My Lords, I rise to speak to Amendment 35A in my name on VAT and excise. I do not wish to prolong the debate at this hour. Very briefly, noble Lords will remember back in March when the then Chancellor Rishi Sunak announced measures in the fiscal event—mini-budget, estimate, whatever it was—that there was a zero VAT cut for households installing energy-efficiency measures, which would apply throughout Great Britain, but not to installation in homes in Northern Ireland of materials such as solar panels, insulation or heat pumps.
Consumers in Northern Ireland could not benefit from that VAT cut because of the protocol. Something that was warmly welcomed across the rest of the United Kingdom provoked concern and outrage across the communities in Northern Ireland. Mr Sunak announced that there would be extra money provided by way of Barnett consequentials to make up for it, but, as people with experience of the operation of the Executive know, sometimes the direct tax cut is the most effective and efficient way of getting these things done.
I have tabled this amendment to explore and seek the Government’s reasoning on their approach to the VAT issue. They have not gone down the route that they have in relation to state aid in Clause 12 of excluding Article 10 and annexes 5 and 6 of the protocol. They have not decided to exclude the relevant article of the protocol which applies the VAT rules. Instead, they have adopted the approach of saying there are large areas where we simply disapply that article and we can make provision by regulations in relation to the VAT excise duties and other taxes.
It is more akin to the situation that we find ourselves in with the protocol itself in relation to customs: Northern Ireland is nominally within the UK customs regime, but all the rules of the EU apply. What is the impact of the Government taking this approach in relation to VAT? Why are they not taking the same kind of approach to VAT as they have to state aid? What are the implications? It says clearly in the subsections what steps can be taken in relation to differences in VAT and making sure that the situation that we saw in March may not arise in the future, but what are the implications of not taking out the relevant article in the protocol completely?