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the new clause as part of the argument to ensure that those changes take place in Britain--and throughout the world-- before the planet is damaged irrevocably.

The Economic Secretary to the Treasury (Mr. Richard Ryder) : At the outset of what I describe as a lively debate, the hon. Member for Islington, South and Finsbury (Mr. Smith) claimed that the Government do not take account of the effects of our financial policies on the environment and that the new clause is necessary to oblige us to do so. As the hon. Gentleman knows full well, that claim is incorrect. When preparing the Finance Bill every year, we take full account of all relevant factors-- environmental, financial, those relating to employment, and a range of others. It would be irresponsible not to do so.

The new clause would not result in the Treasury paying greater attention to the environmental effects of our policies because we already take full account of such effects during the pre-Budget consultations when we consider all the representations that are made to us by a range of outside bodies, including those representing the environmental lobbies.

Mr. Campbell-Savours : Is the Minister suggesting that the comments of his hon. Friend the Member for Eastbourne (Mr. Gow) were ill-founded when he assumed that Ministers would not be able to find the time to do all these things? Is the Minister saying that his hon. Friend was simply wrong?

Mr. Ryder : If we were to accept the new clause, we would necessarily have to provide an environmental assessment along the lines recommended by the Labour party. If those circumstances turned out to be the case, I cannot envisage a more suitable hon. Member to provide us with the environmental dimension of monetary policy than my hon. Friend the Member for Eastbourne (Mr. Gow). He is so well-suited to considering all the environmental aspects of the Government's financial policy as to write a long thesis on the environmental dimensions of monetary policy and especially M0. I should not be surprised if, before the summer was out, my hon. Friend did not send me a clipping from his local paper, "The Eastbourne Trumpet," providing us with an article along those lines. I very much look forward to receiving a copy in the next few months.

I do not think that the new clause would lead to the House being better informed about the effects of the Finance Bill. It would be an unnecessary claim on the resources of the Government to be obliged to prepare a specific assessment of the environmental impact of each clause. My hon. Friend the Member for Birmingham, Northfield (Mr. King) was right to say that the new clause would lead to extra bureaucracy and would not cast any extra light on Budget changes. As the House knows, notes on clauses are already produced and provide a summary of the purpose of Government clauses. They provide most of the technical information that the House requires. As hon. Members know, if they have a specific and detailed question about the impact of any clause--environmental or otherwise--they can ask a Minister to expand on the subject in Committee ; they can write to a Minister ; they can table a question ; or they can bring a delegation to see a Minister.

In Committee we had some interesting and constructive debates about the environmental aspects of the Budget. Debates on the early clauses related to indirect taxes and

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when we discussed vehicle excise duty, for example, the hon. Member for Wrexham (Dr. Marek) made some valid points. I recall saying two or three months ago that his advice to previous Ministers, in his capacity as shadow economic spokesman, was taken into account when we framed the VED policy. The same applies to any other hon. Member who wishes to take an interest annually in this legislation. I see no reason to believe that the existing arrangements do not allow hon. Members to come to a view on the merits of a clause, and to take all the relevant considerations, including environmental ones, fully into account.

The Government place--and will continue to place--a high priority on environmental issues. We have taken several steps to benefit the environment, such as action on CFCs, on sulphur dioxide and nitrodioxide emissions, on water quality, and with the establishment of the climatic change centre. The increase in the differential in favour of unleaded petrol in this year's Budget should increase the uptake of unleaded petrol to 40 per cent by next year's Budget. All that has been achieved within four years of starting down this route.

The Environmental Protection Bill, which has just passed through the House, provides for integrated pollution control, strengthens local authority controls to combat air pollution and to control litter, and includes provisions on waste disposal and recycling. As the House knows, we are preparing a White Paper on the environment, which will be published in the early autumn.

The Budget measures for unleaded petrol and relief for waste disposal operators will bring worthwhile environmental benefits. The Government are conscious of the importance of the environment, but a whole range of factors must also be considered, including, as my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) emphasised, scientific analysis and the effects on the economy in determining the right response to problems. We are prepared to make tax changes for environmental reasons, where tax is the right instrument with which to do so. Unleaded petrol was an example. We shall continue to ensure that measures are based on the best possible scientific and economic analysis.

