VAT on Air Ambulance Fuel Payments

Mark Pawsey Excerpts

Wednesday 11th July 2012 Commons Chamber

[Mark Pawsey (Rugby) (Con)]

I join colleagues in congratulating my hon. Friend the Member for Hexham (Guy Opperman) and the hon. Member for York Central (Hugh Bayley) on securing this debate. I contribute to it as the chairman of the new all-party group on the emergency services. We recently secured a Westminster Hall debate on the interoperability between the emergency services, including the role of the air ambulance, at which my hon. Friend spoke eloquently about his support for the air ambulance, on the basis of the motion before us. I wholeheartedly agree with the sentiments expressed by hon. Members and join them in putting on the record my support and thanks for the service that air ambulances provide up and down our country. They supply a crucial and critical service for which we should all be thankful.

Many hon. Members have given accounts of people who support the air ambulance service, and a friend of mine, Gill, was involved in a major road accident on a country lane. She suffered multiple breakages and was airlifted by the air ambulance to the local trauma centre and treated. Having been helped by our air ambulance, she, along with many others in the same position, is an effective and enthusiastic fundraiser for our local air ambulance. She trains as a volunteer, runs stalls, sells Christmas cards and collected funds at a rugby game played on “The Close” at Rugby school. This is a key feature of the air ambulance service: it is funded through donations and with the support of the community. That unique funding method not only encourages local people, but means savings to government.

Although I support the call for a Government review into VAT, I wish to raise one or two concerns about it, as I believe the House should hear them. I do this because of the approach taken by the air ambulance service, whose Warwickshire and Northamptonshire service covers my constituency. It argues that charities, such as air ambulances, should be working closely together and with the Government to make efficiencies within their organisations, and I have one or two suggestions as to how that can be done. In asking for caution, my case is based on the voluntary funding of the air ambulance service, depending, as it does, on the unique feature of donations from local and national companies. That key feature enthuses people to get involved because they know that currently the air ambulance service receives no Government or lottery funding. Most importantly, the Warwickshire service does not seek Government or lottery funding. In fact, it strongly argues that its independence from Government is what enables it to innovate and drive up service delivery standards.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The London Air Ambulance is based at the Royal London hospital, which is just outside my constituency, in the constituency of my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali). People with serious trauma who are taken by air ambulance to the Royal London are much more likely to survive than those who are not. That underlines the point about the quality of service that this charitable money is delivering.

[Mark Pawsey]

That serves to highlight the unique nature of the air ambulance organisations.

On the payment of VAT, or any other tax, let me quote from a representation from Warwickshire and Northamptonshire Air Ambulance:

“Along with the rest of the world, we would welcome any reduction in taxation levels and in an ideal scenario we would pay no VAT on any aspect of our service.”

That is right, of course. In an ideal scenario—when we are enjoying periods of sustained economic growth and there is no pressure on Government finances—many different kinds of concessions can be made, but unfortunately this Government have been left with a structural deficit, so they may not be able to fund all the items of expenditure that we might want. The air ambulance service made this point to me:

“In the current fiscal climate we believe that charities and organisations like ourselves whose sole aim is to benefit our communities, should not seek further strains on the public purse.”

There is a contrary view, therefore, and it is held by the air ambulance service based in my constituency.

[Hugh Bayley]

I imagine that the hon. Gentleman’s points will be considered by the Treasury if the motion is passed tonight, and so they should be. However, the Royal National Lifeboat Institution has the VAT exemption, but that does not act as a bar to its raising funds for its services. Is he aware that the Association of Air Ambulances—which represents the 18 air ambulance services in the country, including his—put out a press release calling on the Chancellor

“to introduce a balanced and fair approach to the application of VAT and duty charged on Aviation Fuel where it is used in helicopter emergency medical services”?

Although his points are valid, could they not be considered as part of such a Treasury review if we pass the motion tonight?

[Mark Pawsey]

I shall support the motion, but I am putting to the House the contrary view, which is about the unique nature of our air ambulance services.

On the basis of the quote I have just read out, we should applaud the sense of public duty displayed by the air ambulance that covers the area I represent.

[Rory Stewart (Penrith and The Border) (Con)]

I warmly applaud the idea that there should be a strong focus on charitable fundraising, but the challenge we in Cumbria face is that the North West Air Ambulance is attempting to fundraise in exactly the same areas as the Great North Air Ambulance. They are both presenting themselves as the sole Cumbrian provider. We therefore have paid fundraisers fighting on the doorsteps, as it were, to get contributions from Cumbria’s very small population of 500,000 people. Does my hon. Friend agree that we will need a more disciplined approach to fundraising if these wonderful institutions are to flourish and survive?

--- Later in debate ---

[Mark Pawsey]

I accept that point of view. There needs to be some control. We do not want one air ambulance to be competing with another for what we all accept are limited funds. That takes us back to my point about co-operation and interoperability. There may be a case for interoperability not only between air ambulances, but between air ambulances and other emergency services.

Those who support the charitable structure are concerned that it is not very many steps from a grant to offset VAT on fuel to the full nationalisation of the service, and the absorption of air ambulances into the ambulance service more generally. There might be some hon. Members in the Chamber for whom that would be a desirable move, but I believe that it would materially change the unique basis on which the service is delivered. It was interesting that it fell to the right hon. Member for Wentworth and Dearne (John Healey) to describe the air ambulance as probably one of the best examples of the big society.

There are other ways besides a VAT exemption in which the air ambulance can effect substantial savings. I argued in the Westminster Hall debate about the need for air ambulances and other emergency services to share assets. Earlier this week, I spoke at a Royal United Services Institute conference on the future operations of blue-light air assets. RUSI has produced research papers drawing attention to the fact that there is no co-ordination of air assets at this stage nationally or across agencies. If we investigate asset sharing we could effect savings that would be significantly in excess of the amount of savings that could be produced by reducing the costs of fuel.

[Rory Stewart]

On that specific point, one challenge we face in Cumbria is that mountain rescue finds it easy to co-ordinate with the police and the RAF, particularly when Sea Kings are involved, but very difficult to co-ordinate with air ambulances. Air ambulances appear to be reluctant to give information to mountain rescue as a standard operating procedure. Interoperability is a challenge, but I would suggest that it is a particular challenge with air ambulances.

[Mark Pawsey]

I certainly accept that point. One of the challenges for us, which is one reason why we have formed the new all-party group, involves trying to make the links that allow such interoperability. There is no point in having unused air ambulance assets dotted around parts of the country when they are badly needed in other areas. The point of an air ambulance is that a helicopter can move quickly between areas and provide such support.

A wide range of figures have been mentioned. The Association of Air Ambulances says that air ambulance charities across the country collectively generate an income of £46 million, with an average spend per helicopter of £843,000 and an average mission cost of £1,229. I accept that all those sums need to be raised through fundraising and that any savings that could be achieved would be welcome, but the cost of VAT on fuel needs to be seen in the context of some of the other significant costs, which put the total amount paid on VAT in perspective.

I fully support the motion’s tribute to our air ambulance services. They are worthy of more praise than they receive and I am glad that we have had the opportunity to pay tribute to them. I hope, however, that I have been able to put the cost of VAT on fuel in perspective and to suggest other, better ways of saving money through more efficient co-ordination of helicopter assets between air ambulance and emergency services. I hope that I have raised the concerns that the granting of a concession such as that asked for in the motion could be the start of a change to the unique method of funding our air ambulance services which involves the enthusiastic and active participation of volunteers up and down our land.