HC Deb 05 April 1984 vol 57 cc1096-7
2. Mr. Dykes

asked the Chancellor of the Exchequer what representations he has received from trade associations, companies and members of the public concerning the value added tax proposals in his Budget statement of 13 March.

The Chancellor of the Exchequer (Mr. Nigel Lawson)

I have received 729 letters from trade associations, companies and members of the public concerning the value added tax proposals in the Budget.

Mr. Dykes

If major renovations or reconstructions of old buildings do not remain zero rated, is my right hon. Friend not worried that old buildings outside the highest value areas of London and elsewhere could suffer accelerated decay and decline and not receive the refurbishment and renovation that they get now? Will my right hon. Friend seriously reconsider the problem?

Mr. Lawson

I appreciate that there is anxiety in some quarters, for the reason that my hon. Friend has given, but I do not believe that those fears are justified. It will still be economic, in many cases, to refurbish and improve buildings, and generous improvement grants are also available.

Mr. Robert Sheldon

Can the right hon. Gentleman give a clear undertaking that he has no intention of imposing VAT on basic foods?

Mr. Lawson

I have no present intention— [HON.MEMBERS: "Oh!"]—of extending VAT beyond the areas to which it was extended in the Budget three weeks ago.

Mr. Robert Atkins

Is my right hon. Friend aware that, according to information published in Regional Trends recently, more black puddings and potatoes are eaten in the north west than in other parts of the country, and that his proposal to put VAT on take-away foods will put those living in the north west at a disadvantage?

Mr. Nicholas Winteron

That is rubbish, because black puddings are served cold.

Mr. Lawson

As my right hon. Friend has muttered from a sedentary position, on most occasions black puddings are sold cold and they would therefore not be affected by the tax. I realise that there is some concern in the north west about this matter. No one likes the introduction of a new tax. In Manchester on Friday I met a delegation from the Chinese community who own a large number of fish and chip shops as well as Chinese takeaway establishments in the Greater Manchester area. I do not believe that the measure will lead to any serious loss of trade for those businesses. My hon. Friend must remember that what I sought to do was to decrease the amount of income tax paid by large numbers of people. I have sought to raise the tax threshold so that the average married couple will pay £2 a week less in income tax. That has to be done at the cost of increasing some taxes elsewhere.

Mr. Alfred Morris

Is the right hon. Gentleman aware that there is a strong feeling among the leaders of charitable organisations, not least those for the disabled, against the cruel new burden imposed by the doubling of VAT? What representations has the right hon. Gentleman received on that matter, and what action is he taking?

. Lawson

As the right hon. Gentleman will be aware, my hon. Friend the Minister of State announced only last week that zero rating would be applied for certain building alterations for the benefit of the handicapped.

Mr. Bruce

The change in the tax on building and repairs has caused considerable confusion in the building industry. In the wake of a situation in which grants were available, we are now levying a tax on the same area. Is that not likely to lead to further unemployment in the construction industry, which already accounts for a quarter of all jobs lost?

Mr. Lawson

On the contrary, the construction industry not only had a very much better year last year, but has been further assisted on two fronts by the Budget. The abolition of the national insurance surcharge has assisted it as a conspicuously labour-intensive industry, and there has also been the halving of stamp duty to 1 per cent. and the raising of the tax threshold for stamp duty from £25,000 to £30,000. The industry is confident that these changes will give it a tremendous fillip during the coming year. It was under the old system that confusion arose, because repairs and maintenance were liable to VAT, whereas alterations were zero rated. There was tremendous abuse, as that borderline was almost impossible to police properly.