The hon. Member for Islington, South and Finsbury alleged that the car scale increase had been small. He knows that that is not the case. As my right hon. Friend the Member for Hertfordshire, North (Mr. Stewart) pointed out to the hon. Gentleman, over the past three Budgets, the Government have tripled the car scales, having inherited small scales from the last Labour Government. The hon. Member for Islington, South and Finsbury suggested that we should issue a green book at the time of the Budget each year, in addition to the Red Book. Does that mean that we shall also have to provide a crimson book for energy, a purple book for agriculture, and a grey book for education? Where do we stop in producing such documents? The Opposition have not made it clear. But perhaps when the hon. Member for Wrexham replies to the debate, he will do so.

New clause 4, which has also been tabled by the Labour Front Bench, seeks to provide an incentive to fitting catalytic converters in company cars by reducing the car benefit scale charges where that has been done. That proposal is an unnecessary measure which would

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complicate the tax system, reduce the tax revenue, and introduce a new fiscal incentive for company cars. That is probably unintended, but several of my hon. Friends, including my hon. Friend the Member for Northfield, have pointed out that consequence. However, it would make very little difference to our progress towards the important objective of reducing car and lorry pollution. The House knows-- several hon. Members have mentioned it--that the EC exhaust emission standards will require all new petrol engine cars sold in the EEC to be fitted with a catalytic converter by the end of 1992. Company cars are replaced every two or three years on average. As the company car fleet is predominantly composed of new cars, the new EC provisions will bite quickly into the company car sector. For that reason, the Government consider that a fiscal incentive to change over to cars with a catalytic converter is unnecessary in view of the obligations that we have been asked to meet by the EC.

As I have already described, the proposal would be expensive. With just under 2 million company cars on the road, a cost of about £1 million would be incurred for every 1 per cent. of cars fitted with converters. Much of that cost would be dead weight, for example, as employers begin to buy more cars fitted with catalytic converters in the run-up to 1992. Indeed, some manufacturers already fit converters to all their cars.

The other defect of the clause is that it has no time limit. It would continue to run even after we met our obligations in 1992 when converters will be compulsory for all new cars. By then, the proposal would cost approaching £100 million for no benefit whatever. 8 pm

Mr. Hind : Is not by far the most important point against the proposal that there is no reason for introducing a tax incentive for company cars alone to fit catalytic converters? Surely our aim should be that all cars are fitted with catalytic converters to reduce the fumes from cars. Therefore, people who buy their own cars, who represent a large section of the public, should not be cut out from such a tax benefit.

Mr. Ryder : I agree with my hon. Friend. I shall deal with that argument shortly.

The Government believe in principle that benefits in kind should, as far as possible, be fully taxed to provide neutrality in the tax treatment of payments in cash and in kind. The benefit to the employee is not reduced by fitting a catalytic converter to a company car. In general, larger and more expensive cars tend to be fitted with catalytic converters.

While accepting that the new clause would put back the Government's determined action over the past three years, in particular to reduce undervaluation of company cars for tax purposes, the Opposition have argued that company car taxation should be increased, partly for environmental reasons. In the new clause, they would introduce a new fiscal privilege confined to company cars which would have no counterpart--this is the point made by my hon. Friend the Member for Lancashire, West (Mr. Hind)--for the private motorist who must buy his own car. I amplify not only the remarks made by my hon. Friend but the argument deployed by the hon. Member for Southwark and Bermondsey (Mr. Hughes). Over half the number of cars purchased by individuals go to companies for purposes such as short-term car hire, car pools and driving

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tuition, which are not subject to the scale charges. The new clause would do nothing to encourage that group of purchasers to buy cars equipped with catalytic converters.

My hon. Friend the Member for Northfield, with his experience of Birmingham, knows that the motor industry is gearing itself up for the new regime that will apply after 1992. It will require more than simply bolting on a catalyst-equipped exhaust. The introduction of catalyst-compatible engines and engine management systems, particularly for smaller cars, will take time.

"There is no question of providing an incentive to fit catalytic converters. It has to be done. We have agreed it with the EC. There are cases for incentives in certain circumstances, but they should be argued on their merits. I regret that I have to say that I do not think that the case has been proven here. I would rather that the money which would be lost to the Treasury were spent on other environmental concerns."--[ Official Report, 11 July 1989 ; Vol. 156, c. 902.]

