‘(1) The Chancellor of the Exchequer must, within one year of a current budget surplus being achieved, undertake a comprehensive review of the inheritance tax regime, including, but not limited to, rates, thresholds and trusts.
(2) The Chancellor of the Exchequer must as soon as is practicable lay a report of the review before both Houses of Parliament.’—(Rob Marris.)
Brought up, and read the First time.
With this it will be convenient to discuss the following:
‘(1) The Treasury shall, within six months of the passing of this Act, publish and lay before the House of Commons a report on the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service.
(2) The report must include (but need not be limited to) an analysis of the impact on the financial position of Police Scotland and by the Scottish Fire and Rescue Service arising from their VAT treatment and an estimate of the change to their financial position were they eligible for a refund of VAT under section 33 of the VAT Act 1994.’
New clause 2—VAT on sanitary protection products—
‘(1) The Treasury must, within 12 months of the passing of this Act, lay before the House of Commons a report setting out the impact of exempting women’s sanitary protection products from value added tax.
(2) The report must include (but need not be limited to)—
(a) an estimate of the impact on VAT revenue of exempting women’s sanitary protection products; and
(b) an assessment of the impact on the purchase of women’s sanitary protection products of exempting them from VAT, with particular reference to purchasing by women aged under 25.’
New clause 7—VAT on sanitary protection products (No. 2)—
‘(1) Within three months of the passing of this Act, the Chancellor of the Exchequer shall lay before both Houses of Parliament a statement on his strategy to negotiate with the European Union institutions an exemption from value added tax for women’s sanitary protection products.
(2) A Minister of the Crown must lay before Parliament a report on progress at achieving an exemption from value added tax for women’s sanitary protection products within European Union law by
New clause 10—Enforcement by deduction from accounts: review—
(2) The review must address, but need not be confined to:
(a) the number of cases in which the Direct Recovery of Debts has been used;
(b) the effectiveness of the safeguards; and
(c) the total amount recovered.
(3) The review must include a benefit-cost analysis, including speed of recovery.
(4) The Chancellor of the Exchequer must as soon as practicable lay a report of the review before both Houses of Parliament.’
New clause 11—Impact of removal of CCL exemption for electricity from renewable sources—
‘(1) The Chancellor of the Exchequer shall within six months of the passing of this Act undertake a review of the impact of the removal of the CCL exemption for electricity from renewable sources and lay the report of the review before both Houses of Parliament.
(2) The review must address, but need not be confined to:
(a) the impact on consumers and on fuel poverty;
(b) the impact on energy-intensive industries and on employment in those industries;
(c) the level of carbon leakage in the energy-intensive industry;
(d) the effect on investment in new renewable power generation and on investment in new nuclear power generation;
(e) any effective subsidy provided to, or additional profits accruing to, operators of existing and new nuclear power stations;
(f) what additional measures will be enacted to mitigate the impact on energy-intensive industries of the removal of the section; and
(g) the impact on business investment.’
Amendment 90, page 62, line 2, leave out clause 45.
It is pleasure, almost 15 years after I was first elected to this place, finally to make it to the Dispatch Box—albeit, for the moment, the Opposition Dispatch Box, but never fear, comrades, we are working on it!
New clause 9 and amendment 89 deal with inheritance tax. They are twins, and I shall address my remarks to those two provisions before going on to address the many somewhat disparate amendments and new clauses in this large group.
New clause 9 is designed to make the Chancellor of the Exchequer undertake, within one year of achieving a Budget surplus, a comprehensive review of the inheritance tax regime. I have to say that it is a somewhat optimistic new clause, given that five years ago, the same Chancellor of the Exchequer was forecasting a surplus any day now. We have now arrived at any day now, and he is forecasting a surplus for the financial year 2019-20. We will see whether that happens. If the Government accept the spirit of the new clause, as I hope they will, they could have a review of the inheritance tax regime now, rather than wait at least five years until the Chancellor achieves a surplus—if he ever does.
Amendment 89 would remove the inheritance tax provisions in the Bill. Inheritance tax is a somewhat unusual tax. It is the least painful tax any of us will ever face, “because you only pay it when you’re dead.” We need to bear that in mind when we talk about this tax. Most estates on which inheritance tax is levied cross the threshold, whatever it might be, either because people have inherited wealth themselves or because they have had a windfall gain from the increase in the price of the house in which they live. There are, of course, those who start out in disadvantaged backgrounds and make a lot of money in their lifetimes; inheritance tax would then be payable on their estates. But one can say with confidence that that does not apply to a great number. At the moment, very few estates pay inheritance tax.
The hon. Lady is right, of course, that it varies around the country and that there is a much greater tendency to pay it in London and the south-east—the area she represents—but I stand by my remarks that for many of those people, the liability of their estate to inheritance tax is occasioned by a windfall increase in the value of the home in which they live. Some people improve the houses in which they live, but in the last 20 or 30 years, the great driver for estates falling into inheritance tax liability has been a secular rise in house prices. That is not as a result of people doing up their houses, although of course that happens. And good luck to them. Many hon. Members, including myself—and my wife—own the house in which they live. I, along with others, will have a windfall—and it is a windfall—from the secular increase in house prices.
I congratulate my hon. Friend on his promotion to the Front Bench. Does he agree that these Tory proposals amount to a north-south divide policy? While hundreds of thousands of people in the south benefit from the increase in property values, carry this great wealth and want to leave it to their families, families in the north do not have the same advantage—or very few of them do. Is it not another north-south divide policy?
I certainly agree with my hon. Friend. We already have enough geographic and regional divisions in this country, and I do not want their number to increase. Of course, when we legislate we must be aware of the different impacts that the measures that we introduce may have in the country of the United Kingdom, both its regions and its nations. However, there are many places in the United Kingdom where few people will pay inheritance tax, and in the country as a whole, without the changes that would be brought about by the Bill—if the House were to pass them, which I hope it will not—it is forecast that 63,000 estates would have a tax liability by 2020-21. According to the House of Commons, the proposed changes would reduce that to about 37,000, the same level as now.
In absolute terms, 37,000 represents quite a lot of estates, but in proportionate terms it is a very small amount—well below 10%—and in the case of many of those estates, the tax is payable because of a windfall. For many people—again, not all of them—that windfall was brought about when they bought their houses with mortgage interest relief at source: MIRAS. Those people acquired an asset which upon their death, after a secular rise in house prices, led to inheritance tax being a liability, and they acquired that asset with the help of the state; in other words, the help of the taxpayer. Now some of them cavil at inheritance tax, which I think is very unfortunate.
The effects of the proposed inheritance tax changes could be wider than the Government may have thought. When we stop and think about it, we must conclude that it is not surprising that many of those who would benefit because their parents have an estate worth more than £650,000 are themselves well-to-do. There is nothing wrong with being well-to-do; all Members of Parliament are well-to-do, and I have been in the fortunate position of being well-to-do for most of my life. However, when a Government propose a tax regime in which they will favour those who are already favoured, we really have to question their priorities.
The Government’s proposals will make inheritance tax more complicated, and it is already fairly complicated. Successive Governments—the Labour Government under whom I was a Back-Bench MP, the Conservative party which was then in opposition, the coalition Government whom we have just seen and, I venture, the current Government, and certainly the current Opposition—have wanted a simpler tax regime, but that is extremely difficult. We have a Finance Bill, the second of this year, which is about a centimetre thick and runs to more than 200 pages. I am not a tax expert or an accountant, but as far as I can tell, it is owing to the cunning of professional accountants who, quite legitimately, provide tax avoidance advice that we have to keep introducing loophole-closing measures that complicate the tax system. The Government are making the inheritance tax regime more complex in a way that is unfair because it favours those who are already well-to-do. The combination of forgone tax revenue and additional complexities does not amount to a desirable policy.
Moreover, the policy could push house prices even higher, both in the home counties—including the constituency of Mrs Main—and elsewhere, but particularly in London and elsewhere in the south-east. Those who have the necessary liquidity may decide to invest in real estate, so that when they die, their linear descendants will have the advantage of the home exemption. We could see a development that many Labour Members would consider to be a strange social phenomenon. At a time when there is a housing crisis—and I think that Members in all parts of the House recognise that there is a housing crisis in many parts of the United Kingdom—the Government are proposing an inheritance tax policy that could encourage those in the later years of their lives not to downsize but to trade up, because if they sink enough money into their houses, more of their estates will be tax-free when they die.
A change is already taking place in relation to agricultural land, which is making it harder for UK farming to be self-sufficient, and this change will have the same effect, to a greater or lesser extent. I can produce no figures to demonstrate how it will work out, but it is very likely that it will increase house prices rather than decreasing them. Similarly, the measure allowing pensioners to spend their money on a Lamborghini, as a former Minister famously put it—or on whatever they like—is also likely to lead to an increase in house prices, because some pensioners who gain access to their pension pots and wish to secure an income stream will buy a house or houses for buy-to-let purposes.
I think that the Government have got the balance wrong between the freedom that we want to extend to people and the recognition that we have—particularly, but not solely, in London and the south-east—of a housing crisis that is predicated on a shortage of housing: a shortage that has, I hasten to add, built up over the last 30 or 40 years. It is not just a phenomenon of the coalition Government of 2010 to 2015, or of the six months of the current Conservative Government. We have not been building enough houses, which is creating huge pressure. I shall return to that subject later, although not in the context of inheritance tax.
Does my hon. Friend agree that the policy will further escalate the inequality between the people in our communities and throughout the nation? There are people who may work very hard but must depend on the likes of tax credits in order to exist, and have no opportunity to build any wealth whatsoever; and there are people who can inherit a property that may be worth £2 million, and then simply exploit that wealth in order to become even wealthier, to the detriment of everyone else in the country.
My hon. Friend is right. In the constituency that I have the honour to represent, and in which I have lived for almost all my life, I could find no house worth more than £2 million when I looked in April this year. Indeed, none of them was near that value. There is barely a house that is worth over £1 million in the whole constituency, and of the three Wolverhampton constituencies, the one that I represent is undoubtedly the most affluent. The same will apply across swathes of constituencies: there will no houses worth that amount. The idea that an affordable house, as has now been defined by the Prime Minister, is £450,000 in London or £250,000 outside London is frankly a joke in constituencies like mine. For £250,000 it is possible to get a fantastic house in Wolverhampton. We welcome people in Wolverhampton—come to Wolverhampton: decent schools, good cheap housing, no traffic jams to speak of; fantastic, so come—but £450,000 will buy almost any house in Wolverhampton South West.
Does my hon. Friend share my concern that the Government have been unable to drive forward the economy on any basis of productivity and are therefore relying on property price speculation, and that this wills be a way to drive up property prices to cover up their failings in other parts of the economy?
I agree with my hon. Friend, and if I can catch the Speaker’s eye on Third Reading I will be making points along those lines. The true state of our economy, driven by a housing bubble and household debt, is actually quite frightening. In terms of inheritance tax, new clause 9 simply asks the Government, after the Budget is in surplus, to look at the inheritance tax regime. Of course the Government could do it now, and I would welcome a commitment from the Minister, if he is able to make one, that the Government will do so, because the tax breaks in this Finance Bill will be about £940 million a year by 2020-21. That does not seem a wise use of revenue when it is coming in from some of the most well-to-do families—a small number of estates, as I said. It is not a good idea to be in one sense spending money in that way. I appreciate that it is not actually spending money because, technically, it is a case of simply not collecting it in taxes, but in everyday terms it is spending money, because so much of what we do in this House is to do with priorities, and so much of the prioritisation we decide on is predicated on how much money there is with which to do those things.
Does my hon. Friend agree that we cannot afford this measure in this Parliament, not least because it will cost, as the Budget Red Book tells us, about £2.5 billion in this Parliament?
It is difficult to tell what we can afford as the Conservative party, in government since 2010, has consistently failed to meet financial targets for dealing with the deficit. The Opposition agree with the Government that the deficit needs to be tackled, but we disagree on the way in which it should be done. Forgoing £2.5 billion —if that is the exact figure, and I think my hon. Friend is probably right that it is of that order of magnitude—in a very regressive way is something that Labour Members would not countenance, but we need to look at the whole regime, hence the wording of new clause 9.
