VAT on Air Ambulance Fuel Payments

United Kingdom Borders – in the House of Commons at 4:42 pm on 11 July 2012.

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Photo of Guy Opperman Guy Opperman Conservative, Hexham 4:42, 11 July 2012

I beg to move,

That this House
supports wholeheartedly the work and actions of the Air Ambulance Service nationally, and all the individual crew members and staff, who provide an outstanding service to people up and down the UK;
notes that the Air Ambulance Service is a charitable organisation, funded by donations given by the general public, and without any direct funding from Government;
further notes that the Air Ambulance Service has saved successive governments millions of pounds;
notes that the Air Ambulance Service provides an emergency service similar to the Lifeboat Service, and that the Lifeboat Service has been excluded from the EU VAT Directive on fuel costs since 1977, whereas the Air Ambulance Service has been required to pay for VAT on fuel;
notes that successive governments have failed to provide a rebate or exemption to the Air Ambulance Service for this VAT;
calls on the Government to conduct an urgent review of this situation;
and further calls on the Government, in the next 12 months, to consider providing for grants to the Air Ambulance Service commensurate to the sums incurred by the Air Ambulance Service for the VAT on the fuel they purchase, and to publish the outcome of that review within this timescale.

This is a cross-party debate arriving from an e-petition that has approximately 150,000 signatures and is supported by many Members up and down the land. The reality is that our support for the air ambulances and the e-petition derives from a constituent of my co-sponsor of the motion, Hugh Bayley, to whom I give my thanks. The constituent is Mr Ken Sharpe. I also thank the Backbench Business Committee for its support and Mr Speaker for finding time for it to be heard.

On 1 August the eyes of the world will be on London for the Olympics. For months I have been rigorously training my body to be at the peak of physical perfection. But I shall not be lining up against Usain Bolt. I shall be in the sleepy village of Edale, in north Derbyshire, where I, Paul Blomfield and other hikers will be about to commence a 280-mile hike along the greatest walk in the world, the Pennine way. I shall not be walking for a gold medal. My goal is not gold, but hard cash to support the Great North air ambulance service, which is of course the finest of all the air ambulance organisations. Others may be cheering on Jessica Ennis and sipping the corporate champagne, but this ageing, fattening ex-jockey will be existing on a prime diet of beer and flapjacks as I wearily trudge my way north to Northumberland. Usain Bolt has nothing to fear.

This debate is supported not only by the e-petition, but by a petition run by my local paper, the Hexham Courant. Other newspapers up and down the land have also done a great deal to raise the profile of this debate. It is a cross-party debate, giving the Treasury a fantastic opportunity, over the next 12 months, to consider all the information to do with air ambulances, how they are funded and how VAT applies to their fuel, and to come back with a possible solution after the Budget next year.

What is certain is that the issue derives from Europe, an issue that may have been occupying some of our minds these past few months. When our illustrious forebears took us into Europe—purely, as we all understood, for economic reasons—there was a requirement to sign up to the EU VAT directive, which covers UK VAT legislation. In 1977, the lifeboat service was exempted from the VAT on marine diesel. However, as the air ambulance did not exist at the time, it was not exempted and has subsequently been required to pay VAT on fuel costs. We are in this situation today because of that anomaly. As we have learned since the Budget in March, the Government are keen to clear up VAT anomalies.

We Back Benchers are often asked by Whips to believe many outlandish things—that the European Union always makes sensible decisions or that we will one day win a penalty shoot-out or have a Wimbledon singles winner. Today I will ask the House to accept one basic principle: that there is no real difference between a lifeboat and a helicopter. The lifeboat services are exempt from the VAT exclusion but the air ambulance charities are not—but they are both, I suggest, providers of life-saving emergency services that deserve all our support and all the exemptions made available for their vital work so that they may continue.

My constituency is the second biggest in the country; it has schools with catchment areas almost the size of the M25. It has rough, rural country, often without roads. In the west of Northumberland, our nearest hospital is well over an hour away; sometimes the four-wheeled ambulance struggles to be with us within an hour, if at all.

When I was a thinner and better jockey, I met many other jockeys who had struggled after a fall when they needed to be airlifted to hospital. People frequently have to be supported and airlifted to safety from the A1. The issue is not just a rural issue, but one that affects cities and towns just as much, when there is a lack of access or urgent transfers are required.

Photo of Anne Marie Morris Anne Marie Morris Conservative, Newton Abbot

I absolutely commend my hon. Friend’s argument. Devon Air Ambulance in my constituency is absolutely vital. There are very rural parts of the countryside and I entirely agree that it seems disproportionate that it should have to pay VAT, unlike the lifeboat services.

Photo of Guy Opperman Guy Opperman Conservative, Hexham

I endorse everything that my hon. Friend has said; she is a great supporter of that organisation.

Photo of George Howarth George Howarth Labour, Knowsley

I congratulate the hon. Gentleman on being fortunate enough to raise this debate. As he pointed out, urban areas are often as dependent on air ambulance services. The North West Ambulance Service, based in my constituency, is highly regarded right across the region.

Photo of Guy Opperman Guy Opperman Conservative, Hexham

The right hon. Gentleman mentions an exceptional air ambulance charity, which is supported not just by him but all MPs concerned with the north-west.

Put simply, in my part of the world—and all others, for that matter—health care would be jeopardised without the charitable air ambulance service. I am not denigrating the providers of other emergency services, but we could not operate without the air ambulances. For example, the Great North air ambulance covers an area of 8,000 square miles, from the Scottish borders to North Yorkshire and from the east to the west coasts. The helicopters can be anywhere in the region within 15 minutes and on board are specialist trauma doctors and paramedics, who bring expert accident and emergency qualities to the scene. However, each mission costs £2,500, regardless of whether the patient is airlifted. That takes into account the cost of the aircraft, storage, paying the pilots and paramedics, and medicine and other equipment. There are hundreds of call-outs per month, and the same applies all across the country. Given that this involves paying in excess of £100,000 a year on fuel, of which VAT represents 20%, there will be a significant saving not only to the Great North air ambulance service but to several others, and that would equate to life-saving missions.

