VAT on Air Ambulance Fuel Payments

Stuart Andrew Excerpts

Wednesday 11th July 2012 Commons Chamber

[Hugh Bayley (York Central) (Lab)]

Like the hon. Member for Hexham (Guy Opperman), I congratulate my constituent Ken Sharpe and his wife Helen, who have got this important issue on to the agenda of the House of Commons by launching an e-petition that calls on the Government to refund to air ambulance services the VAT that air ambulances pay on the fuel they use. Ken Sharpe has promoted this issue with flair and passion. He achieved the 100,000 signatures needed to trigger a debate in this place within a record 39 days, and the petition now has 150,000 signatures. To any members of the public who are listening to this debate, I would say this: sign that petition now!

I have known Ken for some 20 years. He is an active member of the RMT union and served for several years on its national executive committee. The same principles of voluntary action and social service that underpin his trade union work support his passion for charities and the air ambulance service; it is what the Government call the big society. I know him to be a brilliant and effective campaigner. When this man starts a campaign—I hope that the Minister is listening—he never gives up.

Many people will be aware of the work of the Yorkshire air ambulance service from the BBC1 fly-on-the-wall—perhaps I should say fly-in-the-sky—series, “Helicopter Heroes”, a new series of which starts in the autumn. The Yorkshire air ambulance service made the national news in 2006 when it airlifted “Top Gear” presenter Richard Hammond from Elvington airfield in York to Leeds general infirmary after he sustained life-threatening injuries in a crash in a jet-powered car. I know that Richard would say that he owes his life to the Yorkshire air ambulance service. That is one of many cases. I can think of a case of a young boy who had his ear bitten off by a horse. The air ambulance got him to hospital in time for surgeons to sew his ear back on.

The Yorkshire Air Ambulance, like the 18 other air ambulance services, is a registered charity. The Government help it, for example by seconding NHS paramedics to fly in the helicopters to provide ambulance services to patients. The paramedics also provide services to the pilots. In Yorkshire, it is the paramedic who navigates for the pilot. However, Yorkshire Air Ambulance still needs to raise £2.6 million a year—that is about £7,200 a day—to keep its two helicopters flying.

As the hon. Member for Hexham said, the lifeboat service, unlike the air ambulance service, does not have to pay VAT on the fuel that it uses. We are calling on the Government to treat the air ambulance service in the same way as the lifeboat service. I recognise that EU Finance Ministers are unlikely to extend the exemption that applies to sea rescue services such as lifeboats to air ambulances. However, the United Kingdom Government could act on their own by refunding to air ambulance services the VAT that is charged on the fuel that they use.

Linda McAvan, the Labour MEP for Yorkshire and the Humber, recently asked a question on this matter in the European Parliament. The spokesman for the European Commission replied:

“Member States are free to address the problem of unrecoverable VAT by the introduction of so called compensation schemes.”

I am assured that that means, in EU-speak, that if the Government chose to provide air ambulance services with sums equivalent to the VAT that is raised from them, there would be no objection from the European Union. The Exchequer Secretary, who is responsible for VAT, accepts that that is the case. When the hon. Member for Hexham and I went to see him a week or so ago to discuss our motion, he assured us that if the motion was unamended, the Government would raise no objection to it. I hope that that is the case. We will hear whether it is from the Financial Secretary, who will speak for the Treasury this evening.

The motion calls on the Government to carry out a study over the year ahead into whether they can accede to the request in the e-petition. Members on both sides of the House hope that the study will be completed in time for the answer to be given as part of the Budget statement next spring.

I have been a Minister in a spending Department and know what it is like to get a dozen requests a day for new Government spending commitments. I also recognise that this is a time of austerity. So why do I think that the Government should agree to this request? First, the proposal has caught the public imagination. Ken Sharpe’s e-petition has been signed by 150,000 citizens. We agreed at the end of the last Parliament and confirmed at the start of this Parliament that when more than 100,000 citizens make a request, Parliament should debate it.

Secondly, as the hon. Member for Hexham said, the request is modest and affordable. Yorkshire Air Ambulance paid less than £6,000 last year in VAT on fuel. It serves a population of 5 million. The population of the UK is 60 million, so if all air ambulance services use the same amount of fuel per the size of the population they serve, the total cost will be something in the order of £75,000 a year. Even if I am out in my calculation by a factor of two—the Treasury will check that carefully when it conducts its study —and the cost is £150,000, it will still come to just £1 per person who has signed the e-petition.

The air ambulance petition has attracted more signatures than the e-petition pressing the Government for a change in policy on fuel duty. The Treasury estimates that the recent decision to postpone the August fuel duty increase will cost the Exchequer £550 million. If we divide that by the 148,000 citizens who have signed the fuel duty e-petition, it comes to £3,700 a petitioner, which makes the air ambulance request, at just £1 a petitioner, rather cheap.

[Stuart Andrew (Pudsey) (Con)]

I have spent my working life in the charity sector, and in fundraising in particular. Does the hon. Gentleman agree that groups such as the one that organises the Rawdon fun day in my constituency, which raises £14,000 a year for the air ambulance, find it objectionable that some of that money is going on VAT? If we lost the air ambulance service, the effect on the Treasury would be immense.

[Hugh Bayley]

The hon. Gentleman makes a powerful point. It is important that the Treasury focuses on the fact that the air ambulance service is an emergency service that saves lives, just like the lifeboat service. I used to run a charity, and much as I would love every charity to be exempt from paying VAT, that would be a very expensive ask. This is a limited and specific ask of the Government. As I said, it would not be too costly. More importantly, as I am sure he will acknowledge, it is the right thing to do.

If the motion is agreed to, Ken Sharpe and the 150,000 members of the public who have signed the e-petition will move into a slightly difficult period. They will have got over the hurdle of securing the Government’s attention, but there will then be a period, at least until the Budget in the spring, when the Government are considering the position. It will appear to the public as though not a lot is going on. My advice to members of the public who support the cause is: do not let up on the pressure, and keep reminding the Government that this issue will not go away. The best way for a citizen to lobby the Government is through their Member of Parliament. I invite every single one of those 150,000 people to e-mail or write to their MP and ask them to contact the Treasury, asking how the study is going. In that way, we can continue to remind the Government that this change is both the right thing to do and has a high level of support from the public.