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Schedule 4

Vehicle Excise and Registration

Ms Primarolo: I beg to move amendment No. 27, in page 164, leave out line 23.

The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse): With this, it will be convenient to discuss also the following amendments: No. 22, leave out line 26.

No. 23, leave out line 27.

No. 24, leave out line 28.

No. 25, leave out lines 29 and 30.

Ms Primarolo: The amendments cover similar ground to the previous debate. I do not intend to delay the Committee by referring to each amendment, but I shall make special reference to amendment No. 27, which would maintain the status quo for electrically propelled vehicles. All the amendments would maintain the status quo of vehicle excise duty, as plan B in persuading the Government to undertake the review for which we argued in the past debate but, so far, have failed to secure.

There are no precise figures on the number of electric milk floats in use, but it is estimated that there are 25,000 milk rounds in England and Wales alone and on at least two thirds of those, electric vehicles are used. The imposition of even a reduced rate of £35 vehicle excise duty represents a considerable annual increase in costs to the industry. Any increase in cost targeted directly at doorstep delivery is a further threat to the viability of the milk round. The Government have maintained their support for the delivery of milk to people's doorsteps and we are sure that, on reflection, they will wish to reconsider the imposition.

A statement that the use of electric vehicles should not be penalised would be a positive contribution to the Government's professed claim to reduce carbon dioxide emissions. Because of their very nature, the use of electric vehicles should be encouraged, not penalised by the imposition of vehicle excise duty. Since taxation is used by the Government as a method of encouraging environmentally friendly use of vehicles, it is absolutely absurd that they now propose to extend to all vehicles of this class an initial vehicle excise duty which, no doubt in subsequent years, they will seek to increase.

Ministerial responses to representations made so far have been inconsistent, to put it politely. The Secretary of State for Transport has stated that the imposition of a £35 rate of duty on electric milk floats will

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"reduce evasion and be easier to understand and administer." What gobbledegook; what rubbish. How can there be any evasion if there is no tax in the first place? Perhaps the Government will explain why we need to propose a tax to prevent evasion in a category in which there can be no evasion because there is no tax. The Minister of Agriculture, Fisheries and Food has said that it is a matter for the Treasury and that the imposition

"will make fraud more difficult and increase efficiency of administration."

What utter rubbish. The whole purpose of introducing this taxation is to open up a new area of indirect taxes--a rich vein into which the Government hope to tap, in their efforts to establish for themselves a war chest of booty from the electorate that the Government can try to give back in electoral bribes by reducing direct taxes just before the general election.

The Minister added insult to injury by calculating the additional tax on a cost per pint of milk in an attempt to hide the reality that the industry will face enormous difficulties. The imposition of costs which in the first year may be as much as £500,000 will undermine the milk rounds' ability to continue to exist.

We stand by the speeches made by Opposition Members in previous debates. We urge the Minister to withdraw the imposition of vehicle excise duty on the vehicle classes listed in schedule 4 and to consider bringing before the Committee a more rational, sensible and logically argued case for a new regime of vehicle excise duty.

Mr. Heathcoat-Amory: We recognise that electric vehicles have certain environmental advantages. That is why they will be taxed at such an advantageous rate. Some would say that the environmental advantages are not overwhelming because an electrically powered vehicle has to use power generated elsewhere; in a sense, one is therefore simply shifting the pollution from the vehicle to the generating plant.

I recognise that such vehicles have certain advantages, especially because they produce less noise, which is why they will be placed in a concessionary class and charged £35 per annum only. However, it is right that they should be removed from the totally exempt category, which we are reserving for emergency vehicles and those used by the severely disabled.

Electric vehicles have an additional advantage in that there is no excise duty payable on the fuel that they use--electrical power.

Ms Primarolo: VAT is paid on it.

