VAT on Air Ambulance Fuel Payments

Tracey Crouch Excerpts

Wednesday 11th July 2012 Commons Chamber

[Tracey Crouch (Chatham and Aylesford) (Con)]

I start by congratulating my hon. Friend the Member for Hexham (Guy Opperman) and the hon. Member for York Central (Hugh Bayley) on securing the debate. I was delighted to attend the Backbench Business Committee meeting at which the proposal was made. I know that the hon. Member for York Central was unable to be there, but I am pleased that we now have the opportunity to have this discussion in the Chamber. I want to make a short contribution in support of the motion.

The Kent, Surrey and Sussex Air Ambulance has a special place in the hearts of my constituents. It provides an invaluable service across the three counties, which have seven motorways running through them on which five serious accidents happen every day. However, road accidents account for only 41% of the emergencies that the local air ambulance attends. Medical emergencies such as cardiac arrests and strokes account for a further 25%, and both require a swift response and excellent, quick medical care if they are to be dealt with quickly and properly.

A quick news search on the Kent, Surrey and Sussex Air Ambulance shows how vital it is across the counties. Yesterday, it landed on the M20 motorway and took a lady who had fallen from a bridge not to the hospital at the next junction but to a specialist unit in London. A few hours later, it transferred from Ramsgate to King’s college hospital, again in London, a workman who had fallen 30 feet. That journey would have been very difficult to make by road. Last Friday, the helicopter took a 78-year-old man with serious facial injuries following a DIY accident from Lordswood in my constituency to hospital in London. As the local newspaper reported, the helicopter landed nearby at 10.25 am. Doctors gave the man emergency treatment at the scene before he was flown to the major trauma centre at the hospital in Denmark Hill.

[Mary Macleod (Brentford and Isleworth) (Con)]

This is a crucial issue, because the VAT money could be put back into the air ambulance, especially the London air ambulance, which serves more than 10 million people. We need a second air ambulance to serve those numbers.

[Tracey Crouch]

I completely agree. The Kent, Surrey and Sussex Air Ambulance has two helicopters to serve the three counties. I am sure that all money saved from VAT would be used effectively.

One great thing about the Kent, Surrey and Sussex Air Ambulance is that it transports a specialist doctor and a critical care paramedic directly to the scene of serious medical emergencies. They provide enhanced care at the scene of the accident, often involving medical procedures usually provided only in the emergency department of a hospital. Patients are flown to the most appropriate hospital for their needs, and many are transferred to county or regional hospitals. However, as the three shouts I described show, patients quite often require specialist treatment at a major trauma centre in London. Quite simply, the intervention of the air ambulance team saves lives.

The Kent, Surrey and Sussex Air Ambulance costs £5 million per year to fund and operates 365 days a year, responding to 1,500 to 1,800 medical emergencies per annum. It is funded almost entirely by donations. Its mission, objective and outcomes are as important to our country as those of the Royal National Lifeboat Institution, another lifesaving service very dear to my heart. However, as we have heard, and as the motion states, the key difference between the two is that the air ambulance pays VAT at the rate of 20% at its base in Marden. It buys fuel in bulk and uses between 180,000 and 200,000 litres a year. Given that each mission costs around £2,500, zero-rating fuel for the helicopters would save the air ambulance a significant amount of money that it could reinvest in its life-saving functions. That is not a vast amount of money for the Treasury, but it would be directly available to air ambulances.

It has already been made clear that, under EU law, it is not possible to implement a new zero-rating into UK legislation relating solely to the air ambulance. Although I am not a VAT expert, let me offer the Minister a possible solution. Schedule 8 to the Value Added Tax Act 1994 refers to charities and outlines provisions that allow for the supply, at the zero rate of VAT,

“of any relevant goods to an eligible body which pays for them with funds provided by a charity”.

The Act also makes it clear that “relevant goods” includes “ambulances” and

“parts or accessories for use in or with”

ambulances. Her Majesty’s Revenue and Customs already accepts that “ambulances” includes specially equipped air ambulances or watercraft, and that “eligible bodies” includes charitable institutions providing

“rescue or first aid services”.

Under those provisions, therefore, and with guidance from the Treasury and HMRC, the air ambulance could purchase fuel in its own name for use at a zero rate of VAT. I am sure that, with proper discussion, air ambulance charities could certify the use of the fuel, making them liable for VAT payments if they misappropriate it for other purposes. Furthermore, I am sure the charities would be willing to appease any concerns that HMRC might have on claims for retrospective recovery of VAT incurred over the past four years, which would obviously lead to a greater cost to the Treasury.

