The Value Added Tax (Reduced Rate) (Energy-Saving Materials) Order 2019

Kirsty Blackman Excerpts

Monday 24th June 2019 General Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Roberston, and it is very nice to face the new Minister. I am sure we will be in many more Committees together in the coming weeks and months.

I have a few technical concerns and some general comments to make about the order. The explanatory memorandum included a link to the tax information and impact note, but it was not in the place that the link said it would be, and I eventually found it by googling it. The page that we were linked to has not been updated since March 2017 according to the bit at the top. If that can be corrected for future explanatory memorandums, that would be helpful.

The tax information and impact note does not adequately discuss the impact on the industry. It discusses the impact on businesses generally and whether there will be an impact on civil society, but it does not go into the impact on the industry, which is relatively small and will therefore be significantly affected by a change like this. I do not know whether there is an issue with the guidance given to those who draft such notes, or whether that should have been included. I would have expected to see information about the financial impact on the industry in that note so we can make a more informed decision in this Committee. The Government must have received information about that in the consultation responses, so it must have been possible to include that in the information note.

The Conservative Government have not supported the solar and battery industries. There is a climate emergency, so we need much more support for renewables. The UK Government are not supporting onshore wind. We would love there to be more onshore wind in Scotland, but we cannot make that happen because of the lack of support from the Government. If we are to be more reliant on renewables—I think we all want that—and less reliant on fossil fuels for our electricity needs, we need better battery storage. If this order has a negative impact on the development, creation and installation of battery storage, we will be much less likely to meet our climate change obligations and reduce the amount of carbon we are producing throughout the countries of the UK.

The information about the possible differential regional impact that the hon. Member for Bootle presented is important. Choosing a threshold of 60% seems a very odd way to do it. I was looking at the consultation notes, and basically if a supplier pays £400 for the materials and then charges the customer £1,000, they will be eligible for the reduced rate of VAT. However, if they pay £650 for the material and charge the customer £1,000 before VAT, they will not be eligible for the reduced rate, and the customer will therefore be significantly worse off, purely because the labour costs are less in that particular area of the country. That is a really big issue, and it is not adequately discussed in any of the notes—particularly the tax information and impact note. I think that should have been in there because the Government should be considering it.

It seems odd to have this arbitrary method that discriminates against suppliers with smaller labour costs in comparison with the supply cost, and people who have found such suppliers. It would be useful if the Minister explained the reasoning behind choosing this method for working out the costs, because I do not understand the logic behind it.