VAT on Air Ambulance Fuel Payments

John Healey Excerpts

Wednesday 11th July 2012 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

I pay tribute to the hon. Member for Hexham (Guy Opperman) for moving this debate, to my hon. Friend the Member for York Central (Hugh Bayley) for ably supporting him and leading our campaign to support our Yorkshire air ambulance service, and to all Members, on both sides, who have spoken in support of their local air ambulance services. I pay particular tribute to Ken Sharpe, my hon. Friend’s constituent, who must hold the record for getting 100,000 names on an e-petition in the shortest possible time and who has helped provide the basis for this debate.

I say to the Minister that we are asking for a small contribution that will be a big boost to the efforts of those who support and keep our air ambulances flying across the country. The motion covers the interests of our 18 air ambulance services across England. All of them are sustained by the dedicated efforts of those who raise funds to help finance the costs and all are kept flying by the dedicated, skilled, professional staff who provide this vital emergency service. I am particularly pleased that the Yorkshire caucus is so strong in the House tonight, with not only my hon. Friend the Member for York Central leading the charge but the hon. Members for Leeds North West (Greg Mulholland) and for York Outer (Julian Sturdy), whom I am delighted to follow.

Like most other air ambulance services, ours is a charity. It is, so to speak, the airborne wing of the Prime Minister’s big society. It deserves the House’s support in deed, not just in word, and the sort of support that the motion is urging on the Government. It is funded by the public to provide a vital emergency service for the public across our county. Since the debate started, I reckon that our fundraisers in Yorkshire will have had to raise at least £300 as a contribution towards keeping our two helicopters and our service going. That is a total of more than £7,000 a day or £2.65 million a year. They do this because they understand, like we do, how vital this emergency service is and how essential it is in many parts of our county that patients requiring such help can be at their nearest hospital within 10 minutes. It flies more than 1,000 missions each year, which is a unique and essential service, of interest and concern to us all. As others have said, the fuel costs are about £10,000 a month and the VAT costs are something under £6,000 a year.

I say two things to the Minister in conclusion. We are not asking in today’s motion for the same sort of exclusion from VAT that the lifeboat service has. We are not asking today for the same sort of VAT rebate scheme that has been in place to support the cost of church repairs. We are asking simply for a review to look at the fairness of the situation and the case for making a small public contribution to the voluntary efforts of those who keep our air ambulances flying. I hope that, in responding to this debate, he will accept the terms of the motion and the review that is urged upon him. But I hope actually that he may stand up to tell us that the motion is not needed and the review is not needed because he will introduce that sort of compensation scheme to cover the costs of VAT on fuel and will do so on a similar basis to the one we have established with the precedent of helping with the VAT costs of church repairs.

--- Later in debate ---

[Mr Hoban]

I do not have that information available but I will ensure that either my colleagues in the Department of Health or I write to the hon. Lady with it.

The second review that is being undertaken looks at the tax position of health care charities. The Secretary of State for Health is required by the Health and Social Care Act 2012 to lay a report before Parliament on matters that might affect the ability of providers of NHS services to carry out their activities. That report is expected to cover the full range of different providers, including charities, and will include taxation issues. Treasury officials will be actively involved in the review.

I therefore suggest that, rather than having a separate, Treasury-led review, the most efficient way forward is for the existing engagement to continue, and for the Department of Health and the Treasury to work collaboratively to consider the tax impacts of different funding models as part of the wider work already in hand.

[John Healey]

rose—

[Mr Hoban]

Perhaps the right hon. Gentleman will tell us whether he looked at the matter when he was a Treasury Minister.

[John Healey]

The Minister mentions the review under the 2012 Act, but it is a review of charities that carry out NHS services. The whole point about the air ambulance services is that they are not NHS services, although they play a great role in emergency health support. Therefore, they are unlikely to be covered by the second review. The Minister says that the review proposed in the motion is useful, but will he accept the motion and conduct the review it urges on him? I am still not clear about that.

[Mr Hoban]

I appreciate the right hon. Gentleman’s knowledge—he is a former shadow Secretary of State for Health—but my point is that the Treasury is working with Department of Health officials to ensure that the matter is covered by the review. I can confirm that, if it is ultimately not covered, the Treasury will carry out its own review. However, rather than having three reviews into air ambulances, I believe that two are sufficient if the second covers the tax issue. We are working with the Department of Health to ensure that that is the case. I can confirm to hon. Members that there will be a review and that the Government will not vote against the motion. Indeed, we believe it raises valid issues.

It would be possible in principle to introduce a refund system for air ambulance charities’ non-business activities, although it is important to consider that in the context of broader public spending, as I am sure my hon. Friends appreciate.

To refer to a point made by my hon. Friend the Member for Rugby, it is important for us to consider carefully how air ambulance charities can provide a better service by improving efficiency, and not just through refunds and tax breaks. Effective co-ordination of services could bring cost reductions that far outweigh the scale of a VAT refund on fuel. I am sure the House will join me in applauding such innovation and agree that we should continue to do all we can to improve this excellent service further. As my hon. Friend said, the air ambulance based in his constituency delivers a co-ordinated approach to providing the service across Warwickshire, Northamptonshire, Leicestershire, Derbyshire and Rutland. It has made significant cost savings and earned the transformational change award at the Orange national business awards last year.

I hope I have set out clearly my reasoning on why a change to the VAT law is impractical. I believe the best review on a level playing field for providers is being done by the Department of Health, but, as I have made clear, if that does not fully cover air ambulances, the Treasury will conduct its own, separate review.