Photo of Andrew Bridgen Andrew Bridgen Conservative, North West Leicestershire

I commend my hon. Friend for securing this debate. East Midlands air ambulance is based in East Midlands airport in my constituency. I have met the crew, and they are genuine professionals who, as he says, go out every day saving people’s lives, especially along the M1 and M42 corridor, where the roads are very dangerous.

Photo of Guy Opperman Guy Opperman Conservative, Hexham

At this stage, one has to acknowledge that only a fool would fail to see that the Government are in the headlock of a debt crisis, a eurozone meltdown and a struggling economy. Everyone accepts that they are short of a magic chequebook. However, I am pleased to point out to the Treasury that those at the air ambulance organisations are not difficult people. We do not seek a solution straight away. The motion asks for an urgent review and a study of the submissions and financial arrangements of the air ambulance charities, and for a long-term solution to be reached at some stage in the near future. On any interpretation, successive Governments have got a great deal from this free service. No Government have ever properly addressed this loophole, and we are giving this Government a chance, over the next year, to investigate and address the problem.

We may be divided on many things, but we should all support this wonderful organisation. The sums that the Treasury would have to find are relatively slight—considerably less than £200,000 a year. Given the amount that the charitable organisations raise from members of the public and the amazing service that is provided, at the end of this debate we should be able to agree that there is no fundamental difference between a lifeboat and a helicopter, because both services are invaluable and should receive our support equally.

Photo of Hugh Bayley Hugh Bayley NATO Parliamentary Assembly UK Delegation 4:52, 11 July 2012

Like 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, the Yorkshire air ambulance service 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. The Yorkshire air ambulance service 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.

Photo of Stuart Andrew Stuart Andrew Conservative, Pudsey

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.

Photo of Hugh Bayley Hugh Bayley NATO Parliamentary Assembly UK Delegation

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.

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford 5:03, 11 July 2012

I start by congratulating my hon. Friend Guy Opperman and 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.

Photo of Mary Macleod Mary Macleod Conservative, Brentford and Isleworth

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.

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

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 Kent 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 lifesaving 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.

Photo of Rushanara Ali Rushanara Ali Shadow Minister (International Development) 5:10, 11 July 2012

I, too, congratulate Guy Opperman and my hon. Friend the Member for York

Central (Hugh Bayley) on securing this debate. I also want to echo the congratulations to Ken Sharpe on working so vigorously to get so many people to sign up to the campaign.

I want to focus on the contribution of the London air ambulance service, which is based at the Royal London hospital in my constituency. It was established in 1989 and does incredible work across London, providing critical care to those with serious injuries. The London air ambulance service has completed 26,000 missions since 1989. In March, I visited the service and heard about the amazing work it does. In 2006, the last Labour Government committed £1 billion of much needed funding to rebuild the Royal London hospital in Whitechapel, which included renovation of the helipad. In December 2011, the London air ambulance service moved to its new base, on the 17th floor of the refurbished hospital building.

Last Saturday we marked the seventh anniversary of the 7/7 London bombings, when terrorists detonated bombs on three underground trains, including one near Aldgate in my constituency, and a London bus. We remembered the 52 innocent people who lost their lives in the London bombings and the many more whose lives were changed for ever. It is difficult to forget the harrowing scenes of devastation and chaos across London that day. I would like to use this opportunity to pay tribute to our emergency services, whose response and professionalism following the 7/7 attacks saved the lives of many. In particular, I would like to focus on the work of London’s air ambulance service. Following the attacks, London’s air ambulance staff, who had been attending a monthly clinical governance day, were deployed immediately. London’s air ambulance service flew 26 helicopter missions to deliver urgent medical care and supplies to the scenes of the incidents across London, and the service’s medical teams treated or triaged more than 700 people. The service rightly received praise for its incredible work and quick response in the wake of the attacks.

At the coroner’s inquest into the 7/7 London bombings, Lady Justice Hallet recommended that London’s air ambulance should have its “funding and capacity” reviewed and said:

“Despite current financial constraints, London’s Air Ambulance has, since its formation, provided an invaluable service to the capital.”

The service has been deployed to numerous major incidents in London, including not only the London bombings but the Bishopsgate and Aldwych terrorist attacks, as well as the Southall, Paddington and Potters Bar rail crashes. Yet despite those recommendations, the London air ambulance service has received no increase in major incident funding. The service believes additional funding for major incidents to be a necessity, which would enable it to expand major incident cover.

However, responding to major incidents is just one aspect of the service’s work. It also provides pre-hospital emergency care to victims of serious injuries, attending road traffic accidents, industrial accidents, and stabbings and shootings. The service treats more than 2,000 critically injured patients on the streets of London each year. Without it, patients would not receive the critical care they need.

Photo of Mary Macleod Mary Macleod Conservative, Brentford and Isleworth

I applaud the hon. Lady’s enthusiasm for the London air ambulance service, which I share. The service is also supporting the Olympics and the Paralympics, on top of its normal workload, serving and supporting so many individuals—more than 10 million within the M25—as compared with many other air ambulances, which support far fewer people.

Photo of Rushanara Ali Rushanara Ali Shadow Minister (International Development)

I could not agree more with the hon. Lady. She has been working with me to highlight the work of the London air ambulance service. I will talk about the demands in the run-up to, and during, the Olympics in a moment.

