Joint unionist anger as energy VAT cut is denied for Northern Ireland due to Protocol

Northern Ireland’s exclusion from Chancellor Rishi Sunak’s zero VAT cut for households installing energy efficiency measures because the Province has to adhere to EU VAT rules exposes the “malign influence” of the protocol, unionists warned last night.

By Henry McDonald
Thursday, 24th March 2022, 9:07 am

While the Chancellor announced in his Spring statement that an extra £47 million will be given to the Stormont Executive his decision to impose no VAT on the installation in homes of materials such as solar panels, insulation or heat pumps will not apply in NI.

Under the Protocol Northern Ireland is subject to EU rules that insist there has to be a minimum of 5% VAT.

Unionists united on Wednesday to label the Protocol a “constitutional affront” which was costing households here much needed tax breaks in the cost-of-living crisis.

Chancellor of the Exchequer Rishi Sunak delivering his Spring Statement in the House of Commons.

Sir Jeffrey Donaldson said it was clear families would lose out because of the Protocol.

The DUP leader said: “The ‘rigorous implementers” in Sinn Fein, the SDLP and Alliance are costing our economy millions every year and they are now costing households tax breaks. It is time to join with the DUP and end this Protocol madness.”

Ulster Unionist Finance spokesperson Steve Aiken OBE said the exclusion of the Province from the VAT cut on installing energy saving measures around the home was a “damning indictment of the Protocol.”

Mr Aiken said: “The Chancellor’s statement has done little to alleviate the real pressures being felt by many people due to the cost of living crisis, and has highlighted the malign influence the NI Protocol is having on people in Northern Ireland, as UK VAT rules cannot apply here without the EU’s permission. This unacceptable situation must be promptly resolved once and for all.”

He said it was “extraordinary” that the Protocol could prevent the 0% VAT rate for energy efficiency measures and vindicated the Ulster Unionists’ warning about the influence of the post-Brexit trade deal would have on Northern Ireland.

TUV leader Jim Allister said the Protocol had struck again when it comes to driving a wedge between NI and the rest of the UK. He said: “The Chancellor of the Exchequer announced in his Spring statement that householders installing energy efficient materials such as solar panels,insulation or heat pumps will no longer have to pay VAT.

“Yet, we in Northern Ireland by virtue of being uder the Protocol’s yoke of bondage remain under the EU’s VAT regime which demands a minimum of 5% VAT.

“This is a constitutional affront and a burden on hard pressed families. In the midst of a cost-of-living crisis it will be more expensive for Ulster families to insulate their homes and keep their families warm than in Great Britain.

“This disadvantaging of Northern Ireland in this regard is the outworking of the Alliance, SDLP and Sinn Fein calls to rigorously implement the Protocol. Shame on them!”

Northern Ireland Secretary Brandon Lewis said the Chancellor’s Spring rise in National Insurance thresholds marks a tax cut for 800,000 workers in the Province, which he added would save the typical employee more than £330 a year. Although NI is excluded in the VAT cut for energy saving measures, the Secretary of State pointed out that the Stormont Executive is being given an additional £47 million on top of the annual subvention from the Treasury as a result of the Chancellor’s Spring Statement.

Mr Lewis said: “People in Northern Ireland will be feeling financial pressures which events beyond our control have placed upon us all, but decisions such as cutting fuel duty, raising the National Insurance thresholds, and increasing Employment Allowance will help alleviate these.”

SDLP finance spokesperson Matthew O’Toole said the Chancellor’s Spring Statement was full of nakedly political tax moves but failed to target support to help with the cost of living emergency.

O’Toole pointed out that much of the value of the increase in the earnings threshold for employee National Insurance contributions will be wiped out by the combination of the ending of the Universal Credit uplift as well as the coming rise in the headline National Insurance rate.

Alliance MP Stephen Farry said the Chancellor had done little for the most vulnerable in society.