Opposition Members, including Front-Bench spokesmen, will realise that I have just quoted directly from the speech made by the hon. Member for Wrexham in last year's debate on the Finance Bill on the Floor of the House on a similar proposal to reduce special car tax for cars fitted with converters. I say to my hon. Friends and to the House that the hon. Gentleman's arguments deployed then are as true today. For that reason, I urge the House to reject the new clause.

Dr. Marek : We have had a good debate, with the exception of the speech made by the hon. Member for Lancashire, West (Mr. Hind). The hon. Gentleman came in late, he would not give way, he was bad-tempered, and my hon. Friend the Member for Makerfield (Mr. McCartney) had it absolutely right. Many of us were surprised when the hon. Gentleman told my hon. Friend the Member for Workington (Mr. Campbell-Savours) that he should make his own speech. My hon. Friend tried to make his own speech earlier, but the hon. Gentleman was not present.

Mr. Hind rose --

Hon. Members : No.

Mr. Hind : The hon. Gentleman referred to me. I resent the suggestion that my speech was in any way bad-tempered. It was perfectly good-humoured. Opposition Members reacted badly, perhaps because the arguments that I marshalled against the Opposition's case were penetrating. The only reason why I did not give way to the hon. Gentleman was simply lack of time.

Dr. Marek : I looked and listened in vain for any argument in the hon. Gentleman's speech. However, he makes his own case, and the House can judge him.

The Minister dealt at some length with new clause 4, but not with new clause 1. In some ways, that is not surprising. I have some sympathy with what he said about new clause 4, but new clause 1 is the important clause. We have received support from the Minister's hon. Friends on the Back Benches for similar clauses, if not outright for new clause 1. The Minister said that he already takes account of environmental impact with his colleagues when Ministers prepare the Budget. If I remember correctly, he said, "We already take account of such effects."

What is wrong with the public knowing exactly how Ministers take account of those effects? If Ministers put their fingers in the air to feel which way the wind is blowing, perhaps they should keep that secret, but if they

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take account of such effects in a meaningful and quantitative way, surely it would do the environment good if the public knew exactly how the environment and environmental considerations would be affected by the Budget statement. That is important.

The Minister asked me to answer a point and I shall do so. He asked whether the Treasury should issue crimson books or purple books for different Departments. I suspect that at the end of the day the speech made by my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) will prove accurate. Environmental considerations will be forced on to the agenda, not only of parties in the House but of public conversation and therefore of attitudes to the various parties. My hon. Friend was right. That means that we need an environmental assessment of the work of Government. The only argument deployed by the hon. Members for Birmingham, Northfield (Mr. King) and for Lancashire, West was that we would need armies of bureaucrats to carry out environmental assessments. It need not go that far. In many ways, the work is already being done by the Government and their Departments. Because we believe in freedom of information, we need to know exactly how they do it, and what account they take of that work, so that the public can make their own assessment.

New clause 1 is a very timid measure that does not go very far, and hon. Members will be able to beef it up so that the global problems of the environment can be tackled more effectively. New clause 1 asks that the environmental effects of the Budget should be reviewed and that any effects --or anticipated effects--that it may have on, for example, land use in the United Kingdom--and there are six cases--should be assessed. If that has already been done by the Treasury, why can we not know? What is secret about that? Many statistics are already known.

Mr. McCartney : The Department of the Environment, for the purposes of designating local authorities for the use of derelict land grant, currently does precisely as my hon. Friend says. It designates the area of the derelict land and then stipulates the purpose to which it can be put. It is only when that assessment has taken place that the authority can develop the land and receive project grants. The Department of the Environment states that 20,000 acres of derelict land in the north-west listed in its land bank are suitable for assistance.

Dr. Marek : My hon. Friend is knowledgeable on these matters. He is right to say that an enormous amount of information is held by the local authorities, but it is also held by the Department of the Environment, the Scottish Office, the Welsh Office, and the Northern Ireland Office. It need not require an army of bureaucrats and administrators for such assessments to be made public.

New clause 1 will make the Government assess the pollution levels and the effect that the Budget would have on them. It requires an assessment of the rate of usage of natural resources, whether in the United Kingdom or elsewhere, and the effect that the Budget will have on that rate of usage. It also seeks to assess the rate and types of energy production in use in the United Kingdom, and the effect that the Budget will have on them.

