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Waterson, Nigel

Watts, John

Wells, Bowen

Whitney, Ray

Whittingdale, John

Widdecombe, Ann

Wiggin, Sir Jerry

Willetts, David


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Wilshire, David

Winterton, Mrs Ann (Congleton)

Wolfson, Mark

Wood, Timothy

Yeo, Tim

Tellers for the Noes: Mr. Simon Burns and Mr. Michael Bates


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Question accordingly negatived.

Amendments made: No. 44, in page 168, leave out line 43 and insert--

`10.--(1) Paragraph 5 of Schedule 1 to the 1994 Act (recovery vehicles) shall be amended as follows.

(2) In sub-paragraph (1) (annual rate of duty of £85) for the words "is £85" there shall be substituted "is--

(a) if it has a revenue weight exceeding 3,500 kilograms and not exceeding 12,000 kilograms, the same as the basic goods vehicle rate;

(b) if it has a revenue weight exceeding 12,000 kilograms and not exceeding 25,000 kilograms, 300 per cent. of the basic goods vehicle rate;

(c) if it has a revenue weight exceeding 25,000 kilograms, 500 per cent. of the basic goods vehicle rate."

(3) The following sub-paragraphs shall be inserted after sub-paragraph (5)- -

"(6) In sub-paragraph (1) references to the basic goods vehicle rate are to the rate applicable, by virtue of sub-paragraph (1) of paragraph 9, to a rigid goods vehicle which falls within column (3) of the table in that sub- paragraph and has a revenue weight exceeding 3,500 kilograms and not exceeding 7,500 kilograms.

(7) Where an amount arrived at in accordance with sub-paragraph (1)(b) or (c) is an amount--

(a) which is not a multiple of £10, and

(b) which on division by ten does not produce a remainder of £5, the rate is the amount arrived at rounded (either up or down) to the nearest amount which is a multiple of £10.

(8) Where an amount arrived at in accordance with sub-paragraph (1)(b) or (c) is an amount which on division by ten produces a remainder of £5, the rate is the amount arrived at increased by £5.". '.

No. 45, in page 169, line 19, leave out from beginning to end of line 24.

No. 46, in page 172, line 51, leave out from beginning to end of line 6 on page 173.-- [Dr. Liam Fox.]

Mrs. Ray Michie (Argyll and Bute): I beg to move amendment No. 41, in page 173, line 13, at end insert--

`(13A) Notwithstanding the above provisions within this schedule, the rate of vehicle excise duty for vehicles in the Restricted Heavy Goods Vehicle tax class which are operating primarily within a region in which there has been previous exemption from plating and testing shall be £150 per year.'.

This amendment was tabled because I want the Government to think again about the enormous burden that they are about to impose on small businesses and contractors operating on islands off the west and north coasts of Scotland [Interruption.]

The Chairman of Ways and Means (Mr. Michael Morris): Order. I would be most grateful if hon. Members in the vicinity of the Bar would go further beyond it to continue their discussions.

Mrs. Michie: I make particular mention of the northern islands because my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) shares my concern.


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I first raised this matter with the Department of Transport. I am sorry to see that there is no Minister from that Department in the House tonight. Formerly, island-based heavy goods vehicles paid a concessionary rate of £150 a year, because they are exempted from plating and testing. That is because there are no plating or testing stations on the islands.

But the Government now want them to pay according to the manufacturers' plated weight for each vehicle. As a result, island-based hauliers will have to pay between £1,280 and £4,250 a year per vehicle. As well as adding to the islanders' transport costs, that is likely to force many smaller firms out of business, with a consequent reduction in employment on the islands.

A concessionary rate should certainly be retained for the HGVs used only on the islands. The annual mileage is much lower than that of mainland HGVs, and the maximum payload is often limited by road restrictions. For example, a constituent of mine who runs a tanker to refuel fishing boats on the island of Mull does only 500 miles a year, yet he is threatened with an annual vehicle excise duty of £2,160. He will have to pass that on to the fishermen, and they cannot bear that sort of extra burden.

Some lorries never leave the island, and other contractors are based on, and operate from and to, the island. Arguably, a concessionary rate should also apply to HGVs used solely for deliveries to and from the islands, on condition that they do not ply for mainland business between island runs. That is a reasonable suggestion, because ferry timetables effectively impose restrictions on the use of such lorries. Their total annual mileage is less than 50 per cent. of the national average.

