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Mrs. Margaret Ewing (Moray): As a sponsor of the amendment, I congratulate my hon. Friend the Member for Nottingham, South (Mr. Simpson) on tabling it.
The hon. Member for Southend, East (Sir T. Taylor), who spoke at length, said that the amendment contained flaws. He and I, and other members of the all-party parliamentary warm homes group, trawled through the Bill to try to find other ways of addressing the issues of energy conservation and fuel poverty, and this is the best method that we could come up with. Although it is not perfect, at least it is a step in the right direction, and, if accepted, it would send the country the message that we are trying to deal with such matters in Parliament.
Let me touch briefly on two principles. First, there is the question of the health and safety of the most vulnerable members of society. I thought it despicable that the Budget massively cut the home energy efficiency scheme, given the impact that that will have on the poorest members of society, who are often living in the worst housing. The safety aspect relates to the health issue that has already been mentioned. Many people are now taken into hospital during the winter, which costs the national health service a vast amount. If those people could heat their homes to a reasonable extent, that would not happen. I do not think that the Treasury has considered the saving that could be made.
Before the Budget, we made a substantial submission. We said that we did not want money simply to be thrown at the problem; the Treasury could benefit from some of the positive ideas that had emerged from the all-party group and, indeed, from many voluntary and statutory organisations throughout the United Kingdom. The Treasury should bang a few heads together, get its civil servants to do their sums and realise that our proposals will benefit not only the health of the most vulnerable in society, but--perhaps--the Treasury.
The second aspect is energy conservation and employment creation. When the Government introduced the concept of VAT on domestic fuel, they said that it was part and parcel of the Rio agreement. That seemed to paint a bright picture for the Government, but in reality they were looking for money and not adhering to the agreement at all.
I listened to the speech by the hon. Member for Southend, East (Sir T. Taylor). We all talk about the rights of an elective democracy. We are sent here to represent people, and the amendment would remove some power from the Executive, not just in Brussels, but in Whitehall, and would give members of every party in the House the right to say, "We will take the decisions affecting vulnerable sections of society." This is not just an argument about Europe: it is about the Executive and the rights of elected representatives. I hope that hon. Members will support the amendment.
Sir John Hannam (Exeter):
The hon. Member for Nottingham, South (Mr. Simpson) made a powerful speech in promoting the amendment. I shall be brief, because the case in principle for removal of the VAT anomaly in energy conservation matters is irrefutable. Obviously, the problem is to try to find a method of achieving that objective, whereby customers would pay the same 8 per cent. rate on energy-saving materials as on the fuels that they consumed.
As the hon. Member for Nottingham, South said, new clause 10 was reasonably clear cut, in that it would have established relief from VAT for a designated list of energy-saving products. However, the new clause was ruled to be outside the resolution of the Bill, so instead we are debating a group of amendments that would enable refunds to be claimed by contractors carrying out energy conservation installations.
Over the years, like other hon. Members no doubt, I have engaged in many debates with Treasury officials and Ministers in an endeavour to obtain VAT refunds for charities and charitable operations. I am fully aware of the strong reservations of Customs and Excise and Treasury officials about giving VAT relief for specified products and services. I am sure that, as usual, Treasury Ministers will produce solid evidence against refund proposals, as well as showing them to be counter-productive.
Even if the refund system is not the answer to the VAT anomaly, I implore the Minister to recognise our case for a more positive approach to energy saving. It cannot be right that people have to pay more tax to save fuel than to use it. That is not how our tax system should operate. Many of my hon. Friends have shown their support for that principle by signing early-day motion 383.
If new clause 10 had been the subject of this debate, I have no doubt that it would have been supported by a substantial number of my hon. Friends. The refund amendments do not command the same enthusiasm. If the Minister has alternative proposals for the restoration of confidence in our energy-saving programme, which
took a sudden battering in November from the 31 per cent. reduction in the home energy efficiency scheme, we shall be happy to go along with the Government.
Like many other hon. Members, in November, I took part in the home energy efficiency scheme week. I was mortified when, on the very day I was assisting an elderly couple with draught-proofing in their home, the news broke of the 31 per cent. cut in that scheme. Unfortunately, it was broken to me by the local press. That reduction in financial support will result in 200,000 fewer grants; with a national waiting list of 210,000 households, that was not good news.