Mr. Heathcoat-Amory: The hon. Lady suggests from a sedentary position that VAT is payable on the electricity. That is, of course, not the case. If she were to think more carefully, she would realise that the electricity is supplied commercially and, therefore, the VAT payable on the electricity supply is recoverable as input tax. The other amendments in the group cover snow-clearing, ice-gritting, street-cleansing vehicles, and so on. We covered the point in relation to those vehicles fairly comprehensively. However, the hon. Lady must face up to something that she persistently avoids: she wants street-cleansing vehicles to be exempt from excise duty even though it has been explained to her that when

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the same type of vehicle is used for marginally different activities--for example, cleaning out an underground drain or sewer--it will bear, according to the Opposition amendments, or lack of them, a full rate of vehicle excise duty.

How can Labour Members tolerate the continuance of a glaring anomaly when their whole Budget strategy was apparently based--or so we were told at the time--on ending anomalies and loopholes? Until they clear up that confusion in their own thinking, I do not think that the Committee will take the amendment seriously.

Question put, That the amendment be made:--

The Committee divided: Ayes 222, Noes 276.

Division No. 55] [8.30 pm

AYES

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Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nick

Ainsworth, Robert (Cov'try NE)

Allen, Graham

Anderson, Donald (Swansea E)

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashton, Joe

Austin-Walker, John

Banks, Tony (Newham NW)

Barnes, Harry

Battle, John

Bayley, Hugh

Beckett, Rt Hon Margaret

Beith, Rt Hon A J

Bell, Stuart

Benn, Rt Hon Tony

Benton, Joe

Bermingham, Gerald

Berry, Roger

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (Dunfermline E)

Brown, N (N'c'tle upon Tyne E)

Bruce, Malcolm

Burden, Richard

Caborn, Richard

Callaghan, Jim

Campbell, Mrs Anne (C'bridge)

Campbell, Menzies

Campbell, Ronnie (Blyth V)

Campbell-Savours, D N

Canavan, Dennis

Cann, Jamie

Chidgey, David

Chisholm, Malcolm

Church, Judith

Clapham, Michael

Clark, Dr David (South Shields)

Clarke, Eric (Midlothian)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Coffey, Ann

Cohen, Harry

Connarty, Michael

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Cunningham, Jim (Covy SE)

Cunningham, Rt Hon Dr John

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Dalyell, Tam

Darling, Alistair

Davidson, Ian

Davies, Bryan (Oldham C'tral)

Davies, Rt Hon Denzil (Llanelli)

Denham, John

Dixon, Don

Donohoe, Brian H

Dunwoody, Mrs Gwyneth

Eagle, Ms Angela

Eastham, Ken

Enright, Derek

Etherington, Bill

Evans, John (St Helens N)

Ewing, Mrs Margaret

Field, Frank (Birkenhead)

Fisher, Mark

Foster, Rt Hon Derek

Foster, Don (Bath)

Foulkes, George

Fyfe, Maria

Galbraith, Sam

Galloway, George

Gapes, Mike

George, Bruce

Gerrard, Neil

Gilbert, Rt Hon Dr John

Godman, Dr Norman A

Golding, Mrs Llin

Graham, Thomas

Griffiths, Nigel (Edinburgh S)

Grocott, Bruce

Gunnell, John

Hall, Mike

Hanson, David

Harman, Ms Harriet

Harvey, Nick

Heppell, John

Hill, Keith (Streatham)

Hinchliffe, David

Hoon, Geoffrey

Hoyle, Doug

Hughes, Kevin (Doncaster N)

Hughes, Robert (Aberdeen N)

Hutton, John

Illsley, Eric

Ingram, Adam

Jackson, Helen (Shef'ld, H)

Jamieson, David

Janner, Greville

Jones, Barry (Alyn and D'side)

Jones, Lynne (B'ham S O)

Jones, Martyn (Clwyd, SW)

Jones, Nigel (Cheltenham)

Kaufman, Rt Hon Gerald

Keen, Alan

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