HL Deb 13 November 1984 vol 457 cc210-1

2.48 p.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 what are their intentions regarding the EC proposals to place VAT on all building work.

The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur)

My Lords, the EC Commission has been contending that some of the United Kingdom's zero rates, including those applying to new non-domestic construction and civil engineering work, are contrary to the provisions of the Sixth VAT Directive, which established community rules for the structure and coverage of VAT. Her Hajesty's Government do not accept the Commission's views. It will be for the Commission to decide whether to apply to the European Court of Justice for a judgment on the issue.

Lord Dean of Beswick

My Lords, I am grateful to the Minister for that Answer. I should like to make him aware of the fact that he and the Government will have the support of most noble Lords, I hope, in restricting any extension of the imposition of VAT on any sector of the building industry. Is the Minister aware that if VAT was imposed on new construction, it would have the effect of completely cutting across the Government's policy and intentions for regenerating and refurbishing our decaying inner-city areas, such as those in London, Manchester and Leeds? I hope the Government will dig in their toes because of the adverse effect such an imposition would have also on the unemployment situation which presently exists in the building industry.

Lord Glenarthur

My Lords, certainly we have asked for some clarification on the particular issue which the noble Lord raises about new housing. There has been no evidence in the past that the Commission is challenging the legality of zero rating for new housing but, as I have said, we have asked for clarification of that issue.

Lord Dean of Beswick

My Lords, I should like to press the Minister further. I am talking not only about new housing; I am also talking about development in a general sense. Will he turn his mind just for a moment—and, if possible, give us some figures on this—to what adverse effect the imposition of VAT would have on unemployment in the building sector? Would it mean that a further 30,000, 40,000 or 50,000 people would join the dole queue to suit the Commission of the EEC?

Lord Glenarthur

My Lords, I certainly cannot give those figures to the noble Lord. But, as I said, the Government do not accept the Commission's view and they see no reason to implement the changes because of it.

Lord Barnett

My Lords, does the noble Lord's answer mean that the Government have no intention of imposing VAT on construction work?

Lord Glenarthur

My Lords, the question relates to the particular issue of the EEC, which I think I have answered. The noble Lord is leading us down a different path.

Baroness Airey of Abingdon

My Lords, may I ask the Minister whether VAT is, or will be, applicable to building repairs to churches?

Lord Glenarthur

My Lords, with respect to my noble friend, that question goes slightly wider than the Question on the Order Paper.