Joyce blasts Tory ‘safety tax’ on small businesses and charities

Labour Senedd member Joyce Watson has blasted the UK government’s decision to increase the price of personal protective equipment (PPE).

In May the Treasury scrapped VAT on medical-grade face masks and PPE, to help control the spread of coronavirus.

But from this month businesses will again be charged 20% on the purchase of vital safety equipment, despite long-standing VAT exemptions for other essential health items and safety equipment, like incontinence products and bicycle helmets.

During First Minister’s Questions on Tuesday (10 Nov), Mrs Watson – who used to run pubs and shops in west Wales – said the hike would hit small businesses, charities and fronline third sector organisations hardest.

Joyce Watson MS said: 

“It’s actually unthinkable that the UK Treasury would add VAT to PPE and the impact that that surcharge will have on small businesses across Wales who are rightly trying to do the right thing for their staff and for their customers to keep them safe – and also for charities and third sector organisations, who are providing direct help to people in communities right across Wales.”

Conservative politicians have defended the tax, claiming businesses can claim back VAT costs they incur as expenses. But smaller businesses that do not reach the £85,000 annual turnover VAT threshold – and charities and other not-for-profit organisations – will not be able to do so. 

First Minister Mark Drakeford backed up his Labour colleague and attacked Welsh Conservative health spokesperson Andrew RT Davies.

Mr Drakeford said:

“I thank Joyce Watson for that and entirely agree with her. It’s unfathomable to me as to why the UK Government has decided that this is the right moment to add additional costs on to essential safety equipment.

“We are providing PPE on an industrial scale in the Welsh NHS and social care system: 440 million items of PPE already this year, of which 220 million have been provided to social care providers. It will cost, in the Welsh system alone, an extra £20 million, which is money now we don’t have to provide services for cancer patients and cardiac patients or the other things that Members on the Conservative benches have been asking me about this afternoon. That money will now be handed back to the Treasury as a result of this decision.

“Joyce Watson is very right to point to the impact on small businesses and charities here in Wales, organisations that are really struggling during the pandemic, whose business model has been very badly affected by it, who are trying to do the right thing, who are spending money on PPE for their staff and sometimes for customers. Now they will be paying VAT.

“Andrew R.T. Davies suggested to me they’ll just get it back. Well, small businesses that are not VAT registered won’t get it back at all. Charities that are VAT exempt will not get it back at all.

“I’m glad to see that he thinks it’s a good idea that a safety tax should be introduced here in Wales. It tells us a lot about the priorities of people on those benches, that they’re willing to pontificate when they think it suits them and then, when something as ridiculous as this happens, they’re prepared to defend it as well.”

Health minister Vaughan Gething weighed in on social media, tweeting:

“Good question by Joyce Watson about the VAT safety tax on PPE & strong clear response from First Minister – staggering that Welsh Conservatives support UK decision to make PPE more expensive in the midst of a second wave of #COVID19“

The Welsh Government has asked the Chancellor of the Exchequer to urgently reconsider the decision.