HC Deb 17 January 1992 vol 201 cc706-7W
Mr. Spearing

To ask the Chancellor of the Exchequer if he will list those goods and services which the Council of Ministers of the European Community currently agrees can be subject to a reduced rate of 15 per cent. VAT, showing those that are currently exempt from value added tax, or zero rated respectively, in the United Kingdom and any commodity of each category not featuring in the Council's current list.

Mrs. Gillian Shephard

There has been no discussion by the Council of Ministers on the application of a reduced rate of VAT of 15 per cent. However, a political agreement was reached at ECOFIN on 24 June 1991 to apply a minimum standard rate of VAT of 15 per cent. from 1 January 1993. Agreement was also reached providing for the retention of existing United Kingdom zero rates. It was further agreed that member states may apply either one or two reduced rates of VAT below their standard rate, and that these reduced rates may not be less than 5 per cent. The reduced rate shall only apply to supplies of goods and services defined in a list of categories, the basis of which was agreed at ECOFIN on 18 March 1991. The list is as follows. Items included in each category which are zero-rated in the United Kingdom under schedule 5 of the Value Added Tax Act are identified by reference to the group number of that Act.

Category Number and Description Zero-rated under Schedule 5
1. Foodstuffs for human and animal consumption (excluding alcoholic beverages). Group 1
2. Water supplies. Group 2
3. Pharmaceutical products. Group 14
4. Medical equipment for the disabled. Group 4 and Group 14
5. Passenger transport. Group 10
6. Books, newspapers and periodicals. Group 3
7. Admissions to shows, theatres, circuses, fairs, concerts, museums, zoos, cinemas, exhibitions, libraries and access to television.
8. The output of writers, composers, performers etc. and copyright
9. Social housing. Group 8
10. Farm inputs. Group 1
11. Hotel accommodation.
12. Hire of camping sites.
13. Admission to sporting events.
14. Use of sporting facilities.
15. Welfare and charitable activities. Group 16
16. Funeral undertakings, cremation.

Category Number and Description Zero-rated under Schedule 5
17. Medical care in hospitals, spas etc., dental services. Group 14
18. Street cleaning, refuse collection.

At ECOFIN on 24 June 1991 Ministers agreed that the list of categories be extended to include supplies of natural gas and electricity.

Ministers also agreed that for supplies of restaurant services, young children's clothing and footwear, and all housing; a reduced rate may continue to be applied by those member states applying a reduced rate 1to these products on I January 1991; and for Spain and Luxembourg a reduced, or super reduced rate may be applied.

The goods and services which are zero-rated in the United Kingdom and which are not included in the list of reduced-rate categories are sewerage services; fuel and power for domestic and charity use; housing not provided as part of a social policy; reconstruction, and supplies of services in connection with the alteration, of protected buildings; residential houseboats and caravans; clothing and footwear for young children; protective boots and helmets for industrial use; motor-cycle helmets.

Negotiations are continuing on the reduced rate list.

The inclusion in a reduced rate list of goods and services which are specifically exempted from VAT, or for which a

Monthly interest payment1
Region Average new building society mortgages quarter 2. 1988 June 19882 Current3 Increase
£ £ £ £
Northern region 22,200 135.98 159.56 23.58
Yorkshire and Humberside 23,000 140.88 165.31 24.43
East Midlands 27,000 165.38 194.06 28.68
East Anglia 34,800 222.95 261.63 38.68
Greater London 54,900 387.10 454.25 67.15
South East 44,500 302.17 354.58 52.41
South West 34,900 223.77 262.58 38.81
West Midlands 28,100 172.11 201.97 29.86
North West 24,300 148.84 174.66 25.82
Wales 23,900 146.39 171.78 25.39
Scotland 24,200 148.23 173.94 25.71
Northern Ireland 24,300 148.84 174.66 25.82
United Kingdom 32,900 207.43 243.42 35.99
1 Assuming endowment mortgage, net of basic rate tax relief.
2 At an interest rate of 9.8 per cent.
3 At an interest rate of 11.50 per cent.

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