Childcare Payments Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Childcare Payments Bill:


1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 28 October 2014.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Mr Gyimah.)

Question agreed to.

Childcare Payments Bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Childcare Payments Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Mr Gyimah.)

Question agreed to.

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Childcare Payments Bill (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Childcare Payments Bill, it is expedient to authorise the restriction of relief from income tax in respect of the provision for an employee of childcare, or vouchers for obtaining childcare, under a scheme operated by or on behalf of the employer.—(Mr Gyimah.)

Question agreed to.

Business of the House (Data Retention and Investigatory Powers)


That, in respect of the Data Retention and Investigatory Powers Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—(Tom Brake.)

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Respect Policy

7.13 pm

Kevin Barron (Rother Valley) (Lab): I beg to move,

That this House approves the First Report from the Committee on Standards, Session 2014-15, Respect Policy, HC 321, which endorses proposals for the operation and review of a policy to deal with complaints of alleged bullying or harassment by Members or their staff towards House of Commons staff.

The motion appears in my name and those of the Leader of the House, the shadow Leader of the House my hon. Friend the Member for Wallasey (Ms Eagle), and members of the House of Commons Commission.

I want to make one thing clear at the outset: the fact that the Committee on Standards and the Commission are inviting the House to agree to a policy to deal with allegations of bullying and harassment is not a sign that there is a widespread problem. It shows the reverse: that the Commission wants to be a good employer and that Members of Parliament themselves want to make sure that any incidents of bullying and harassment are dealt with effectively.

Recent events have shown the dangers of not taking action to deal with potential problems. We are no longer in a situation where a quiet word with the Whips might be used to persuade an MP to change his or her behaviour. We need to be able to demonstrate that we do not have a culture of covering things up or of avoiding difficult issues. We also need to make sure that the system is fair and recognises that complaints need to be handled appropriately.

Although we may have very different political philosophies, those who stand for election do so because they believe in social justice, however they define it. It would be perverse for this House to be one of the few places without an effective and visible policy.

This debate and this policy are necessary because MPs are not employees of the House, but we depend on the services provided by those who are employed by the House of Commons Commission. If staff of the House are bullied by their colleagues, management can discipline those colleagues. If we as MPs bully our own staff, they have rights under employment law, as well as the support structures many parties have now put in place.

MPs, however, cannot be disciplined by the House of Commons Commission if they bully or harass House staff. We are in the position of hotel guests or other service users. If this were a hotel, services might be withheld from a particularly obstreperous MP, but that would be going against everything that the House service exists to do. It has never, ever been contemplated.

If it is to be a good employer, the House needs to have a policy in place that tackles the fact that MPs cannot and should not be subject to sanctions imposed by House management, but provides a clear framework for dealing with incidents when things go wrong. The motion gives us the opportunity to do that, and I believe we should agree it not only because we think it is right and that the House should be an exemplary employer, but for reasons of self-interest. Without such a policy, the House of Commons Commission is vulnerable to legal challenge if things go wrong.

The report by the Committee on Standards, which I Chair, briefly sets out the background to this debate. There has been, and there still is, a respect policy, which

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comes in two parts. The first deals with the informal resolution of disputes between Members and staff, and it remains in force. The second, which dealt with formal action if differences could not be resolved, has been suspended, because in practice it was found to be flawed, not least because it was seen as unfair to the Members being investigated. Investigation was done by a member of House staff and Members had no right of appeal, but staff did. It was quite clearly, in the Committee’s view, flawed in that way and I think most people agreed.

The note on our website on what Members can expect from the House service makes it clear that dignity, courtesy and respect on both sides are central to the relationship between Members and staff. That is generally the case. I have checked before delivering this speech, and there is not a single live complaint about a Member at present.

That is not to say that bullying is inconceivable: I think we all have to accept that it happens in almost every workplace. We operate in a high-pressure environment, and I am absolutely sure that, sometimes, things are said that are almost instantly regretted. Diffidence and patience with the status quo are not natural qualities for an MP, so a framework is necessary in case things go wrong.

The proposed policy strengthens the informal part of the process and revises the formal part of the process, so that investigation is independent and the complainant has no more rights than the person complained about.

