4-12-02

Barrett demands tax change to boost energy conservation

John Barrett, Scottish Liberal Democrat MP for Edinburgh West, today called on the UK Government to reduce value added tax (VAT) on energy saving materials.

Mr Barrett has signed a House of Commons motion which calls on the Government to tackle the issue before the review of VAT by the European Commission next year.

In a statement, John Barrett said:

"With over 7.5 million tonnes of carbon dioxide emitted into the atmosphere every year because of poor loft insulation alone, it is critical the Government reforms the tax system to encourage the use of energy saving materials.

"Under current rules, only energy saving equipment which is professionally installed is eligible for the reduced VAT rate of 5%. This leaves materials sold at point of sale with the full rate of tax, leaving those who undertake such tasks themselves liable for the increased cost.

"It is crucial the Government now removes this disincentive to energy saving in the home by including energy saving materials under the 5% VAT level and before the European Commission reviews VAT next year."

ENDS

Notes to Editors

• Mr Barrett has signed EDM 29 which states:

That this House recognises that climate change is one of the world's most significant environmental challenges, and that poor domestic energy efficiency is a key part of the problems; notes that 17.6 million UK households have inadequate loft insulation which means that an unnecessary 7.5 million tonnes of carbon dioxide are emitted into the atmosphere each year; expresses its concern that the full rate of VAT is payable on energy-saving materials at the point of sale and that a reduced rate of five per cent. only applies to people who have energy-saving materials professionally installed in their home; fears that the continuance of this anomaly provides a disincentive for people to install energy-saving materials themselves; and therefore urges the Government to secure the inclusion of energy-saving materials within the reduced rate provision in advance of the European Commission's 2003 review of VAT.