The London air ambulance service has a doctor-led team that provides advanced medical procedures and leadership in situations in which a patient might otherwise die before reaching hospital. As London’s only helicopter medical emergency service, the team works incredibly hard to provide 24/7 emergency care services to the 10 million people who live and work in the capital.

Despite the incredible work of the London service, its funding is limited. Many people do not realise that it is a charity, as are many of the other air ambulance services around the country. At a time when it should be expanding its operational capacity, a lack of funding means that it is unable to do so. That will have an impact across London, and, as Mary Macleod has mentioned, that is deeply worrying in a year in which millions of visitors will come to the city for the Olympics.

Compared with other cities in England and Wales and around the world, London’s air ambulance service lacks resources. It has just one helicopter and one team to serve 10 million people, compared with an average of one helicopter per 1.5 million people across the rest of the UK. Internationally, Paris has 12 teams and at least three helicopters, and Sydney has six helicopters.

London’s air ambulance service is currently funded through private donations and an NHS contribution, but much more work must be done to raise funds if it is to provide the level of service required to meet London’s growing needs. In these tough economic times, it is even more challenging for the service to achieve its funding objectives. As a charity, it relies heavily on donations from the corporate sector, and in 2011 donations and sponsorship made up 45% of the service’s overall income. The donations from organisations, charities and companies are welcome, and donors include organisations such as Virgin, Coutts and the London stock exchange. At a time of economic uncertainty, however, that funding is not stable, and it does not meet the funding needs of the service.

Contributions from the private and corporate sectors play a large part, but it is vital that the Government should meet their obligations to support the charity. The London service has received a long-standing donation of £1.2 million from the NHS, which represented 40% of its overall income in 2011, but I believe that the Government must do more. The impact of the Government’s VAT increase to 20% is being felt by services such as the London air ambulance, which receive no support to cover the cost of VAT on aviation fuel payments. We are calling on the Government temporarily to reduce the rate of VAT from 20% to 17.5%, which would lessen the VAT bill for charities, including air ambulance services.

The London air ambulance service needs an estimated £3.9 million if it is to enhance and expand the service that it provides in the coming years. The necessity for the service to do that will only increase, and it is important that we take action now to ensure that the service can cope with future demand. The extra funding would enable the service to acquire and maintain a new helicopter in order to achieve 100% “up time”, so that if one helicopter required maintenance, another would still be operational. It would also allow the service to maintain medical and rescue equipment, fund medical innovation and invest in staff training, research and the charity’s infrastructure. That type of expansion would greatly enhance the service, benefiting Londoners and ensuring a sustainable model for the future.

The London air ambulance is a service that many of us take for granted. It is a service that many of us do not think of as a charity, and one that we would expect to assist us in an emergency. This is a call to the Government to reduce VAT to 17.5% and give charities such as London’s air ambulance service the support that they need. It is also a call to the private sector and the business community, in London and elsewhere, to invest in the air ambulance services and support their incredible work of saving people’s lives.

Photo of Greg Mulholland Greg Mulholland Liberal Democrat, Leeds North West 5:19, 11 July 2012

I start by congratulating my hon. Friend Guy Opperman and Hugh Bayley. I am delighted and proud to have my name on this motion and to have signed the early-day motion and been a part of this excellent campaign. I echo their words in congratulating Ken Sharpe and the 150,000 people who have spoken out on this issue and enabled us to have this debate in this place—a clear example of the democratic e-petition process working to allow us to debate the subjects that matter to local people.

There are 18 air ambulance service charities up and down the country. As we have heard, each and every one does work that is not only vital but that can be done only by air ambulances attending emergencies that are difficult, and sometimes impossible, for road ambulances to get to. Speed is vital, too, with lives saved every week of every month of every year by air ambulance staff throughout the country. That would not happen if the air ambulance services were no longer there.

I am incredibly proud to be the MP representing one of our two Yorkshire air ambulances—the one based in my constituency at Leeds Bradford airport. Yorkshire air ambulance was set up back in 2000, with the helicopter introduced at Leeds Bradford airport, and to this day the YAA service has rescued 4,446 people. A second helicopter was added in 2007, and Yorkshire became the first air ambulance service in the UK to operate a dedicated air desk. Having recently added airways communication systems, it is now one of the most developed and highly sophisticated emergency services in the whole country.

Yorkshire air ambulance now operates these two helicopters, which, as the hon. Member for York Central said, serve 5 million people around the Yorkshire area, covering an incredibly diverse landscape of rural and suburban areas, as well as the great cities. But the YAA needs £7,200 every single day to keep both of our helicopters in the air. Last year, it used approximately 170,000 litres of fuel, which cost £5,800 in VAT. It is a simple, stark fact that if the YAA did not have to pay this charge on fuel, it could save a minimum of three extra lives each year. We can extrapolate from that that the number of lives that could be saved around the country by that change would be substantial. This is not just about money.

I would like briefly to mention a constituent of mine. We have already heard about the importance of fundraising for keeping these air ambulances in the air and functional. A lady from Cookridge, Mrs Val Pawsey, has attended shows, fairs and fêtes all around the Yorkshire area with her knitting. She knits all sorts of products—teddies, dolls, dolls’ clothes, babies’ clothes and so forth. To date, she alone has raised £8,500 for the Yorkshire air ambulance as a volunteer by doing this incredible work as she goes round the shows with her husband John. It is difficult to have to tell someone like Val Pawsey that the Government are taking £5,800 a year in VAT from the service for which she is working so incredibly hard, giving her own effort, energy, resources and time to raise money. That is why I sincerely hope we will get a sympathetic response from Ministers today and a commitment properly to look at this issue.

