VAT on Air Ambulance Fuel Payments

Catherine McKinnell Excerpts

Wednesday 11th July 2012 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I thank the Backbench Business Committee for bringing this important matter to the House. I congratulate my constituency neighbour, the hon. Member for Hexham (Guy Opperman), and my hon. Friend the Member for York Central (Hugh Bayley), both of whom paid moving tributes to their air ambulance services—the Yorkshire Air Ambulance and the Great North Air Ambulance Service.

The debate has been well considered and well informed. As hon. Members have said, it came about following an e-petition, signed by nearly 150,000 people, that calls on the Government urgently to review the amount of VAT paid on fuel for air ambulances and

“to return in the form of grants to Air Ambulance Service providers all the future VAT which the Treasury collects from them”.

I should like to put on the record my thanks to all those who have taken the time to sign the petition and bring this important matter to the Floor of the House.

We all now know that air ambulances play a key role in communities up and down the UK. They have been in use since the beginning of the 20th century. Early versions included the Red Cross’s “Florence Nightingale”, which began to carry vital medical equipment across the country in 1934. However, it was not until 1987 that the first UK air ambulance charity, the foundation of the modern air ambulance service, was established in Cornwall.

The most recent air ambulance charity was established in Hertfordshire in 2008. There are now 30 helicopters in service for the 18 air ambulance charities in England and Wales, with a further two run by the Scottish Ambulance Service. We have heard moving tributes to the work that the services undertake around the country. To give the overall picture, I should say that they undertake 19,000 missions a year, servicing 177 accident and emergency departments. On average, an air ambulance takes off every 10 minutes in the UK; every hour of every day, seven air ambulances may be attending accidents and medical traumas around the country.

The emergency teams have an enormous impact on our communities and play a vital role in supporting and extending the work of conventional land ambulances.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

I apologise to my hon. Friend the Member for Hexham (Guy Opperman) for being unable to get to the earlier part of the debate because of a meeting.

The hon. Lady will know that in the remote rural parts of Northumberland such as my constituency the air ambulance is vital because, without it, it would be extremely difficult to get cases to hospitals, which are often closer to her constituency in Newcastle, where they need to be treated.

[Catherine McKinnell]

Indeed. We all know of very moving stories in our respective localities where lives have, without doubt, been saved by air ambulances.

As the hon. Member for Hendon (Dr Offord) said, air ambulances have come an awfully long way since their early days. They are now high-tech, mobile A and E departments carrying senior trauma doctors alongside paramedics and transporting state-of-the-art medical equipment to wherever it is needed.

[Andrew Percy (Brigg and Goole) (Con)]

I recently met people at Lincolnshire and Nottinghamshire Air Ambulance, to whom I pay tribute. They told me about some of the other problems they face, apart from VAT. Does the hon. Lady agree that there are other issues that we need to address, such as the fact that while some hospitals can accept air ambulances, others will need a land-based ambulance transfer?

[Catherine McKinnell]

The hon. Gentleman makes an important point, and I am sure that the Minister will take it on board and deal with it in his response.

Only a few months ago, air ambulances proved that they are at the cutting edge of technology. As the hon. Member for Hendon pointed out, we are in an ever-progressing medical world where we need to keep constantly under review all the services that provide vital care to people, but particularly the air ambulance service. A few months ago, for the first time, an air ambulance carried blood supplies allowing a blood transfusion to be carried out at the scene of an accident. London’s air ambulance service believes that this innovation has been made possible due to a new refrigeration unit devised by the British military, and it could no doubt save hundreds of lives in the years to come.

It is no wonder that air ambulances continue to receive such outstanding support from members of the public and that over 150,000 people have been moved to sign the petition. I do not think that anyone would disagree that we have to support such services. However, as has been discussed, there are other issues relating to EU law and the harmonisation of VAT legislation across member states. Members have already mentioned the anomaly whereby fuel for lifeboats is VAT-free. As hon. Members and members of the public who have signed the petition have noted, there is no equivalent provision in these EU-wide rules to allow for fuel bought by charities such as air ambulances to be provided VAT-free, although various provisions such as medical equipment and first aid kit are VAT-free, and air ambulance providers that lease the air ambulance rather than buying it outright receive different treatment for VAT. Air ambulance services are put in a difficult position when there are anomalies within the VAT system and they are subject to change.

The motion calls on the Government to review the tax treatment of air ambulances and their fuel and to carry out the requested study on compensating them for VAT payments. I will be interested to hear the Government’s response to that, but there is more that they could do to try to help these life-saving services. As we all know, we are living in difficult times. Our economy is in a double-dip recession; borrowing forecasts are rising, not falling, and not only families and businesses are feeling the pressure and the squeeze but charities and organisations in the voluntary sector, which have been hard hit by the cuts that have been made. Collectively, air ambulances are one of the busiest voluntary services in the country. As charities, they rely on the support of over 1.25 million donors to keep them going. Air ambulances save hundreds of lives every year. They are expensive, but for those who benefit from the service they provide, they are priceless. The average spend per helicopter is more than £750,000. Put simply, without charitable donations and funding, these life-saving services would not exist. The men and women of these emergency teams work tirelessly. The Government should do all they can to support them.

There are changes that the Government could make immediately to ease the pressure on air ambulance services and other charities. As part of Labour’s five-point plan for jobs and growth, we are calling on the Government to introduce a temporary reduction in VAT to 17.5% to bring down the cost of fuel across the board. Air ambulances and motorists alike would benefit from that. Since the Government increased VAT, people across the country have been feeling the squeeze. Equally concerning is the impact it has had on charities. It has cost them an overwhelming £143 million.

With air ambulances using about 130 litres of fuel on every mission, a decrease in the rate of VAT would bring immediate relief to those services up and down the country—so too would clarity on the Government’s position on fuel duty, because it would allow services to plan for the future. The Labour party called for the 3p rise in fuel duty that was scheduled for August to be delayed to help hard-pressed motorists. Although we welcome the U-turn on that, it would be helpful if the Government explained what they will do in the long term on the price of fuel and how they will put it on a more sustainable footing for motorists and for air ambulance services.

As well as responding to the request in the motion put forward by the Backbench Business Committee, the Government could usefully respond to some additional questions to reassure air ambulance services that they have the support of the Government and that the Government are doing all they can in these difficult times to ease the pressure on them, so that these hard-working teams can continue to save lives and carry out their excellent work. What plans do the Government have to provide support to the thousands of charities that are increasingly performing vital services in our communities and that are struggling as a result of the increases in VAT and the cuts to funding? How do the Government intend to pay for the delay in the 3p fuel duty rise in August? What are the Government doing to put the cost of fuel on a more sustainable footing to help not just households and businesses, but vital charitable services? Finally, what assessment has the Minister made of the possibility of offsetting the cost of VAT on fuel payments by air ambulances through the use of other departmental budgets or anticipated departmental underspends?