Backbench Business

Part of the debate – in Westminster Hall at 3:29 pm on 15 June 2023.

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Photo of Victoria Atkins Victoria Atkins The Financial Secretary to the Treasury 3:29, 15 June 2023

I hope my right hon. Friend will understand that this is not my area of expertise, and that I am here responding on VAT, but I will take away his observations on the hubs. Schools find their own ways of teaching their children. I recently had the pleasure of a Friday afternoon visit to a wonderful primary school in my constituency, Mareham Le Fen Primary School. They have “mystery reading”, where someone reads an extract of a book to the entire primary school to try to encourage pupils to finish that book. Schools across the country have programmes like that to encourage reading and to make it a real pleasure for children, and I very much support any efforts to bring that about.

We have provided £8.7 million of funding this academic year to support schools in purchasing complete systematic synthetic phonics programmes for their curriculum—that is a good example of Department for Education jargon. By ensuring high-quality phonics teaching and improving literacy, we are giving children a solid base on which to build as they progress through school. We published the reading framework in 2021. Over 90% of schools have read that framework, which provides guidance on how to improve the teaching of reading. It focuses on the early stages of teaching reading, and on the contribution of talk, stories and systematic synthetic phonics. It also helps schools to meet expectations for teaching early reading.

We very much appreciate the fact that these measures are paying off. England came fourth out of the 43 countries that tested children of the same age for primary reading proficiency in the Progress in International Reading Literacy Study, the results of which were published last month. That is a real success, and we know that it is down to the concentration on phonics and is driven by improvements for those pupils who have perhaps struggled in the past. I am very grateful, as I know my right hon. Friend the Member for Hemel Hempstead is, to ministerial colleagues whose efforts over the years have driven those changes.

However, we also recognise the importance of provision for children with special educational needs and disabilities, including children who live with some of the conditions that we have heard about today, including partial sightedness and blindness, dyslexia and other learning conditions. These cohorts may require extra support, so the next reading framework to be published will include guidance on supporting children who are struggling to read, including those with special educational needs. The Government speak regularly to experts, including SEND specialists, specialist schools and English hubs, about how we can support teachers to ensure that children with dyslexia and other learning difficulties can progress well in their reading, and meet the expectations on them by the time they leave primary school.

If I may, I will now turn to the subject of VAT. Of course, as colleagues from across the House know, VAT is a broad-based tax on consumption, and the 20% standard rate applies to most goods and services. Although there are exceptions to the standard rate, these have always been strictly limited by both legal and fiscal considerations.

We did indeed cut the VAT on certain digital publications in the March 2020 Budget to support literacy and reading in all its forms, and to make it clear that e-books, e-newspapers, e-magazines, and academic e-journals are entitled to the same VAT treatment as their physical counterparts.

The extension of the zero rate of VAT to e-publications was introduced to address the inconsistency of approach between certain physical publications and their digital counterparts, so that there is a mirroring between the two; if a publication in physical form has a zero rating, then in digital form it now has the same exemption. There will be categories of publication where, because the physical form does not have zero rating, the digital form does not either. I say that because audiobooks—and podcasts, which Christine Jardine mentioned—would not come under that approach, if one were to extend it to audio publications. We say that there is no such inconsistency in relation to audiobooks, but I appreciate that that is the point under discussion today.

As colleagues know, any VAT relief would come at a cost to the Exchequer, and it would be very difficult to target. The hon. Member for Motherwell and Wishaw said that the RNIB has asked if this approach has been costed, both for people living with sight conditions and the public more generally. My answer to her is that there is ongoing work on that. I do not have figures that I can give her today, because I need to satisfy myself that any figures I give are accurate, but I take her point, and I will write to her in due course, when I am in a position to do so, because that is a very fair question.

As was noted by James Murray, who spoke for the Opposition, there is a sense that the law has to try to keep pace with the speed of change in technology, which can be difficult; I think we all acknowledge that. For example, many audiobooks are now provided through subscription, along with other forms of media, such as podcasts, and trying to introduce distinctions between these different types of products would introduce additional complexity into the VAT system.

There is also no guarantee that the benefit of any VAT relief would be passed on to the consumer in the form of lower prices. That is quite an important point. We all assume that the VAT exemption announced in March 2020 was passed on to consumers by businesses, but it seems that that is not necessarily the case. It is not for me to advise either right hon. and hon. Members or charities, but where that benefit is not being passed on to consumers, perhaps publishers of e-books and so on should be asked why.

Audiobooks are enjoyed by a wide range of consumers, so the majority of any relief would primarily be felt by those not living with disabilities that prevent them from accessing physical and digital books. Also, I am obliged to mention, as in any debate on VAT, that it is the third largest tax in the UK in terms of yield, and it allows the Government and the state to provide public services. It is forecast to raise £161 billion this financial year alone. Many public services are supported from those funds, so we have to look very carefully at every request to change or tweak the VAT system, or to use it to meet the laudable aims and concerns of colleagues from across the House.

There was a question about the VAT cut. Some might say, “Hang on a minute; if the Government have imposed the VAT cut, why can’t they force businesses to pass on that cut?” We set the tax framework, and businesses must operate within it, but if a business chooses to absorb that tax relief as profit, rather than pass it on to consumers, that is a commercial decision taken by the business. That may be something that others outside this Chamber may wish to reflect on when considering the issue as a whole.

In conclusion, we understand why my right hon. Friend the Member for Hemel Hempstead called for this debate. We agree that literacy is a vital issue, not just for our youngest citizens but throughout our lifetimes. We are confident that our record over the past 13 years shows that we are making the right decisions for children in school. We believe that the measures that we continue to take to support reading are the best way to target our resources to deliver this wonderful benefit to everyone. However, we do not rest on our laurels; that is why the reading framework guidance will also focus on the needs of children living with special educational needs.

I thank my right hon. Friend for his debate, and I thank hon. Members from across the House for their contributions. I am sorry that I am not able to give quite the news that my right hon. Friend was hoping for, but I look forward to discussing the matter with him in future.