Paragraph (e) urges and imposes upon the Government a general duty to encourage

"the use of renewable sources of energy of raw materials in the United Kingdom".

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That is a subject on which I hope that there will be no dispute. It is important that the effects of the Budget are assessed in this regard.

8.15 pm

New clause 1 asked for an assessment of the Budget's effects on human and animal health, whether in the United Kingdom or elsewhere. That is a sensible and moderate new clause, and not one that would impose an intolerable burden on the Government. It would inform the public and ensure that we had more information on which to base future policy. It would also enable other countries to give greater weight to our views on environmental protection, because they too would have more information on which to base their judgment. Such an assessment must be good for the environment.

New clause 4 has been criticised, but its provisions would look very well as part of any environmental assessment. The hon. Member for Northfield was wrong when he said that it is defective because people provided with pool cars would not be taxed. If the hon. Member for Northfield--although he is not listening at the present--will study the clause properly, he will see that he is wrong.

I have some sympathy with the Minister when he says that new clause 4 is unnecessary because, when catalytic converters are required for all new cars, the rate of turnover in the company car sector is such that they will all have them quickly. Nevertheless, the amendment would be an incentive to fit company cars with converters in the remaining years before they are mandatory.

The Minister was stretching a point when he said that excise tax will remain even when all cars are converted. If I heard him correctly, he said also that the proposed concession would cost about £100 million per year at some future date. It must have occurred to the Economic Secretary that new clause 4 is meant as an incentive for only a number of years, and that any tax relief given this year can be taken away in two or three years' time.

The right hon. Member for Hertfordshire, North (Mr. Stewart) gave welcome support to new clause 1. He got it slightly wrong about the Labour party being the high tax party and the Conservative party being the low tax party. Taxation as a percentage of GDP is higher now than it was when Labour left office in 1979. I forget the precise figures, but taxation is today about 3 or 4 per cent. higher--so the party that taxes the British people more is the Conservative party, not Labour. Conservative Members try to mislead the public and are not accurate with their use of words. Members of the Government and Back Benchers talk about income tax, sometimes about tax, and at other times about indirect tax.

At the end of day, one cannot get away from the fact that the lowering of income tax has been more than made up by the increase in value added tax from 8 per cent. to 15 per cent. and a large increase in the national insurance contribution.

The hon. Member for Carshalton and Wallington (Mr. Forman) largely supported new clause 1. The Liberal party also supported it--although, as usual, rather churlishly. More forthright support would have been welcome.

Important considerations include whether we look after the environment by regulation or by the judicious adjustment of tax and taxation policy. Minimum standards must be set, but the use of a taxation policy must

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be a club in the bag. We would try to see whether value added tax could be differentiated so that, for example, non- biodegradable and non-recyclable substances would bear a higher rate than substances that were recyclable and biodegradable.

In the corporate sector, there should be additional allowances against corporation tax for companies making specific anti-pollution or conservation investment. As a straightforward example, it must be wrong that there is just one rate of vehicle excise duty of £100 for a small or big car. Changes could be made there.

We have long advocated that the price differential between leaded and unleaded petrol should be increased still further and I am pleased that the take-up of unleaded petrol is still increasing. The Government have promised that, by the end of the year, or by next year's Budget, that take- up will have increased to 40 per cent. of the market. I wish them luck, but if they do not achieve that target, I look forward to the price differential between leaded and unleaded increasing in due course.

If company cars receive a benefit in kind that is untaxed, that should be changed. Most hon. Members believe there are large classes of company cars which do not bear the correct rate of tax and which receive a great untaxed benefit in kind. I hope that the Treasury will consider addressing that in the next Budget.

I am not arguing that taxation should be increased in aid of the environment--that public debate will be held in the next two years. It is an argument of swings and roundabouts. Taxing for environmental purposes means that incentives are changed to reflect the true cost of any particular goods. Such tax changes are good for the Inland Revenue and also encourage innovations to reduce pollution. We believe that, as a first step, tax allowances should be made in particular areas to encourage conservation of the environment and improvements in the quality of life.