The informal part of the process is most important. It requires Members to be told if they have upset a member of staff. I am told that, in most cases, Members have immediately apologised and taken steps to make amends as soon as they know that they have upset someone. It requires managers to look at the wider picture and consider whether difficulties arise because of a lack of capability or resources. If difficulties cannot be resolved, and both parties agree to it, there will be mediation.

These measures should mean that very few cases are taken forward to the formal stage of the process—that is, possible investigation by the Parliamentary Commissioner for Standards—but it is right that we should have effective measures to deal with such exceptional cases. If a complaint is made, the Parliamentary Commissioner will review the material. She will decide whether the behaviour alleged is so serious that it meets the high bar of conduct that would have the potential to

“cause significant damage to the reputation and integrity of the House of Commons as a whole, or of its Members generally.”

Members will know that that quotation is from Members’ code of conduct.

As the respect policy itself makes clear, the commissioner may be concerned by a complaint about a brusque response in a highly charged political situation. She has the power to make recommendations to management about the handling of the situation and to settle matters informally, if both parties are willing to do so, even at such a late stage. Where it is appropriate, she will be able to investigate and report to the Committee, which will decide what action to recommend.

We recognise that cases of this kind can be difficult for both the complainant and the person complained about, so they will be handled differently from normal complaints. A far higher level of confidentiality will be observed, and names will be released only if the

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commissioner concludes that bullying or harassment has occurred. As hon. Members know, when the commissioner investigates the activities of a Member of this House, that fact is currently stated on the commissioner’s website, even though nothing is found against the vast majority of Members. The commissioner—like the Committee on Standards and, I believe, the Commission—thinks that that should not happen in the rare circumstances of these cases.

The Committee did not take the decision lightly to endorse the Commission’s proposals. We wanted to be sure that the existence of the formal stage of the process was not seen as an excuse for management to ignore their responsibilities towards both staff and Members. We consulted every Member of the House, and took comfort in the fact that there were very few replies on that point. We did not agree to this change until we were sure that real measures were in place to prevent problems from arising in the first place, and to stop problems needlessly escalating if they did arise.

We wanted to make it clear that this matter is primarily the responsibility of the management of the House. I welcome the fact that the respect policy recognises that difficulties may arise not simply from a Member’s behaviour, but from other behaviour. At the very first stage, it requires line managers to consider whether there is a resourcing, capacity or other issue that needs to be addressed.

We wanted staff training to make sure both that staff are appropriately trained to deal with what I shall call “customers” in difficult situations, and that managers understand their responsibilities under the new system. We understand that training has begun, and that there will be more training for staff of the House to implement the change.

We wanted it to be clear to everyone that the bar for investigations by the commissioner would be high, and we are satisfied that the new policy spells that out. We were also concerned that the new system should work for staff. We asked the House authorities to assure us that staff whose first language is not English will be adequately supported, and I am glad to say that that is included in management guidance.

We are also grateful to the Parliamentary Commissioner for Standards for her work with the House authorities and with us. She worked with the House authorities to make sure that the human resources processes in place recognise that making a complaint to the commissioner is a last resort. She reviewed the procedures for investigation so that there is a separate appropriate procedure for use in such cases. I have already noted the higher level of confidentiality. The new procedure also involves the complainant, as well as the MP, in checking the facts in the commissioner’s memorandum. Both parties will of course have the opportunity to appear before the Committee if there are further proceedings.

There is one final safeguard. The Committee recognises that this is a major change, so we recommend that it is reviewed in the next Parliament, and we invite the House to give the House of Commons Commission, together with the Committee, powers to suspend or renew the policy. I expect the findings of the review to be published and possibly debated, if that is felt necessary.

Let me repeat that I do not expect many cases to be brought under the policy. I do not think that bullying is widespread, but that should not be an excuse not to

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have an effective means to deal with it. I am sure colleagues on both sides of the House would condemn bullying in any other workplace. This motion gives us the opportunity to make it clear that we will not tolerate it in our own workplace. I hope that the House will agree to the motion.

7.23 pm

John Thurso (Caithness, Sutherland and Easter Ross) (LD): May I place on the record the thanks of the House of Commons Commission to the Chair of the Committee on Standards, the right hon. Member for Rother Valley (Kevin Barron), for his and the Committee’s work on this very important matter? As with everything it does, the Committee took it extremely seriously, put in a lot of work and came up with something that is thought through and detailed, and does exactly the job we had hoped it would do.