As other hon. Members have said, we need to give enormous credit to all the people involved in the amazing charitable work that provides the funding, but we also need to be clear that millions of pounds are saved for the Government and for us as a society when a service such as this is provided. If the air ambulance service did not provide it, it would have to be provided in another way through the NHS. Surely, therefore, we have a strong case.

People have already mentioned the example of the lifeboats and the complications with EU legislation, and our message is clear: we want Ministers to make the case very strongly in Europe; when things are wrong with European directives we all must say so; and we should say that the EU directive in question clearly needs to be amended. Until it is amended, however, we need Government action; we cannot simply wait and hope that it might be changed. That is why I am very happy to support the motion and to urge the Treasury to find a solution within its own means to the problem.

We have also seen a huge rise in fuel costs over recent years and, indeed, months, and it stretches even further the limited resources that arise from fundraising. That is why it is even more important that the Treasury mitigate the effect by looking at the VAT that is currently charged.

The Treasury can be sympathetic, and has been in the past. I was delighted to support my hon. Friend Tim Farron in his campaign for a VAT refund on the emergency services provided by our wonderful mountain rescue teams, and the air ambulance is another service that carries out a similar and equally important life-saving function. It therefore deserves similar sympathetic treatment.

I hope that Ministers have noted that 150,000 people have so far signed the petition, and have noticed the consensus among Members on both sides who have spoken and campaigned with passion on the issue. We are proud of our air ambulances throughout the country, and we know that the Government are, too. The Treasury, in its response in April to the petition, said that the Government noted

“the valuable role that the air ambulance services play in responding to emergencies.”

We believe that today should be the start of a process whereby they put their money where their mouth is. We believe that there is a solution to the problem, and we look forward to some good news in the Budget next year.

Photo of Julian Sturdy Julian Sturdy Conservative, York Outer 5:27, 11 July 2012

It is a real privilege to speak in today’s debate, and I too pay tribute to my hon. Friend Guy Opperman and my close constituency neighbour, Hugh Bayley, who alongside others have secured this important debate.

Whenever there is a debate in this place about our emergency services and personnel, it is humbling to think of the sheer number of lives that have been saved because of the dedication, bravery and professionalism of our firefighters, police officers, NHS nurses, doctors and ambulance drivers. But the emergency service family extends far further than we often appreciate. From our lifeboats and coastguards to countless voluntary agencies, our society is underpinned by the dedication of so many committed public servants.

In this debate, however, we are rightly focused on an area of the emergency services that plays a vital yet, sadly, under-acknowledged role in saving lives each and every day. According to the Association of Air Ambulances, an emergency air ambulance takes off every 10 minutes in the UK, collectively undertaking more than 19,000 missions in a year and serving 177 accident and emergency departments.

Today’s debate is focused on the VAT on fuel that several air ambulance charities are required to pay as a result of owning and operating their own aircraft. The e-petition that prompted this debate attracted, as many Members have said, about 150,000 signatures, and it calls on the Government to exempt the air ambulance service from paying VAT.

I will discuss that request later in my speech, but first let me join the hon. Member for York Central and my hon. Friend Greg Mulholland in praising the work of Yorkshire’s own local air ambulance service. It flies seven days a week, providing a life-saving, rapid service for 5 million people across Yorkshire. It is also an independent charity which, as was pointed out by my hon. Friend the Member for Leeds North West, must generate £7,200 a day—some £2.65 million a year—to keep our air ambulance operational. I think that the public will be as astonished as I was to learn that it has to find such an amount.

The need to raise awareness of the charitable status of the air ambulance service is undeniable. Its real strength lies in its ability to work throughout our county’s vast and challenging landscape, from densely populated urban centres to the rural and almost wild countryside in parts of north Yorkshire. It ensures that anyone in trouble can be reached and transferred to life-saving health centres within minutes. Without such provision, some people would die of their injuries and health complications. Let me put it simply: I truly believe that the Yorkshire air ambulance saves lives every single day.

The hon. Member for York Central has already given a famous example of the superb work of the service in action, but that is well worth mentioning again. I refer to the devastating accident involving the “Top Gear” presenter Richard Hammond in 2006. That almost fatal accident occurred in Elvington airfield, which is in my constituency. Mr Hammond was driving a dragster car while filming “Top Gear” when the vehicle crashed at terrific speed. I am sure that many Members recall seeing the sickening footage of the crash on the news at the time. The injuries sustained by Mr Hammond were life-threatening and required immediate medical attention. Like so many other individuals over the years, he received initial treatment followed by an immediate transfer to hospital. The speed of the transfer was crucial, and because of the work of the Yorkshire ambulance which flew to his rescue, Richard Hammond’s life was saved.

That high-profile case reflects the cases of many individuals who are saved every day by the air ambulance service. It brings to life the importance of the service and its work, and we should bear such examples in mind when considering the financial demands that threaten the sustainability of the service.

Many Members have touched on the technicalities of whether, and how, the Government can return VAT payments or make exemptions in the future, so I shall keep my remarks about the motion itself brief. First, there is an issue of fairness. At present, only charities that own their helicopters are required to pay VAT on fuel. The result of the status quo is clear: the more money is swallowed up in VAT payments to the Treasury, the less there will be to keep air ambulances operational and ready to respond to emergencies as and when they are needed.

Secondly, when considering cost, we must take into account the millions of pounds that the air ambulance service as a whole has saved successive Governments. A number of Members have already mentioned that. Any decision that we make should take into consideration the amount that the charity saves the Government by running the service at its own cost, funded by public donations. What would we do if these charities could no longer afford to operate? My hon. Friend Stuart Andrew made a telling intervention on this point. Would the Government pay directly for an air ambulance service? Would they have to purchase all the helicopters and equipment? Or would such a service simply not exist?