There will also be complications with the wording of the inheritance tax provisions. There is a feeling of unfairness among some as to the definitions—which I will not go through tonight—of a linear descendent. Many, if not all, Members will know from our own lives, advice surgeries and places we live that the definition of a family and those who are regarded by someone as being a member of their family are somewhat fluid in our society, and have become much more fluid in the last 50 years in terms of social recognition. For example, the Labour Government introduced civil partnership legislation, which I welcome—it is possible this Parliament will extend that to opposite-sex couples—and, commendably, in the last Parliament gay marriage was put on to the statute book. Those are concrete examples, dealt with by this House, of the fluidity and changing nature of family structures, but the provisions in this Bill rather lock in whether somebody is, or is not, regarded as a member of a family. Inheritance tax in this Bill is a bit of a problem, therefore, and I urge the Government to accept new clause 9 and amendment 89, which in a sense is a stand part motion.
I will now turn to value added tax, enforcement by deduction from accounts and the climate change levy—unless any Member wishes a quick run-around again on inheritance tax, but I suspect not.
On the question of equality in our nation, we have seen the Government deliver huge tax cuts for their friends in the City and the hedge fund managers. We would rather that money went to the needy in our society, so that they do not have to rely on loans from the loan sharks that our friends on the Government Benches make some money from as well. Does my hon. Friend agree that the Government’s proposals will do us out of the chance of recovering some of this wealth when these people die?
I agree that it sometimes seems that the policies of this Government are not only to shrink the state, but to give to those who already have and take away from those who have not, for example in terms of tax credits. I will not be drawn by my hon. Friend on the subject of tax credits, but it does seem a rum state of affairs. It is the sort of thing that drew people like me to join the Labour party, to fight for that kind of equality and to fight against regressive taxation.
That is in the interests of having some clarity as to when this should kick-in. The Government could do it now if they chose. They do not need primary legislation to do it, but the proposal for a review of inheritance tax is in the context of the Government now being five years behind the original projections made by the current Chancellor as to when we will be in surplus. We are giving the Chancellor a lot of latitude now. We hoped that there would not be draconian cuts, which are now being planned by the Government, to public spending and that we could, through adopting a growth strategy, get to a Budget surplus with no deficit earlier than 2019-20, but I fear we will not do so. So a review now is fine, but Labour Members are reasonable people and we are giving the Government lots of latitude. They ought to think again on this regressive tax, as on others.
On the issue of inheritance tax, does my hon. Friend recognise that it is odd that the Government in this Budget and in the language of the legislation have moved to do away with any concept of child poverty? They are moving on work and family tax credits with very little discussion on their part about the impact on children. When they talk about inheritance tax changes, they use the word “children” a lot, but of course the children they are talking about there are people who are well-off.
My hon. Friend is quite right. If I may be so bold, in this context, the word “child” means people of around my age and that of my hon. Friend rather than minors. I wish the Government had paid a little more attention to minors and to child poverty. One of the achievements of the Labour Government was that child poverty fell significantly while we were in office. I regret, however, that that Labour Government, under Gordon Brown, cut inheritance tax by introducing the doubler—the Minister referred to this in Committee—whereby the £325,000 personal allowance could be utilised by the surviving spouse if the first spouse to die had not used that allowance. I expressed my regret about that at the time. At that point, when the threshold was around £300,000, only 6% of estates in England paid inheritance tax. Then the threshold was raised to £325,000, and then the doubling up came in. That was regressive and regrettable, but so be it: that is the regime that the coalition Government inherited.
I accept the point that the hon. Gentleman is making, but will he explain why he believes that we are more likely to have a successful review of inheritance tax when we move into a surplus, when the pressure on public finance is less, than when we are in deficit? Does he not think that the best time for a review of inheritance tax—that is, the giving up of tax revenue—is when we have a deficit problem?
No; I disagree with the hon. Gentleman. We want to achieve economic stability—something that has been sadly lacking over the past seven years and that will probably continue to elude us for the rest of this Parliament—at which point we can pause for breath. This is part of the Labour Opposition’s overall approach: we believe that our Government finances need something called zero-based budgeting. This will be a major undertaking, in which we start by looking at what society needs rather than looking at what it has been spending its money on and simply topping that up, salami-slicing it away or whatever. We need to step back from that, but we can do so only at a time when we have a budget surplus and are not running a current—I stress the word “current”—deficit. That is the right time to look at this question.
I want briefly to talk about new clause 1, which has been tabled by Scottish National party Members, and to which I imagine they will speak later. It seems slightly odd that they wish to evade the consequences of devolution. As I understand it, a decision was taken in Scotland to amalgamate eight police forces and, I think, a similar number of fire and rescue services to create a single police force and a single fire and rescue service. My understanding is that, because they were new organisations, they became liable to VAT, which their predecessor organisations had not been. I quite understand the sentiment behind new clause 1, but it seems a little strange that, having used the powers of devolution which were quite properly passed by this House, the people of Scotland—refracted through their Parliament—should wish to change the rules on VAT. That said, we are heading towards a position of full fiscal devolution—[Hon. Members: “Are we?”] Well, I am not saying that we have got there yet, but we are heading towards it. That is the trajectory, and we would therefore not oppose new clause 1.
I congratulate the hon. Gentleman on reaching the Front Bench after far too long a wait. I can tell him that we would be more than happy to take over the setting of VAT in Scotland. That could remove the anomaly.
I thank the hon. Gentleman for that. We shall shortly be having a discussion about the mechanics of setting VAT in the United Kingdom.
New clause 7 has been tabled by my hon. Friend Paula Sherriff. New clause 2, tabled by the Scottish National party, is similar but not as good. It was also tabled in Committee. The greater virtue of my hon. Friend’s new clause—in contradistinction to new clause 2—is that she has carefully listened to what the Government said in Committee about the road map, as we say these days, to achieving this worthy goal. She has worded her new clause in the light of the remarks made by the Minister in Committee, and I commend her for that. Her proposal has gained considerable momentum on both sides of the House, for obvious reasons. Of course, those of us on the Labour Front Bench will support it and I urge hon. Members on both sides of the House to do the same. I will not say a great deal more about the new clause—
Some of us do have a certain amount to say about it. These are weasel words. The Opposition know perfectly well that they are not going for a full relief, or any relief, and are instead going for a pathetic little report, because of sections 2 and 3 of the European Communities Act 1972. The hon. Gentleman knows it, and we know it. These are weasel words, and the proposal would make no real change.
I wish no disrespect to the hon. Gentleman, but I am not going to get into a big debate about this subject. It is not a great idea for a man to stand at the Dispatch Box and get into such a debate. On the broader issue of the European Union, it might surprise him to learn that more than half the population of the EU is female. It might also surprise him to contemplate the fact that this measure could be on the shopping list that our Prime Minister takes to Brussels, and that it could gain considerable support—from the Chancellor of Germany, Mrs Merkel, for example.
I will not give way for two reasons. First, the hon. Gentleman can seek to catch the Deputy Speaker’s eye later. Secondly, as I have said, I do not propose to get drawn into a debate on this issue. I support my sisters in the Labour party and around the House, and they are more capable than I am of putting forward the reasons behind the measure being proposed by my hon. Friend the Member for Dewsbury. They are more than capable. They do not need me to do it, and I shall say no more than I have already done.
New clause 10 seeks to place a statutory requirement on the Government to produce a report, within two years of the passing of the legislation, on the effects of clause 47 and schedule 8. In lay terms, clause 47 and schedule 8 will—with safeguards—allow HMRC to nick money out of our bank accounts without a court order.
Of course, under these provisions HMRC would not, in any legal sense, be stealing money from a bank account. Were it to do so, that would be covered by section 1 of the Theft Act 1968—I am not a criminal lawyer, but that is my recollection of it. What HMRC would be doing is something that other people cannot do: it would, with safeguards, be removing money from a debtor’s bank account without a court order and without the agreement of that debtor. That is a very big step forward for our society to agree to, refracted through clause 47. In Committee, the Labour Members tried to persuade the Government not to press ahead with the clause, as did other organisations, but we failed on that. We are not trying that again tonight directly, but we are saying that we take cognisance of the safeguards the Government have introduced and beefed up as a result of representations, and that a report should be produced within two years to see how they are working.
Before I deal with the safeguards, I wish to remind the House of why clause 47, allowing HMRC to go into people’s bank accounts without a court order, has been introduced. One major driver is HMRC’s fears about revenue loss through non-compliance. In an earlier Budget speech, the Chancellor said:
That was welcome: there is too much non-compliance going on, some of it blatant, some of it immoral avoidance but not illegal evasion, such as large corporations squirreling away money in tax havens and in places such as Luxembourg; and there are people who owe money to HMRC but fail to pay, and so HMRC has to take steps to recover that money.
Another major reason given by HMRC, which might trouble Sir William Cash, was as follows:
“The current processes for recovering debts…can be costly”.
That was said on page 2 of the consultation document, which contains an introduction by the Financial Secretary to the Treasury—the words I read out were not his but they were contained in a document whose preface he wrote. Paragraph 2.31 on page 9 goes on to say that
“a county court judgment…can be a slow and expensive process.”
In clause 47, the Government are therefore saying, “We find the court system a bit slow and a bit costly, so we are going to have our own system to take money out of people’s bank accounts, with safeguards.” That is echoed in clause 48.
Where someone wins at court, there is a calculation to be made as to how much they are owed on a debt. I believe the basis for calculating what is known as the judgment debt rate goes back to about 1837, but the Government are not having that either in clause 48. Under the interest rate provision in clause 48, and in clause 47 on HMRC taking money out of bank accounts without a court order, we have one rule for them and one rule for the rest of us. We have to ask ourselves: are they right about the court system? Is it a slow and expensive process? I have not practised law for almost 15 years, but I try to keep up with it and I think the process is getting slower and more “costly”. That is because it has been starved of money by this Government and their predecessor Conservative-led Government.
Many observers will feel uneasy about this system. The approach being taken is, “The rules aren’t quite working for everybody, because the court system is not quite working for loads of people.” But instead of dealing with the cause and sorting out the court system, which may require an injection of money, which is worth it, as long as it is done wisely, for justice and access to justice in our country, what the Government do in clause 47 is say, “The system is not working, we are going to deal with the symptom by having our own new system, which you cannot have.” If the Minister owes me money—of course he never would—I cannot say, “Here are a load of safeguards, I’ll have some money out of your bank account.” I have to go through a court process if he is denying that he owes me money. I have to prove it before a judge and then I have to use the enforcement processes of the court—not those of a couple of men with baseball bats. It is a bit slow and a bit costly, but rather than have one rule for them and one rule for the rest of us, the Government ought to sort out the court system—then they would not need clause 47 and schedule 8.
As ever, Labour Members are reasonable people. We are saying, “Let us have new clause 10 and let us look at the safeguards.” I shall set them out, and I am sure the Minister will correct me if I miss some out. They are quite good: the debt has to be more than £1,000; the alleged debtor has to be seen face to face by an HMRC official; an assessment has to be made by HMRC as to whether that debtor is vulnerable—the Government have acceded to requests that such an assessment should be not only made, but recorded in writing, which is good; HMRC has to be satisfied, as it should be before it embarks on this action, that there is sufficient money in the bank account and the debtor is knowingly refusing to settle their debt to HMRC; the debtor has to get a warning notice, with 30 days before it is, “pay up or we might take it out of your bank account”; HMRC must ensure that, having taken the debt, at least £5,000 remains in the bank account; and the debtor, or alleged debtor will be able—presumably this would often happen during the 30-day warning period—to appeal to a county court.
On the Government’s figures, the average amount owing will be £9,000—I believe the estimate was that the measure will bring in about £100 million a year from about 11,000 cases. I understand that the estimates will be in round terms.
I hope my hon. Friend will indulge me further on the question of equality. Not everybody can go into court or argue with HMRC, as they do not have the skills and understanding always to take on all these intricacies of debts, claims and this, that and the other. Where people do get to court, they find protection there for them, because they can argue their case in front of a judge and make various points, and the judge can actually aid them. These people cannot afford to have legal representation, because there is no legal aid any more, and so they are in a better position because the judge can actually help them a little.
