§ Ms Harman
To ask the Chancellor of the Exchequer whether councils which provide unmetered supplies of gas and electricity to council tenants through district heating schemes will be able to claim back VAT incurred under section 20 of the Value Added Tax Act 1983; whether council tenants receiving unmetred supplies of gas and elecricity through district heating schemes will be effectively exempt from VAT on gas and electricity; if he will provide an estimate of the number of council tenants receiving unmetered supplies of gas and electricity through district heating schemes; and how many council tenants receive metered supplies of gas and electricity through district heating schemes.
§ Sir John Cope
[holding answer 14 March 1994]: A local authority can recover the VAT incurred in pursuance of its statutory, non-business activities under section 20 of the Value Added Tax Act 1983. This includes the provision of council housing. Council tenants paying rents which include a flate rate element for heat supplied under an unmetred district heating scheme will, in VAT terms, be receiving only a single supply of heated accommodation and will be unaffected by the extension of VAT to domestic fuel. The number of council tenants receiving unmetred supplies is estimated to be less than half of one per cent. of total United Kingdom households.