I want to pick up on two of the right hon. Gentleman’s points. The first is that it is absolutely essential that the policy is fair to all parties. It is vital that the House has a respect policy that looks after staff, but it is equally of the utmost importance that it is one in which Members have full buy-in and can feel confident, because otherwise it would not be fair to both sides. The second point is that there are no outstanding complaints at this time. By far the majority of Members treat the staff with the courtesy and respect that they so richly deserve. When it is made clear to them, most Members who have from time to time been errant in their behaviour immediately apologise to the members of staff concerned. The policy is as much a preventive measure as something to deal with a problem, and it puts us into the category of best practice employers. The way in which the right hon. Gentleman framed the opening of the debate is very much what the Commission had hoped for.

I will briefly set out why the policy is so important to the Commission. The Commission is of course the statutory legal employer of House staff, and it therefore has a very important duty of care towards them. Without effective policies on bullying and harassment, the House is more vulnerable to legal charges. There are of course policies in place for bullying and harassment of members of staff by their line managers and employers and for relations between Members and Members’ staff, but there is a gap between members of the House service and Members of the House in that, as was pointed out, we are rather more customers than employers. In that respect, the problem is that unlike the customers of most establishments, who can be shut out by the establishment’s owner if they are felt to be bullying or harassing the staff, it would be unthinkable for Members to be excluded. We therefore require a policy that works, and the respect policy seeks to address that situation.

Notwithstanding the fact that occurrences are very rare, some 7% of staff—nearly 100—experienced some form of harassment, according to a survey of staff, in the previous 12 months. For one in six of those affected, the harassment took the form of repeated incidents involving the same individual. The proportions are small, but that suggests that something like 20 to 25 House staff may experience ongoing problems with one or more individuals.

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As the Committee’s report sets out, the policy initially agreed by the Commission in June 2011 proved to be flawed. It was based on policies used by other employers, but it did not fully take into account the special relationship that exists between House staff and Members. I reiterate that the Commission is very grateful to the right hon. Gentleman for taking on this unenviable task. We believe that it has produced something that provides a proper mechanism for dealing with the rare circumstance of the most serious cases. The Committee has concluded that the revised policy is fair to all parties, as I have mentioned. On that basis, the Commission both thanks the Committee and commends the policy to the House for its endorsement.

I should note that, assuming the House agrees to the motion, the policy will come into effect immediately, but it will not be retrospective.

Kevin Barron: The hon. Gentleman says that the policy will not be retrospective. However, if somebody has a difficult relationship at the moment, something that has gone on during the past few days, weeks or months might be added to a complaint to the commissioner if she felt that it ought to be investigated. There are no such cases whatever to my knowledge, but just in case there are, I thought that we should mention that the policy would be retrospective in relation to such behaviour over many months or years that is considered at some point in the future.

John Thurso: I am most grateful to the Chair of the Committee for intervening to make that point. Of course, at the moment no complaints are extant, so there will be nothing retrospective about complaints that we know about and have dealt with. However, if a complaint is made now, it will of course be subject to this policy.

The House greatly values its staff and the exceptional work that they do in supporting us all. An effective respect policy is a very important part of delivering the Commission’s aim to be exemplary employer. I commend the policy to the House.

7.29 pm

Ms Angela Eagle (Wallasey) (Lab): I support the motion, to which I put my name, on behalf of the Opposition. It states that the House accepts the first report from the Committee on Standards on the respect policy.

I concur with the tribute that the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) paid to the Chair of the Standards Committee, my right hon. Friend the Member for Rother Valley (Kevin Barron), for the work that he and his Committee have done on this important issue.

Every employer has a duty of care to its employees, and it is absolutely right that the House should be no exception. House staff serve this place with diligence and care, and the least that we must do is to afford them a safe and encouraging working environment and offer them protection against any instances of bullying or harassment, however rare.

After the suspension of the formal stage of the respect policy that was originally endorsed by the House in June 2011, we have endeavoured to replace it with something that works more effectively and that is fair to all concerned. It is therefore right that the House considers the motion to ensure that we have new and comprehensive rules in place immediately.