One of the busiest lorries on Mull does about 16,000 miles a year, compared with the national average of 47,000.

There is another category of vehicle that will be caught, with devastating consequences for the economy of the islands. They are known as shunt units. One of the main hauliers of goods to the islands in my constituency uses elderly cab units to marshal trailers on board Caledonian MacBrayne ferries and terminals. They are currently exempt from VED, but from 1 July of this year they will have to pay according to the manufacturers' plated weight. That will cost £3,150 per vehicle per year.

Although the contractor has been told that the increase will be phased in, with each vehicle paying £1,000 in the first year, I believe that the concession will last for only one year. Apart from travelling to and from the depot for occasional maintenance, shunt units do not use public roads; so why should they pay vehicle excise duty?

This haulier therefore faces a total extra cost of £15,750, which he will have no option but to pass on to his customers, thus adding to the cost of living on the islands. And he has already had to face increases in the ferry fares.

Mr. William Ross: The hon. Lady makes a powerful case for concessions to lorries that operate on islands--presumably she means islands that do not have a road bridge. Would she extend that same concession to the Isle of Wight? What will happen to Skye and Anglesey?

10.30 pm

Mrs. Michie: The Isle of Wight is quite a wealthy island, and many wealthy tourists go there. I am particularly concerned with the islands off the coast of


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Scotland, which struggle to survive with their farming and crofting communities. It is they who must be given help-- indeed, they are given help in terms of ferry subsidies, so it seems ludicrous that the Government should give subsidies on the one hand and tax them on the other.

I contacted the Department of Transport, which last year started to tell owners of HGVs that it was removing the concessionary rates for road tax on certain islands, and that would mean that island-based operators would be faced with the sums about which I have already spoken. I am sure that the Minister can understand and imagine the shock and dismay.

The Minister responsible, at the time, however, the hon. Member for Salisbury (Mr. Key), responded in a worthwhile manner. He ended his letter by saying-- [Interruption.]

The Second Deputy Chairman of Ways and Means (Dame Janet Fookes): Order. I am sorry to interrupt the hon. Lady, but there is a general hum of conversation. That is not polite to the hon. Member who has the Floor, and I must ask the Committee to be very much quieter so that I can hear, without straining my ears, what the hon. Lady is saying.

Mrs. Michie: Thank you, Dame Janet.

The Minister said:

"I am afraid that in some cases this will have significant cost implications, particularly for the heavier vehicles."

He continued:

"Because of the effects this might have on hauliers whose vehicles never leave the islands, I have asked my officials to review the position and will write to you in due course to let you know the result of the review."

I then had a letter in September 1994 from the Under-Secretary of State at the Department of Transport. He said:

"the law in this area is not as clear as it might be, and I have therefore decided that we will return to the criteria for qualifying for the basic rate VED for HGV's that applied before last April." In fact, the licensing people in Swansea had already started to increase the licensing fees to the lorry drivers. Fortunately, the Minister interfered; told it to stop and asked it to pay back--indeed it did--the lorry drivers who had paid the cheques that it had requested.

The Under-Secretary of State went on the say--this is important-- "This is an interim measure while we carry out a review . . . We are continuing to examine the position of off-shore islands in this wider review, which I expect to be complete in the Autumn. We will of course make sure that we consider the views of all interested parties."

Perhaps the Minister can ask the Department of Transport if he does not know the answer. What was the outcome of the review? Whom did the Department of Transport consult?

I wrote again to him on 30 December 1994, but to date have had no reply. Then I found all this being slipped, as it were, into the Finance Bill. If the Government go ahead with these massive increases and penalise the islanders in that way, the consequences for the economy and for the people will be very detrimental, for it will put not just the small contractors out of business--the man with one lorry, which never leaves the island--but people out of jobs. It will increase the cost of living for everyone.


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Anyone who had heard tonight's speeches would think that the lorries were operating on mainland trunk roads. I wonder whether the Minister knows whether the roads involved are like: most are single-track, and some islands have only a few miles of roads--if they can be called roads.

