§ Mr. Woolas
To ask the Secretary of State for Trade and Industry what assessment his Department has made of(a) competition policy issues which arise from insurance companies which own their own garages and carry out in-house repairs being exempt from VAT on labour and (b) the impact which this has on independent garages; and if he will make a statement. 
§ Dr. Howells
Under UK competition legislation, the Director General of Fair Trading is responsible for monitoring markets and considering allegations of anti-competitive practices, abuse of monopoly position and restrictive trade practices.
I understand that the possible VAT advantages which may be derived by insurers who carry out repairs in their own in-house body shops were considered by the Director General in 1998 as part of a review of the recommended repairer schemes operated by insurance companies. The Director General concluded that action under the competition legislation was not appropriate.
Questions about exemptions from VAT systems are a matter for Customs and Excise. I understand Customs and Excise are currently looking further at this issue and would welcome evidence of the revenue and employment consequences.