11th September 2012
I am delighted that the UK Government is going to stand up to the 'hypocritical' European Commission over their desire to increase the VAT rate being charged on energy-saving materials.
The EU Commission has reprimanded the UK for charging a reduced rate and in June this year they sent a 'Reasoned Opinion' (the second stage of infringement proceedings) to the UK. They argue that the UK can only apply 'reduced rates' of VAT on products that are explicitly set out in the Annex of the EU's VAT directive. As energy saving materials are not in the Annex, the Commission is saying that the UK must charge the full rate or face a court challenge.
This would mean that the cost of installing draught insulation, ground-source heat pumps and controls for central heating would increase.
The Government has now said that they will challenge the ruling. It is baffling that an organisation that preaches environmental responsibility, to the point where it is jeopardising jobs, argues against a scheme that is both good for the economy and the environment. Rather than obstruct us, Europe should follow our example!
How can the Commission claim to lead the fight against climate change one day and then push up the price of insulation the next?
The Commission should encourage all European countries to follow the UK's lead and reduce the costs of making houses more energy efficient.
The UK has common sense on its side in this case and it is right to fight this ruling all the way.