Sunscreen Products: VAT

Patricia Gibson Excerpts

Thursday 9th February 2023 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I am delighted to participate in the debate and I pay tribute to my esteemed colleague, my hon. Friend the Member for East Dunbartonshire (Amy Callaghan), for her pursuit of this important matter and for her excellent, comprehensive and very powerful opening speech.

My hon. Friend, along with the hon. Member for Erewash (Maggie Throup), came to Westminster Hall today to speak as a survivor. That gives what they say power and authenticity. When survivors speak, it is incumbent on us all to listen to the lessons they are trying to teach us. Whether we are in government or not, what they say matters and must be listened to in that way.

It seems odd to most people that suncream is not already classified as an essential healthcare item in the UK and, as such, is not exempt from VAT. After all, we know and have heard today in some detail that suncream plays a vital role in preventing serious health conditions such as skin cancer. In all honesty, I am not aware of anybody who wears suncream for cosmetic purposes; they wear it because the consequences of exposing themselves to the sun without sunscreen are extremely serious and potentially fatal. That is because it provides protection against harmful ultraviolet radiation. Importantly, it is strictly regulated to ensure that it provides sufficient ultraviolet protection for consumers, so there is no sense or logic in classifying it as a cosmetic product.

As we have heard, that is recognised in the US, where sunscreen is regulated by the Food and Drug Administration, and in Canada, where it is classified as a non-prescription drug, so there is international precedent for reclassifying the product as a healthcare item. The hon. Member for Strangford reminded us of those international examples and precedents for the change that everybody in the Chamber seeks.

The debate matters, and it is even more important when we consider that skin cancer is now much more common across the UK, where around 16,000 new cases of melanoma are diagnosed each year. Of the 16,000 people who are diagnosed, about 2,300 will die. Cancer Research UK concludes that being sunburnt just once every two years can triple the risk of melanoma, and statistics show that more than one in four skin cancer cases are diagnosed in people under 50. When we consider the cost of treating the growing numbers of people diagnosed with skin cancer, removing VAT from suncream should be considered as important preventive spend. I suspect that the Minister will tell us about the pressure on the public finances and the significant contribution that VAT makes to the public finances, but, like others in the debate, I find it unbelievable that simply removing VAT from sunscreen—that one act on its own—would create insurmountable fiscal challenges for the Treasury. It would make sunscreen more affordable, and that can only be positive when we think about the quest to reduce skin cancer cases and pressure on our NHS.

Some retailers, such as Tesco, have decided to absorb the cost of VAT on sunscreen, so that at the point of sale the consumer is spared that cost. It is worth noting that when Tesco made that announcement, in May 2021, consumers were outraged to discover that sunscreen was subject to VAT. There is a lesson in that outrage for all of us and for the Government: we are working in a situation in which the public believe one thing when the reality is entirely different. Of course, the public are using logic, which we all want the Government to use. The work that Tesco and other retailers have done is to be applauded, but it is a pity that the Government will not and have not taken the lead on the issue and shown that they understand the importance of making that important health product VAT-free.

Tesco made the decision to absorb the cost of VAT on its sunscreen products because, after it did some research, it discovered that 57% of adults think sunscreen is too expensive, 29% say that they would wear it daily if it was a little bit cheaper and 31% of parents—this is important in terms of the stats for melanoma—state that they cannot always afford to apply sunscreen to the whole family. That means that this is not really a debate about sunscreen; it is a debate about public health. It is hugely disappointing that the Government are content to leave this important public health concern to the discretion of retailers, who have taken a lead on the issue. It is important that retailers have done so when the Government have not acted, because we know how financially challenged households are at this time.

I do not want to second-guess what the Minister will say, but I suspect that she will say that high factor sunscreen is available on the NHS on prescription for certain conditions, and therefore is provided VAT-free when dispensed by a pharmacist. That point has been made to me in the past. As my hon. Friend the Member for East Dunbartonshire said, that does not really help someone in Scotland; to be honest, it does not really help all the people who do not get it on prescription but who would benefit enormously from using it.

