Green, when there's money in it

"Is Brown really green?" you ask (Editorial, 15 November). From my experience, it depends on whether he thinks he can raise money for the exchequer, or whether he is likely to lose revenue. For years, the Association for the Conservation of Energy has campaigned to alter the VAT rate levied on energy conservation (currently 17.5 per cent) to the same rate as that charged on energy consumption (5 per cent). In its last year in opposition, the Labour Treasury team sought to amend the Finance Bill to remove this "absurd anomaly which makes a nonsense of any attempt to use the tax system to assist the environment" - a direct quote from the 1993 Budget speech. It lost by one vote, but maintained that it was possible under EU rules to reduce VAT rates on energy conservation.

However, in government, the party line has altered. We wish to lower the rates, the argument now goes, but those bureaucrats in Brussels are stopping us. It is strange how first Belgium, then France and now Italy are changing their VAT systems so that the rates charged on energy-saving investments are cut. But our Treasury keeps stating that "under current EC law the UK may not consider a reduced rate for the installation of energy-saving materials for all housing" (Paymaster General Dawn Primarolo, in umpteen letters on the topic).

Equalising the tax rates would mean a loss of VAT revenue for the Treasury. We estimate it at around £18 million per year. Surely that can't be the reason the Treasury so stubbornly refuses to remove this anomaly? Can it?

Andrew Warren
Director, Association for the Conservation of Energy, London N1

Getty Images.
Show Hide image

Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.