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The changes before us have been explained in detail by my right hon. Friend and the hon. Gentleman, who represents the House of Commons Commission. However, the rules do two important things that I want to highlight. First, they rightly place an emphasis on informal resolution, where it is possible, and emphasise the role of managers in resolving complaints at an early stage. Secondly, they ensure that there is unbiased treatment for the complainant and the person who has been accused. The decision about any formal investigation is taken by the commissioner, who is independent of House staff and Members. Both parties will have equal access to make their case.

As the report notes, the respect policy needs to be fair and be seen to be fair. I am content that the proposals before us meet that test. I am also satisfied that they address the concerns that were raised before the previous formal structures were suspended because of the flaws that my right hon. Friend highlighted so clearly in his excellent opening speech.

It is vital that the changes are well communicated to Members and employees alike. I am pleased that training for staff is already under way. I hope that, after this debate, every effort will be made to ensure that all Members are aware of the new rules. I thank all who have been involved throughout the process of building this package, in particular the Standards Committee and its Chair.

As the report before us states about the new rules,

“the revised Respect Policy is fair to Members and House of Commons staff; has a clear process for investigation; provides both sides with the opportunity to put their case; and provides sanctions for improper behaviour.”

As the report notes, the unions view the changes as the

“basis for an effective and proportionate policy”.

The rules are supported by the House of Commons Commission, as the hon. Member for Caithness, Sutherland and Easter Ross said, and by the Committee on Standards. They provide a sensible and comprehensive process, and I urge the House to support them.

7.33 pm

The Deputy Leader of the House of Commons (Tom Brake): I am grateful for the contributions of all colleagues and for the support that they have expressed. I will speak briefly in support of the motion.

I thank the Chair of the Committee on Standards and the members of the Committee for their detailed and thoughtful report. During the debate, the Chair set out fully the background to the report, and the consideration and reasoning of the Committee in coming to its conclusions and recommendations.

The report sets out the relationship between the House, in particular the House of Commons Commission, and the thousands of people who come to work on the estate every day. The House is unusual in that many of the people who work on the estate are not employed by the House. That applies most obviously to Members of the House and Members’ staff. As the statutory employer, the House of Commons Commission has a duty of care to those it employs, which includes protecting them from bullying and harassment, including by third parties.

We heard from the spokesman for the Commission how seriously the House authorities, including the House of Commons Commission as the statutory employer, take their duty of care towards staff. It is important

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to reiterate, as did the right hon. Member for Rother Valley (Kevin Barron), that having a policy does not necessarily indicate that widespread problems exists. In such matters, prevention and planning are better than waiting for difficult situations to arise.

I know that we can agree that all workers on the estate deserve to be treated with dignity and respect. I echo my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and the shadow Leader of the House in expressing my congratulations and those of the Office of the Leader of the House to the staff on the outstanding work that they do for us all in this place.

The respect policy is one of the ways in which the House aims to be an exemplary employer. It might be appropriate at this point to recognise the other good work that has been achieved by the House recently, such as its accreditation as a London living wage employer, the offer of minimum guaranteed hour contracts to all previously casually employed staff and the work to secure a long-term pay deal that paves the way for the modernisation of working practices. I am pleased that, as the shadow Leader of the House said, the unions are supportive of the policy we are debating.

I am grateful for the reassurances that have been offered to Members, particularly by the Chair of the Standards Committee. It is right that the bar for the acceptance of complaints for investigation by the commissioner is high, and that there is a higher requirement for confidentiality under the procedure for inquiries under the respect policy than for the other work of the commissioner. The House should also be reassured by the commitment to ensure that training is provided to ensure that managers are equipped to do their jobs, as was set out by the Chair of the Standards Committee. I note from the report that such training has already been provided to large numbers of staff. As the report states, the policy

“needs to be fair, and needs to be seen to be fair.”

Let me remind Members why the House needs the respect policy that has been developed. It is not right that members of staff do not have an independent process of appeal in respect of unresolved complaints relating to Members or their staff. Nor is it right that staff of the House, however senior, should adjudicate on the conduct of Members. The consideration by the Parliamentary Commissioner for Standards, followed by investigation and decision by the Committee on Standards, albeit only after an extensive prior process and where the conduct alleged is serious or prolonged, provides the authoritative and proportionate approach that will protect the interests of all parties.

