EU VAT rule changes

14th January 2016

David Gauke updates MPs on the negotiations on the removal of VAT on women’s sanitary products. 

Mr David Hanson (Delyn) (Lab): What progress the Government are making on negotiating the removal of VAT on women’s sanitary products. [903009]

The Financial Secretary to the Treasury (Mr David Gauke): I have written to the European Commission and to other member states setting out our strong view that member states should have full discretion over what rate of VAT they can apply to sanitary products, and that the matter should be considered in the context of the Commission’s action plan on VAT, which is now expected to be published in March

Mr Hanson: I am sure that the letter is very good, but I think the Minister should do more than that: I think that he should pursue the issue. When he does so, and when he succeeds—as I am sure he will—will he ensure that the money that he is currently providing from this unfair tax to finance domestic violence services is raised from general taxation? As a man, I think that it should be, so that the whole of society owns this problem.

Mr Gauke: In terms of the action the Government are taking, the right hon. Gentleman will be aware that VAT rules currently do not allow us to reduce the rate below 5%, which is why when the previous Labour Government reduced it, they reduced it to 5% not zero. But we are making the case to other member states and the European Commission, and the right hon. Gentleman highlights the fact that, as the Chancellor announced in the autumn statement, for the first time we are using the funds collected from VAT on sanitary products to provide support specifically to women’s charities. We will, of course, review that in the event that we are able to reduce it to a zero rate.

Philip Davies (Shipley) (Con): The Minister will know that I voted with the Opposition on this issue. He is a good man and I am sure he is doing his very best to battle away on this issue, but is it not the case that those who want a zero rate on sanitary products at the earliest possible opportunity should find the easiest way of doing that, which is by voting to leave the European Union, and then we would be able to do it straight away?

Mr Gauke: My hon. Friend’s answer to this question does not entirely surprise me; it is in fact his answer to quite a lot of questions. The Government are engaging constructively with other member states and the European Commission. It is the case that EU rules prevent us from lowering the rate below 5%, but we are engaged in negotiating with other member states.

Paula Sherriff (Dewsbury) (Lab): While any action is better than nothing, it does not appear that the issue has been placed alongside the Prime Minister’s other demands in the EU membership renegotiation, so we may not even have a report back prior to the referendum. Can the Minister reassure the House today that women’s rights are not a second-class issue on this Government’s European agenda by making those commitments, and will the Prime Minister or Chancellor come before the House to make a statement on this, as they have done on other EU issues?

Mr Gauke: The Chancellor of the Exchequer addressed this issue in his autumn statement, when he announced the additional funding for women’s charities, reflecting the sums that are raised from VAT on sanitary products. The Government are taking this issue seriously; previous Governments have done so too, but we are doing everything we can, and we are, I think, the first Government who have gone to the European Commission and to other member states and made the case for flexibility.

Mr Christopher Chope (Christchurch) (Con): Will my hon. Friend explain why this is not part of the Government’s renegotiation strategy? Surely this country and this Parliament should be able to decide levels of VAT not just on sanitary products, but on fuel, defibrillators and so on—on all of which I think it would be better if there were no VAT?

Mr Gauke: We are engaged in a wide-ranging renegotiation addressing issues about economic competitiveness and the roles of Parliament and so on. This is not explicitly part of that renegotiation, but we are, as a Government, going out making the case to other member states, and we will have the report from the Commission in March and we have made our position very clear.

Kate Green (Stretford and Urmston) (Lab): The funding the Government are putting into services for women fleeing sexual and domestic violence has been described as like filling a bath with the plug pulled out. End Violence Against Women says the tampon tax cannot possibly fill the gap, while across the country refuges and specialist services are closing. Will the Minister commit to a full review of the effect of the Government’s fiscal policies on the availability of services and to publishing the information?

Mr Gauke: We have already announced £40 million in funding for domestic abuse services between 2016 and 2020, as well as a £2 million grant to Women’s Aid and SafeLives to support early intervention. The hon. Lady raised a very broad point, and, in reply I would say the best future for the entire country is to ensure we have strong public finances, a credible economic policy and a long-term economic plan that delivers jobs and growth. That is what this Government are doing.

Kate Green: I am afraid that the Government’s economic policies are not protecting women from violence. Research published yesterday by Professor Sylvia Walby of the University of Lancaster shows that violent crime against women has been under-reported and has in fact been rising since 2009. That is a result of cuts to services, cuts in the police, a lack of housing to move into, financial pressures on relationships and difficulties accessing justice. Does the Minister not recognise that the holistic effect of the Government’s policies has been to place women in danger? Will the Government take urgent action to address this?

Mr Gauke: The hon. Lady makes the point that domestic violence is under-reported, and we accept that that is a problem, although reporting has increased. Indeed, the number of convictions has increased. She also made the point that there had been cuts in police services. The Chancellor made clear in his autumn statement, however, that because the economy was performing better than had been the case before, we could afford not to cut police funding over the course of this Parliament. Again, I make the point that Labour can oppose every single cut and every single change that we make to try to bring the public finances under control, but if we do not take those decisions, I am afraid that we will run into a crisis. That was what the 2015 general election was fought on, and the result was very clear.

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