A refund of VAT on energy-saving material costs would represent only modest help to the home energy efficiency scheme, so I would prefer to see a restoration of the lost funding in the next Budget. I hope that my right hon. Friend the Paymaster General will be able to reassure my hon. Friends and me that the Government are determined to strengthen our energy conservation policies and that they will look at the issue again if they are unable to accept the amendment. My right hon. Friend's reply to the debate will be crucial in determining my attitude in any Division that may be called later, and I am sure that that applies to other hon. Friends as well.
Mr. Matthew Taylor (Truro):
The answer to the hon. Member for Exeter (Sir J. Hannam) is that there is one simple alternative to the amendment before us: the Government could accept the original measure promoted by so many hon. Members. If the Minister so wished, he could choose to do that. It is clear that, sadly, the Government are not prepared to do so. Just one conclusion can be drawn by all those who signed the early-day motion, including many Conservative Members. If they believe in what they said they believed in by signing that early-day motion, they will vote in favour of the amendment.
If the Government pursue their current line, the Paymaster General will put his own colleagues in an extremely difficult position. He is asking them to choose between standing by what they said they believed in publicly by signing the early-day motion, and supporting their party. I understand that difficulty, but if the Government pursue that line, they will be defeated tonight. I certainly hope so, because that would be the only creditable position for the House to adopt, given the widespread support for the early-day motion.
The amendment deserves support, quite apart from the fundamental principle involved. It offers good news for the industry, which has been hit by the cuts in the home energy efficiency scheme grants, which were so unexpectedly announced in November, as the hon. Member for Exeter said. It would be good news for jobs and for the environment. It would also be good news for those currently living in damp, cold homes that they cannot afford to heat properly. Those arguments have been put very well already, and I do not intend to dwell on them.
It is nonsense for the House to be in the current position of supporting a regime whereby those who seek to save energy are penalised by the tax system, whereas those who use it wastefully are supported by it. That cannot be maintained. The Finance Bill already contains a refund system for certain building works, and all the amendment seeks to do is to add an extra category of goods for refund.
Although hon. Members would prefer a different system from that advocated in the amendment, that system works and the necessary bureaucracy has already been created. That is not at issue here. That system would offer the benefits to which I referred and, above all, it reflects the concern that so many hon. Members have already expressed by supporting the early-day motion. If they are honourable men and women, they will support the amendment.
Mr. Tim Yeo (South Suffolk):
I do not intend to reiterate the points that have already been made in the debate, most of which I agree with, but I have a couple of pleas to make to my right hon. Friend before he answers the debate. If he is unable to accept the amendment--and it will not be a great surprise to me if he is unable to do so, because I am sure he could find plenty of good technical arguments objecting to it--I hope that he will say something about his view of the principles involved. Both inside and outside the House, there is overwhelming support for what the amendment is designed to achieve: to produce the same VAT rate for energy use and energy saving.
Energy efficiency is one of those rare subjects where economic, environmental and job creation aims coincide. In that respect, it is a happy and unusual subject. That makes the principle that the amendment would establish genuinely difficult to fault. If in answering the debate my right hon. Friend deals only with deficiencies in the amendment and does not deal with the principles, the issue is bound to return. I hope, therefore, that, if he does not accept the amendment, for whatever reason, he will at least assure the House that the issue will be examined with a view to finding, between now and the next Budget, a satisfactory method of achieving the principle and the amendment's aim.
Reducing the VAT rate on energy-saving materials to the same rate as on fuel can be achieved in a variety of ways. I would be happy if my right hon. Friend said that he will perhaps introduce measures in the Budget, provided that--I recognise that the Treasury may be concerned about administrative costs and the cost of the concession--in the next eight months, he can be satisfied in relation to the total cost of the concession and the bureaucratic difficulties that some people suggest may arise. If he told the House that, subject to that, he would accept the principle, that would be a huge step forward.
My right hon. Friend's task has not been made easier by the change to the funding of the home energy efficiency scheme. My hon. Friend the Member for Exeter (Sir J. Hannam) referred to the change, which was announced just before Christmas. If there are to be alternative solutions, many hon. Members would be happy for that reduction in funding to be restored. That would be another way of dealing with the issue and of demonstrating the Government's commitment.
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