Replying to a debate on an earlier amendment, the Minister said that he wanted to give special treatment to those who most needed it--those with a very good case. I believe that the island businesses qualify on both counts. The Minister also said that inevitably there would be winners and losers; I thought from the tone of last year's ministerial letters that the islanders would be winners, but if these measures are passed, their impact will be severe and out of all proportion to the return to the Treasury.

I feel badly let down, and my constituents will feel even more so. They believed what I told them, because I believed the Minister. [Interruption.] Some may say that that was a mistake, but I think that it is a shame. I genuinely believed the Minister, and I was sure that my constituents would understand the problem. On behalf of the islanders, I therefore ask the Ministers involved to reconsider the matter.

Mr. Brian Wilson (Cunninghame, North): I support the amendment. I must say that it is encouraging--and very unusual--to see such a large demonstration of interest in Hebridean affairs on the Conservative Benches.

As the Minister to whom the hon. Member for Argyll and Bute (Mrs. Michie) has referred is present, I shall pay a small tribute to him. Unfortunately, he is in fact an ex-Minister. The then Minister who wrote to me in similar terms is the hon. Member for Salisbury (Mr. Key).

It was an unusual case, in which there was a specific constituency point for me--and for the hon. Member for Argyll and Bute, my hon. Friend the Member for Western Isles (Mr. Macdonald) and one or two others. We argued a fine intellectual case; we got through to the Minister and his civil servants personally, made the case and defined its peculiarities, and we made progress. We received a very good response from the hon. Member for Salisbury: he was sensitive, he was intelligent and he was sacked. If I may say so, in other contexts what has taken his place is certainly no improvement in terms of the criteria that I have defined.

Fragile island communities are heavily penalised by the current level of ferry charges. In those islands--including islands in my constituency--a concession on VED has historically been granted because its fairness has been recognised. I do not know what goes on in the minds of civil servants on cold grey winter mornings when they feel that they have to take it out on someone; perhaps, on the 6.30 am train from Chipping Norton, they decide that they are going to cancel an anomaly whereby island haulage operators benefit in comparison to others, and that in a vast Finance Bill they will incorporate a clause that, in financial terms, is probably not worth the time that has been devoted to it tonight.

But it is absurd that they should go to such lengths to cancel out a tiny anomaly for the sake of financial gain to the Treasury--an action that will have an entirely disproportionate effect on the small number of communities that we are discussing.


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That is the curiosity of it. Of all the matters on which we can legislate and of all the sources of revenue, we adopt the absurd idea of going for a small number of island contractors. That is why I make no apology for detaining the Committee and arguing that case. If Conservative Members intend to vote for such legislation they might as well pay for it by spending a little of their time hearing just how absurd it is.

10.45 pm

There are three categories of island hauliers, and I am sure that hon. Members will be interested to hear each of them described in detail. As the hon. Member for Argyll and Bute said, the first consists of those who have lorries that never leave the island. I know that the hon. Member for Salisbury will confirm that it would be incredible and totally at odds with the representations and responses for those hauliers to be brought within the ambit of the clause. There is a clear distinction to be made. The vehicles of those hauliers can travel only within their own island communities. On the island of Barra, which is represented by my hon. Friend the Member for Western Isles there is one circular road. Cumbrae in my constituency is exactly the same, and in terms of road distance, Arran is not much greater. I see someone to whom I am not allowed to refer who is familiar with the island of Coll.

The idea that such hauliers should pay the same taxation for road use as those whose vehicles thunder up and down the M1 and the M6 every day is such a patent absurdity that I hope it impacts upon some Conservative Members. There is a clear distinction to be drawn in terms of vehicles which never leave the islands.

There is also an important distinction to be drawn for the second category of vehicles--those which legitimately ply between the islands and the mainland providing an island and not a mainland service. In providing that service, it is necessary for them to travel to the mainland to deliver and bring back goods. During that process, they attract charges which are not imposed on other haulage operators because they pay substantial ferry costs, which the hon. Member for Argyll and Bute has mentioned. Those charges are reflected in the costs that the hauliers pass to their customers. There is a separate case to be argued for them.

The third category was not mentioned by the hon. Member for Argyll and Bute, and it is at the root of why the legislation has been produced. The hon. Member for St. Ives (Mr. Harris) is in his place and will recognise from another context the term quota hoppers. Such people recognise that they can gain advantages by registering on an island which has a certain privilege.

