Justine Greening: That was an interesting intervention. I shall not take any more time than I need. I tend not to use the House of Commons gym because I am worried about some of the hon. Members I may meet on the exercise bike.
Angela Eagle: As someone who regularly uses the House of Commons gym, I can assure the hon. Lady that it is a very welcoming place, and we would all be happy to see her there.
Justine Greening: This seems to have become a debate about my physical exercise. I am happy to tell the hon. Lady that in the Commons versus Lords swimming competition two years ago, I won the prize for fastest female. I exercise, but I tend not to be a gym person. I am more of a swimmer, which I am sure Sir Nicholas is very relieved to hear. I apologise for being slightly diverted. I will now return to the nations health rather than mine.
We have discussed why physical exercise is important. It is fair to say that our main concern in tabling the amendment, which relates to fruit juice in particular, was to encourage healthy lifestyles. In an interesting report in May, a senior medical director at Alder Hey childrens hospital in Liverpool said that significant numbers of children aged between two and three were being classed as obese. He said that they were experiencing conditions such as type 2 diabetes, which would normally only be expected in middle-aged people. Depressingly, the medical director, Steve Ryan, said that
it was almost certain that surgeons will have to staple childrens stomachs within a few years.
That is horrendous. The same medical director talked about seeing breathing difficulties in overweight children, which is a particularly depressing state of affairs. That is one of the reasons why we must consider all the levers that can be pulled, including ones in the tax system, to start addressing such issues.
It is fair to say that the Government have made some efforts. There have been a number of different initiatives including the five-a-day programme, which included the school fruit and vegetable scheme. We are also aware of the big debate and the improvements that were made to school lunches. We can all pay tribute to people such as Jamie Oliver who put the issue of healthy eating at school high on the agenda. I know that the matter is
The Chairman: Order. May I say to the hon. Lady that she is going slightly wide of her new clause, which relates to VAT on beverages and not food? I am not sure whether she is suggesting that there should be VAT on food. I hope that she is not.
Justine Greening: Thank you, Sir Nicholas. There is some rationality in the way I am building up my argument. I know that I have been talking about food, but I want to go on to discuss the contrast between VAT on some food and VAT on fruit juices. We may expect to see a different approach to the VAT rates on some food compared to some beverages and fruit juices, but I will come to that very shortly.
Mr. Philip Hammond (Runnymede and Weybridge) (Con): I listened carefully to what the Chairman said, but I, too, have received a great number of representations on that issue. At the root of them is concern that fruit, which is generally regarded as a good thing, is not subject to VAT as a food, but as soon as one squeezes it to make equally healthy fruit juice, it becomes subject to VAT. That contrast is at the heart of this debate, as I think my hon. Friend would agree.
Angela Eagle: Does the hon. Lady recognise that it became the case because the previous Government in 1993 changed the rules to bring fruit juices into the VAT system?
Justine Greening: The Exchequer Secretary is right. It happened following the decision regarding Tropicana UK Ltd, which found that pasteurised orange juice was not a manufactured beverage. We are all conscious that VAT law can be complex. This may be a good time to discuss some of the anomalies.
I draw the Exchequer Secretarys attention back to the purpose of the new clause. For the first time, we want to put a fact base on the table to show whether the tax system can be used to encourage healthy eating. The proposal specifically uses VAT. I understand that the Government are considering the issue; the Wanless report looked at dietary-based taxes so there is clearly a debate to be had. We will not be able to understand whether the idea is realistic or important or whether it can provide real achievements unless we have a statistical fact base. Only then can we understand the impact and take a decision.
A lot of VAT law is set through case law. There is no doubt that there are some odditiesthere is no other word for themin what is zero-rated and what is not. When looking at healthy eating, such oddities jump out. Chips, hot dogs, burgers, biscuits, tea and coffee, yoghurt and a range of other foods are zero-rated, but fruit juice, bottled water and some herbal teas are not. As my hon. Friend the Member for Runnymede and Weybridge
We have already started to debate the issue in the House. In this very room, we have the hon. Member for Dundee, East, who tabled early-day motion 558, called VAT on Fresh Fruit Juice, which called
on the Government to investigate the possible benefits of reducing VAT on fresh fruit juice to encourage children in particular to choose to drink fresh fruit juice rather than other less healthy drinks.
That received the signatures of 59 colleagues in the House. I spotted the signature of the hon. Member for South-East Cornwall of the Liberal Democrats. There is, therefore, some support for the issue in the House.
There is also evidence of support outside the House. A petition on the issue was set up by Innocent smoothies, although it is fair to say that the company has a business interest in the issue.
Mr. Hands: I am delighted that my hon. Friend has mentioned Innocent, as it is located in my constituency. She is right to say that the company has launched an extensive campaign. However, I have received representations not only from that company, but from a large number of constituents advocating a change. It is certainly very popular in Hammersmith and Fulham.
Justine Greening: I am not sure whether the hon. Gentlemans constituents would describe him as an innocent smoothie, but I am sure that he is a smoothie in his own way. The campaign was backed by the British Soft Drinks Association, which I am sure also has its own reasons for supporting it. When Innocent smoothies set up the petition, it received 22,000 signatures.
