§ 2.36 p.m.
§ Lord Ezraasked Her Majesty's Government:
Whether they will apply a reduced rate of VAT to energy-saving materials sold direct to the public, in line with the reduced rate which applies when they are sold through professional installers.
§ Lord McIntosh of HaringeyMy Lords, the Government wish to introduce a reduced VAT rate on the DIY installation of energy-saving materials, and have pressed the European Commission to bring forward early legislative proposals to allow such a change to be introduced under EC VAT law. That request is due to be considered as part of the EC review of VAT reduced rates currently scheduled for 2002–03.
§ Lord EzraMy Lords, I want to declare an interest as president of the National Home Improvement Council and to express my appreciation to the Minister for the positive message that he gave us.
Is he aware that in support of the Government's intention it is estimated that approximately 17.5 million homes in this country have inadequate loft insulation and if that were remedied approximately 7.5 million tonnes of CO2 would not be emitted?
I believe that in those circumstances what the Government are trying to do is right and I hope that they will be fully supported by other EU countries.
§ Lord McIntosh of HaringeyMy Lords, I am grateful to the noble Lord, Lord Ezra, for his comments. He is right that there are potential huge savings from energy efficiency at home. It seems to us 574 absurd that professionally installed energy-saving materials should benefit from a reduced VAT rate while those installed by householders should not.
§ Lord SaatchiMy Lords, I, too, am grateful to the Minister for that reply. Could not the Government save a great deal of energy by generating fewer press releases on the subject of energy saving by cutting down on emissions of hot air? Would not that help to reduce global warming?
§ Lord McIntosh of HaringeyMy Lords, some hot air saves energy and some hot air, particularly in your Lordships' House, seems to create unnecessary energy. The amount of money spent on press releases must be minimal compared with, for example, the £600 million which is being spent on the Home Energy Efficiency Scheme. That scheme is on track to meet its target of 600,000 low-income householders over the next three years. If we are talking about the publicity side of the issue, the valuable work of the Energy Saving Trust, which receives £22 million of government money a year, should not be overlooked. I do not believe that press releases are that important in the circumstances.
§ Lord EzraMy Lords, I believe that the promotion which the Government are giving to the important issue of energy efficiency is worth while. Is the Minister aware that last month B&Q, which is the leading retailer in home improvement equipment, remitted VAT on loft insulation material during Energy Saving Week and that it doubled its sales? That shows that the public are keen to improve their energy efficiency.
§ Lord McIntosh of HaringeyMy Lords, it is not true that the company remitted VAT. It cut its prices by the equivalent of what the VAT would have cost its customers. It sounds as though it was a worth while marketing initiative.