Thirdly, comparisons to other services must be made. The life boat service has already been mentioned. I appreciate that Ministers have said that under EU law we cannot extend the scope of existing zero rates or introduce new ones, but perhaps this is the sort of nonsense that should be tackled in any forthcoming EU renegotiation. Regardless of one’s position on European matters, it is simply ridiculous that this elected, sovereign House lacks the power to decide such matters because of European red tape.

Naturally, I understand that the Government cannot do everything and that many requests are made for financial exemptions and tax cuts in many areas, but I believe that our air ambulance service is being unfairly targeted. It is told by countless politicians that its dedicated work is essential, but it is then told to make do with an unfair and expensive deal for paying VAT on fuel. We must make up our minds. If we are truly to back the service, let us fight for it in Europe and at home, and let us prioritise its financial needs higher up the agenda. I very much support the part of the motion urging the Government to review the matter in depth over the next few months. In the light of the work of the air ambulance service across the country, that is the least we could agree to tonight.

Photo of John Healey John Healey Labour, Wentworth and Dearne 5:36, 11 July 2012

I pay tribute to Guy Opperman for moving this debate, to my hon. Friend Hugh Bayley for ably supporting him and leading our campaign to support our Yorkshire air ambulance service, and to all Members, on both sides, who have spoken in support of their local air ambulance services. I pay particular tribute to Ken Sharpe, my hon. Friend’s constituent, who must hold the record for getting 100,000 names on an e-petition in the shortest possible time and who has helped provide the basis for this debate.

I say to the Minister that we are asking for a small contribution that will be a big boost to the efforts of those who support and keep our air ambulances flying across the country. The motion covers the interests of our 18 air ambulance services across England. All of them are sustained by the dedicated efforts of those who raise funds to help finance the costs and all are kept flying by the dedicated, skilled, professional staff who provide this vital emergency service. I am particularly pleased that the Yorkshire caucus is so strong in the House tonight, with not only my hon. Friend the Member for York Central leading the charge but the hon. Members for Leeds North West (Greg Mulholland) and for York Outer (Julian Sturdy), whom I am delighted to follow.

Like most other air ambulance services, ours is a charity. It is, so to speak, the airborne wing of the Prime Minister’s big society. It deserves the House’s support in deed, not just in word, and the sort of support that the motion is urging on the Government. It is funded by the public to provide a vital emergency service for the public across our county. Since the debate started, I reckon that our fundraisers in Yorkshire will have had to raise at least £300 as a contribution towards keeping our two helicopters and our service going. That is a total of more than £7,000 a day or £2.65 million a year. They do this because they understand, like we do, how vital this emergency service is and how essential it is in many parts of our county that patients requiring such help can be at their nearest hospital within 10 minutes. It flies more than 1,000 missions each year, which is a unique and essential service, of interest and concern to us all. As others have said, the fuel costs are about £10,000 a month and the VAT costs are something under £6,000 a year.

I say two things to the Minister in conclusion. We are not asking in today’s motion for the same sort of exclusion from VAT that the lifeboat service has. We are not asking today for the same sort of VAT rebate scheme that has been in place to support the cost of church repairs. We are asking simply for a review to look at the fairness of the situation and the case for making a small public contribution to the voluntary efforts of those who keep our air ambulances flying.

I hope that, in responding to this debate, he will accept the terms of the motion and the review that is urged upon him. But I hope actually that he may stand up to tell us that the motion is not needed and the review is not needed because he will introduce that sort of compensation scheme to cover the costs of VAT on fuel and will do so on a similar basis to the one we have established with the precedent of helping with the VAT costs of church repairs.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby 5:41, 11 July 2012

I join colleagues in congratulating my hon. Friend Guy Opperman and 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.

Photo of Meg Hillier Meg Hillier Labour, Hackney South and Shoreditch

The London air ambulance is based at the Royal London hospital, which is just outside my

constituency, in the constituency of my hon. Friend 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.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

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.

Photo of Hugh Bayley Hugh Bayley NATO Parliamentary Assembly UK Delegation

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?

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

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.

Photo of Rory Stewart Rory Stewart Conservative, Penrith and The Border

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?

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

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 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.

Photo of Rory Stewart Rory Stewart Conservative, Penrith and The Border

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.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

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.

Photo of Richard Drax Richard Drax Conservative, South Dorset 5:53, 11 July 2012

It is a pleasure to follow my hon. Friend Mark Pawsey. I am delighted that my hon. Friend Guy Opperman and 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.

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

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.

Photo of Richard Drax Richard Drax Conservative, South Dorset

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 accents 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.

Photo of Matthew Offord Matthew Offord Conservative, Hendon 6:00, 11 July 2012

It is a great pleasure to speak in this debate and I congratulate my hon. Friend Guy Opperman and Hugh Bayley on securing it. 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 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 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.

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

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.

Photo of Matthew Offord Matthew Offord Conservative, Hendon

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 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.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Education) 6:06, 11 July 2012

I thank the Backbench Business Committee for bringing this important matter to the House. I congratulate my constituency neighbour, Guy Opperman, and my hon. Friend Hugh Bayley, both of whom paid moving tributes to their air ambulance services—the Yorkshire Air Ambulance and the Great North Air Ambulance Service.

The debate has been well considered and well informed. As hon. Members have said, it came about following an e-petition, signed by nearly 150,000 people, that calls on the Government urgently to review the amount of VAT paid on fuel for air ambulances and

“to return in the form of grants to Air Ambulance Service providers all the future VAT which the Treasury collects from them”.

I should like to put on the record my thanks to all those who have taken the time to sign the petition and bring this important matter to the Floor of the House.

We all now know that air ambulances play a key role in communities up and down the UK. They have been in use since the beginning of the 20th century. Early versions included the Red Cross’s “Florence Nightingale”, which began to carry vital medical equipment across the country in 1934. However, it was not until 1987 that the first UK air ambulance charity, the foundation of the modern air ambulance service, was established in Cornwall.

