Finance Bill (First sitting)

Alison Thewliss Excerpts

Thursday 17th September 2015 Public Bill Committees

[Roger Mullin]

Dare I agree? Back to a slightly less humorous point. When we had eight police forces in Scotland, some of them were very small, and at times that created difficulty in co-ordination on cross-border issues with forces south of the border. One benefit is that we now get much greater co-ordination of police forces across the United Kingdom. Terrorism and cross-border co-ordination are two serious areas where the police service is delivering benefits not for merely the people in Scotland, but for the people of the whole United Kingdom.

It seems strange, therefore, that the Government of the United Kingdom has continued to deny every overture made by the Scottish Government for VAT relief. My colleagues in Edinburgh inform me that no fewer than five letters from Scottish Ministers have been sent to the UK Government: two from the Justice Secretary, two from the Deputy First Minister and one from the Minister for Community Safety. There has also been: a letter from the cross-party Convenor of the Scottish Parliament’s Finance Committee to HM Treasury; eight letters from Scottish Government officials; and six meetings or conference calls in which the Scottish Government have sought to have our police and fire and rescue services treated in the same manner as all other forces in the United Kingdom.

We are not asking for something completely unusual or out of order. Since the amalgamations took place, the new transport agency, Highways England, has been granted VAT exemptions, so there is precedent. It is matter of common justice that this should be looked at. In new clause 1, we ask the Government to produce a report and lay it before the House to examine in greater detail some of the problems that arise because the police and fire and rescue services cannot reclaim VAT.

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to serve under your chairmanship, Sir Roger. I welcome the support of the hon. Member for Worsley and Eccles South for new clause 3, and I saw the Economic Secretary to the Treasury nodding as well. I therefore hope to get some support on this issue.

My concern with the VAT lock as presented is that it is very restrictive. Our new clause would leave a window open to resolve the injustice of VAT being levied on sanitary products. This injustice has long needed to be corrected and, as a female MP, I feel obligated to use this opportunity to raise the issue. My hon. Friend the Member for Glasgow North East (Anne McLaughlin) informed me that she campaigned on this issue in the 1980s, so it is a long-running one. The fact that it has not yet been resolved is quite disappointing and perhaps reflects a lack of willpower from the men who hold the purse strings in many of these cases. This is perhaps the chance for the Minister to make a difference. In the past, we have seen Jaffa Cakes and Tunnock’s teacakes go to the courts to fight for their zero ratings, and I seek the support of all Committee members to allow leeway for further consideration of this issue.

There seem to be a lot of inconsistencies in the application of the rating. As no one can fully control the manner in which sanitary products are required, it is a bit odd and incongruous that we do not treat them as we do other exempted items, such as medical incontinence pads and babies’ nappies, which I understand are both zero-rated. There is a recognition that those products do not fall under the full rate. Sanitary products are taxed at the 5% rate, but they are not, as the hon. Member for Worsley and Eccles South said, optional or luxury items. I certainly know of no woman who would exclaim, “Wow! I had my period—what a luxury!” We need a recognition that these are essential items that are very much required in households across the country. Indeed, if we were to go without these products, we would see public indignation, as there was when Kiran Gandi ran the London marathon in April without any protection, as a means of protest about the issue.

Another concern for me is that sanitary protection for women who have just given birth is not exempted from VAT. It is charged at 5%, despite being an absolute essential for women who have just had a child and being used for up to six weeks afterwards. These are medical products, in my view, and should also be exempted. We cannot do without them, and it would be both unsanitary and dangerous for our own health and that of our families if we were to go without them. We need a recognition that women across the country use these products. There is no recognition that they are essential items, and a zero rating would go some way to addressing that.

It has been mentioned that this is a European Union issue. My understanding is that Ireland has an exemption for these products, which is something we should look at. It would be useful if the Government were to take a stance on this, push it and send a message out to the rest of the European Union and women right across it, who would see a benefit if this went to the EU for further discussion.

What we are proposing today leaves a window open. I appreciate that we cannot ask for a particular change to be made, but it would leave the window open for negotiation, for further study and for a report, in order, I hope, for the issue to finally be resolved after many decades of campaigning.

[Holly Lynch (Halifax) (Lab)]

rose—

--- Later in debate ---

[Mr Gauke]

There are a number of ways in which the European Union and the rules that apply within it could be improved. A strong case is made from all parts of the House that greater flexibility in this context would be helpful, but the point I would make is that we see little indication that other member states, which by and large have higher rates—the average rate is 17%—share that objective. If there is a general move, we would support that.

Other than when an accession country joins the EU and negotiates a zero rate, there is no particular indication that the Commission or member states as a whole are prepared to introduce new zero rates. Indeed, quite a lot of the advice coming from organisations such as the OECD and the general position that the Commission takes tend to be against that, so I do not want to underestimate the difficulties.

[Alison Thewliss]

Will the Minister give way?

[Mr Gauke]

I will take one more intervention, but I am sure the Committee will want to conclude shortly.

[Alison Thewliss]

I thank the Minister for giving way, and I am glad he was able to make that correction, because I checked whether Ireland had a zero rate this morning on the Irish Tax and Customs website. I appreciate what he is saying about things being difficult, but this is about promoting what is correct and right. I seek an assurance that he will lead on this issue. Changes could and should be made in this instance to correct a long-standing injustice, and I would like to hear a wee bit more about the Government’s ability to do that.

[Mr Gauke]

I come back to the point that we are not stating that we do not see the case the hon. Lady is making, but that we should not underestimate the resistance to the introduction of zero rates. The UK already has zero rates to a greater extent than most if not all other member states. As I said, zero rates have been possible only on accession, which is why the Republic of Ireland has a zero rate. There is a reason why the Labour Government introduced a 5% rate, not a zero rate. We are supportive and we would like the rate to be as low as possible, but without wider EU reform and greater flexibility in this area—other member states have other priorities—it will be a challenge. I do not dismiss the issue: were we able to progress further, I would be sympathetic, but we should bear in mind the task ahead of us.

With those remarks, I hope that new clause 3 will not be moved when it comes to it, however much I sympathise with the intentions behind it.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Mel Stride.)