Removing VAT from sunscreen for everybody will help make the product just a little cheaper during these difficult times. More people would be able to stretch to affording it and would get the protection they need, and it would thereby help to prevent some of the 16,000 diagnoses a year of melanoma. We all urge the Minister to rethink. This is not a debate about the wider principle of VAT—we understand that VAT is levied on certain products. It is about VAT on sunscreen. When I have asked about the issue in the past, I have been told, in great detail, why VAT matters. VAT does matter, but the Treasury is well able to forgo VAT on this particular product, for the sake of public health.

The levy on this particular product has to end. As my hon. Friend the Member for East Dunbartonshire said, that would logically go alongside a public health campaign on the importance of wearing sunscreen. Such measures would ultimately take pressure off our NHS. I urge the Minister to ensure that sunscreen is no longer categorised as a cosmetic item—that is just daft; it is ludicrous. We need to call it what it is. Sunscreen is an important weapon in our armoury for tackling melanoma.

--- Later in debate ---

[Victoria Atkins]

I will develop my argument, and then I will give way to the hon. Lady.

I know that hon. Members have said they suspect they know what I am going to say, but I cannot change the fact that VAT is one of the main forms of revenue for the UK Government. In the year 2022-23, VAT is predicted to raise some £157 billion. To put that into context, that it almost the entire cost of our NHS. That is how important it is as a revenue raiser for the Government so that we can fund the services we care so much about.

Against that VAT backdrop, we look at items that we want to zero-rate or exempt. The hon. Member for East Dunbartonshire mentioned period products; I am really proud that a Conservative Government removed VAT from period products. That is a definite benefit of our having left the EU. Starkly, evidence is emerging that such VAT cuts are not being passed on to customers by those who sell those products. I have asked for more details about that, because when Government change tax policy in order to try to help with the cost of living—

[Patricia Gibson]

On that point, will the Minister give way?

[Victoria Atkins]

In a moment. It is important that those changes are passed on to the consumer, as that is the purpose of the policy. Our raw concern is that if relief is provided, not just with VAT but on other taxable items, it may not be passed on to the customer.

Colleagues across the House have rightly commended Tesco for choosing to absorb the VAT on sunscreen products within its profit margins. I stand with those Members and encourage other retailers to do the same, if this is a matter they care deeply about. While I am delighted to hear that Morrisons will promise to pass on the cut to customers if this VAT policy is changed, I gently point out that we would expect it to do that anyway; perhaps Morrisons should be encouraged to follow the lead of its market competitor Tesco. I know not, and I had better not get involved in competition between supermarkets. However, I would very much hope that retailers—I am sure they take a close interest in their customers’ ability to pay—will follow Tesco’s lead.

[Victoria Atkins]

There were a number of points there. First, the hon. Lady asked about independent retailers, and I fully accept what she said. I do not pretend that this is an easy decision or an easy policy area. My duty as a Minister is to weigh up the trade-offs implicit in deciding tax policy. We have to ensure that when we make changes to the VAT system, we do so fully understanding the potential consequences for other aspects of that system.

The hon. Member for North Ayrshire and Arran said that this change would represent a very small sum. The truth is, since the 2016 referendum, the Treasury has been encouraged to make changes to the VAT system totalling some £50 billion. Many of those changes will be commendable, and we will have a great deal of sympathy with why a Member feels compelled to make that case on behalf of their constituents. However, we have to make these difficult decisions as to which items are VAT-exempted or VAT-free and which are not, and that is why those products are so small in number.

[Patricia Gibson]

The Minister is making a powerful case as to why VAT is an important source of revenue for the UK Government, and I do not think anybody would dispute that. But if she was to do as Members in the Chamber ask and remove VAT on sunscreen, can she tell us how much that one single measure would cost the Treasury?

[Victoria Atkins]

It is very difficult to calculate. Because of the way multinational companies such as Tesco conduct their VAT returns, it is difficult to break it down. Our concern is, as I say, a practical one about the impact. Each and every time I get asked to exempt a product from VAT—this is a regular occurrence, I promise, and I completely understand why Members of Parliament would wish for such matters to be exempted—I have to conduct this trade-off. It is incredibly difficult. I very much understand the intentions behind the campaign, but this is the thinking behind why we have thus far had to say no. Of course, we keep it under review.