I thank my hon. Friends the Members for Carlisle (Mr. Martlew) and for Glanford and Scunthorpe (Mr. Morley) for their well-informed speeches, which were listened to with interest. On a slightly churlish note, it is a pity that many of the Conservative Back Benchers who were members of the Finance Committee have not been present. I hope that that will be redressed in our later debates. There is an unanswerable case for a new clause similar to new clause 1. For that reason, I urge my hon. Friends to press our new clause to a Division.

Question put, That the clause be read a Second time :

The House divided : Ayes 206, Noes 261.

Division No. 293] [8.22 pm

AYES

Adams, Allen (Paisley N)

Allen, Graham

Anderson, Donald

Archer, Rt Hon Peter

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashley, Rt Hon Jack

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Barron, Kevin

Beckett, Margaret

Beith, A. J.

Bell, Stuart

Benn, Rt Hon Tony

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Carlile, Alex (Mont'g)

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Column 751

Carr, Michael

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Cousins, Jim

Crowther, Stan

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eadie, Alexander

Eastham, Ken

Evans, John (St Helens N)

Ewing, Harry (Falkirk E)

Fatchett, Derek

Faulds, Andrew

Fearn, Ronald

Field, Frank (Birkenhead)

Fields, Terry (L'pool B G'n)

Fisher, Mark

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galloway, George

Garrett, John (Norwich South)

George, Bruce

Godman, Dr Norman A.

Gordon, Mildred

Gould, Bryan

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Grocott, Bruce

Hardy, Peter

Harman, Ms Harriet

Hattersley, Rt Hon Roy

Heal, Mrs Sylvia

Henderson, Doug

Hinchliffe, David

Hogg, N. (C'nauld & Kilsyth)

Home Robertson, John

Howarth, George (Knowsley N)

Howells, Geraint

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Hughes, Simon (Southwark)

Illsley, Eric

Janner, Greville

Jones, Barry (Alyn & Deeside)

Jones, Ieuan (Ynys Mo n)

Jones, Martyn (Clwyd S W)

Kennedy, Charles

Kirkwood, Archy

Lambie, David

Lamond, James

Leighton, Ron

Lewis, Terry

Litherland, Robert

Lloyd, Tony (Stretford)

McAllion, John

McAvoy, Thomas

McCartney, Ian

Macdonald, Calum A.

McFall, John

McKay, Allen (Barnsley West)

McKelvey, William

McLeish, Henry

Maclennan, Robert

McNamara, Kevin

McWilliam, John

Madden, Max

Mahon, Mrs Alice

Marek, Dr John

Marshall, David (Shettleston)

Martin, Michael J. (Springburn)

Martlew, Eric

Maxton, John

Meacher, Michael

Meale, Alan

Michael, Alun

Michie, Bill (Sheffield Heeley)

Michie, Mrs Ray (Arg'l & Bute)

Moonie, Dr Lewis

Morgan, Rhodri

Morley, Elliot

Morris, Rt Hon A. (W'shawe)

Morris, Rt Hon J. (Aberavon)

Mullin, Chris

Murphy, Paul

Nellist, Dave

Oakes, Rt Hon Gordon

O'Brien, William

Orme, Rt Hon Stanley

Parry, Robert

Patchett, Terry

Pendry, Tom

Pike, Peter L.

Powell, Ray (Ogmore)

Prescott, John

Primarolo, Dawn

Quin, Ms Joyce

Radice, Giles

Randall, Stuart

Redmond, Martin

Rees, Rt Hon Merlyn

Reid, Dr John

Richardson, Jo

Robertson, George

Robinson, Geoffrey

Rogers, Allan

Rooker, Jeff

Ross, Ernie (Dundee W)

Rowlands, Ted

Ruddock, Joan

Sedgemore, Brian

Sheerman, Barry

Sheldon, Rt Hon Robert

Shore, Rt Hon Peter

Short, Clare

Sillars, Jim

Skinner, Dennis

Smith, Andrew (Oxford E)

Smith, C. (Isl'ton & F'bury)

Smith, Rt Hon J. (Monk'ds E)

Smith, J. P. (Vale of Glam)

Spearing, Nigel

Steinberg, Gerry

Stott, Roger

Strang, Gavin

Straw, Jack

Taylor, Mrs Ann (Dewsbury)

Taylor, Matthew (Truro)

Thomas, Dr Dafydd Elis

Turner, Dennis

Wallace, James

Walley, Joan

Wardell, Gareth (Gower)

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