The most recent air ambulance charity was established in Hertfordshire in 2008. There are now 30 helicopters in service for the 18 air ambulance charities in England and Wales, with a further two run by the Scottish

Ambulance Service. We have heard moving tributes to the work that the services undertake around the country. To give the overall picture, I should say that they undertake 19,000 missions a year, servicing 177 accident and emergency departments. On average, an air ambulance takes off every 10 minutes in the UK; every hour of every day, seven air ambulances may be attending accidents and medical traumas around the country.

The emergency teams have an enormous impact on our communities and play a vital role in supporting and extending the work of conventional land ambulances.

Photo of Alan Beith Alan Beith Chair, Justice Committee, Chair, Liaison Committee (Commons), Chair, Liaison Committee (Commons), Chair, National Policy Statements Sub-Committee, Chair, Justice Committee

I apologise to my hon. Friend Guy Opperman for being unable to get to the earlier part of the debate because of a meeting.

The hon. Lady will know that in the remote rural parts of Northumberland such as my constituency the air ambulance is vital because, without it, it would be extremely difficult to get cases to hospitals, which are often closer to her constituency in Newcastle, where they need to be treated.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Education)

Indeed. We all know of very moving stories in our respective localities where lives have, without doubt, been saved by air ambulances.

As Dr Offord said, air ambulances have come an awfully long way since their early days. They are now high-tech, mobile A and E departments carrying senior trauma doctors alongside paramedics and transporting state-of-the-art medical equipment to wherever it is needed.

Photo of Andrew Percy Andrew Percy Conservative, Brigg and Goole

I recently met people at Lincolnshire and Nottinghamshire Air Ambulance, to whom I pay tribute. They told me about some of the other problems they face, apart from VAT. Does the hon. Lady agree that there are other issues that we need to address, such as the fact that while some hospitals can accept air ambulances, others will need a land-based ambulance transfer?

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Education)

The hon. Gentleman makes an important point, and I am sure that the Minister will take it on board and deal with it in his response.

Only a few months ago, air ambulances proved that they are at the cutting edge of technology. As the hon. Member for Hendon pointed out, we are in an ever-progressing medical world where we need to keep constantly under review all the services that provide vital care to people, but particularly the air ambulance service. A few months ago, for the first time, an air ambulance carried blood supplies allowing a blood transfusion to be carried out at the scene of an accident. London’s air ambulance service believes that this innovation has been made possible due to a new refrigeration unit devised by the British military, and it could no doubt save hundreds of lives in the years to come.

It is no wonder that air ambulances continue to receive such outstanding support from members of the public and that over 150,000 people have been moved to sign the petition. I do not think that anyone would disagree that we have to support such services. However, as has been discussed, there are other issues relating to EU law and the harmonisation of VAT legislation across member states. Members have already mentioned the anomaly whereby fuel for lifeboats is VAT-free. As hon. Members and members of the public who have signed the petition have noted, there is no equivalent provision in these EU-wide rules to allow for fuel bought by charities such as air ambulances to be provided VAT-free, although various provisions such as medical equipment and first aid kit are VAT-free, and air ambulance providers that lease the air ambulance rather than buying it outright receive different treatment for VAT. Air ambulance services are put in a difficult position when there are anomalies within the VAT system and they are subject to change.

The motion calls on the Government to review the tax treatment of air ambulances and their fuel and to carry out the requested study on compensating them for VAT payments. I will be interested to hear the Government’s response to that, but there is more that they could do to try to help these life-saving services. As we all know, we are living in difficult times. Our economy is in a double-dip recession; borrowing forecasts are rising, not falling, and not only families and businesses are feeling the pressure and the squeeze but charities and organisations in the voluntary sector, which have been hard hit by the cuts that have been made. Collectively, air ambulances are one of the busiest voluntary services in the country. As charities, they rely on the support of over 1.25 million donors to keep them going. Air ambulances save hundreds of lives every year. They are expensive, but for those who benefit from the service they provide, they are priceless. The average spend per helicopter is more than £750,000. Put simply, without charitable donations and funding, these life-saving services would not exist. The men and women of these emergency teams work tirelessly. The Government should do all they can to support them.

There are changes that the Government could make immediately to ease the pressure on air ambulance services and other charities. As part of Labour’s five-point plan for jobs and growth, we are calling on the Government to introduce a temporary reduction in VAT to 17.5% to bring down the cost of fuel across the board. Air ambulances and motorists alike would benefit from that. Since the Government increased VAT, people across the country have been feeling the squeeze. Equally concerning is the impact it has had on charities. It has cost them an overwhelming £143 million.

With air ambulances using about 130 litres of fuel on every mission, a decrease in the rate of VAT would bring immediate relief to those services up and down the country—so too would clarity on the Government’s position on fuel duty, because it would allow them to plan for the future. The Labour party called for the 3p rise in fuel duty that was scheduled for August to be delayed to help hard-pressed motorists. Although we welcome the U-turn on that, it would be helpful if the Government explained what they will do in the long term on the price of fuel and how they will put it on a more sustainable footing for motorists and for air ambulance services.

As well as responding to the request in the motion put forward by the Backbench Business Committee, the Government could usefully respond to some additional questions to reassure air ambulance services that they have the support of the Government and that the Government are doing all they can in these difficult times to ease the pressure on them, so that these hard-working teams can continue to save lives and carry out their excellent work. What plans do the Government have to provide support to the thousands of charities that are increasingly performing vital services in our communities and that are struggling as a result of the increases in VAT and the cuts to funding? How do the Government intend to pay for the delay in the 3p fuel duty rise in August? What are the Government doing to put the cost of fuel on a more sustainable footing to help not just households and businesses, but vital charitable services? Finally, what assessment has the Minister made of the possibility of offsetting the cost of VAT on fuel payments by air ambulances through the use of other departmental budgets or anticipated departmental underspends?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury 6:17, 11 July 2012

I congratulate my hon. Friend Guy Opperman and Hugh Bayley on securing this debate, and the more than 150,000 who signed the e-petition that triggered it.

