HL Deb 11 March 1992 vol 536 cc1326-8

3.18 p.m.

Lord Donoughue asked Her Majesty's Government:

Whether they have any proposals to bring the United Kingdom's rate of VAT on bloodstock transactions on a par with those operating in France and Ireland, in order to keep the bloodstock breeding industry in this country.

The Minister of State, Department of Transport (Lord Brabazon of Tara)

My Lords, the Government prefer a single positive VAT rate. That simplifies administration and lessens burdens on business. Member states' ability to maintain or introduce a reduced rate for bloodstock after 1992 depends on discussions in Brussels on the "reduced rate list". The UK could not match the Irish VAT rate after 1st January 1993 because EC finance Ministers agreed that super-reduced rates of below 5 per cent. can be kept only if they were in force on 1st January 1991 and conform with Community law. The UK has never applied a reduced rate to bloodstock.

Lord Donoughue

My Lords, bearing in mind that the EC Commission has already authorised France to have a VAT rate of 5.5 per cent. on bloodstock sales and Ireland will have a rate of 2.7 per cent. after 1993, is the Minister aware that rigidly insisting on a 17.5 per cent. rate will simply force buyers of bloodstock to abandon their traditional market in Britain to seek the lower VAT costs in France and Ireland? Is he further aware that the British bloodstock sales industry will be forced to follow those buyers abroad with disastrous impact on related industries, such as breeding, auctioneering, training, insurance and transportation? Why do the Government neglect that aspect and allow this highly respected and valuable industry to be driven abroad? Does the Minister agree that we need a level playing field with competitive VAT rates with France and Ireland?

Lord Brabazon of Tara

My Lords, the noble Lord assumes that the French will be able to retain their VAT rate. I understand that that is not certain. The EC Commission agreed that bloodstock should not be within a reduced rate. It could well be that the rate will rise to 12 per cent. As I said in my original Answer, the Irish will be able to keep their rate because it was a super-reduced rate which was in force on 1st January 1991.

The rate of VAT is not the sole factor in deciding the fate of an industry. Many large UK breeders have said that they have no plans to stop breeding in the UK although they may not be selling all their horses here. One should not be surprised at that in a single market.

Lord Harmar-Nicholls

My Lords, will the Minister confirm that if France does not upgrade—as, he said, the EC hopes—we shall then see to it that we have the level playing field for which the noble Lord asked? Or must we perpetually have an inferior position in what is a very important industry?

Lord Brabazon of Tara

My Lords, as I said in my original Answer we should prefer to have a single positive VAT rate. Many industries no doubt would plead special circumstances for a reduced rate but we have not encouraged them.

Lord Wyatt of Weeford

My Lords, is the Minister aware that only the Commission in Brussels can order equity in this matter between all the nations concerned? Is he further aware that at the Commission hearings last December I initiated such an intervention by the Commission which it is taking up? I hope that the Government will not interfere with the benign actions of Brussels in this matter.

Lord Brabazon of Tara

My Lords, we should like to see comparable VAT rates in this and other matters. As I said earlier, it is quite possible that France will have to increase its rate but, as I also said, the Irish are safe with theirs.

Lord Bruce of Donington

My Lords, will the Minister confirm that Her Majesty's Government will determine the rates for the United Kingdom irrespective of what Brussels may endeavour to impose upon us? Having asked that, does he think it wise that under our own authority we should retain our VAT rates at such a high rate, thus rendering the United Kingdom slightly uncompetitive with the bloodstock industries in France and Ireland?

Lord Brabazon of Tara

My Lords, we have agreed to a minimum rate in Europe. On the second part of the noble Lord's Question, as I said, we do not intend to reduce our rate for this industry.

Lord Molloy

My Lords, is the Minister aware that there exists an all-party bloodstock group with members from both Houses? Does he feel that it would perhaps be wise and sensible for the Government to have talks with the leaders of the all-party bloodstock group, from whom I am sure he will obtain some good advice and guidance to help him with this problem?

Lord Brabazon of Tara

My Lords, my right honourable friend the Chancellor of the Exchequer received representations from many different industries and, I believe, many from the bloodstock industry in the run-up to yesterday's Budget. I have no doubt that if the all-party group to which the noble Lord referred wishes to make representations, it will be heard.