Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make a comparative assessment of the potential merits of providing payments through the Energy Bills Support Scheme (a) after and (b) before the application of VAT.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
Whether VAT applies to the payment made under the Energy Bills Support Scheme is determined by VAT legislation. Under the Scheme, the government is paying £400 of the domestic customer’s energy bills. Payments made under the scheme into the customers energy account are regarded as third-party payments from the government. Energy suppliers are required to account for VAT at the reduced rate of five percent under the normal rules, as the payment is made for a taxable supply of energy. There are no plans to review the VAT legislation.Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps he is taking to help ensure his taxation and fiscal policy supports the pub industry.
Answered by Felicity Buchan - Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)
The Government understands the benefits pubs bring to our communities, recognises the pressures currently facing the sector and is taking action.
Businesses in the retail, hospitality and leisure sector will receive a tax cut worth almost £1.7 billion in 2022-23. Eligible properties will receive 50 per cent off their business rates bill, up to a maximum of £110,000 per business.
Combined with Small Business Rates Relief, this means over 90 per cent of retail, hospitality and leisure businesses will receive at least 50 per cent off their rates bills in 2022-23. The Government has also committed to freezing the multiplier for a further year, which is a tax cut worth £4.6 billion to businesses over the next 5 years.
Further, as part of the alcohol duty reform, the government will introduce a new draught relief, giving an approximate 5% duty cut to cider and beer sold in pubs. The government will provide an update on the alcohol duty reforms over the coming weeks.
Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of a real terms pay increase for public sector workers.
Answered by Simon Clarke
The Government recognises that public sector workers play a vital role in the running of our economy, and in delivering our world class public services.
Spending Review 2021 confirmed that public sector workers will see pay rises across the whole Spending Review period (22/23-24/25).
Pay for most frontline workforces - including nurses, teachers and armed forces - is set through an independent Pay Review Body (PRB) process. They will consider a range of evidence when forming their recommendations, including the need to recruit, retain and motivate suitably able and qualified people; the financial circumstances of government; the government’s policies for improving public services; and the government’s inflation target. They will consider the whole remuneration package of those working in the public sector when forming their recommendations, including substantially more generous pensions.
The Government will carefully consider all recommendations from the Pay Review Bodies once their final reports are submitted.
Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of reintroducing the cost control mechanism for public service pensions.
Answered by Simon Clarke
The cost control mechanism was introduced following the recommendations of the Independent Public Service Pensions Commission in 2011. Whilst the Commission recommended a mechanism to protect the Exchequer from increased costs, the Government went a step further and introduced a mechanism that is symmetrical and so also maintains the value of pensions to members when costs fall.
The mechanism still operates with respect to the main public service pension schemes and so is not in need of reintroduction. It was tested for the first time at the 2016 valuations, but the process was paused before results were finalised due to uncertainty regarding the value of pension schemes following the McCloud judgment. The Government subsequently published amending Directions in October 2021 which enable schemes to complete the cost control element of the 2016 valuations. Most schemes have now finalised their results and those that haven’t will do so shortly.
The mechanism will be tested again at the next scheme valuations (“the 2020 valuations”). The Government previously announced that, following a review by the Government Actuary and a full public consultation, it will implement three reforms to the cost control mechanism for the 2020 valuations onwards to ensure it is operating more in line with its objectives. All three changes are expected to make the mechanism more stable, meaning changes to member benefits or contributions become less likely. The reforms thus help provide greater certainty regarding members’ projected retirement incomes and level of contributions.
Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department has plans to review tax allowances for airline cabin crew.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
Overseas Scale Rates (OSR) allow employers to reimburse expenses without the need to check receipts. The published rates are designed to reflect the average cost of subsistence, including local taxes and gratuities, when staying overseas.
Employers do not have to use OSR and can reimburse using actual amounts provided receipts are checked. Additionally, if an employee spends more than the amount their employer pays, they can claim tax relief on the difference.