I agree with my hon. Friend on that. It is no coincidence that my hon. Friend Stella Creasy is in her place tonight, as she has done sterling work on trying to stand up for the financially disadvantaged. I thank her for her work on so-called “payday lenders”, because when I tried as a Back Bencher under the last Labour Government to amend a Finance Bill to give the Government the power—just the power—to cap payday loan rates, I could not get a Labour Government to go even that far. She has done magnificent work because, as my hon. Friend Alex Cunningham said, this is to do with protecting the financially vulnerable. That is why it is a big step forward. I congratulate the Government on introducing the safeguard that an assessment must be made of the vulnerability or otherwise of the alleged debtor and that that assessment must be recorded in writing.
In that particular respect, the hon. Gentleman has heard me correctly. However, if he had heard my earlier remarks, he would also be aware of my great unease at many other policies put forward by the current Government as well as by the previous Conservative-led Government. But in the narrow respect to which he refers, he did understand me correctly.
Does my hon. Friend agree that a Government who voted three times against a cap on the cost of credit should not be lecturing the Opposition on how to protect the vulnerable? Perhaps if they had listened earlier to the concerns expressed from the Labour Benches about people who are vulnerable and who have personal debt in this current economic climate, this country would have made much more progress.
I agree that progress can be pitifully slow under Conservative-led Governments, and that sometimes those Governments are very slow learners. With regard to the work that my hon. Friend has done, which has an echo in the safeguards under clause 47, she has persuaded the Government to be less hard-nosed and to be more “listening” about financial vulnerability than they had previously been and much credit for that success must go to her for her work with charities and others.
New clause 10 seeks in a very reasonable and moderate way to have a review of the effects of clause 47. The review would cover the total amount recovered, and whether it was as expected. It would cover the number of cases dealt with: would it be 11,000, because at one point the Government thought that it might be 19,000? It might also provide some measure of the effectiveness of the new procedure. I say to the Minister that we on the Labour Benches do not like the procedure, because it smacks of hypocrisy—of the Government, not of him personally. It is a case of, “It’s one rule for them and another for us. The court system is not working, so we will do a workaround on that.”
I now wish to turn to new clause 11 on the climate change levy, and to amendment 90, which would delete clause 45 on the CCL. In a sense, the proposal is a double negative. If clause 45 were deleted, the exemption would be restored. Again, I urge the Government to look at both these measures, which retain, certainly for the moment, the exemption on the climate change levy and, as stated in new clause 11, look at the effect of the abolition of that exemption. As I understand it, there was no consultation to speak of before the measure was announced. In contradistinction, when a fundamental change to the tax regime of combined heat and power units was introduced, that industry got two years’ notice of exemptions. In this case, this year, there was 28 days’ notice, which is next to no notice at all, because these things have long lead times.
I accept the Government’s figure that a third of this exemption is claimed by overseas producers—if only that were not the case. When many, if not all, western countries address the issue of greenhouse gas emissions, which is the nub of what we are talking about, they tend to offshore the problem. Carbon dioxide intensive manufacturing, using lots of non-renewable fossil fuels, gets relocated by capitalists to places such as China and India, making it look as if the CO2 emissions per capita in the United Kingdom are falling quite dramatically, but if the CO2 emissions in the United Kingdom were to include those for which UK residents and consumers are responsible, we would see a rather different picture. Of course these Benches are not happy about a third of this exemption money going overseas, but in one sense that is all part of offshoring. As far as one can see, successive Governments have been turning a blind eye to the offshoring of greenhouse gas emissions to China and India and so on, but when we are talking about measures to lessen that, no offshoring is to be allowed under this Government. They should think again.
I am not an intimate of the industry—this is after all a finance debate and not an energy debate—but I accept that the cost of the CCL exemption in the five years of this Parliament could be in the order of £4 billion. We are talking about a lot of money. It is symptomatic of this Government being penny wise and pound foolish—if one can be penny wise with £4 billion—because they are cutting the exemption too soon, before the industry reaches self-sufficiency. If the industry were treated like the nuclear industry, we would have 100 years of subsidy before deciding whether the technology worked and it was self-sufficient. I am not suggesting that, but what we have is an industry in which the UK has been pretty successful. Indeed, it is a desirable industry. It is a renewables industry which, on all the evidence of which I am aware, is likely to grow in future years around the world, not shrink. We had some technological lead and a skilled UK workforce, but then the Government take us a step back with what they do at 28 days’ notice to the CCL exemption. I understand that prospective onshore wind projects are, almost as we speak, being abandoned, which is regrettable. That is not to say that every one of those projects should proceed, but it is regrettable if the whole industry is shrinking.
As I understand it, the impact assessment for the changes to the CCL exemption and the feed-in tariff is that there will be 1 million more tonnes of CO2 produced in the UK each year, which seems to be going in the wrong direction. What other financial incentives are there to encourage UK non-domestic users—I am talking about business and the public sector, not households—to use renewables? Secondly, in what ways are the renewables obligation and contracts for difference more efficient and more effective?
This whole issue cannot be divorced from carbon capture and storage and the need for the Government to confirm their support for the two projects in the competition—I think we are due a decision on that in the new year. After that, we need to encourage industry with industrial CCS, especially on Teesside where my constituency sits and where, nearby, we have just lost a large section of the British steel industry.
It is a tragedy what is happening to steel production around the country, and energy prices are part of the mixture behind it. They are as high as they are partly because we have not got to grips with technology like carbon capture and storage, and that is shackling companies in our country.
Does the hon. Gentleman not see the contradiction in saying that the Government should be looking for ways to encourage high-intensity energy users to use more renewables, which are three times more expensive than producing electricity from gas, while lamenting the decline in energy-intensive industries in the UK?
I disagree with the hon. Gentleman. The difficulty is that we have high energy prices because we have not invested in new technology to bring them down. For example, if we had cracked the holy grail of carbon capture and storage on a commercial basis—it is already cracked on a scientific basis—this country would be quids in, because of all the coal we have.
The short response to what the hon. Gentleman is saying is that massive subsidies deployed in other countries are being authorised by the European Commission, but we do not get them. As Sammy Wilson said just now, there is an increasing failure in renewable energy because it is too expensive and the subsidies are a complete disaster zone.
The hon. Gentleman is right that the European energy market and the production of energy within the European Union are a bit of a mess. The United Kingdom is part of that mess because we are in the European Union, but it is a mess here anyway because we have not tackled energy security. Again, the problem started under the previous Labour Government and I berated them for it at the time. I was berating a
Labour Government on energy security before I lost my seat in 2010, and on returning to this House five years later, so far as I can tell almost nothing has been done on that front apart from the poisonous deal—in many senses of the word—backed by China and EDF for new nuclear power stations in this country.
One can see a bit of a pattern with what is happening with the removal at 28 days’ notice of the climate change levy exemption for electricity from renewable sources used by non-domestics—non-doms, as it were. The Liberal Democrat policy was for the percentage of taxation to come from environmental taxes to keep rising year on year, and when the Liberal Democrats first came up with that crazy idea in about 2007 I pointed out that it was a bit self-defeating. That has been formally abandoned by this Government, which is not necessarily a mistake, but in the context the issue is what has or has not replaced that policy. Support for large onshore wind is being cut, and support for photovoltaics is being ended one year early. The Government’s policy is to lessen air passenger duty, and they aim to abolish it and to expand airports. That is not good news for the environment. The policy on zero-carbon homes for 2016 is being scrapped, not just diluted. There is a massive nuclear subsidy, which we heard about last week with the visit from China. What will our nuclear industry be built on? State support from China and from France.
I should have declared that I was chair of the all-party group on carbon capture and storage, and I am also chair of the all-party group on energy intensive industries. My grandfather was a miner, so I am pleased to hear the word “coal” mentioned in the Chamber. We have huge resources, particularly under the North sea close to Teesside. Does my hon. Friend agree that we need to see investment now in coal gasification if we are going to provide the natural gas needed by companies such as GrowHow, the UK’s only remaining fertiliser producer?
I did not know that my hon. Friend had gathered so many accolades, but I thank him for the work he has done on these energy matters, which is particularly important for his constituency interests and for our country. As I said, if we could get the holy grail of carbon capture and storage, our country would be quids in because of the amount of coal we have. I am sadly old enough to remember what was called town gas; I do not know whether my hon. Friend remembers it. Town gas was made from coal, produced and piped, before we discovered abundant natural gas in commercial quantities under the North sea. Yes, we could go back to that, but we need the technology.
Instead, we have a massive subsidy for nuclear energy. Leaving aside the safety issues for the moment, that subsidy is just twice the price per kilowatt hour guaranteed with indexation. Who is proposing it? A combination of France and China—China with, as I understand it, a reactor that has not yet been built anywhere in the world, and France, through EDF, with the wonderful record we see at Flamanville in Normandy, where the reactor is now three times behind schedule at twice the predicted cost and still has not opened. There is a similar story with a similar reactor, also being helped by France, in Finland.
The Government are contemplating huge subsidies in a panic over energy security, which of course will not guarantee energy security as it will take so long to build a new fleet, as they are pleased to call it, of nuclear power stations. Meanwhile, as my hon. Friend the Member for Stockton North points out, we have the craziness of all this abundant coal yet quite insufficient Government-funded CCS research and development through which we could proceed to the gasification of coal as North sea gas is running out.
My hon. Friend may be surprised to learn that I spent 17 years of my career in the gas industry, so I know very well what town gas is. I was pleased to play a part in seeing natural gas come to large parts of the country. It does not matter whether subsidies are for wind, for panels on people’s roofs or whatever else; this is also about the creation of jobs. If we get carbon capture and storage right, a place like Teesside could start to replace the highly skilled jobs we have seen going down the pan over the past few weeks.
I quite agree with my hon. Friend. We want those highly skilled jobs and we want the cheaper energy that one hopes we can get from that technology. We need the Government to kick-start research and development investment to develop that technology. However, I must caution my hon. Friend. There is only so far I can go in agreeing with him. Yes, we want those jobs, and quite a lot of them will be highly skilled, but it is a dead end for us as a country always to have subsidised jobs. That is the obvious thing to say, but it is a dead end. We need a plan to get from where we are, without energy security and without technological development, to the sunlit uplands where we have that technology and development, and where they are self-sufficient and commercially viable. That will need some support from Government, and the removal under clause 45 of the CCL exemption for electricity from renewable resources used by non-doms is a step in the wrong direction.
The Department of Energy and Climate Change Minister Lord Bourne of Aberystwyth wrote to me on
The final point that Lord Bourne mentions, which will please my hon. Friend the Member for Stockton North, is carbon capture and storage. We need to go down that route, but as I say, we need a bit more help from Government, and the measure in clause 45 goes in the wrong direction—at least, we are uncertain what direction it is going in as there has not been a whole bunch of consultation on it as far as I can tell and I am not aware of an impact assessment.
“Changes in HMRC costs are estimated to be negligible and would fall as part of the existing operational cost of administering CCL. The government will consult Ofgem and NIAUR”— that is, the utility regulator—
“over summer/autumn 2015 to establish the costs and other impacts on the regulators of removing the exemption.”
That is a consultation, as I understand it, only on the impacts on the regulators, but that might shed some light on the impact on the industry and on employment. I hope that when he responds to the debate, the Minister can address that point.
I do not think new clause 7 is strong enough. It just asks for progress. We are not doing enough. Let me explain why.
Rob Marris, who presumably helped to draft this proposal, knows perfectly well that he is trying to find a way of satisfying those who would like to see a serious attempt made to reduce the VAT on these products. They are clearly necessary and the tax on them should be reduced in the way that has been proposed. Unfortunately, however, he also knows that because of sections 2 and 3 of the European Communities Act, it is impossible to do that without getting the agreement of all the other member states. There is a variation as between other member states and ourselves to the advantage of those states, the net result of which is that supporters of new clause 7 are not going to get that agreement and they know it.
I am completely on the side of those who want to see a total elimination of VAT on these products.
I note with pleasure the hon. Gentleman’s support for the idea that tampons, as they are called, and sanitary towels are an essential. I am an avid follower of many of his debates in Parliament, and I know that he has raised concerns before about the European Union. Having discovered his support for this proposal, I wonder whether he can update us on when he last raised in this House the issue of VAT on tampons.
