entitled to accreditation and, therefore, to exemption from VAT is not accredited and has to damage its prospects by passing on the cost of the taxation.In a number of respects the order indicates insufficient understanding and insufficient consultation with the industry. Currently, a school that operates throughout the year must have been established for two years before it can apply for British Council accreditation, and a seasonal school must have been established for three years. Am I right in thinking that, by implication, a newly established school will have to operate for two or three years, charging VAT, before receiving the accreditation that is the passport to exemption ? That is an extraordinary proposal, given that it would hit new schools at precisely the time when they are trying to build up their custom. Surely it ought to be regarded as a massive and unfair barrier to entry to this sector of education services. What is more, the differential liability to VAT may well be very damaging to many reputable schools, which will suddenly find themselves having to explain why they have to levy VAT when their competitors do not. We can all imagine the problems that will arise. As I said earlier, I think that the timing of the order's implementation also betrays some ignorance of the education sector involved. I understand that the Customs explanatory leaflet is due to go out in June, and that the order is due to take effect in August--bang in the middle of the peak EFL season. Could not a more satisfactory arrangement be considered even at this late stage ? I think it likely that the cost to the Exchequer will exceed the Customs estimate of £10 million. Obviously that will become clear in due course, but we should take into account the hundreds, sometimes thousands, of pounds that are charged in fees for many courses. The differing treatment of different sorts of institution that are similar in other respects gives rise to issues of hybridity in the order. It is an affirmative instrument ; if it went to the House of Lords, whether it was in fact hybrid would have to be considered. If it were found to be so, it would be subject to the petitioning procedure. I mention that in the light of a Customs and Excise news release issued on 28 April, which stated in its notes to editors : "The Treasury Order is subject to the Affirmative Resolution procedure and will be debated in both Houses of Parliament." I understand that the Government now say that that was a mistake. I should be grateful if the Paymaster General would explain the position : if it was a mistake, how did that mistake come about ? I have a further question to ask in connection with language schools. It relates to the position of universities. The exemption that Customs intends to extend to EFL seems--certainly in the case of universities--to be dictated by the need to realign United Kingdom interpretations of VAT law with the European Commission's interpretation of the sixth directive, which exempts education provided by a body governed by public law.
The Customs consultation paper to which the Paymaster General referred concedes as much in paragraph 3.2, which states :
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"However, if EFL is accepted as education' (and the European Commission has argued strongly that it is), then it must be exempt when provided by bodies entitled to mandatory relief under Article 13 A 1 (i), eg we should not exclude EFL from the exemption when provided by a UK university."That raises the question of the previous supply of EFL tuition by universities. If such courses should not have been taxed and, in effect, were taxed incorrectly, are universities now entitled to ask for a refund of the VAT that was levied on them ?
At the bottom of the first page, the brief on the order states : "There will be some changes at the margins from exemption to taxation and vice versa. Whether or not these changes are welcome will depend on the trading circumstances of individual providers." Can the Paymaster General clarify the reference to
"some changes at the margins" ?
How many providers does he expect to be caught in that way, and what kind of providers will they be ?
My next question bears some relation to that last point. It relates to the word "any" in note (1)(f)(ii) of the order, which provides that a body that does not fall within the other categories for exemption--as the Paymaster General said, schools, colleges and universities fall into those categories --will be exempt if it is non-profit-making and
"applies any profits made from the supplies of a description within this Group to the continuance or improvement of such supplies." Where that provision applies, does "any" mean any part of the profit, or all of it ?
Let me give an example. What will be the position of a charity that sells some expertise--perhaps a course in public speaking--to the business sector, and then ploughs the profits back into a different area of its charitable work ? Will all that supply still be exempt ? Many charities will consider the question important.
I can give a converse example. What will be the position of a management college that provides tuition for corporate clients who can simply recover any VAT that they pay ? Such a college might well prefer to charge VAT on its supply to reclaim the VAT on the input costs of such courses. Could it opt to do so under the order ? We welcome the clarification of the position of evening classes, adult education and so forth, because we campaigned hard for their exemption from VAT. Nevertheless--as I hope I have made clear--I think that the operation of the order will pose serious problems, especially in relation to English language schools. We all want the position of adult education classes to be sorted out as a matter of urgency, and there is no reason why that cannot be done on the basis of the order, which in that respect has our full support ; but would it not have been better for the Paymaster General to withdraw the order this evening, and return it later minus the reference to EFL ? He could have consulted before bringing back a revised order that reflected proper consultation and thorough consideration--which clearly has not gone into the part of the policy that we are now discussing.
We do not oppose the motion, but we shall pay close attention to the consultation with EFL providers and the conclusions--and, I hope, amendments--to which it gives rise.
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