Guidance was last updated in February 2019 and applied from 6 April 2019. The current rates are considered appropriate for general use and therefore it is not necessary to review them at this time.
Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of making combined solar and battery systems eligible for zero rated VAT.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Chancellor announced at Spring Statement 2022 that the VAT relief for the installation of energy saving materials (ESMs) will be expanded in Great Britain.
From 1 April 2022, complex eligibility conditions to access the relief will be removed, and wind and water turbines will be reinstated as qualifying materials. Qualifying installations will also benefit from a VAT zero-rate until April 2027. Overall, this represents an additional £280 million of support for investment in ESMs over the next 5 years.
This will support the uptake of products to increase the energy efficiency and decarbonisation of residential accommodation. These improvements are key to reducing gas dependency and household bills, and are also a vital part of the UK’s transition to Net Zero.
Battery storage supplied as part of the installation of any qualifying material, including solar panels, will benefit from a VAT zero rate for the next 5 years. Battery storage has not been added to the list of qualifying materials itself and therefore will continue to be standard rated when installed as a standalone product.
Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of making replacement radiators and other pipework for heat pump systems eligible for zero rated VAT.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Chancellor announced at Spring Statement 2022 that the VAT relief for the installation of energy saving materials (ESMs) will be expanded in Great Britain.
From 1 April 2022, complex eligibility conditions to access the relief will be removed, and wind and water turbines will be reinstated as qualifying materials. Qualifying installations will also benefit from a VAT zero-rate until April 2027. Overall, this represents an additional £280 million of support for investment in ESMs over the next 5 years.
This will support the uptake of products that are used to increase the energy efficiency and decarbonisation of residential accommodation. These improvements are key to reducing gas dependency and household bills and are also a vital part of the UK’s transition to Net Zero.
Where the installation of new radiators and pipes are ancillary to the installation of a heat pump, these are eligible for the zero rate as part of a single supply of energy saving materials. Pipes and radiators have not been added to the list of qualifying materials themselves, and therefore will continue to be standard rated when installed as a standalone product.
Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how much VAT revenue has been raised through the sale of heat pumps in the last 12 months.
Answered by Jesse Norman
HMRC do not hold information on VAT revenue from specific products or services. This is because businesses are not required to provide figures at a product level on their VAT returns, as this would impose an excessive administrative burden.Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, under what circumstances low carbon investments pay (a) 20 per cent and (b) five per cent VAT.
Answered by Jesse Norman
VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. While there are exceptions to the standard rate, these have always been limited by both legal and fiscal considerations.
One such exception is the reduced rate of VAT of 5 per cent for the installation in residential accommodation of certain energy-saving materials such as ground source heat pumps, air source heat pumps and solar panels that help to reduce carbon emissions. Detail about the circumstances in which such reliefs apply can be found in Energy-saving materials (VAT Notice 708/6).
Asked by: Alex Norris (Labour (Co-op) - Nottingham North)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the effect on the economy of long-term investment in energy efficiency programmes.
Answered by Kemi Badenoch - President of the Board of Trade
Maximising the economic benefits of long-term investment in energy efficiency programmes is a central component of the government’s approach to decarbonising our building stock on the path to Net Zero.
The ONS estimate that already 114,400 people are employed in the energy efficiency sector and this will need to expand significantly to support our aspiration to raise the energy efficiency of all homes to EPC Band C by 2035 - where practical, cost-effective and affordable. The policies already set out in the 10 Point Plan are expected to generate £11bn in private investments in heat and building decarbonisation over the 2020s and their effect on the economy are already being felt.
Since June, we have provided £1.5bn to support low income households across the country to improve their energy efficiency while also expanding the Energy Company Obligation to £1bn per year. Together, this is estimated to support over 25,000 jobs and save households an average of £350-450 per year on their energy bills.
The upcoming Heat and Buildings Strategy will set out further detail on the Government’s plans to maximise the potential economic benefits of improving energy efficiency.