I am not going to say that I did, but I put through an Act of Parliament, the International Development (Gender Equality) Act 2014, both to protect women and to promote their interests, with massive support from all parts of the House, so I want no suggestion that I am backward in coming forward on these issues.
New clause 7 contains weasel words. It does not solve anything. It is not in the interests of the United Kingdom not to deal with the problem properly.
I have raised the issue over a number of years, and I am pleased that we are debating it tonight. Does the hon. Gentleman agree that this is one of the ridiculous things that the European
Union does, and that we need to get back in our own country control of how we levy VAT, which is why we should vote to leave the European Union?
I entirely agree with the hon. Lady’s last remark, for the reasons that she has given. We need to get back control over our own power to make laws, levy taxation and deal with all the matters which we do not need to go into today. The supremacy of this House affects tax, spending, and the way in which we run our own country. We have a right and a duty to return to the people of this country the right to govern themselves. This happens to be an extremely good example of the kind of thing that would help women in a way that I would much like to see.
I am pleased to hear the hon. Gentleman talk about his concern for global gender inequality, and his support for the idea that tampons are an essential and therefore should not be zero-rated. There is another way to read the amendment, is there not? Were we to pass it and to propose these matters at the European Union and secure zero-rating on tampons across the whole EU, he would be showing solidarity with his sisters in France, Belgium, Germany, Italy—indeed, he could be helping many more women by supporting zero-rating across the European Union.
If there were a cat in hell’s chance that we would get this through the European Union, I would entirely endorse the hon. Lady’s sentiments. I would like to see the changes. The problem is that everybody on the Opposition Benches and the Government know quite well that they are not going to be able to achieve that with the kind of progress report that is mentioned in the new clause. It would be a great opportunity now to propose a provision that would override European law to make sure that we could achieve the objectives that she and I clearly share.
I thank the hon. Gentleman for giving way again. I do not want to pursue this, not least because I am avidly waiting for the speech from my hon. Friend Paula Sherriff, which I think will be compelling, but may I give him a spark of hope? It is not just on these shores that there are women—and men—fighting for zero-rating on tampons; there are others doing so in France. The proposal was put forward just this summer. Should he choose to vote with us and support the new clause, he will be joining many people across the European Union. I want him to have hope that we can win this at the European level, rather than the despair that he currently feels.
My final remarks on the issue are these: that is wishful thinking. What is needed is not a report, but action—action to return to this Parliament the right to determine its own levels of taxation. I regard the proposals in the new clause as aspirations without substance, yet I agree with the underlying principle, which can be implemented only by an effective legislative change to the Finance Bill, whereby we take back control over our own affairs and govern not only the men but the women of this country in the way in which they would like.
New clause 7 is tabled in my name and supported both by my hon. Friends and by a number of Members on the Government Benches.
It is time to end the tampon tax once and for all, and we have the chance to take a step towards achieving that today. It is absurd that in Britain tampons and sanitary towels are taxed as luxuries, not essentials, and not treated as a public service activity or medical provision by EU law. Almost 250,000 people from across the country have signed up to a call for that to change, and it is about time they were heard in Westminster and Brussels. Quite simply, a tax system that lets someone dine on crocodile steak on their private jet without paying a penny, when we cannot survive a period without the Treasury taxing us for it, cannot be a fair one.
That is why the Minister’s predecessor, Dawn Primarolo, urged on by many of my predecessors on these Benches, reduced the rate to 5% under a previous Labour Government, and it is why Laura Coryton and other feminist campaigners are running a campaign to finish the job with a zero rate now. Hon. Members can still sign up at change.org/EndTamponTax.
Periods are a fact of life and it is not as though women have a choice. Many were shocked to see Kiran Ghandi run the London marathon without a tampon to highlight the fact that too many women around the world do not have access to sanitary products. But that is the point—this is a basic matter of biology and it is time to end the taboo.
We can buy tampons in this country, but we are taxed for doing so. This is an issue for all women, but, as with so many things, it hits the poorest the hardest. Imagine being homeless when that time of the month comes. Think about what it is like to face a period without even having a bathroom.
My hon. Friend refers to the plight of the homeless. As I am sure she is aware, homeless shelters can request free condoms from the NHS, but not free sanitary products. Does she agree that it really is time we dealt with that indignity, because homeless women face enough challenges already?
I completely agree that homeless women face enough challenges without the added burden of periods without sanitary products.
Some great work is being done by food banks, and student unions, such as those at Leeds University and Sheffield University, have started selling sanitary products at cost price in order to avoid VAT, but this is an issue where the Government need to lead from the front. The Minister told us in Committee that he was sympathetic to this, but we do not need to be patronised with tea, sympathy and platitudes; we demand action. He told us that his hands were tied and that change would require difficult negotiations and EU reform, but the Prime Minister has just promised us that he will undertake just such negotiations, and that he will be able to deliver just such EU reforms. This issue, which affects the majority of people across Europe, could hardly be more difficult to achieve than the rest of his demands.
Frankly, VAT on tampons is the vagina added tax. It is a tax on women, pure and simple. Therefore, instead of going to Brussels to water down our protections at work, the Prime Minister has an opportunity to deliver a victory for women across the continent. This issue transcends party politics, and I am pleased that the amendment has received cross-party support, from other parties on the Opposition Benches and from some Members on the Government Benches. I sincerely hope that Members on both sides of the House will support taking steps to axe the tampon tax tonight.
The hon. Lady refers to people across Europe, no doubt meaning the European Union. The only problem is that if we cannot get unanimity among all member states, we will not get any change at all. From that point of view, the most important thing is to fight and fight again to ensure that we get what we want, but also to guarantee that we bring back the powers to this House.
I am not sure whether the hon. Gentleman is suggesting that we should do absolutely nothing about this huge inequality that affects more than half the population. We have an opportunity to take a significant step forward for women and families this evening. We turned our clocks back on Sunday. Let us not turn them back even further tonight, period.
I am pleased to have an opportunity to discuss this matter, because we need to examine why we cannot do something about it—if we really cannot. I know that I would not be in your good books, Mr Deputy Speaker, if I brought in some props to illustrate my argument, so I will have to ask you to use your imagination, which I am sure is prodigious. Imagine that I have laid out on the Bench beside me a selection of products, including pantyliners, maternity pads, mild bladder weakness pads and incontinence pads. They would all look fairly similar and would be made from similar materials, but some would have a designed difference. In other words, they would be taxed.
I call that tax a femi-tax. I know that there has been a lot of alliteration, with references to a “tampon tax”, but it is somewhat perverse that in a selection of products that look pretty similar, and that are perhaps interchangeable, some should incur tax simply because they are associated with a woman’s bodily function. To me that seems unreasonable and totally illogical.
When I looked into the matter, I found that incontinence aids do not attract tax because they come under a different tax regime. It is assumed that they are intended for use by people who have illnesses, who are elderly or who are disabled. However, those of us who watch too much television—I am probably in that category—will have seen plenty of adverts for products for those “Oops” moments, as they have been described, and they do not show geriatric, disabled or elderly people; they show sassy young ladies and women of a certain age who are still attractive to members of the opposite sex. Therefore, let us assume that this is some sort of contrivance. Those products, should a woman choose to use them to ensure that she does not have an embarrassing “Oops” moment, do not attract VAT. I cannot see why the products a woman might choose to use, even if they might also be used by the elderly, the infirm and the disabled, are not regarded for tax purposes as the same as any other product she might choose to use. That is the illogicality we must tackle today.
I understand the alliteration of the “tampon tax”, but I think that phrase is misleading. If those products were laid out, most people would struggle to identify which ones incur VAT. This contrivance, because this only affects a woman’s bodily function, whether she has had a baby or her normal monthly period, means that it is that function that is taxed. I think that it is unreasonable that we cannot at least appear to deal with the matter.
I want this to be discussed tonight because I want to understand why we cannot deal with the matter. I would like to say that we could go to Europe and make all sorts of bluster and noise, but I would like the Minister to tell us tonight whether he agrees about that illogicality and whether he agrees that this is indeed a femi-tax—a tax on women’s bodily functions, but not on other bodily functions. If he has sympathy with that view, I would like him to explain to the public why we cannot look at these products and say, “They all look pretty similar and they all have similar functions in absorbing fluids, so why has someone somewhere decided that we cannot choose to make them all exempt.?” It seems ridiculous that a woman could buy an “Oops” moment product—I do not want to advertise any particular brand—and use it for sanitary protection and that that would be cheaper. It might not be quite as effective, but it would be cheaper. I think that it is absolutely ridiculous that a similar-looking product intended for personal hygiene, such as a pantyliner, would be taxed differently. I do not understand it.
I would like the Minister to explain why we as a country would want to persist with that illogicality in taxation. If he has a reason—I suspect that my hon. Friend Sir William Cash has hinted at this, but I want to hear it from the Minister—that is associated with us being bossed around and told what to do by a conglomeration of countries that I have never voted for, then we need to start raising these issues. If Europe insists on taxing women through a femi-tax, I would like them to explain why.
Perhaps this will help the Minister. Does the hon. Lady agree with the point the Chancellor made to the Treasury Committee last week that there needs to be a debate within Europe about the tax regimes affecting eurozone countries and those affecting non-eurozone countries? Will she therefore support the Chancellor in those discussions, and will she support negotiations that are about a sensible conversation with our European partners and allies, rather than bluster?
I agree, and I am pleased that there are hon. Gentlemen who are not too cowed to take part in this debate. I am old enough to have read Ms Greer’s “The Female Eunuch” in the ’70s, when this was a hot topic. It was about how women can face up to the fact that this is just part of being a woman, not something shameful to be hidden away. Therefore, we need to have a discussion, without bluster or embarrassment, about why we cannot take back control and have fairness in our society in this country.
I remind the hon. Lady that under the sixth directive, which sets out the tax rules in the EU, the anomalies that she mentions between different kinds of medical products, including tampons, are precisely the evidence we need to take to the VAT Committee in order to get a derogation that would allow us to move to the zero rate for all these products. In advancing her line of argument, would she like to ask the Minister why the Government have never asked for that derogation, which is perfectly possible given the evidence she has raised?
The Minister may well explain that to the hon. Gentleman, but I personally do not want to have to go cap in hand asking for derogations. I would like this country to decide that it is a ridiculous illogicality to have different tax rates on similar-looking pads that could be used for interchangeable purposes. I would not wish to have to go and ask, “Please, European Union, can you allow us to do what we would like to do, which is to free up our women from this taxation that only affects them: a femi-tax?” I would like us to have the ability to do it.
I hope that the Minister will explain to all hon. Members here and to all the women out there in the country why, if they go and buy a mild incontinence, bladder weakness or “Oops moment” pad—call it what you like—and use it as a sanitary towel, they will not be taxed, because they do not understand it, and nor do I. It is time that we stood up to the European Union. If it does not like us doing that and having to ask, “Please can we have permission for a derogation?” then perhaps we need to consider this matter when we are deciding whether we wish to stay in the European Union.
Members may have seen the images circulating on the internet of groups of world leaders with the men photoshopped out, where Angela Merkel and Hillary Clinton cut lonely figures. A version has even been done of the House of Commons. I imagine that some of these Benches would look pretty bare this evening if we took away the men.
That is a stark reminder that despite much progress, we still have a long way to go before gender equality is realised. That is desirable not just for its own sake but because without women the issues that disproportionately affect women do not get resolved. VAT on essential women’s sanitary products is one such issue: it affects only women. I dare say that if it did affect men, it would have been resolved long before now. Every month when I purchase a box of tampons or towels, the Chancellor benefits. Women, on average, begin menstruating at age 12 and continue until age 52. That represents a significant sum of money spent by every woman in the country over their lifetime. This seems particularly unfair for younger women who may not even be old enough to work. That is why our new clause mentions women under 25, who will most likely be in lower-paid jobs or not yet working at all.
