VAT
The VAT system is an EU-wide common system of indirect taxes that was introduced in the late 1960s to improve transparency in exports and imports between EU countries. Initially each country could set its own rates. The Commission has since tried to set a standard rate and a reduced rate of VAT for the whole of the EU because of concerns that different rates are distorting competition. This has not been achieved - standard rates vary between 15% and 25% and countries apply reduced rates to different products - as most countries, in particular the UK, see tax as a national prerogative. The Commission is proposing to rationalise the system so it is the same across the internal market by having a single list of products to which countries can apply a reduced rate. Unfortunately, it has not included some important products, notably children's shoes and clothing and domestic heating fuel. I will be calling for these and other necessary goods and services to continue to benefit from a reduction in VAT.

Services of General Interest
We are currently debating the EU's role in promoting the provision of quality public services. It is, of course, not the job of the EU to decide which services should be provided with public money. That is a decision to be made at national or regional level. Nevertheless, by focusing on specific sectors, the EU has encouraged the opening up to competition of a variety of service areas since the 1980s such as telecoms and energy, which are now subject to internal market and competition rules. Liberalisation has had massive benefits for consumers resulting in better quality of service and lower prices. Local authorities are not necessarily able to provide the best services and opening this area up to competition will stimulate modernisation and greater efficiency. But there must also be sufficient rules in place to guarantee access to everyone, wherever they live and at an affordable price as well as security of supply, especially since the recent power cuts in London and in parts of the Continent.

EU research programme
Last year the European Parliament and national ministers responsible for research came to agreement on areas to be funded under the EU's 5-year research programme. One of the key priorities of the programme is entitled "life sciences, genomics and biotechnology for health". Researchers across Europe are able to apply for EU funding to work together on breakthroughs in the life sciences field to benefit public health. One of the areas of research under this priority is on stem cells. Stem cells from early stage embryos offer promising new treatments for currently incurable diseases. However, a lot of controversy has surrounded the issue of whether it is morally right to use embryonic stem cells for research purposes. Those who are against it argue that research should be restricted to adult stem cells. Many researchers have said that one type of research should not be excluded in favour of another at this early stage and that embryonic stem cell research should help improve their understanding and eventual use of adult stem cells. A majority in the European Parliament voted in favour of EU funding for research on stem cells from surplus embryos (i.e. surplus to IVF treatment and to be destroyed). However no agreement was reached with all 15 national research ministers. The Commission has now come forward with a set of guidelines. I hope the Parliament and Council will be able to reach a compromise to allow some research within those countries that allow it and have strict ethical rules in place. Scotland is a world leader in this area of research and has benefitted considerably from EU funding.