The hon. Member for Argyll and Bute and every Opposition Member as well as every Conservative Member, I hope, would say that such an abuse should be stamped out. That is the abuse against which the measure is directed, and it is practised by people who are not island operators but who can evade taxation by registering their businesses on islands.

Is it not possible for Conservative Members to stamp out an abuse, which we all agree should be stamped out, without penalising that tiny section of the community which operates legitimately and which should be the beneficiary of the status quo? With the might of the civil service behind them, Ministers should be able to find a way of striking against those who abuse the system, while protecting those who legitimately use it.


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The Scottish Road Haulage Association feels that its members, who operate on the mainland, are at an unfair disadvantage with those pirate operators who use the islands as a kind of flag of convenience. That is the abuse that Ministers, in so far as they know anything about the matter, should strike against. In doing so, they should not discriminate against legitimate island operators. That is a fair argument that should transcend party boundaries.

I do not think that many of the operators I am arguing on behalf of tonight are my voters. I do not care or ask about that, but I suspect that they might not be Labour voters--employers in that industry do not traditionally vote Labour. I am arguing not from that point of view, but from that of fairness and of the legitimate interests of fragile island communities.

Make no mistake: if the measure goes through, some small haulage businesses will go bust. They will have to take lorries off the road, make people redundant and pass on costs to users, so for heaven's sake, let us in Committee have a common-sense solution and retain the advantage for small island operators and for people who legitimately ply between island and mainland. Let us unite and stamp out the abuse of using islands as a flag of convenience to avoid taxation.

Mr. James Wallace (Orkney and Shetland): My hon. Friend the Member for Argyll and Bute (Mrs. Michie) and the hon. Member for Cunninghame, North (Mr. Wilson) have deployed powerful arguments as to why the Government should rethink their decision to impose a substantial amount of vehicle excise duty on islands-based hauliers. I add my endorsement to their arguments.

As has already been said, we are dealing with islands that often have poor roads that add up to small amounts of mileage. They are being asked to pay the same amount as hauliers who are based, for example, in Birmingham, and who have immediate access to hundreds of miles of motorway. That in itself is an anomaly.

The Government have several times said that they are in favour of lifting the burden on small businesses. That does not square with the decision to impose on those businesses the financial burden that my hon. Friend the Member for Argyll and Bute illustrated. If the measure goes through, in the first year the increase for small islands-based hauliers has been limited to £1,000. Even that is a significant increase. In subsequent years, it could be even more. I do not necessarily subscribe to the comment of hon. Member for Cunninghame, North that this is some conspiracy hatched by civil servants because they got out of the wrong side of bed or because the morning train from Chipping Norton did not arrive. I think that I am right in saying that there have been a considerable number of exemptions to the vehicle excise duty. That allows the basic rate of £150 to be paid. I suspect that the islands' case has been swept up along with the rest of the cases.

I hope that the Paymaster General has heard enough arguments to persuade him to think again. By imposing the burden on many islands-based hauliers, he proposes a financial burden that many of them will not be able to accommodate in their businesses. If they do, it will mean considerable extra costs for their customers. We are talking about people who serve islands of only a few hundred people. The position is not the same as that referred to by the hon. Member for Londonderry, East (Mr. Ross).


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In my constituency, the exemption is applied only to the smaller islands. It is not applied to the main islands of Orkney and Shetland, which, it is recognised, have historically had plating and testing stations. Therefore, they did not qualify. Equally, no pressure has been exerted for the exemption to apply.

People would be horrified to discover, however, that additional costs will be imposed in the smaller islands. I hope that the Minister will show some of the sensitivity and intelligence that was attributed to his hon. Friend the Member for Salisbury (Mr. Key), and that he will be prepared to reconsider the proposal and introduce a fair solution for islands-based hauliers.

Mr. Harris rose --

Mr. Barry Porter (Wirral, South): There are more of them.

