HL Deb 18 May 1984 vol 451 cc1605-7

11.19 a.m.

Lord Dean of Beswick

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they will reconsider their proposal to charge VAT on the installation of double glazing in domestic properties in the light of their declared policy of energy conservation.

The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon)

My Lords, value-added tax was designed as a broad-based tax. It is not therefore an instrument designed to assist every aspect of public policy. Successive Governments have not seen fit to introduce a relief for energy-saving work as such. There is no justification for excluding the installation of double glazing from the proposed application of standard-rate VAT to building alteration work generally.

Lord Dean of Beswick

My Lords, I am grateful for that rather unhelpful reply, but may I ask the noble Earl whether he is aware (as I am sure he will be) that double glazing installed in domestic property produces a saving in heating costs of approximately 10 per cent. or upwards? Is the noble Earl aware that on the basis of present figures the introduction of VAT on Ist June will increase the cost per house, depending on the type of job done, by between £225 and £450? Does the Minister not agree that that will be a disincentive to people to involve themselves in double glazing, and that it will cut across the very policy that the Government have on energy conservation?

The Earl of Avon

My Lords, I understand what the noble Lord is saying. We in the Department of Energy believe that tank jackets, draught proofing, loft insulation and cavity insulation are all good energy savers, as is some double glazing, particularly in dwellings where window frames have deteriorated to the point where there is no alternative but to replace them, and in dwellings undergoing general rehabilitation. But the effects of the new tax are limited. New construction will continue to be zero-rated. Both repair and maintenance work and supplies for DIY installations are already taxed at the standard rate.

Lord Taylor of Blackburn

My Lords, is the noble Earl aware that quite a number of young people who have already entered into commitments with double glazing firms find that, following the Government's policy, and because of the imposition of value added tax, they are no longer able to go forward with the work?

The Earl of Avon

My Lords, I should be very sorry if that were the case. On the other hand, this is a tax which has been imposed in order to correct distortions.

Lord Graham of Edmonton

My Lords, can the Minister tell the House how often there has been a revision of the application of VAT on other items in the past? If ever there was a need for sensitivity and flexibility, it is here. Does the Minister not take fully on board the nonsense of the conflict between the Government's policies, which on the one hand are determined to conserve energy, and on the other hand are setting out to clobber the consumer?

The Earl of Avon

My Lords, may I first say that we are still encouraging people on all the various propositions that I suggested earlier. These will still be encouraged, as they are still energy-conservation-effective. So far as the current tax position is concerned, it discriminates in favour of manufacturer-installed double glazing and against both contractor and DIY installation. That is why this change is being made.

Lord Stoddart of Swindon

My Lords, is not the noble Earl's answer completely unsatisfactory? Is it not a fact that the Government have been telling Parliament for a long period of time that they are interested in conserving our energy resources, which are in the long-term likely to be in short supply, and that the building of new power stations and new installations is very expensive? Is it not a crazy policy that we should now be imposing a 15 per cent. tax on insulation measures which will save an enormous amount of energy? Will the noble Earl make represent-ations to his colleagues, particularly in the Treasury, in order that this tax can be repealed or, at least, not proceeded with?

The Earl of Avon

My Lords, I take the noble Lord's point. I should just like to say that I cannot accept the word "enormous". The savings in this field are not as great as the ones that I mentioned earlier, but I shall not go through the list again. However, there are savings from double glazing which, as I said, we recognise. I do not think that the noble Lord's exaggerations will help the situation. As I said earlier, we are still encouraging energy efficiency, and the methods which I have been talking about and the paybacks remain very good.

Lord Strabolgi

My Lords, may I ask the noble Earl whether it is true that, when householders install double glazing and other methods of insulation, they are liable to have their house rerated to a higher value?

The Earl of Avon

My Lords, so far as I am aware, there would be no change in the rateable value for double glazing.

Lord Boyd-Carpenter

My Lords, can my noble friend say what is the authority for the extension of the scope of VAT referred to in this Question? Has there been any specific legislation, or is this just a decision of the Board of Customs and Excise?

The Earl of Avon

My Lords, it was in the Budget.

Lord Dean of Beswick

My Lords, is the noble Earl aware that in one of his answers today he referred to loft insulation and cavity wall filling? Is he aware that by combining those two with double glazing there can be a 30 per cent. saving on heating bills and energy costs? Is the saving not so significant that it ought to be looked at again? Finally, does the noble Earl agree that the imposition of this 15 per cent. VAT will have yet another adverse effect on the building industry, which has been massacred over the past five years?

The Earl of Avon

My Lords, I again think that the noble Lord exaggerates somewhat in trying to make his points. Of course, I understand what he is talking about, but I said in earlier answers that the energy efficiency paybacks, particularly on the subjects he mentioned of loft insulation and cavity wall insulation, are still extremely good in spite of the imposition of VAT.

Lord Broxbourne

My Lords, in the context of the question from the noble Lord on the Front Bench opposite, relating to any possible effect on revaluation and my noble friend's reply thereto, may I ask whether this does not supply further evidence of the imperative need for an urgent acceleration of the processes of reviewing and revising these complex, and sometimes incomprehensible, rules?

The Earl of Avon

My Lords, I am very grateful to my noble friend, but I do not much wish to be drawn into that field.