I thank my hon. Friend Tracey Crouch, Rushanara Ali, and my hon. Friends the Members for Leeds North West (Greg Mulholland) and for York Outer (Julian Sturdy) for speaking. When John Healey spoke, I was waiting to find out whether he looked at this issue when he was a Treasury Minister, but he did not share that insight. My hon. Friends the Members for Rugby (Mark Pawsey), for South Dorset (Richard Drax) and for Hendon (Dr Offord) also spoke.

Catherine McKinnell showed remarkable restraint in speaking for nine minutes before mentioning the five-point plan. Perhaps she should have shown more restraint and mentioned that this Government are deferring the fuel duty increase for which her Government legislated. She should be careful about the comments that she makes on this matter, because her Government’s record in introducing the fuel price increases that we have deferred or cancelled is nothing to boast about.

This is a good opportunity to explain the Government’s position on an issue that has generated a great deal of public interest. First, I want to reaffirm how much the Government appreciate the commitment of air ambulance charities. Since every other Member has named their local service, I will mention the excellent work of the Hampshire and Isle of Wight air ambulance service. We can all agree that, whether it is in Hampshire, Yorkshire, London, Cornwall or elsewhere, air ambulances play an important role in our society and we are very lucky to benefit from the valuable service that they provide.

I shall remind the House of the current position on VAT. It is a broad-based tax levied on final consumption, and businesses can recover VAT charged on supplies that will be used to produce products that will carry VAT. If a service is not charged for, the provider cannot claim back VAT, and that is the position of air ambulance charities.

Throughout the debate, hon. Members have mentioned their concern about the impact of VAT on air ambulance fuel and asked how it can be mitigated. One suggestion is that we seek an exemption from VAT for that fuel. Members, including the hon. Member for York Central and my hon. Friends the Members for Leeds North West and for Hendon, have drawn a comparison between air ambulance services and the provisions that apply to lifeboat services. The analogy between the critical life-saving services that both provide is clearly strong, but the relief from which the RNLI benefits relates not to charities or to life-saving services but to international transport. The RNLI makes good use of that, but it is not about life saving.

There is no equivalent provision for air ambulance services, or indeed for any other rescue services, and rectifying that would require a change to EU law. That would need unanimous approval by all 27 member states, and I am sure it will not surprise the House if I make the point that that is exceptionally difficult to achieve. The most recent discussions on reduced VAT rates took six years of charged negotiation to conclude. For that reason, I believe that there is little prospect of agreement on new zero VAT rates in the medium term, and the Government cannot legally introduce new zero rates without that agreement.

As my hon. Friends the Members for York Outer and for South Dorset noted, the air ambulance service comes in many shapes and sizes, and the VAT system supports different operating models in different ways. Charities that purchase their helicopters outright benefit from full VAT relief on the purchase cost, saving about £600,000 on the cost of a £3 million helicopter, whereas charities that lease their helicopters benefit from a similar relief on their leasing costs of about £86,000 a year for each helicopter. If the helicopter contractor makes no separate charge for fuel, the whole leasing cost is covered by the zero rate.

That situation has been likened to a zero rate on fuel for some charities and an unfair charge on others, but I disagree. Each charity is free to decide on the commercial operating arrangements it thinks best, so I would not describe the situation as an anomaly. Different operating models have different costs and benefits, and organisations of all kinds often lease their equipment because it is difficult, costly or risky to make a large up-front investment. I have seen no evidence to suggest that significant investment decisions are taken purely for tax purposes, given the many other substantial considerations that go into them.

The majority of air ambulances use aviation fuel rather than diesel, and aviation fuel for commercial flights is exempt from excise duties and taxed at a reduced VAT rate of 5% on each occasion when less than 2,300 litres is purchased. Although that is not specific to air ambulances, it represents a significant reduction in the cost of services for the majority of air ambulance charities, which use aviation fuel in their helicopters rather than diesel.

My hon. Friend the Member for Chatham and Aylesford came up with the typically ingenious suggestion of using the Value Added Tax Act 1994. However, I have to disappoint her, because the exemption to which she referred relates to relevant goods and accessories for ambulances. Relevant goods cover parts and accessories, but not fuel, as fuel is neither a part nor an accessory. It was an ingenious idea for dealing with the matter, however.

The motion suggests that there should be an investigation into what should be done. There are many merits to reviewing the position of air ambulances to see whether some consistency can be achieved, and in that context it is useful to consider two separate reviews that the Government have already conducted. First, on the London air ambulance, which was raised by the hon. Member for Bethnal Green and Bow and my hon. Friends the Members for Hendon and for Brentford and Isleworth (Mary Macleod), the Department of Health is working with other bodies to undertake a review of the capability and funding of emergency medical care of the type provided by the London air ambulance service. That follows the publication of the coroner’s report into the 7 July bombings. It is likely that the outcome of the review will have implications for other air ambulance services operating across the country. I can confirm that my officials will engage with the Department of Health on the review.

Photo of Rushanara Ali Rushanara Ali Shadow Minister (International Development)

Will the Minister indicate on what date we can expect the outcomes of the review and the publication of the report?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

I do not have that information available but I will ensure that either my colleagues in the Department of Health or I write to the hon. Lady with it.

