Archived press release

Groups angry as blair u-turn threatens vital energy efficiency moves

10 March 1997

The leaders of three [1] of the countries leading environment and pensioner organisations have written to Labour leader Tony Blair expressing "serious concern" at his U-turn in support for reducing VAT on energy efficient products [2]. The VAT reduction to 8 per cent, which has been tabled as amendments to the Finance Bill on Tuesday, has widespread support - particularly among Labour MPs - and seemed likely to succeed[3] until pressure last week from Labour Whips led to at least 19 MPs withdrawing their names from these amendments [4].

A similar VAT reducing attempt last year, which had the full backing of the Labour Party, failed by only one vote.

In their letter, the heads of Help the Aged, Friends of the Earth and the Association for the Conservation of Energy urge Mr Blair to reconsider. They point out that the amendment to the Finance Bill would "remove the ridiculous anomaly whereby VAT on energy conservation goods and materials is currently set at 17.5 per cent whereas VAT on energy consumption is set at 8 per cent". They recall that last year "Dawn Primarolo [Shadow Treasury Spokeswoman] urged all MPs to vote for very similar amendments by promising that "We shall be voting against the Government..and I ask all Hon Members in the name of justice, jobs, democracy and energy efficiency to vote with us"".

Charles Secrett Director of Friends of the Earth said
"We are astonished by Labour's apparent U-turn, especially given their passionate support last year. It is imperative that the Labour leadership rethinks now and votes for the VAT reduction amendments on Tuesday. Taxing energy efficiency at more than double the rate of energy use will not convince anyone to take Labour's environmental policies seriously"

Mervyn Kohler , Head of Public Affairs at Help the Aged said:
"This is a spineless move by the Labour leadership - I urge them to reconsider"

Andrew Warren, Director of the Association for the Conservation of Energy said:
"Last year the Labour leadership emphasised the employment benefits of reducing VAT on energy efficiency - I don't know what can have happened to have made them change their minds. Environmentalists will be furious".

Reducing VAT on energy-saving goods and materials would have the following benefits:

• it will make them easier to afford and will especially help those on low incomes, the elderly and people with disabilities;
• it will enable more people to keep warm each winter and lead to a reduction in the 50,000 excess winter deaths in the UK;
• it will kick start sales, leading to an estimated 10 per cent increase in demand;
• it will create up to 10,000 new jobs;
• it will create extra revenue for the Treasury by the avoidance of cold related illness costs to the NHS -estimated at over 1 billion per year and the creation of new jobs;
• it will significantly help Labour meet its ambitious commitment to reduce climate change CO2 emissions by 20 per cent by 2010: saving energy will also reduce emissions of SO2 and NOx.

Notes to Editors
[1] The letter from the three organisations was signed by Meryn Kohler (Head of Public Affairs - Help the Aged), Charles Secrett (Director - Friends of the Earth) and Andrew Warren (Director - Association for the Conservation of Energy).

[2] In 1995 around 250 (out of 271 MPs) Labour MPs signed a Early Day Motion calling for a cut in VAT on home insulation products to 8 per cent. And in a vote on an amendment to the Finance Bill in 1996, the Labour Party - including Tony Blair - voted for a similar reduction in VAT. A number of Conservative MPs abstained and the move failed by only one vote.

Three amendments to the Finance Bill [New Clauses 11, 12 and 13] have been tabled which, if passed would lead to VAT on energy efficient materials being reduced from 17.5 per cent to 8 per cent. The amendments were tabled with the support of 107 MPs - the majority being Labour MPs. However,subsequent amendments have now been tabled [New Clauses 14 and 15] by the Shadow Cabinet (Blair,Prescott, Brown, Darling, Meacher and Dewar) which only call for the Treasury to carry out a report on the effects of a VAT reduction on the Exchequer.

[3] All the smaller parties support the VAT reduction, so with a minority Conservative Government hopes are high that the amendment will be passed if Labour supports it.

[4] A number of Labour MPs who originally signed up to the Finance Bill amendments calling for VAT reduction have now withdrawn their names. They include:
Alan Keen MP Feltham and Heston
Irene Adams MPPaisley North
Joe Ashton MPBassetlaw
Jim Callaghan MPHeywood and Middleton
Lawrence Cunliffe MPLeigh
George Stevenson MPStoke on Trent
Dr Norman Godman MPGreenock and Port Glasgow
Alan Howarth MPStratford on Avon
Austin Mitchell MPGreat Grimsby
Bill Olner MPNuneaton
Sir Raymond Powell MPOgmore
Thomas Graham MPRenfrew West and Inverclyde
John Heppell MPNottingham East
Tam Dalyell MPLinlithgow
Terry Davis MPBirmingham Hodge Hill
Brian Donohoe MPCunningham South
Paddy Tipping MPSherwood
John Gunnell MPLeeds South and Morley
Bob Hughes MPAberdeen North

A copy of the letter to Mr Blair and Finance Bill amendments available from the FOE press office

A press conference in support of the Warm Homes Bill (a 15 year programme to insulate 7.5 million homes) will be held at 11 am on Tuesday 11 March. The venue is Room C, 1 Parliament

Street, London SW1. The press conference will be attended by supporting MPs and organisations including FOE, ACE, Help the Aged, Age Concern, Child Poverty Action Group and NEA.

If you're a journalist looking for press information please contact the Friends of the Earth media team on 020 7566 1649.

Published by Friends of the Earth Trust