Charities: VAT Rating (Hansard, 24 June 1992)

§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)
My Lords, substantial progress has been made. Agreement has been reached that the United Kingdom's existing social zero rates, including those specifically designed to benefit charities and charity shops, can be maintained until at least 1997 without prejudice to their future thereafter.

§ Lord Judd
My Lords, is the Minister aware that grave anxiety exists among many voluntary charity workers as to what will happen after 1997? For example, is he aware that it is the work of countless thousands of volunteers in charity shops which adds value to donated goods and that there is a danger of voluntary service being taxed? Can the Government give a categorical assurance that they will never allow that to happen?

§ Lord Henley
My Lords, I join the noble Lord in congratulating all voluntary workers for their work in charity shops throughout the country. As I said, I can give a categoric assurance up to the end of 1996. Thereafter, it is a matter for unanimous agreement by the member states. We have no intention of giving up the existing zero rates, particularly those applying to charities. We look to the best possible regime for charities existing both before and after 1997.

§ Lord Boyd-Carpenter
My Lords, did my noble friend suggest that unanimity would be needed to withdraw the concession? If so, why cannot the Government give an undertaking here and now that they will never agree to withdrawal?

§ Lord Henley
My Lords, my noble friend is correct: unanimity is required. Obviously, I cannot speak for my right honourable friend or his successors and give an absolute categorical assurance that the provision will continue after 1997.

§ Lord Stoddart of Swindon
My Lords, is the noble Lord aware that that is a most unsatisfactory position for him to take? And as he represents the Government, it is an unsatisfactory position for them to take. Is the Minister aware that most, if not all, in this House have been brought up to believe that the 436 only taxing authority in this country is the House of Commons? How is it that he can now equivocate about a tax which may be introduced in 1997 even though the other place may not want it?

§ Lord Henley
My Lords, I made myself perfectly clear. I did not equivocate at all. I said that obviously I can give no categorical assurance, for exactly the same reason as the noble Lord has given—that is to say, it is a matter for my right honourable friend and the other place as to whether the zero rates should he given up. It is a matter for unanimous agreement by all the parties. We will not give it up, but at the moment I cannot give a categorical assurance.

§ Lord Renton
My Lords, does my noble friend agree that it is essentially a matter in which Brussels should not be involved? Perhaps I may now ask a separate question. Can my noble friend confirm that our VAT rate is very much higher than that of other European countries?

§ Lord Henley
My Lords, the second part of my noble friend's question is another matter. I can give the assurance which I have already tried to give; namely, that until the end of 1996 our position is perfectly safe. We intend to preserve it thereafter, but obviously I cannot give a categorical assurance about what my right honourable friend or his successor might do post-1996.

§ Lord Barnett
My Lords, does the Minister agree that it would be better if he were to concede that the reason why he cannot give a categorical assurance is precisely that his right honourable friends are likely to compromise on all areas of VAT?

§ Lord Henley
My Lords, I cannot give a categorical assurance. Save for constitutional questions, I cannot speak for my right honourable friend and his successors in 1997. I do not want to equivocate. We are quite sure that we shall maintain the present position until 1997, and we wish to maintain it thereafter.

Lord Bruce of Donington
My Lords, is the Minister aware that in another place categorical assurances have already been given, which are not limited to 1997, as regards all the other categories covered by the sixth VAT directive?

§ Lord Henley
My Lords, my right honourable friend the Paymaster General has said in another place that there is no question of the United Kingdom being forced to accept unwelcome proposals to end zero rating after 1996. However, it obviously remains a question for my right honourable friend or his successor in 1997.

§ Lord Swinfen
My Lords, can my noble friend tell the House whether the other countries in the EC have a similar system of charities and voluntary bodies? Secondly, does he think that they understand how the charity and voluntary body system in this country works?

§ Lord Henley
My Lords, obviously charities exist in all countries of the European Community. What is 437 different is that charity shops are a peculiarly United Kingdom institution—or at least they exist to a far greater extent in the United Kingdom. It might therefore be that some of our colleagues in the Community do not understand adequately our problems.

§ Earl Russell
My Lords, am I right in understanding that my noble kinsman's reply is based on the constitutionally impeccable principle that no Parliament can bind its successors?

§ Lord Henley
My Lords, I think that my noble kinsman is right.

§ Lord Donoughue
My Lords, is the Minister aware that charities' VAT bills will treble if the zero-rating concession is abolished? Will he tell his Secretary of State that it is apparently the unanimous view of this House that it is unacceptable that this burden be placed upon charities? Will he come back and give us a categorical assurance that while this Government are in power they will not make such damaging compromises or concessions?

§ Lord Henley
My Lords, this Government will be in power for a considerable time to come. But, as I said, one Parliament cannot bind its successors. I have made our position perfectly clear. We wish to continue with zero-rating, particularly as it protects charity shops. We do not intend to see ourselves forced to accept any unwelcome proposals to end zero-rating after the date I mentioned. As I said, any decisions relating to that matter require the unanimous agreement of all member states.

§ Lord Judd
My Lords, does the Minister recognise that what is galling for volunteers up and down the country is that any concession on this issue will turn them into voluntary tax collectors? They give their service for those in need—not in order to become honorary tax collectors.

§ Lord Henley
My Lords, I do not accept the premise behind the noble Lord's question. As I said, we intend to continue with zero-rating. We intend to continue the help that is offered in a variety of different ways to charities—and that, I think, is as far as I can take it.