This has been a helpful debate. I hope that the House will approve the motion so that the policy can come into effect.

Question put and agreed to.

Business without Debate

Delegated Legislation

Mr Deputy Speaker (Mr Lindsay Hoyle): With the leave of the House, we shall take motions 7 to 11 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

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That the draft Copyright and Rights in Performances (Quotation and Parody) Regulations 2014, which were laid before this House on 9 June, be approved.

That the draft Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014, which were laid before this House on 9 June, be approved.

Local Government

That the draft Local Audit (Delegation of Functions) and Statutory Audit (Delegation of Functions) Order 2014, which was laid before this House on 16 June, be approved.

Energy Conservation

That the draft Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014, which was laid before this House on 16 June, be approved.

Children and Young Persons

That the draft Adoption and Children Act Register (Search and Inspection) (Pilot) Regulations 2014, which were laid before this House on 11 June, be approved.—(Mr Gyimah.)

Question agreed to.

Scottish Affairs


That Mark Menzies be a member of the Scottish Affairs Committee.—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)


Clocaenog Wind Farm (Vale of Clwyd)

7.38 pm

Chris Ruane (Vale of Clwyd) (Lab): I would like to present a petition to the House concerning pylons that will come from the Clocaenog wind farms. The wind farms are located outside my constituency, but the

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pylons will lead to St Asaph in my constituency. One wind farm is in place. That is connected by underground cabling. However, four more wind farms are proposed and those will have overground cabling.

The petition states:

The Petitioners therefore request that the House of Commons urges the Government to encourage local authorities to ensure that planning inspectorates recognise and carefully consider local residents’ views when making planning permission decisions and further that the House urges the Government to encourage Denbighshire County Council to show the same consideration to residents’ views in relation to the development of the Clocaenog wind farm as it has in the development of other wind farms.

Following is the full text of the petition:

[The Petition of residents of the Vale of Clwyd,

Declares that Clocaenog wind farm is currently being developed; further that the Petitioners believe that all cables connecting the wind farm to the electricity sub-station should be underground so as to minimise the visual impact on this beautiful area, to minimise the health risks to residents, to limit the devaluation in property prices and to respect the democratic will of the people of Henllan, Cefn Meiriadog and surrounding areas who unanimously voted to endorse the placing of these cables underground; further that Tir Mostyn, the first wind farm near Clocaenog Forest, placed its cables underground; and further that the offshore wind farms off the coast of Rhyl also placed its cables from the seashore to St Asaph underground.

The Petitioners therefore request that the House of Commons urges the Government to encourage local authorities to ensure that planning inspectorates recognise and carefully consider local residents’ views when making planning permission decisions and further that the House urges the Government to encourage Denbighshire County Council to show the same consideration to residents’ views in relation to the development of the Clocaenog wind farm as it has in the development of other wind farms.

And the Petitioners remain, etc.]


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VAT Relief (Talking Newspaper Associations)

Motion made, and Question proposed, That this House do now adjourn.—(Mr Gyimah.)

7.39 pm

Iain Stewart (Milton Keynes South) (Con): I am grateful for the opportunity to raise the subject of VAT relief for talking newspapers. For the convenience of Members who may not be familiar with the concept of a talking newspaper, let me begin by explaining what they are and the important service that they provide to people who are blind or partially sighted, or who have some other disability that makes reading a newspaper difficult. There are 500 talking newspapers in the UK and Isle of Man. By and large they are small charities where a group of volunteers will read the contents of a local newspaper on to a cassette, CD or digital recording device. Those are then posted to registered listeners who listen to the recording and return the cassette or CD to the talking newspaper association in time for it to prepare the next edition, usually on a weekly basis.

It is important to emphasise the small, local and charitable nature of these associations. On average, each talking newspaper has 130 listeners and 34 volunteers, and they should not be confused with larger, national organisations that provide an excellent service of national newspapers, magazines and books for people who are registered blind or partially sighted. Their services are provided free of charge and they rely on small-scale local fundraising and grants to provide an income to cover the recording and distribution equipment and running costs.