The Treasury might be concerned about the reduction of revenue, but it should recognise how much the air ambulance saves the NHS. First, like others, the Kent air ambulance is not funded by the ambulance service or the NHS. Secondly, the speed at which it can transfer injured persons to hospital often means that they are treated and discharged more quickly, thereby saving the NHS money in the long term.

Throughout the debate thus far, Members have spoken highly of the air ambulances serving their constituents. There can be no doubt about the level of genuine support they enjoy, but as the motion makes clear, and as we have heard, there is potential for the Treasury to give additional financial support to help air ambulances up and down the country to carry on providing a vital service. It is for this reason that I urge the Treasury to review the current VAT arrangements and use this opportunity to recognise further the vital contribution that the air ambulance service makes to people’s lives.

--- Later in debate ---

[Richard Drax (South Dorset) (Con)]

It is a pleasure to follow my hon. Friend the Member for Rugby (Mark Pawsey). I am delighted that my hon. Friend the Member for Hexham (Guy Opperman) and the hon. Member for York Central (Hugh Bayley)—he might recall that I used to interview him as a fledgling reporter all those year ago—have brought this matter to the attention of the House.

First, like all other Members I want to pay tribute to the professionalism and bravery of our air ambulance crews. The A31 just outside my home is, sadly, notorious and I often see that yellow bird of mercy landing to rescue people and take them to hospital. It saves countless lives. In my constituency, the Dorset and Somerset Air Ambulance saves lives as we have no motorways as such, at least not in Dorset, and our roads are narrow, which means that getting down them is extremely difficult. It is especially important, therefore, for us to have that air ambulance cover.

Which air ambulances pay VAT on fuel and which do not—I hope I am being accurate because I know we like to be accurate in the House—is a matter of who owns and operates them. As has been said, owner-operators—those who own and operate the helicopter directly through their charities—are seriously disadvantaged. Because they are VAT registered they must pay VAT. In contrast, leased aircraft, operated through a third party, such as Bond Aviation, which is the case for the Dorset and Somerset Air Ambulance, which bills for a total service, including fuel, are exempt under an agreement with HMRC in 2005.

[Tracey Crouch]

It is worth pointing out that not every helicopter that is leased is done so with the fuel included. Some air ambulance helicopters are on a lease agreement, such as the Kent air ambulance, but that does not include the fuel.

[Richard Drax]

I totally accept that. I am not saying that they are all the same. I am looking for some harmonisation. I am not for one minute saying that we should not tackle the VAT issue. However, it seems from my research that there are some anomalies in the system.

Of the 18 charities, operating 29 helicopters, 12 operate such leasing agreements—admittedly, as my hon. Friend said, under different arrangements. For example, our Dorset and Somerset Air Ambulance pays no VAT, while our neighbouring Devon Air Ambulance pays £3,000 a year, which is about the cost of a mission, give or take a few pounds. The situation is clearly deeply unsatisfactory, with thousands of pounds of hard-raised money being squandered needlessly. I would have thought that some harmonisation would resolve the issue.

Overall, the Association of Air Ambulances must pay £100,000 every year in VAT. That rises with every increase in the price of fuel. That sum would pay for about 30 mercy flights to road traffic accidents and medical emergencies and for urgent hospital transfers. As has been said, this is not really about money; this is about saving people’s lives.

It is interesting how many of our valuable services in this country are charitable. Think of our armed services. These are men and women whom we send to places such as Afghanistan who are relying on charity to be looked after. That begs another debate altogether.

I hardly need point out that charging VAT on fuel for our air ambulances is an EU initiative. In a characteristic Catch-22 situation, the EU VAT directive allows no zero-rating provisions, except for those that were in place in 1975. Again as we have heard this afternoon, there were no air ambulance helicopters in the UK in 1975. Only the RNLI has been allowed exemption from duty charges on marine diesel due to its life-saving role—no different, in effect, from that of the air ambulances. With such a precedent already set, it seems an obvious and relatively inexpensive step for HMRC to extend this exemption to helicopter emergency air services.

The Association of Air Ambulances has suggested three solutions, each of which I would commend to the Minister. The first is a total exemption for all helicopter emergency medical services. The second is a refund arrangement provided by HMRC for air ambulance charities. The third is for new legislation to exempt air ambulances from VAT, as with the RNLI.

As all hon. Members have said, this is a worthy cause, and, frankly, the sums of money are a pittance when one looks at the Government’s overall expenditure. I cannot think of a better cause in the big society. That is not a phrase I entirely endorse, but I would use it in this case, because it conjures up the worthiness, bravery and dedication of those who crew the ambulances and the lives that are saved, and, importantly, the knock-on benefits to the families of those who have been injured and who can continue to live their lives with their fathers, mothers, brothers and sisters because they have been rescued by this exemplary service. I hope that common sense prevails today.