Mr. Mark Todd (South Derbyshire) (Lab): The new clause refers to beverages containing fruit juice. That is substantially different from a discussion of fresh juice, which I am sure Innocent would advocate very powerfully. I drink Innocent smoothies myself. The new clause does not make entirely the point that the hon. Lady is dwelling on.
Justine Greening: It does, but one of the key issues that the Government need to look at is how broad would be the extent of any reduction of standard rate VAT to a lower rate. A key debate would be whether it would be restricted to pure fruit juice. One main reason for the change in VAT law was a reaction to how fruit juice might be defined. Those are all issues to be discussed.
We seek to encourage that debate but, most importantly, to encourage it in terms of where we are now rather than in a fact-free environment. We do not know the Treasury view on demand elasticity, health benefits or price elasticity of fruit juice. The Treasury could look into many issues to get a better understanding of where
We need to understandI think that the hon. Member for South Derbyshire was alluding to thiswhether it is better to have a more restricted definition or whether broadening it out would mean fewer health benefits. Although drinks and beverages may have fruit juice in them, they may also have other ingredients such as sugar, which may lessen the health benefits. The hon. Member for South Derbyshire raised a very good point.
As I was saying, the Innocent smoothie petition got 22,000 signatures. It is becoming recognised that this nation has a real issue with obesity, particularly childhood obesity. A Foresight report estimated that such weight problems could cost the wider economy in the region of £16 billion.
It is time to start looking at whether we are using all the mechanisms available to Government, including VAT law and tax. We will not get to the bottom of this if we do not get the facts for Ministers to look at and for this House to start debating.
Our new clause is designed to help do that. I look forward to hearing what the Minister has to say. We should not hide from facts. In todays Britain we are increasingly looking at our tax system to change behaviour. This is not something that we have ever done as broadly as we are now discussing, particularly with regard to green taxation. We will not be able to understand how tax can change behaviour for the betterfor the individual and the countryif we do not carry out the research and investigations and have the necessary debate.
New clause 10 is about ensuring that we will lay a report before Parliament so that it can have a debate and get to the bottom of these vital issues, including fruit juice. I will listen with interest to what the Minister has to say.
Angela Eagle: I will respond briefly to what has been a short but tantalising debate about some of the uses of tax instruments for incentivising potentially healthy outcomes.
I do not think that any member of the Committee disagrees with the worries raised by the hon. Member for Putney about trends in obesity, childhood eating habits, nutrition and ongoing health. I suspect that those concerns are shared across the House.
New clause 10 proposes that the Treasury should, within six months of the Bill passing into law, lay before the House of Commons a report on the potential revenue costs and health benefits of a VAT reduction for beverages containing fruit juice. There is a bit of a difficulty in that issue, as hon. Government Members have pointed out. As the hon. Lady hinted after my earlier intervention, that problem led to the term manufactured being dropped from the existing tax rules in 1993, as that had meant that all fruit drinks, whether manufactured or pure, were included in VAT rather than excluded.
I do not think that any member of the Committee is unaware of the worries surrounding obesity and the challenge of ensuring that we can change the nations eating habits in a positive way. I thank the hon. Lady for her observation that the Government have been doing
Justine Greening: The Minister is right that the Government have been doing stuffI should say initiatives, rather than stuff. However, one thing that I did not mention was that last year the Government abandoned their target to halve childhood obesity by 2010 and set a goal of reducing it by 2020. Despite that action, there is an issue regarding what progress will really be made. I caveat my comments about what the Government have been doing with a concern about that step back from what was an ambitious but obviously important target on childhood obesity reduction.
Angela Eagle: I do not want to get diverted by having an argument with the hon. Lady about the Governments commitment to ensuring that we have a healthy nation and that we teach our children, in particular, how to eat healthily when they are besieged by all kinds of temptations to do otherwise, because that is not appropriate to the new clause. However, I hope that she will acknowledge, as I thought she had, that all members of the Committee are interested in a positive solution to those challenges. I am particularly interested in what we can do to reduce the seemingly absurd positive correlation between poverty and obesity, which I do not think many people would have been able to predict would have been such a problem as we move forward.
Let us get back to new clause 10, which suggests that we look at the potential revenue costs and health benefits of a VAT reduction on beverages containing fruit juice. There are, however, many difficulties about what those beverages are.
Angela Eagle: No, I want to develop this argument. The hon. Lady admitted that fruit juice could be 100 per cent. pure, which many of us know to have good health benefits, although one has to be careful that children do not drink too much because the acidity is not always good for their dental health. It is much better for them to eat the fruit and get the fibre at the same time, so some issues need to be considered. Also, beverages containing fruit juice could cover all sorts of beverages that are completely unhealthy, so it will become an issue of whether we can restrict the VAT reductions to the right kinds of beverages. It was difficulty in that area that saw beverages brought into VAT in the first place, with the 1993 changes.
We are not against thinking about the issue in principle, but some of the difficulties with using VAT and tax rules to try to achieve healthy outcomes are precisely those that were experienced in 1993. We have a thing called fiscal neutrality in our VAT rules, which are EU-based, meaning that there has to be equal VAT treatment of substitutable products to the extent that any VAT difference could impact on consumer choice. Whether one could argue that pure fruit juice and a fruit juice made with higher levels of sugar were not substitutable products for that VAT rule is part of the difficulty that was resolved in 1993. It is not a boundary
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