I should also declare a family interest in this subject. More than 30 years ago, my father—Jim Stewart—and a small group of helpers set up the Hamilton Sound talking newspaper in the town in Scotland in which I grew up. He is still chairman of that today, and more than three decades later over 1,000 editions of the talking newspaper have been produced. I know that its listeners—a couple of hundred or so on average—have greatly valued the service. While national news can easily be accessed by a number of means, it is not always easy for people who are blind or partially sighted to obtain the local news that a local newspaper can provide.

I salute the work that volunteers up and down the country do in their communities to help often vulnerable people keep in contact with the outside world, and in this debate I wish to seek clarification and an update of the VAT rules that affect talking newspapers. For some time, talking newspapers have rightly been able to benefit from some financial assistance in providing their service—for example, they do not have to pay postal charges for the issuing or return of their products. In the 1986 Budget the then Chancellor, Lord Lawson, announced a number of VAT reliefs for charities. That included relieving charities from VAT on

“all recording equipment for talking books and newspapers used by charities for the blind”—[Official Report, 18 March 1986; Vol. 112, c. 178.]

After the 1992 Budget, the then Chancellor, Lord Lamont, extended the relief available to include

“repairs and maintenance of equipment used for talking books.”

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The most recent guidance from Her Majesty’s Revenue and Customs—notice 701/1 from May this year—states:

“Charities and voluntary bodies caring for the blind and the severely visually impaired can obtain zero-rating for purchases of sound recording and reproduction equipment (or parts and accessories for such equipment) that has been designed or specially adapted for recording or reproducing speech for the benefit of such persons. In the case of reproduction equipment, zero-rating will not apply where the equipment is available for use by anyone other than the blind or severely visually impaired. The zero-rating also covers radios and cassette recorders purchased by charities for free loan to the blind, and the repair or maintenance of any equipment mentioned in this paragraph.”

There is, however, considerable confusion in the talking newspaper community about what is and what is not eligible for VAT relief. Part of that stems from the fact that the technology used by talking newspapers has changed considerably since the original VAT exemption in the 1980s and 1990s. At that time, an original tape recording of the edition was made and copied on to audio cassettes by a high-speed copier. Now, although a minority of talking newspapers still use that traditional method, approximately 80% produce digital recordings.

The confusion stems from the part of the guidance which states that

“zero-rating will not apply where the equipment is available for use by anyone other than the blind or severely visually impaired”.

The onus is on the manufacturer or supplier to come to an agreement with HMRC that the product is designed specifically for blind and partially sighted people. When purchasing sound equipment from a company, the talking newspaper must supply the company with a declaration for the benefit of Customs and Excise, stating that the equipment is exempt from VAT. The problem is that talking newspapers now use equipment such as computers, digital copiers, memory sticks and memory stick players that can be used by the general public and other businesses, and therefore attract VAT. Talking newspaper associations are finding that many companies are not willing to risk applying for a VAT exemption on those products. I received a number of comments from talking newspapers ahead of this debate, and a remark by Bob Finch of Colchester talking newspaper neatly summarises the point:

“Most suppliers just charge the VAT to cover their own backs. I am aware that Kings Audio and Laplock Technology are both selling their versions of memory stick players VAT free, having apparently convinced HMRC that these particular items are only ever going to be used by visually impaired people. I applaud them for doing that, but any other items they or other suppliers sell are charged because they could be used by non-disabled people.”

It is clear that many talking newspaper associations in the country are having to meet a VAT cost that they should not have to meet, given the spirit of the 1986 and 1992 measures, and it is a significant extra cost for what are often very small charities. Brian Sharp of the Forth Valley talking newspaper association told me:

“We have recently transferred all our listeners on to USB memory sticks from both cassette tapes and CDs. The total cost of the project was £11,542 which included £1,247 in VAT”.

Roughly £1,250 is small change for the Treasury but a hugely significant cost for the charity.