[Dr Matthew Offord (Hendon) (Con)]

It is a great pleasure to speak in this debate and I congratulate my hon. Friend the Member for Hexham (Guy Opperman) and the hon. Member for York Central (Hugh Bayley) on securing it. The hon. Member for Bethnal Green and Bow (Rushanara Ali) has already spoken about the London helicopter, which serves not only her constituency but mine and, indeed, the rest of London, so not all the comments I will make are about London’s air ambulance because I do not wish to replicate the fine things she has already said.

I want to describe for the Minister some of my experience of one of the UK’s air ambulance services. He is probably unaware that I grew up in Cornwall, which was the first county to have an air ambulance. Indeed, I have quite some experience with that air ambulance. There was not a great deal to do in Cornwall when I was young, so one of the things I did was surf, which led me to become a lifeguard, and on several occasions we needed to make use of the air ambulance.

Before the air ambulance service was established, the RAF had to become involved if someone needed to be airlifted—I look to my hon. Friend the Member for York Outer (Julian Sturdy), who talked about what would happen if there was no air ambulance. I remember one occasion when a Frenchman had fallen down a cliff and I could see that the back of his head was open. The RAF was called in from the royal naval air station at Culdrose and a helicopter came out to pick him up. That was the cost of not having the air ambulance, but it was a cost for the RAF, so someone did pick up the bill. The difference between the RAF helicopter and the air ambulance was what was on board.

On one occasion I had to call an air ambulance myself when I was a lifeguard in Crackington Haven. The chairman of my local Surf Life Saving club had managed somehow to cut his leg on his surf board. When we brought him to shore, we called the ambulance service, which sent the air ambulance. That necessitated that we clear the beach very quickly, which we did with the help of the Surf Life Saving club, so that the helicopter could come in. We loaded the chairman on board and got him safely away.

I had the foresight to pick up a loudhailer and ask all the tourists on the beach to put their hands in their pockets and fill up a bucket that I sent some of the nippers around with. That was a good way of raising money, and one of the points I made was that the people on the beach might one day need the air ambulance themselves, so I asked them to dig deep. However, I found having to do that quite demeaning. The air ambulance was an emergency service, but I was asking people who were visitors to Cornwall and who did not actually live there to pay for it. But they did the air ambulance very proud.

The air ambulance in Cornwall has continued. My hon. Friend the Member for Leeds North West (Greg Mulholland) spoke about an individual who raised money in his constituency. When I grew up in north Cornwall there was a lady called Pearl Cory who did the same. Pearl was well known for going around the pubs and clubs and selling her lottery tickets, which funded the air ambulance. Again, I look to the Minister and say that there are people such as Pearl who go out and do that kind of work, which is admirable. Pearl was well known in every pub for the work she did. She received an OBE for her service, for which I am grateful.

[Tracey Crouch]

As a Cornishman, my hon. Friend will understand the close links between the air ambulance service, RAF search and rescue and, of course, the RNLI, which has been mentioned many times. I think that we should take this opportunity to thank all the volunteers, particularly those in the RNLI—having grown up in Cornwall, he will know that, sadly, some lifeboat men have been lost over the years—for their great work and bravery.

[Dr Offord]

I certainly echo my hon. Friend’s comments, although I must correct her and say that I am not a Cornishman—I was born in Hampshire. I certainly acknowledge the work of the RNLI. As a keen yachtsman, I am always pleased that I do not have to seek their services, and hope I never will.

As a London MP, I know that air ambulance services are not valuable only in peripheral, rural counties such as Cumbria, Cornwall or Yorkshire; they are so important to my constituents and me in London because of what they can achieve. I mentioned the RAF helicopter that was manned by the pilot, the linesman and the navigator but had no medical equipment. The air ambulance in London not only has a trained paramedic, navigator and pilot, but a trauma doctor and an observer, who is often observing as preparation for being a trauma doctor.

The helicopter has qualified people and specialist equipment on board. As we know from accidents in our constituencies, the issue is not always about what the patient is suffering from, but about getting them medical assistance. Air ambulances can provide that quickly—the similarity between Cornwall and Hendon, for example, is that the air ambulance can be on site quickly. As my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) said, they can take the patient to the most qualified centre that they can find and the patient can get treatment that would not have been available if a road ambulance had taken them to the nearest hospital.

The Minister is many things, including a maritime MP. If, for example, the VAT exemption of the RNLI were taken away, how would the organisation feel? I appeal to the Minister to accept the review and put the air ambulances of London, Cornwall, Yorkshire and everywhere else on the same footing as the RNLI. That is not only the fair thing to do; it is the best thing to do for our constituents.