I do not know of any woman who exclaims on a monthly basis, “I have my period—what a luxury!” For women, these items are not treats, and they are certainly not optional. Any number of female colleagues here today may have their period and nobody knows, and that is quite right. But people would certainly know all about it if, like the brave London marathon runner, Kiran Gandi, we came into this House deliberately forgoing sanitary protection. That is no doubt an uncomfortable prospect for male Members of this House, but I would say, “Good. I did not come here today, or any day, to make you feel comfortable but to challenge any status quo that I feel is unjust, and I am not done yet.”
I want to highlight the particular case of maternity pads. As Mrs Main said, it is illogical that incontinence pads are zero rated but maternity pads are not. Such pads are essential for women who have just had a baby; they are absolutely essential for post-birth lochia for up to 10 days after birth. I do not understand why these items are not treated as medical items and similarly zero rated.
As I suspect the hon. Gentleman well knows, the Scottish Parliament does not have jurisdiction over this matter, but the SNP feels sufficiently strongly about it that we put it in our party manifesto for this place, and the First Minister has been vocal in speaking out in support of zero rating for sanitary products. We would very much like this to happen, and we will give any support that we can in the Scottish Parliament as well as from our Benches here.
This issue has been very protracted over many years, and this House cannot resolve it alone, but we can make a start. VAT has already been reduced by a previous Labour Government, and we have a good deal of cross-party support here tonight. I think that we can do much better than the Prime Minister, who, during the election campaign, described this as a “difficult” issue and said that he “can’t remember the answer”. The answer, of course, is that we can take a lead on this. In June 2015, the European Commission, which is yet to have a female President—perhaps that would make a difference on such issues—gave an answer that was not entirely positive. It set out the background to its reasons why this cannot be done, but it also said:
“As part of its upcoming work on a definitive VAT regime based on the destination principle, the Commission will assess the functioning and possible improvements to the system of reduced rates.”
So we have an opportunity to get involved in this debate to say that this is an important issue for us as a nation and for women across Europe.
We have an opportunity and an obligation to try again to resolve this issue. Members may not know this, but the Republic of Ireland entered the European Union at the time of a 0% rating on sanitary products that it was able to retain in much the same way as we have derogations in different areas, so there is already a precedent within the EU of a zero rating in a European member state. I urge the Government to take a lead on this for women across these islands and across the EU. Let us end this bloody unfairness.
This debate is like history coming back to me, because not only does the hon. Member for Glasgow Central
(Alison Thewliss) now represent the constituency that I stood for in 1987, but I was first made aware of this issue by Stella Creasy, who, when she was an A-level student in my constituency, berated me for the inequality of this tax. Ever since, I have been convinced that it is an unjust tax. Indeed, on that occasion I raised the matter in the shadow Cabinet, which was then under the leadership of William Hague. I got a very frosty and uncomfortable reception for raising such a matter in a semi-public meeting, including from some of our right hon. and hon. Friends who are female and hold extremely senior positions in Government to this day.
That demonstrates an important point about how attitudes change. Whatever we might have agreed to in our original agreements with the European Union that lock this tax in place, albeit reduced by the previous Labour Government to the minimum of 5%—I celebrate that—we are now, within the European Union, operating in a system based on a different principle—the principle that taxes should be harmonised as part of the single market. I refer the House to article 113 of the treaty on the European Union, which says:
“The Council shall, acting unanimously…adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition.”
So taxation has crept into the idea of being part of the single market. At the point at which this country signed up to the Common Market, or even at the stage of the Single European Act or of the Maastricht treaty, this principle crept into the acquis communautaire of the European Union rather than being something that was expressly agreed by this House.
I very much hope that the Government will negotiate something fundamental on this particular tax, and I am looking forward to what the Minister has to say about it. However, I make no apology for raising the far more general principle that different taxation regimes in different countries represent different social settlements and the development of our societies in different ways at different paces. That is why we are separate nations and separate peoples with separate democracies.
The attempt to use the pretext of the single market to harmonise taxes is one of the most democratically regressive manoeuvres the European Union could adopt. France puts VAT on food and children’s clothes, but this country would not put VAT on such items. Ever since we adopted the cheap food policy following the abolition of the corn laws in the 1840s, that has been part of the fabric of our social settlement. It is the right of an individual nation state to continue to evolve its social settlement, and the conduct of Government and the imposition of taxes are inseparable from that democratic social settlement.
The treaties as currently formulated are a denial of national democracy. This House should not have to go and beg 27 other member states in order to change a rate of tax on an issue that we think is socially important. This is a matter of national democracy, and that is why the treaties are unfit for purpose.
My hon. Friend is making a powerful speech. If we were to negotiate and were met with an immovable force, we would be forced to enshrine this unfairness because the European Union dictates that we should do so. We are not allowed to remedy it.
That is absolutely correct. Having observed the history of 40 years of membership of the European Union, as it is now called, we know that it is not going to stay like this. The European Union will continue to develop. The trend of taking more taxation powers away from the member states, in the name of the single market, is enshrined in article 113, so it will continue to do so. Yes, we have a veto, but the European Court of Justice tends to accelerate the pace of tax harmonisation just when we do not expect it to do so. It is the ECJ that extended VAT to certain items and categories of goods when we did not expect it to do so.
The group of amendments also addresses the renewables obligation incentives and seeks to adjust the feed-in tariff regime. Why are we able to reduce taxation on renewable energy products to only 5%? It is because of the European Union. Why could the previous Labour Government not abolish VAT on fuel, which they said they wanted to do after it had been applied by the Major Administration? It is because of the European Union.
Surely the harmonisation of tax fails on two fronts. First, different countries treat these products at the higher rate, the lower rate or at no rate. Secondly, on equality of treatment, is my hon. Friend able to think of any other product that is taxed so discriminately that it affects only one half of the population of the European Union, who just happen to be women? Is that not the most discriminatory and iniquitous measure that the EU has come up with?
My hon. Friend makes an interesting point and raises the spectre of a case to bring before the courts—perhaps even the European Court of Justice—on the basis of discrimination. Perhaps that would be one way of resolving this particular problem.
I am shamelessly using this example as an opportunity to make a far broader and more important constitutional point.
I am glad the hon. Gentleman has admitted to his own shame, because it seems somewhat shameful to fudge the issue. We may not have all the powers to change the situation, but this House has an opportunity to send a clear message to Europe on something that is very wrong and about which so many people feel strongly. I cannot believe that the hon. Gentleman is using that as an excuse to not support us on an issue for which there is clear cross-party support.
I point out to the hon. Lady that my name is on new clause 7. I support it, but I will wait to hear what the Minister has to say before deciding whether to vote against my own Administration. I am sure she will understand that. There have not been many rebellions among the SNP yet. The point about being a political party in this House is that we are all individuals and we are all allowed to do what we choose. In fact, that is our responsibility.
Surely what this really boils down to is that the European institutions intend to—and actually do—tax women on these products in order to get the money to run the very system that is discriminatory.
Our problem with the EU’s VAT directives is that they are a one-way street. Once the EU has adopted powers to regulate a particular tax, that power cannot be taken back by the member states. We are then left begging the EU as to whether we can set the tax rates for which the British people vote, as opposed to setting them ourselves. It strikes me as ironic that the Scottish National party wants independence from the United Kingdom in order to do its own thing, but it is happy to go on giving up more and more power to the European Union, so it will have even less freedom and less voice than it has in the UK.
The problem is that once VAT rates on any product are set above 5%, the European Union does not allow any member state to reduce them to below 5% again. We therefore have an anomaly whereby there is a zero VAT rate on sanitary products in the Republic of Ireland because it has never charged VAT on them. Had we started from the principle of charging no VAT on sanitary products, we would be in the same position as Ireland, but because we already charged it we cannot take it away. What a mess.
I wonder whether the hon. Gentleman recognises all of the good things the European Union has done for women. As somebody who has had to suffer periods and pay this unfair tax, I was also afforded maternity rights that I would never have had if it had not been for some of the pressures exerted by the European Union.
I certainly acknowledge that what has happened in other member states has influenced what has happened in this country, but the hon. Lady enjoys no rights in this country that we could not have afforded ourselves through our own political processes. The question of the possibility of leaving the European Union is about taking back control over those policies, not deciding them in a different way from that which she would like. Long may we continue to agree on the importance of equal rights for women in as many areas as possible—in fact, in every area that we can possibly legislate on.
Does my hon. Friend agree that this tax is very unfair because it is not about the equality of sexes? The tax is not equal because men do not need any of these products. If we had thought at the very beginning that this would impact on women only, I am sure people would have thought much harder about putting tax on sanitary products, which every woman, mainly, needs for a long period in their life. It is not fair.
I entirely agree with my hon. Friend. It is a deeply discriminatory and unfair tax.
I am not going to give way again.
I congratulate Paula Sherriff on tabling new clause 7. She may be a little surprised at how many Members support it, but, sadly, we have to have this debate not because it is the British Government’s policy to levy the tax, but because it is the EU’s policy to do so. That is a fundamental freedom and control that we should bring back to this House in the future.
I feel the need to make all sorts of declarations of interest in this debate, having used sanitary products pretty much all my life.
I wish to pay credit to a number of women who have brought this subject to the House over the years. Without women in this place, I am certain that this issue would never have been raised, although I am delighted that so many men interested in Europe are in the Chamber to talk about it. Dawn Primarolo, a working-class woman brave enough to dare to speak up in Parliament about the taboo subject of women’s periods back in the year 2000, should be commended.
Today, when such topics are far easier for us to discuss, I have already received a number of sideways glances from colleagues around the estate on speaking about the subject and there is a certain desire among Conservative Members to say the word “products” instead of tampons. I know from speaking to my right hon. and learned Friend Ms Harman today that, at the time, it was considered vulgar and even shameful that Ms Primarolo brought forward the subject. She was brave. Today, our brave woman prize goes to my hon. Friend Paula Sherriff. Regardless of what has been said on the other side of the House, doing nothing achieves nothing.
It is completely ridiculous that women are taxed, even at a 5% rate, for a product which, in my experience, is more than essential. The fact that we still have the tax is probably down in no small part to the fact that most of the people in the House and in our sister Parliaments all across the EU do not have wombs. The reason why we must force the Government to have a conversation with our European partners is that, without force, I fear that they will be too squeamish to talk about women’s periods. But they should not be: every person in the House exists only because their mother had a period. Today, with half term, Parliament has been teeming with children—my own have been on the slides in Portcullis House—who all exist only because their mothers had periods. It is nothing to be scared of, and nor should any man or woman ever feel that we should not talk about periods.
Such a revision in taxation may seem a marginal change, but it would make a huge difference to the women in this country. Having worked in a women’s refuge, I know that the things we had to stock up on the most—because they presented a challenge to the budgets of the women in our care—were nappies, tampons and sanitary towels.
I totally agree. When you have no money left, having fed your kids and paid your bills, the cost of a product such as Tampax is a real issue for people.
Let me be clear: tampons and sanitary towels are essential, and everyone in the House knows it. I will not tell how I know it. I am sure there are plenty of mishaps that the women in the House could all talk about, including no doubt those that have happened even on these Benches. This tax is a tax on women and girls. I started my period when I was 10 years old, so I have paid the tax for 23 years. If the House will excuse the pun, it is a bleeding scandal.
This problem of taxation on tampons and other sanitary products is one that, quite rightly, excites a great degree of anger and controversy, but the solution to the problem is uncontroversial. It is perfectly obvious that we are all agreed in the House that we should get rid of the tax on tampons and other sanitary products. The reason why this is a subject of interest to so many is that the House is of course prohibited from doing so by EU law.
Of course that tax was similarly egregious to women. I am happy to say that I was born in 1971, so I hope the hon. Lady will forgive me for not taking responsibility for decisions made at that time.
I am just trying to help my hon. Friend. He was not old enough to have voted at that time. Actually, I was not either—just. If we still had that tax in place and we were not in the EU, we could alter it. That is the problem.
Indeed. That is precisely the point. It is not because we are spinning-eyed nutcases that we wish to get excited about Europe; it is because we find, again and again, that the European Union obstructs us from solving real problems in people’s lives.
On this occasion, it so happens that Paula Sherriff deserves all our congratulations on forcing the issue. I am very glad that my name appears on new clause 7. I must say that those who are attacking us for signing the new clause are probably going some way to diminishing the support they will receive. We are all in the House because we wish not to send messages but to take action that serves our constituents. I would like to break the news to some Members of the House that approximately half the electors of Wycombe are in fact women, and I am very happy to do the best I can to represent them in this place.