There is certainly an appetite in the talking newspaper community for a clarification of current VAT rules, and an updating of them to ensure that the spirit of the original provisions is reflected in new technology that talking newspapers increasingly use. I heard from Janelle

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Scotland, chair of the Association of Scottish Talking Newspapers, that advice on the matter from local HMRC offices around the country seems to vary, which adds to the confusion. Such a move would be supported by the Royal National Institute of Blind People, which stated:

“Advances in technology mean that most talking newspaper associations are no longer using the kinds of equipment that have historically been VAT exempt; the RNIB urges HM Treasury to extend VAT relief to cover the digital equipment now used to produce talking newspapers.”

I accept that there will always be a risk that VAT-free digital equipment could be misused, but we are talking about a comparatively small number of listeners in the country and a small number of associations. Would it not be acceptable for them to complete a VAT exemption per purchase of equipment outlining the proposed use? Under current postal arrangements the Royal Mail trusts talking newspaper associations to send mail free under the articles for the blind scheme only to blind or partially sighted people, but it reserves the right to carry out spot-checks to ensure that an association is adhering to the regulations. Could HMRC do something similar?

Another possible solution would be to allow talking newspapers to claim back VAT retrospectively. A potential problem is that many talking newspapers will not be VAT registered as their turnover falls way below the threshold, but surely some special arrangements could be made. Perhaps it could be done collectively through the national talking newspaper bodies in Scotland, England and other parts of the United Kingdom, rather than via each individual association.

At the very least, may I ask my hon. Friend to facilitate a meeting between herself, HMRC and representatives of talking newspapers associations to clarify both the current law and what items of equipment are and are not exempt? It is a muddle at the moment and most talking newspapers are small charities whose volunteers are not necessarily well-versed in the intricacies of fiscal policy. I received another good comment from Rob Pearman, from St Albans & District talking newspaper. He wrote:

“It is a problem when some of us are scared of HMRC and we do not actually feel secure on all aspects of the laws and regulations with which we have to struggle. As a child I went to a school where the school rules were headed ‘Ignorance of these rules shall not be taken as an excuse - it haunts me to this day!’”

If a change in the law is required to update the current regulations, I would like the Minister to take this as an early submission for the autumn statement and next year’s Budget. I very much doubt it would incur a significant cost to the Exchequer to bring the regulations up to speed in the original spirit. I am grateful to have had this opportunity to raise an issue that is of considerable concern to these wonderful charities that provide a valuable and much cherished service to some of the most vulnerable members of our communities.

7.51 pm

The Economic Secretary to the Treasury (Andrea Leadsom): I am grateful for the opportunity to speak in this debate. I would like to start by congratulating my hon. Friend the Member for Milton Keynes South (Iain Stewart) on his kindness and generosity in securing this Adjournment debate on a very important area of support for people who are vulnerable by virtue of being visually

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impaired. It is very important that we do all we can to support them. The Exchequer Secretary would normally respond to a debate on VAT. I am speaking on his behalf, but I will do my best to answer my hon. Friend’s questions.

The Government value the important contribution talking newspaper associations make to ensure that blind and severely disabled people can independently remain informed and up to date on current affairs. On the issue of tax itself, I reassure hon. Members that charities are at the heart of the Government’s ambition to build the big society, enabling people to play an active role in their community. To help support this, the Government provide support for charities primarily through more than £4 billion a year in tax reliefs, of which VAT relief makes up £300 million.

Reliefs from VAT are strictly limited under EU law. As hon. Members may know, when the UK joined the European Community in 1973 we successfully negotiated to keep our existing zero rates on items such as children’s clothing, most foods and physical books, newspapers and journals—a derogation from which most other member states do not benefit. Two zero rates of VAT are relevant to talking newspapers. First, a zero rate of VAT is applied to talking books and newspapers for the blind. However, this zero rate is limited strictly to specifically adapted magnetic tape and apparatus designed to reproduce speech for the blind and severely disabled people in our community. Many talking books and newspapers for the blind, as my hon. Friend pointed out, are no longer produced on magnetic tapes and so this relief cannot apply to them. EU VAT rules do not permit member states to extend the scope of existing VAT reliefs or to introduce new ones. As such, it is not possible to amend this zero rate to include talking newspapers that are not on magnetic tape.

