Energy Bill [HL]

My Lords, the noble Lord, Lord Jenkin, is right to remind us that exempting certain goods from the normal rate of VAT is a matter for the Treasury. We are all too well aware that the Treasury looks at these issues with a sharp eye and intensive scrutiny at any time, but in this age of austerity that position is likely to be intensified. As the noble Lord indicated, the noble Baroness, Lady Maddock, is seeking to build on the 5 per cent reduced rate of VAT that already applies to a number of installations that relate to energy conservation, both to encourage householders to install energy-saving facilities and as a clear earnest of the Government’s intent that these issues are significant enough for us to look at them in this regard, albeit not quite as we do food and children’s clothes, which attract no VAT. Nevertheless, the 5 per cent rate relates to a clear priority area; it is an exclusive area. In her amendment, the noble Baroness wants to extend that area. I am not in the slightest doubt about the merits of doing that and I think that, in the framework of the Bill, we should indicate that we think that this will give substance to the Bill’s principles. However, like the noble Lord, Lord Jenkin, I acknowledge—no doubt the Minister will also indicate this to the Committee—that it is difficult to write Budgets in the framework of energy legislation when that is the preserve of the Chancellor of the Exchequer and the Treasury. I would not be at all surprised if we had a somewhat guarded response to the amendment. However, we already have provision of the reduced rate in this area and the amendment would not add a great deal, although the Treasury might argue that the cost would be significant. Nevertheless, the amendment fits in with the pattern of reduced rates of VAT in this area and I hope that the Minister will indicate that, at the very least, the Government have an open mind on the issue.