It seems to me that there are five courses of action available to the Government. The first is to do nothing. That is clearly untenable. We are in the House today because doing nothing is untenable. Some course of action must be taken to resolve the problem.
Not for 100 years has the House of Lords defied this elected House. This is a serious matter, and I ask you or Mr Speaker to make a statement to protect the rights of the elected representatives—not just for us, but for the people of this country.
Sir Edward, as you well know, it takes both Houses to agree. The subject has come before this House and I am sure that this is not the end of the matter, but you have certainly enabled us to be informed.
Further to that point of order, Mr Deputy Speaker. The very fact that Sir Edward Leigh raised that point of order in the manner he did underpins the importance of Members of this House—I believe the majority of them are also opposed to the changes—trooping through the right voting Lobby to ensure that there is in fact an alignment of opinion between the two Houses, even though the Government Whips colluded last week to ensure—
Order. I am not getting into a debate on the merits or not of the subject. I have given my answer and I am sure that all hon. Members have taken it on board. I want to get back to the debate. We still have a lot of speakers to come.
In ascending order of difficulty, there are another four things the Government could do. The first is to do what new clause 7 would impose on them, which is to negotiate within the existing EU framework to deliver a zero-rating on tampons and sanitary products. The second would be to renegotiate the power to set such taxes. I commend that to the Minister, and I hope he will comment on the Government’s willingness to repatriate all tax powers, particularly VAT, back to this country. The third is to legislate, notwithstanding the European Communities Act. It seems to me that that would be a bold move, but I would certainly support it to end the problem swiftly, and I hope that Members on both sides of the House would support that. The final thing that could be done would be for us to leave the European Union and, as my hon. Friend Mrs Main said, decide for ourselves in this House matters of taxation that apply to all our constituents.
This evening, I want to listen extremely carefully to what my hon. Friend the Minister says. It is quite clear that we can no longer go on saying that this issue of the taxation of tampons and sanitary products is too difficult to push through all the member states and the European Commission. Clearly, action must be taken that is robust and dynamic. I must say to those who criticise us for being Eurosceptics that we know we are taking a risk. Unlikely as it seems, the Commission and the member states may well rise to the occasion and solve the problem. Well, good on them if they do. I should be very glad indeed to see no tax on these products right across the European Union.
I imagined that the hon. Gentleman and some of his colleagues would welcome the Government’s being able to report to the House in February or March next year whether it was the Commission, other member states or poor negotiating powers that had failed to achieve this measure. Would he not welcome such transparency?
I remind the hon. Lady that I have added my name to the new clause. My point is that this situation cannot continue any longer, and I hope the Minister will say that the Government accept the principle that tampons and sanitary products should be zero-rated. I hope they will explain why they are not able to bring such a measure before the House, and that the Minister will commit robustly to advancing this cause in the interests of women in the UK and across Europe this year and in future. We should get the whole thing cleared up as soon as possible.
It is genuinely a pleasure to follow Mr Baker. However he got to support the new clause tabled by my hon. Friend Paula Sherriff, I am grateful, because tonight we have an opportunity to make progress on this issue.
I am also pleased to see Mr Jenkin and hear his story of our meeting back in 1993—more than 20 years ago. That offers a parable for tonight’s debate, and an opportunity for Sir William Cash to have hope when it comes to difficult issues. The hon. Member for Harwich and North Essex is right to recall that, as a newly elected MP, he came to my school to speak to the girls on a wet afternoon, and got a grilling from one member of the sixth form. I am sad that the debates we had about child poverty and access to further education did not make such an impression on him, but I am delighted and genuinely humbled to hear that he took the issue that we raised back to the then shadow Cabinet for debate. As he knows, at the same time my head teacher threatened to exclude me should I ask the MP any more difficult questions.
The parable that I think that offers for negotiations in Europe is simple: we may need courage to raise difficult issues with a respected authority figure, but—I say this to the hon. Member for Stone—look at what happens when such issues are raised. People who we think might disagree with us, in fact turn out 20 years later to be champions for social and progressive change.
In 1993 we were conducting the entire Maastricht referendum in order to get the results that the hon. Lady wants on this particular matter. At that time, we realised that if we did not sort out the European Union properly, we would never get the kind of equality that she is now demanding.
The idea that if we do not ask a question we shall never find out the answer is an issue that is on point tonight, and one reason why this eminently reasonable and sensible new clause should garner support from across the House. This debate has not happened at the European level, and, given what happened 20 years ago, my point is that when we ask such questions and challenge people, we can be amazed at the results we secure.
This debate is not about VAT or even the European Union. I recognise that the hon. Member for Wycombe was too young to take part in the vote to join the
European Community, but my point in mentioning the purchase tax is that it is a bit of a red herring to think that this is about the European Union. Tampons and sanitary towels have always been considered a luxury. That is not by accident; that is by design in an unequal society in which the concerns of women are not treated as equal to those of men. Even if we were not in the European Union, there is every possibility that a purchase tax would be applied to sanitary towels and tampons but not to other products.
The International Development (Gender Equality) Act 2014 was nothing to do with the European Union. Some of us believe passionately in the same sorts of arguments that the hon. Lady is putting forward, and that is by no means exclusive to issues of the European Union.
I will come on to issues of gender and equality on an international level, but I give the hon. Gentleman warning that I will not take any more interventions from him unless he uses the terms “sanitary towels” and “tampons”. It is important to use appropriate wording in the House.
The inequality that women have faced in having to pay this tax has existed for generations. The question for us all is what we can do to change that, which is why I add my name to those who have congratulated the former Member for Bristol South, Dame Dawn Primarolo. She is a hero to many of us for her persistence in fighting to reduce the rate of VAT on sanitary towels and tampons in the European Union in 2000. I have talked to her at first hand about those negotiations—she had to use the appropriate terms and explain that if we did not resolve this issue, men and women could be sitting next to each other, with women experiencing their periods and the difficulties that can come from that, but without that same protection because of the cost of these products. Her work was visionary.
Talking to Dame Dawn Primarolo, it became clear that this is not about VAT rates but about VAT descriptions. I am looking forward to hearing what the Minister has to say about this, because there is common agreement that we wish to resolve this issue and a recognition that in 2015, a tax on women—a femitax, a vagina tax, or whatever we want to call it—is unfair. The issue can be resolved not necessarily by considering VAT rates, but by considering the way that VAT is described and ascribed to certain products. That is where the inequality has come from—the concept of what is a necessity.
I do not remember the hon. Lady giving way 20 years ago. She was at the very fine Colchester county high school for girls, which is a grammar school. In parenthesis, I am delighted that, through the reforms we are pursuing, this Government are doing more for educational opportunities for the least advantaged than any Government in living memory.
Why does the hon. Lady think that Dame Dawn Primarolo was unable to remove the 5% VAT on tampons and sanitary towels when she succeeded in reducing the things that we had discretion over? Why did she not take this initiative to the European Union? It was because she found that the Government of the day felt that they had other, more important fish to fry in their negotiations with the European Union. We should get away from such an unsatisfactory give and take to national interests by leaving the European Union.
I thank the hon. Gentleman for mentioning the school that I attended. I was incredibly lucky to get there, having failed the 11-plus the first time I took it. I shall always be against selection because I recognise the benefits that I received from being able to take that exam a second time and get that education. That school taught me to do my homework, which is why I know that one of the rules and challenges of this issue is that zero-rated VAT is different from reduced rate VAT. At the time, Dawn Primarolo found that the issue was not about unwillingness but about the way that the rules on what a zero-rating—as opposed to a reduced rating—could be applied to had been changed. That is why she was able to secure a reduction in VAT to 5% from 17.5%—I am sure that the hon. Gentleman will agree that that was progress—but this issue is about the way that products are described.
I am sure that the Minister knows his history of value added tax, how a product is described and what is described as a “necessity”. It is important to have a concept of what is currently described as a “necessity” and is therefore zero-rated. I wonder whether Conservative Members will agree that when we change these definitions, progress can be made.
For example, Jaffa Cakes are zero-rated. I am not a fan of Jaffa Cakes—let it be known that if I am offered a Jaffa Cake, I will refuse. I do not consider them to be essential to my life; I can give or take them. I recognise that razors are zero-rated, and judging by many Conservative Members the opportunity to shave every day is a human right. They are cleanly shaven, and I am sure they would be concerned to be charged a higher rate of VAT. Pitta bread is zero-rated—we can probably all agree that that is a necessity. What is the kebab without a good pitta bread around it? It is a necessity. When we start looking at what is described as a “necessity” and what is a “luxury”, we see the inequalities in this debate. As I said earlier, those inequalities existed long before we joined the European Union and long before we started to work on value added tax.
The question for all of us is not how to have similar rates of taxation, but how to recognise the similar descriptions. That is the way that this issue can be resolved in the European Union. It is also why working with our colleagues in other countries matters to us. I come back to the concern expressed by the hon. Member for Stone about gender inequality, because he is absolutely right: our sisters in France are paying 20% on their tampons and sanitary towels because they do not have the reduced rate. This is therefore not about sanitary towels and the rate of taxation across the European Union; it is about the way in which different countries have interpreted the concept of necessity and essentials.
With respect to the question of sanitary towels and tampons, may I simply make this point? I recognise that the hon. Lady really knows what she is talking about, so I would like to know whether, in her experience, there is a similar problem internationally, outside the European Union, that perhaps comes from international organisations? Could she please explain whether there is anything in that?
And people say that progress cannot be made in this Chamber or that there cannot be cross-party agreement! The hon. Gentleman is absolutely right. In fact, 10% of girls in Africa do not go to school when they have their periods because they do not have appropriate sanitary protection, so he is right to be concerned about this. What I am saying—let us see whether we can tempt him to make further progress—is that feminism should be without borders; in which case we should be concerned about inequality in the tax rates and VAT that our sisters pay in a range of countries, including those in the European Union.
Tonight we have an opportunity, here in the British Parliament, to show solidarity across the continent and make sure that this issue is part of the negotiating process. Because let us be honest, it was never part of the negotiating process in this House prior to joining the European Community. It was only part of the negotiating process because of Dame Dawn Primarolo. It is a red herring to think that this is about the European Union; rather, it is a recognition that the time has come to end these inequalities. Our sisters in France tried to bring forward legislation just this summer and were defeated. What a strong message of social progress we could send from the British Parliament today by passing this proposal and sending our Prime Minister to have that difficult conversation and to say, “How do we clarify the way in which essential items are categorised across the European Union? How do we make this work for 51% of our population?”
I am sensing from the hon. Member for Stone that he does care about these issues deeply and does recognise the inequality. If he has frustration tonight, it is simply that he is not seeing progress happening quickly enough. Let me reassure him that, whether it takes 20 years or two hours of debate, it is possible to make progress. I urge him to support our new clause, so that we can send our Prime Minister to the European Union with something worth fighting for. We can all hear back from him in February whether he has made progress and been able to say to our French, German and Italians counterparts that tampons and sanitary towels should be treated as necessities in 2015. I am sure that when we hear that message from the Minister tonight, he will give us great succour—that he will use the appropriate terms and bring us all into the 21st century by supporting the new clause as well.
May I give my respects to Paula Sherriff for bringing this debate to the House? I have heard some very interesting figures this evening—in particular, that 250,000 people have signed previous amendments and discussion points about this issue over the years, and I know that there have been all sorts of discussions about this very issue for as long as I have been in Parliament.
I am not surprised that new clause 7 has attracted cross-party support, with many Members, both female and male, from the Government, SNP and, obviously, Labour Benches supporting it, and so they absolutely should, because this has always been, and will always be, a wholly illogical tax. We heard some interesting detail from my hon. Friend Mrs Main. I would not know the difference between various products if they were laid out, yet some would be zero-rated and some would be taxed at the lower rate, although this is not just a female issue. I think she described some of these items as “Oops-a-daisy” products, and if there is a male “Oops-a-daisy” product, it would be zero-rated, so we can immediately see these anomalies in the tax system. Nappies have always been zero-rated because they relate to children. Indeed, one of the anomalies that we have enjoyed compared with much of the European Union—how long that will last, who knows—is that children’s products and food continue to be zero-rated, no matter how luxurious the food might appear to some.