Mr. Harris: Yes, there are more of them, and I am one of them. I also represent a group of islands--the Isles of Scilly--and I am horrified by what I have heard tonight. I thought that the issue had been settled by my hon. Friend the Member for Salisbury (Mr. Key). Like others, I had correspondence with him, and I thought that we had come to a completely satisfactory and sensible solution. If that is not the case--it is news to me that, apparently, it has all been upset--I shall be after my hon. Friend tonight. I do not say that as a threat, but I look to the Minister to reassure me.

Hauliers operating on the Isles of Scilly come into the first category. There are only a few hauliers there, and their vehicles never leave. Unlike the Scottish isles, the Isles of Scilly do not have a roll on/roll off ferry, and certainly do not have a subsidised ferry service to the mainland. It is a matter of great regret to my constituents, who look with envy at what their Scottish counterparts have.

In those circumstances, it would surely be extremely unfair if the three or four haulage firms that operate lorries on the small island of St. Mary's-- the only island on which there are hauliers--were penalised as has been suggested. I look to the Minister for reassurance and await his comments with interest. I am sure that there has been a mistake, but if not, I suggest that my hon. Friend had better think again.

Mr. Calum Macdonald (Western Isles): I shall not go into great detail, as the arguments have already been well made by the hon. Member for Argyll and Bute (Mrs. Michie), whom I congratulate on moving the amendment, and my hon. Friend the hon. Member for Cunninghame, North (Mr. Wilson), who I think was the first to support the move by the Department of Transport and pursue it with the Minister involved.

I shall make three points. The first is self-evident: islands, especially the Scottish islands, are a special case. A mark of good-quality legislation would be that it took into account the special needs and distinctive nature of the Scottish and other island communities.

It is ridiculous to think that one law and one regulation can properly cover all communities in the United Kingdom, from Tunbridge Wells to the Western Isles. There are clearly vast differences in the nature of the communities and the circumstances they face. We should be mindful of that fact and careful to reflect it in our legislation. That is why the exemption has existed for so


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long. It is absurd to suggest that we should attempt to apply the same regulation uniformly the length and breadth of the British Isles.

Secondly, having emphasised that islands are a special case, we need to emphasise that our communications are almost by definition of crucial importance to island communities, not only communications between them and the mainland but communications among the islands themselves. Anything that strikes a blow at the viability of our communications strikes a blow at the viability of the island communities.

The third point is just as important as the first two. All of us who were in correspondence with the former Minister, the hon. Member for Salisbury (Mr. Key), received an assurance that the matter under discussion was to be reviewed. We then assumed that we would in due course receive a letter telling us the outcome of the review. It is outrageous that the Government have instead apparently reached a conclusion without having had the courtesy to inform us of what they intend to do.

Will the Minister not only reflect on the points that have been made and-- hopefully--respond positively to them, but also explain why none of the hon. Members who raised the issue with the Government and who were assured by the Government were approached before this matter was introduced in the Finance Bill?

11 pm

Dr. John Marek (Wrexham): I support the amendment moved by the hon. Member for Argyll and Bute (Mrs. Michie). I think that I understand why the Government have proposed this extra tax. It does not affect the constituency of any Conservative Member--until tonight. The hon. Member for St. Ives (Mr. Harris) is an extremely valuable Member. If the matter were to affect his constituency, the Government would begin to worry.

At the moment, the Government do not worry about those constituencies that they cannot win. They are concerned only with getting money for the Treasury. The Government get that money through vehicle excise duties in a haphazard way every year. I will not accept the Minister's view that we have an imperfect system and that this year they are looking at it and that they may get it right next year or the year after that.

I want to bring to the Minister's attention a principle on which vehicle excise duty ought to be levied. It ought to be levied with some regard to track costs--the costs of road repairs that vehicles cause. The hon. Member for Argyll and Bute said that many vehicles covered by the amendment do not travel on roads. Therefore, presumably the track costs would be very light.

I refer the Minister to "The Allocation of Road Track Costs", a statistics bulletin issued by the Department of Transport. The 1995-96 edition is ready, and I have it. It says:

"Tracks costs for vehicles of over 3.5 tonnes GVW are covered by the ratio of 1.4:1."

Another category of vehicles consists of crown, disabled, other vehicles exempt from vehicle excise duty, haulage, machines, three-wheeled motor vehicles, special types, recovery vehicles and non-plateable vehicles. As I understand it, that category will catch all the vehicles which are the subject of the amendment.


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