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
nation’s 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 children’s
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 children’s 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
important in my constituency. Last year, I visited Albermarle, one of my
local primary schools, which has a fantastic school kitchen that
produces healthy food. 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.
Justine
Greening: My hon. Friend has expressed the point
perfectly—better than I could have
done.
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 Secretary’s 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 oddities—there is no other word for them—in 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
said, we end up with the bizarre situation where a fruit that is still
intact has a zero rate of VAT, but the minute it is squeezed to become
a fruit juice, it has a standard rate of VAT. There are some questions
that need to be
raised. 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.
The
Chairman: Greg Hands—innocent
smoothie!
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.
Gentleman’s 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. 5.15
pm
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
the line might be drawn, such as whether fruit juice combined with water
or any other liquid might be included or whether it would be a more a
restricted definition of pure fruit juice. We need to
understand—I think that the hon. Member for South Derbyshire was
alluding to this—whether 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 today’s
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
better—for the individual and the country—if 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 nation’s eating habits in a positive way. I thank the hon.
Lady for her observation that the Government have been doing
good things in that area, such as the school fruit and vegetables
scheme, the five-a-day programme, the education issues that are being
raised and the move to much healthier school
lunches. Justine
Greening: The Minister is right that the Government have
been doing stuff—I 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 Government’s 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.
Justine
Greening: Will the Minister give
way?
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
that it would necessarily be possible for us to maintain. That is one of
the issues that we are having to consider as we think about whether we
could use reductions of VAT on particular beverages to incentivise
healthy eating or
drinking. | 