The reason we have the anomaly with tampons and female sanitary products is historical. Prior to
Despite those anomalies, we are in a customs union with the European Union and, to a certain extent, VAT rates can be different. For instance, a couple of weeks ago I was in Luxembourg on parliamentary business, and there the standard rate of VAT on products is 17%, whereas in Hungary it is 27%, and some countries have a tourist rate or a restaurant rate, which might mean a deduction of 10%. Even in this country we have had some flexibility on VAT rates over the years. At one time it was 8%, before moving to 15%, then to 17.5%, and then back to 15% for a bit; and now here we are, with VAT back up to 20%.
It is quite remarkable how this evening’s debate has managed to get Members so active. We have discussed feminism at some length and we even managed to touch on grammar schools—which I thought was quite a clever move—as well as the fan club of Dawn Primarolo. We salute Dawn Primarolo for what she did in 2000, when she reduced the VAT rate applying to tampons and the like from the standard rate, which I assume was 15% at the time, down to 5%. We must ask ourselves: why did she not go that extra 5%? Quite curiously, it was not until 2006, some six years after the reduction in the rate on tampons, that the rate applying to condoms was reduced from the full standard rate—which at that time would probably have been 17.5%—to 5%. It took six years to get there.
If memory serves me well, Gordon Brown at that time was doing something to the economy, and perhaps it was appropriate at that time to reduce tax while he was doing it. Again, though, why was the rate on the condom—a product that is the most valuable barrier against sexually transmitted diseases and higher pregnancy rates in this country—not reduced to 0%? The difference is that they are freely available in many clinics, but we were incapable, despite the benefits of such a product, of getting the tax rate down to 0%.
Therein lie the arguments that many of us have made this evening. I support the proposal of the hon. Member for Dewsbury because it is the right thing to do. These products are not a luxury; they are essentials and they should not be taxed, in the same way that post-natal pads, which Alison Thewliss mentioned, are not taxed. They are an essential part of a woman’s life, so tampons should be similarly taxed, yet we are incapable of doing so because of that old historical anomaly, dating back to before
Order. The hon. Gentleman must remember that he is speaking through the Chair. I have made no proposals today.
My sincere apologies, Madam Deputy. [Interruption.] You have taken me way off track now.
In conclusion, the hon. Member for Glasgow Central made an appeal earlier for a message or plea to come from this place to the European Union. I think we have heard that from many Labour Members, too. I am afraid this goes back to the very old times of taxation without representation. Messages are all very well, but surely this sovereign place should be able to choose to set the rate of sales tax or VAT on products such as tampons and sanitary towels. I am afraid that it rather reduces the status of this House to one of being a colony of old, pleading with an empire power.
I certainly hope his visits around various European capitals have an awful lot on their agenda. Following today’s debate, I hope this issue will be one such item. The issue is one of exclusivity in setting VAT rates on products important to us in this place, not elsewhere.
In response to the hon. Lady’s intervention, is not the point that there are so many issues we want our Prime Minister to raise in the European Union? There is an increasing number of myriad issues, such as how much contribution we make, the free movement of people and how we control our borders. It is these little things—I say “little” mistakenly, because of course it looms large as an equality item in our minds—that get set aside in favour of other things. This is a rotten way of running a continent.
I agree with my hon. Friend. I hope progress can be made on very many areas, not least on this one.
We should not be like a colony pleading with an empire power. This is clearly a rate that should be set here. I thank again the hon. Member for Dewsbury for raising this issue, which, important in itself, has opened a Pandora’s box on who governs this country.
I rise to speak to new clause 1, which also relates to VAT. I pay tribute to everyone who participated in the previous debate, particularly my hon. Friend Alison Thewliss who, in Committee, was the first to raise this issue and moved new clause 2. At that time, we were favoured with support from the Labour Benches. They can look forward to us reciprocating that support this evening.
On Second Reading, I focused on the fire and rescue service and its punishment by the UK Government in relation to VAT. I should now like to focus in some detail on Police Scotland, which came into being in 2013. I should say that I have a prejudice in supporting the police, as I am a former academic adviser to the Scottish Police College, and have contributed in the past to training programmes for chief officers, police super- intendents and, most recently, crime analysts.
A key reason for the creation of Police Scotland was, according to the Scottish Government:
“Establishing a single service aims to ensure more equal access to national and specialist services and expertise such as major investigation teams whenever and wherever they are needed.”
Allow me to give a few examples of the effect of creating a single force. Assistant Chief Constable Malcolm Graham, speaking as recently as
“Since the advent of Police Scotland, every murder committed has been detected.”
He is overly modest. Such has been the improvement in homicide detection that they have opened old, unsolved cases from when there were eight smaller forces and have already solved five of them. Police Scotland has improved the investigation of rape and sexual crimes across the entire country and is now able to treat rape as seriously as murder. The National Child Abuse Investigation Unit has been established as a specialist unit to support the investigation of complex child abuse and neglect across Scotland. Police Scotland has also been able to tackle intellectual property crime much more effectively, recovering about £20 million in criminal assets and making about 70 arrests. The result has been improvements on areas such as cross border co-operation and terrorism, as I discussed in Committee.
The Government, however, say we must abandon the improvements resulting from Police Scotland to satisfy some old rules established in the Value Added Tax Act 1994. Reflecting on the debate we have just had, this is one area on which the UK Government have it entirely within their power to act reasonably on a matter related to VAT. They have chosen to provide VAT exemptions to other public bodies elsewhere in the United Kingdom, while at the same time completely denying the right of the Scottish police and fire and rescue service to achieve an exemption.
“I do find it bewildering that we seem to be the only police service in the United Kingdom that is charged VAT. None of the 43 forces in England and Wales pay it. And the answer seems to come back from the Treasury, ‘oh, that’s because you’re a central government organisation’. Well, you’ve got the Police Service of Northern Ireland, they don’t pay VAT. And you’ve got the National Crime Agency and they don’t pay VAT—but we pay VAT. I just don’t understand the logic of it and I frankly don’t think the Scottish public would understand it either.”
Consider what the Government have been willing to do on VAT. At the stroke of a pen, the Government made central Government-funded academy schools in England exempt from VAT. For goodness sake, even the BBC does not have to pay VAT. When it suits the Government, and previous British Governments, they have little difficulty in allowing exemptions.
In Committee, the Minister said:
“If the Scottish Government are now reconsidering their position and wish to discuss how the service can be eligible once again for VAT refunds, the Treasury will happily engage with them to advise.”––[Official Report, Finance Public Bill Committee,
It is not the Scottish Government who need to reconsider their position, but the UK Government. Although we are talking significant sums for Police Scotland and the Scottish fire and rescue service—in total, in excess of £30 million per annum—it is a mere pittance compared to the overall UK budget. There is no economic rationale for continuing to deny VAT exemption. The Government seem simply to lack the decency to care about policing and fire and rescue services in Scotland. So much for the party of law and order. So much for the respect agenda. Its attitude has about it the stench of duplicity and blind prejudice.
I was not going to speak in this debate, but I have decided to join in because it is a vital matter. I worked with other Opposition Members in this debate during the first day of Committee, when I was the sole representative of the shadow Treasury team. It was an important debate then, but I think we have really moved it on today. Alison Thewliss and my hon. Friend Holly Lynch spoke well on this subject in Committee, and I want now to touch on some of what they said.
New clause 7, introduced by my hon. Friend Paula Sherriff, is an important new clause that has enabled a hard-hitting and sensible debate on the VAT rate for tampons and sanitary products. As others have said, they are not luxury products, but, as we noted in Committee, some bizarre products are VAT exempt. As my hon. Friend the Member for Halifax found out, alcoholic jellies, edible sugar flowers, exotic meats, such as crocodile and kangaroo, and the amazingly named millionaires’ shortbread are apparently all VAT exempt. I am sure everyone agrees that alcoholic jellies are a luxury product, while tampons and sanitary products, which are vital products for women, are not.
As I said, we had a good debate in Committee. My hon. Friend the Member for Dewsbury, the hon. Member for Glasgow Central and my hon. Friend the Member for Halifax all spoke well, and I support what they said, but what did the Minister say? I hope we can change how he feels about this matter. At the end of the debate, he said:
“We are supportive and we would like the rate to be as low as possible”,
which was very good and supportive, but he also said that
“without wider EU reform and greater flexibility…it will be a challenge.”
Importantly, however, he also said that
“were we able to progress further, I would be sympathetic”.––[Official Report, Finance Bill Public Bill Committee,
I think the Minister should be supportive, given that a number of his hon. Friends want him to be.
I wish to add my name to the list of those who have praised Dame Dawn Primarolo’s early campaign to reduce the VAT rate by 5% in 2000. Fifteen years ago, that was a brave thing to do in the House. Plenty of Members tonight have been willing to talk straightforwardly about this, but 15 years ago there were not as many women in the House and it would have been difficult to talk about. I am in her fan club and glad to thank her for the campaign she ran.
This VAT rate, which we have had since 2000, is unfair to women and families. It might be a challenge for the Minister to negotiate with the EU on this matter, but I hope that he and the Prime Minister are equal to it and can take it on. There have been many things they have been happy to challenge in their EU negotiations, and many of his hon. Friends have indicated that they also want him to take on this challenge. I am sure he is up to it, as he is well steeped in these matters, and it is clear from this debate that he has support from both sides. I urge hon. Members to support the new clause and give him a reason to take on this challenge.
This debate is in great contrast to that taking place in the House of Lords. Here we are debating a cut to inheritance tax, while the unelected House is championing the interests of working people by doing something that many more Government Members should have done: put their consciences in their feet and march through the correct Lobby.
We know from evidence already debated that the changes to inheritance tax will effectively cost the Exchequer £940 million by 2020-21. As the great Nye Bevan once said,
“the language of priorities is the religion of socialism”.
To Government Members who ask where our priorities lie, I say: they will always be in championing the interests of hard-working people and trying to improve the lot of the low-paid. For this reason, new clause 9 would delete the Government’s proposed changes to inheritance tax. That says exactly where our priorities are and where they should be. It is humiliating for the Chancellor and Prime Minister, having claimed at the recent Conservative party conference to be these great centrist modernisers, that it is in fact the House of Lords that has had to do what the elected House of Commons should have done last week, and still has the opportunity to do in debates taking place tomorrow and on Thursday.
The “Conservative modernisation project mark 2” is now dead in the water, but let us remind Tory Members of “modernisation project mark 1”. We remember the Prime Minister promising “the greenest Government ever” when he was running with the huskies and hugging hoodies, yet here we see clause 45 of the Finance Bill, which will remove the exemption from the climate change levy for electricity produced by renewable sources from
My hon. Friend mentions his environmental credentials, which I share, and also mentions sanitary products such as tampons and sanitary towels. Does he recognise that menstrual cups and moon cups are more environmentally friendly sanitary products and should also be included in this debate?
In this as in other respects, I have always favoured a woman’s right to choose. It is, of course, for women to decide which is the appropriate form of sanitary product. My hon. Friend is quite right that the moon cup does indeed have the environmental benefits that she mentions. I was glad to add my name in support of new clause 7 proposed by my hon. Friend Paula Sherriff, which would tackle this issue. I am glad to see so much cross-party support, but I am disappointed to hear some of the language used this evening about our partners in Europe.
Apparently, according to Mr Jenkin, this is the most iniquitous measure that the European Union has put in place. No wonder there is such representation in the Chamber. I hope that the Out campaign is not going to be predicated on VAT on sanitary products, as proponents are likely to find it a struggle to get wider traction. I find it objectionable that so many Conservative Members talk about negotiating with our European partners as “begging”. It is no different from our constituents coming to lobby us and having a reasonable conversation with us. If this is how the renegotiation strategy is going to work, we really are in trouble as a country.
I do not know about the hon. Gentleman, but I am here because I had to stand in an election and my constituents have the right to vote me out. How can people vote out the European Union except by voting to leave in a referendum?