My hon. Friend asked whether we can just change that. The European Commission is undertaking a review, including a public consultation, of member states’ application of reduced VAT rates. Among other matters, it is looking into the principle that similar goods and services should be subject to the same VAT rate, and that progress in technology should be taken into account in this respect so that the challenge of convergence between the online and the physical environment is addressed. This principle is regarded as an openness to consider a reduced rate for goods and services such as e-books and newspapers. However, if the Commission did decide to take this view, article 98(2) of the EU VAT directive, which currently excludes electronically supplied services from a reduced rate of VAT, would need to be removed. As most talking books and newspapers now use mainstream technology, I have to tell my hon. Friend that they cannot easily be distinguished from other sound reproduction equipment that is used by the general public. Talking books and newspapers for the general public do not benefit from a VAT relief and therefore attract the standard rate of VAT.

The EU has challenged and commenced infraction proceedings where it has identified member states that have allowed reduced rates, including zero rates, on general purpose products, or where they have extended existing reliefs to include them. However, the Government considered that it was important to ensure that talking books and newspapers for blind and disabled people continued to benefit from a VAT relief. Her Majesty’s

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Revenue and Customs therefore reviewed the legislation and considers that talking books for the blind could come under an alternative zero rate of VAT: group 12(2)(g) in schedule 8 to the UK Value Added Tax Act 1994, under relief for aids for the handicapped. The zero rate of VAT applies to talking newspapers and books if: they are supplied to a blind or disabled person for their personal or domestic use; or if they are supplied by a charity that makes them available for such use by blind or disabled people. This relief applies to items of equipment such as CDs and memory sticks for books and newspapers that are designed solely for use by a handicapped person. This relief is limited to supplies of physical goods and cannot be extended to downloaded newspapers where the supply is a digital service. This is, as I said, because article 98(2) of the EU VAT directive specifically excludes “electronically supplied services” from a reduced or zero rate of VAT.

Turning now to the progress in technology and electronic newspapers more broadly, EU VAT law does allow member states to implement reduced rates of VAT of no less than 5% for certain goods and services listed in annexe 3 of the EU VAT directive, at the discretion of the member states.

One of those reliefs is the supply of books on all physical means of support, newspapers and periodicals other than material wholly or predominantly devoted to advertising. This may sound like it should include electronic newspapers, but, as I mentioned, the EU VAT directive specifically excludes electronically supplied services from the reduced rates of VAT. This means that, where talking newspapers do not fall under the zero rate of VAT as an aid for a disabled person, the UK charges the standard rate of VAT, at 20%, on electronic newspapers and the zero rate of VAT on physical newspapers.

On the related and very important topic of electronic or e-books, many Members will probably be aware that, since 2011, France and Luxembourg have chosen to levy a reduced rate of VAT of 7% and 3% respectively to bring them in line with their VAT rates on physical books. This is creating competitive distortions to economic operators in other member states, and there has been

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pressure from the industry for the UK to reduce its VAT rate on e-books alongside them. The EU Commission, however, has begun European Court of Justice infraction proceedings against France and Luxembourg and has formally instructed them to apply their standard VAT rates to supplies of e-books. If the UK were to reduce or zero rate e-newspapers, it is extremely likely that we, too, would be infracted.

Furthermore, reducing the rate of VAT on e-books or e-newspapers would be likely to create borderline issues in the wider electronic services market because problems of definition could lead to a widening of the relief through legal challenge and industry changes. This would put revenue at risk in the UK market, which is currently worth over £2.5 billion a year.

The Government remain firmly committed to our ability to maintain the UK’s existing zero rates as we recognise their importance for social reasons. EU law does not permit member states to extend the scope of existing VAT reliefs or introduce new ones. Zero rating all talking newspapers that might be used by the general public, as well as by blind or disabled people, would be an extension of the relief. The EU Commission’s position is clear that talking newspapers, which do not fall under the existing zero rate of VAT, attract the standard rate, as they are electronically supplied services. The UK’s rates of VAT on talking newspapers are therefore in line with EU law and there is no intention to change that, other than in tandem with the Commission’s own review that I mentioned.

I hope that my hon. Friend the Member for Milton Keynes South will now have more clarity about when the zero rate of VAT can be applied to talking newspapers for blind and disabled people, and that he and other hon. Members will be reassured that we support the sector and that we will continue to do everything we can to support it.

Question put and agreed to.

8 pm

House adjourned.