The second review that is being undertaken looks at the tax position of health care charities. The Secretary of State for Health is required by the Health and Social Care Act 2012 to lay a report before Parliament on matters that might affect the ability of providers of NHS services to carry out their activities. That report is expected to cover the full range of different providers, including charities, and will include taxation issues. Treasury officials will be actively involved in the review.

I therefore suggest that, rather than having a separate, Treasury-led review, the most efficient way forward is for the existing engagement to continue, and for the Department of Health and the Treasury to work collaboratively to consider the tax impacts of different funding models as part of the wider work already in hand.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

Perhaps the right hon. Gentleman will tell us whether he looked at the matter when he was a Treasury Minister.

Photo of John Healey John Healey Labour, Wentworth and Dearne

The Minister mentions the review under the 2012 Act, but it is a review of charities that carry out NHS services. The whole point about the air ambulance services is that they are not NHS services, although they play a great role in emergency health support. Therefore, they are unlikely to be covered by the second review. The Minister says that the review proposed in the motion is useful, but will he accept the motion and conduct the review it urges on him? I am still not clear about that.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

I appreciate the right hon. Gentleman’s knowledge—he is a former shadow Secretary of State for Health—but my point is that the Treasury is working with Department of Health officials to ensure that the matter is covered by the review. I can confirm that, if it is ultimately not covered, the Treasury will carry out its own review. However, rather than having three reviews into air ambulances, I believe that two are sufficient if the second covers the tax issue. We are working with the Department of Health to ensure that that is the case. I can confirm to hon. Members that there will be a review and that the Government will not vote against the motion. Indeed, we believe it raises valid issues.

It would be possible in principle to introduce a refund system for air ambulance charities’ non-business activities, although it is important to consider that in the context of broader public spending, as I am sure my hon. Friends appreciate.

To refer to a point made by my hon. Friend the Member for Rugby, it is important for us to consider carefully how air ambulance charities can provide a better service by improving efficiency, and not just through refunds and tax breaks. Effective co-ordination of services could bring cost reductions that far outweigh the scale of a VAT refund on fuel. I am sure the House will join me in applauding such innovation and agree that we should continue to do all we can to improve this excellent service further. As my hon. Friend said, the air ambulance based in his constituency delivers a co-ordinated approach to providing the service across Warwickshire, Northamptonshire, Leicestershire, Derbyshire and Rutland. It has made significant cost savings and earned the transformational change award at the Orange national business awards last year.

I hope I have set out clearly my reasoning on why a change to the VAT law is impractical. I believe the best review on a level playing field for providers is being done by the Department of Health, but, as I have made clear, if that does not fully cover air ambulances, the Treasury will conduct its own, separate review.

Photo of Guy Opperman Guy Opperman Conservative, Hexham 6:29, 11 July 2012

I suggest that the principle is the key. The proposed change would, without a shadow of doubt, potentially save lives. If anyone doubted the universal appeal of the air ambulance, we should look at who has spoken in this debate.

The debate was commenced on the Scottish border, in Hexham, but took in the constituencies of my right hon. Friend Sir Alan Beith, my hon. Friends the Members for Penrith and The Border (Rory Stewart) and for York Outer (Julian Sturdy), and Hugh Bayley, as well as other Yorkshire constituencies, such as that of my hon. Friend Stuart Andrew. We then went down to the constituencies of my hon. Friend Andrew Percy, John Healey and Greg Mulholland. Then we travelled down the country, taking in the constituencies of my hon. Friend the Member for North West Leicestershire

(Andrew Bridgen) and Mr Howarth, as well as constituencies in London, such as those of my hon. Friends the Members for Brentford and Isleworth (Mary Macleod) and for Hendon (Dr Offord), before going down into Kent, to the constituency of my hon. Friend Tracey Crouch. We then went down to the constituency of my hon. Friend Richard Drax—not forgetting my hon. Friend Mark Pawsey, whose constituency we passed on the way—before finally heading down towards the vast reaches represented by my hon. Friend Anne Marie Morris, and that is without taking into account the areas represented by the shadow Minister, Catherine McKinnell, and the Minister.

I am grateful that this has been a cross-party debate. My thanks go to all who signed the petition. The debate was also well informed, but it would have been helpful if the shadow Minister had remembered the 10 fuel duty rises from the last Government, which have had such an impact on the air ambulance service, and the fact that this Government have not put fuel duty up once.

To sum up, I want to give particular credit to two groups of individuals: to all the staff of the air ambulances, all over the country, and to all those who raise money for individual air ambulances. Last weekend I was at the Haydon Bridge beer festival, and I shall be at the Otterburn show raising money for these institutions this coming weekend. Anybody who has no plans for the Olympics in the summer can come and join me on the Pennine way odyssey, which is taking place in August, or give funds to the event. The principle is the key. The proposed change will save lives, and I commend the motion to the House.

Question put and agreed to.

Resolved ,

That this House supports wholeheartedly the work and actions of the Air Ambulance Service nationally, and all the individual crew members and staff, who provide an outstanding service to people up and down the UK; notes that the Air Ambulance Service is a charitable organisation, funded by donations given by the general public, and without any direct funding from Government; further notes that the Air Ambulance Service has saved successive governments millions of pounds; notes that the Air Ambulance Service provides an emergency service similar to the Lifeboat Service, and that the Lifeboat Service has been excluded from the EU VAT Directive on fuel costs since 1977, whereas the Air Ambulance Service has been required to pay for VAT on fuel; notes that successive governments have failed to provide a rebate or exemption to the Air Ambulance Service for this VAT; calls on the Government to conduct an urgent review of this situation; and further calls on the Government, in the next 12 months, to consider providing for grants to the Air Ambulance Service commensurate to the sums incurred by the Air Ambulance Service for the VAT on the fuel they purchase, and to publish the outcome of that review within this timescale.