Well, we have the European Parliament and the Council of Ministers, which are accountable to their respective Governments and, of course, the Commission itself is in many ways accountable. I would like to see reforms to some of the accountability mechanisms, but as the old saying goes, “you’ve got to be in it to win it”. On Europe, as on climate change, inheritance tax and the debate taking place in the other place on tax credits, we have seen in virtually every clause debated this evening that this is not the new modernised Conservative party; it is the same old right-wing Tories. They have hung their Chancellor and Prime Minister out to dry, and I hope that the Opposition’s reasonable, centre-ground amendments will be supported by Members from all parts of the House.
I welcome new clause 7 and hope that everyone can unite in supporting it. I do not think it goes far enough, but it is a great step forward, and I would like to congratulate my hon. Friend Paula Sherriff on introducing it. Many people watching the debate tonight—and I hope many millions of women will be watching it—will have started to ask why we still cannot proceed on the basis of what I think everyone in the Chamber believes, which is that sanitary towels and tampons are not a luxury and we should have the right to decide the level of tax on any product in this country. The people who have listened tonight will know that whatever we say about negotiations and working with our EU partners—let us not forget it is the EU, not Europe—we will not be able to win the argument because the reality is that the European Union wants to maintain control of how we run our affairs in this country. This is the beginning of a hugely important debate on the referendum, and important issues of this kind would never be recognised by the European Union. I hope that the Prime Minister will go and at least negotiate, although I do not think he will get anywhere.
If the Minister really believes in democracy in this country, and given that our Parliament wants this tax reduction, why do we not just do it? What would the EU do if we did? I hope that every Member will support new clause 7 tonight.
It is a pleasure to respond to the debate. Let me begin by congratulating Rob Marris on his debut at the Opposition Dispatch Box—and what a debut it was, consisting of a speech lasting more than an hour. In the time that is available to me, I shall attempt to respond to his speech and, indeed, the many other speeches that we have heard this evening, but let me first deal with the measures that we are discussing.
New clause 9 would require the Chancellor of the Exchequer to undertake a comprehensive review of the inheritance tax regime within one year of a current budget surplus. Amendment 89 would remove clause 9 from the Bill, as a result of which the additional transferable nil-rate band for all individuals who leave their home to direct descendants would not be introduced. Clause 9 represents a commitment that was made in the Conservative party manifesto—a promise made to the British people—and recognises that more hard-working families face an inheritance tax bill than has been the case at any time since the introduction of the system nearly 30 years ago.
Last year, 35,000 estates had an inheritance tax liability. It has been forecast that that figure will nearly double, rising to 63,000, in 2020-21. Thousands more worry about leaving their families with inheritance tax bills when they die. The additional transferable nil-rate band will simply return the number of estates with an inheritance tax liability to 37,000 in 2020-21, broadly the same level as in 2014-15. I remind the Opposition that that level is still higher than the level in any year between 1997 and 2010. Furthermore, we have ensured that the wealthiest will make a fair contribution to the public finances through inheritance tax. It will not be possible for the largest estates to benefit from the new allowance. It will be gradually withdrawn by £1 for every £2 that the estate is worth over £2 million.
Those who support amendment 89 demonstrate that they do not understand those who wish to save, pay their taxes, work hard to own their own homes, and pass them om to their children and grandchildren without facing a hefty tax bill. We believe that it is right for people to be able to pass on their homes to their descendants rather than the taxman.
The hon. Member for Wolverhampton South West expressed what sounded like concern about the fact that no properties in his constituency—or very few—would be affected. He also said that he opposed measures taken by the last Labour Government to introduce the transferable nil-rate band. I remind him that in the year in which those measures were introduced, 4.3% of estates paid inheritance tax. If we do not act, some 11% will pay it by 2019-20.
Given the comments that we have heard from the Opposition Front Bench, suggesting that they wish to raise more revenue from inheritance tax, I rather suspect that their desire for a review is connected with their perception of it as a potential cash cow. If I have misunderstood, I am happy to withdraw what I have said, but that seems to me to be the direction in which Opposition Members want to go.
It is not a question of inheritance tax being a “cash cow”; it is a question of whether we maintain the regime that we have now, and the revenue that it brings in, or move to the much more generous regime that the Government wish to introduce.
The regime as it stands will affect more properties than it did under any of the Labour years. The reality is that if we do not take action, inheritance tax will hit more and more estates. It will be a tax that will be much more widespread than was previously the case. If that is the position the Labour party holds, that is the position, but I think we should be aware of what it is.
In the time available I will briefly touch on some of the points raised by the hon. Gentleman in this area. He raised concerns that this policy would have a big effect on the housing market. Let me reassure him that the OBR has looked at this matter and it believes it will only have a small effect on the housing market. The allowance here only applies to a single home; it does not encourage people to buy multiple homes to maximise the allowance. It is capped at £175,000 per individual, or £350,000 for a married couple, and there is no disincentive to downsize because families will not lose the allowance in these circumstances.
The hon. Gentleman raised a concern about upsizing. Upsizing would only be attractive if a house is only a small part of an estate, but as the hon. Gentleman said, this is a very rare occurrence, and I repeat the point that the OBR believes this will have a small effect on the housing market.
The hon. Gentleman also raised a concern about lineal descendants and particularly made the point that the family structure tends now to be somewhat wider than the traditional nuclear family. Let me reassure him that this allowance will apply for houses that are left to adopted children or foster children or stepchildren. I hope that point of clarification is helpful to him.
Let me also address the other matters we debated. New clause 1 refers to Police Scotland and the VAT treatment. This is familiar territory which we have debated extensively in Committee. In 2012 Scotland’s eight locally governed police and fire authorities consolidated to become two national bodies. As a result, they no longer became reliant on local taxation as a means for funding. This is one of the two criteria for eligibility to the section 33 VAT refund scheme, so following this restructuring these new national bodies no longer were eligible for VAT refunds. It is important to remember that the Scottish Government were forewarned of this consequence well in advance of the decision they took. The Treasury was keen to ensure the Scottish Government considered the consequences as part and parcel of their decision to restructure these services. Because the expected cost savings from restructuring the Scottish Government outweighed the loss of any VAT refunds, I perfectly understand why the Scottish Government went ahead with their restructuring programme. As I have explained, since the Scottish Government restructured these services they are no longer eligible for VAT refunds. This was plain and clear with eligibility set out in legislation and I do not believe there is a need for a report to further make this clear
The issue that has dominated the debate is new clause 7 and VAT on tampons and sanitary towels. New clause 2 would require the Treasury to write a report on a VAT exemption of women’s sanitary protection products including a financial assessment of the impact on the purchasing of these products, especially for those aged under 25.
I put my name to this amendment because I have long thought that this is a bizarre and discriminatory tax on sanitary products and it needs sorting out. Perhaps in the 1970s, when I am sure the Minister like myself was at school, the luxury goods description still made sense as many women were not using a product which has now transformed our ability to be freed up from the monthly restrictions of periods. Many girls at school with me were off games every month because they did not have access to what is now considered a completely normal part of our sanitary products and frees young women to be sportswomen. I ask the Minister to be brave, to think about this and to stand up for all young women.
I am grateful to my hon. Friend for her remarks, and I will address that point in a moment.
“lay before both Houses of Parliament a statement on his strategy to negotiate with the European Union institutions an exemption from value added tax for women’s sanitary protection products” within three months of the passing of the Act. It would also require a Minister of the Crown to
“lay before Parliament a report on progress at achieving an exemption from value added tax for women’s sanitary protection products within European Union law by
This debate has highlighted the ongoing campaign to zero-rate or exempt from VAT tampons and other sanitary protection products. As we have heard tonight, that campaign has cross-party support. In the case of Stella Creasy, that support goes back many years to when she was at school. My hon. Friend Charlotte Leslie has also campaigned on the issue for many years, and my hon. Friend Mrs Trevelyan has raised it tonight and on other occasions, as have many other hon. Members.
As Barbara Keeley pointed out, this Government sympathise with the aim of the new clause. As we have also heard, however, the UK does not have the ability to extend zero rating to new products unilaterally. We have more extensive zero rating than most, if not all, other member states, but any change to EU VAT law would require a proposal from the European Commission and the support of all 28 member states. Without that agreement, we are not permitted to lower rates below 5%. None the less, as this debate illustrates, there is considerable cross-party support for the UK to abolish VAT on sanitary products. To that end, I undertake to raise the issue with the European Commission and with other member states, and to set out the view, which has been reflected in this debate, that it should be possible for a member state to apply a zero rate to sanitary products. In that context, I thank Paula Sherriff for raising the matter tonight. We have seen on both sides of the House a demonstration of the belief that that flexibility should exist.
My hon. Friend used the word “permitted”. We do not have the capacity to effect a change such as this, because of the European Communities Act 1972. He knows that, the Opposition know it, and Members on the Conservative Benches know it. Will he now commit not only to talking about this but to doing something about it? It is a hugely important cross-party issue. Will he please take on board the fact that we insist on legislating on our own terms in this House? We want to govern ourselves.
I do not want to conceal from the House the fact that we do not have flexibility in these circumstances. Nor do I want to conceal the challenge that we would face in reaching agreement on this. Other member states take a different approach. As the hon. Member for Walthamstow has pointed out, it was striking that the vote in the French Assembly just a couple of weeks ago on an attempt to move the rate down from 20% to 5.5% was defeated. I do not wish to pretend that this would be a mere formality; other member states do take a different approach to this issue.
I would certainly be happy to update the House on any developments at any stage, as and when they might occur. I am happy to give the hon. Lady that reassurance.
It is incredibly welcome to hear that the Minister is going to raise this matter, but may I press him to be a bit clearer about which environment he will raise it in, and about when we will hear back? Will he also confirm that the European Commission can produce a zero rating if it is declared to be in the public interest to do so? Will he commit to raising that point as part of his negotiations with the European Commission? We all recognise the points that have been made about the technicalities of VAT, but there is a public interest exemption that he could use in his negotiations, is there not?
Why is it the policy of the Government to argue that it is necessary to have any tax harmonisation in the EU in order for us to have trade with the EU?
Doing full justice to that question in the five minutes available for me and for the hon. Member for Wolverhampton South West would be a challenge. This has been part of the VAT regime since 1973, but on this specific area, as we have heard, time has moved on and it is right that we look again at it.
It is not just a matter of the EU law; the UK courts would ensure that we have to comply with the law, one way or the other. I suspect that my hon. Friend Sir William Cash would be happy to explain the position to the hon. Lady, but it would not be lawful for us to reduce that rate.
I have listened extremely carefully to my hon. Friend and he knows how seriously I take this issue. Will he reassure me directly that he will specifically press the European Commission to bring forward measures to zero-rate tampons and sanitary products right across the EU?
Yes, I will make those representations to the European Commission to allow member states to have the flexibility to do that, which I think is the key issue here.
On the climate change levy, let me briefly explain the policy rationale, as we have debated this on a number of occasions. The climate change levy renewables exemption was misaligned with today’s energy policy, providing indirect support to renewable generators when the Government are now investing in more effective policies that target them directly. Together, policies such as the renewables obligation and feed-in tariff will provide more than £5 billion-worth of support to renewable electricity generation in 2015-16 alone. I do not believe the report on this clause is necessary. The Chancellor has already written to the Chairman of the Treasury Committee in August setting out the environmental analysis of the summer Budget in 2015.
On enforcement by deduction from accounts, we believe that we are introducing a necessary measure and that we have struck the balance correctly. I am grateful for the remarks made by the hon. Member for Wolverhampton South West in pointing out that the safeguards are strong. I know he still has concerns about the measure, but the safeguards are strong and we believe we are striking the right balance.
To conclude, I urge the House to reject new clauses 1, 2, 7—if it is pressed to a vote, and I hope it will not be—10 and 11, and amendment 90.
On inheritance tax, the Government have not gone far enough. It is not a problem to us that 11% of estates might face it, as that is still a tiny minority, and if the Government were worried about preserving assets, they would have done a lot more about social care for the elderly and what that takes out of their houses. On new clause 1 and VAT on the Scottish police, that was indeed a decision of the Parliament in Scotland, but simply saying, “They were warned” is not good enough. I understand and support the SNP on new clause 1. On new clause 7, I salute the Minister for coming a very long way, but he has not come far enough. The same applies on new clause 11.