VAT (Confectionery)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 10th March 1988.

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Photo of Mr Conal Gregory Mr Conal Gregory , City of York 12:00 am, 10th March 1988

To ask the Chancellor of the Exchequer what value added tax revenue is expected from United Kingdom confectionery sales in the current financial year; and if he will make a statement.

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

VAT on confectionery, including chocolate biscuits and similar products, is expected to yield some £450 million.

Photo of Mr Conal Gregory Mr Conal Gregory , City of York

I thank my hon. Friend for that reply. On behalf of the House may I extend warm birthday congratulations for tomorrow to my right hon. Friend the Chancellor of the Exchequer and hope that he may still enjoy confectionery despite the penal rates of taxation imposed upon it. Does my hon. Friend agree that there would be considerably more employment in the manufacture of confectionery if, along with other EEC countries, we re-regulated VAT on confectionery in line with food?

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

Obviously I join my hon. Friend in wishing my right hon. Friend a happy birthday. I understand that I must extend the same congratulations to my hon. Friend, because he shares a birthday with my right hon. Friend. I am sure that confectionery will be in order.

I have noted the points that my hon. Friend has persistently and assiduously made in the House on behalf of an industry which is of great importance to his constituency and the country. He will appreciate that I cannot be more specific during this pre-Budget period.

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

Does the Minister accept that it is ridiculous that children at birthday parties tomorrow who eat cookies with chocolate on the outside will have to pay VAT on that chocolate, but that those who eat cookies with the chocolate on the inside will not pay VAT?

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

I pay tribute to the hon. Gentleman, who has also pursued the interests of the confectionery industry in Adjournment debates and otherwise. He has displayed a great knowledge of the details and complexities of the industry. The hon. Gentleman should take up his argument with his right hon. Friend the Member for Leeds, East (Mr. Healey), who imposed VAT on confectionery in the first place.

Photo of Mr Harry Greenway Mr Harry Greenway , Ealing North

Is VAT constant on all confectionery at a relative level? If so, why is some confectionery so much more expensive than others, although the same items are involved? Why are humbugs and fudge up the road so much more expensive than they are in the House of Commons?

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

Humbug is in more plentiful supply in some places than in others and, doubtless, that determines the price. Taxation does not determine the price. The rules of taxation, as they apply to biscuits, are somewhat strange and include as confectionery only buscuits that are entirely covered with chocolate. Those that are partially covered with chocolate are, for some reason, exempt.