VAT on Air Ambulance Fuel Payments

Part of United Kingdom Borders – in the House of Commons at 6:06 pm on 11th July 2012.

Alert me about debates like this

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

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?