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Mr. Quentin Davies: I always enjoy the hon. Gentleman's interventions on my contributions, and I have listened to a number of them in Committee. Most of them are attempts to caricature my position, but that particular intervention does not caricature it; indeed, it does not relate to my remarks at all. Under no circumstances did I take any of the lines that the hon. Gentleman has attributed to me.

I have always argued that a balance must be struck. I am extremely conscious of the burden placed on my constituents by any hydrocarbon fuel duties. On the other

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hand, as I have now had to repeat several times during my speech, as a result of interventions, I recognise a strong environmental case for hydrocarbon duties, which take a disproportionately high share of total consumption taxes. If I did not believe that, they should not be subject to excise duties at all, but simply to VAT. We have singled out those fuels, together with alcoholic drinks and tobacco, for special forms of consumption tax. I accept that principle, which was also accepted by the previous Government.

If we are to strike the correct balance, it is important that the Government should set out the parameters of the equation. They should explain what they are specifically trying to achieve in terms of the environmental impact of the taxes and, therefore, what levels of tax are appropriate for particular types of hydrocarbon fuel. That argument has not been made.

The Government seem to govern us from watertight compartments. When Treasury Ministers defend the hydrocarbon duties they do not engage with the environmental arguments that are used to justify, spuriously, the fiscal measures introduced. That is not good enough.

If the public are to be asked to pay a disproportionate burden of taxation through hydrocarbon duties, they are entitled to be given a clear and coherent account from the Government of the exact environmental purpose of those taxes. They should inform the public how those hydrocarbon fuels have been selected for tax with regard to their particular environmental attributes, positive or negative.

Dawn Primarolo: The increase in hydrocarbon taxes signals the Government's commitment to the environment. It is intended to raise sufficient revenue and achieve sustainable economic growth while protecting the environment.

To answer the point raised specifically raised by the hon. Member for Grantham and Stamford (Mr. Davies), that duty is designed to ensure that road users cover the economic costs that they impose as well as help to reduce harmful emissions. In particular, the duty will help to achieve the target that the Government have set themselves to try to reduce carbon dioxide emissions by 20 per cent. by 2010. The measure will contribute 2.5 million tonnes towards that target.

To pick up on the points raised by the hon. Members for Grantham and Stamford and for Cotswold (Mr. Clifton-Brown), which relate to new clause 4, this Government, in common with the previous Government, must continue to make assessments of the fuels used and their polluting nature. We must judge the impact of those fuels on health and the environment. The Government must consider the mechanisms available to them to encourage greater fuel efficiency and, therefore, less pollution.

Sir Michael Spicer: I am glad to hear what the Minister has said in answer to the points raised by me and my hon. Friend the Member for Grantham and Stamford (Mr. Davies) about a thorough, comprehensive review. If that is what is proposed, what would be the deadline for such a report and when would it be published? In the absence of such studies, how can the hon. Lady say that the new tax has a specific relationship either to economic costs, towards which, as she knows, the motorist pays far more than he gets back, or environmental costs?

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4.45 pm

Dawn Primarolo: The previous Government's use of hydrocarbon taxes showed that they led to an increase in efficiency and a reduction in pollution and carbon dioxide emissions. For instance, I am sure that the hon. Gentleman is well aware of the debate surrounding leaded and unleaded fuel and the successful strategy of using the tax system to encourage the growth in unleaded fuel consumption.

This is the second year in which the hon. Member for West Worcestershire (Sir M. Spicer) has tabled such a new clause. It represents special pleading on behalf of a single product, ecodiesel. As he has already said, he is using the clause as a means of discovering the extent of the Government's intentions. Although we appreciate the environmental argument for blended diesel fuels, we took full account of the available products when setting the rate for the ultra-low-sulphur diesel. The problem is that if new clause 4 were accepted, it would create a need for a product that would have to be imported. The balance we have struck on the ultra-low-sulphur diesel has the advantage that the current definition of such a fuel means that the United Kingdom industry could immediately produce such oil if it chose to do so.

The hon. Gentleman has also asked about the Government's intentions. I am afraid that there are no definitive studies that can tell us about the exact polluting properties of all the fuels. Our knowledge of them continues to develop in line with scientific knowledge. We will, however, continue to review the case for tax incentives for environmentally friendly fuels, in line with our statement of environmental intent which was announced by my right hon. Friend the Chancellor at the Budget. Such assessment will continue and, each year, the Government will make a judgment on how best to use the carrot-and-stick approach, as described by the hon. Member for Cotswold, to enhance and develop fuel efficiency and to protect the environment.

The hon. Member for Grantham and Stamford was a little confused in his arguments about the environment. Information gained from the experience of the previous Government reveals that the use of tax incentives has helped to develop fuel efficiency and reduce pollution. They will also help this Government to achieve their target.

I shall now respond to what the hon. Member for North Tayside (Mr. Swinney) said about the impact of the measure on rural motorists. The requirement for the total cost of motoring to be borne by the motorist will apply in urban and rural areas, but he specifically identified the problems that people living in rural areas have with increased costs--in particular, the price of petrol is higher.

The Government are very sensitive to the needs of the rural areas and we are aware of car dependency, but it is not the place of the duty system necessarily to take that into account. The hon. Member for North Tayside knows that the Government are committed to reducing car dependency and encouraging greater use of public transport, and that the Deputy Prime Minister has announced his intention to publish a White Paper in the spring that will seek to address those problems. The White Paper will pick up on the points that the hon. Member for Cotswold made about seeking new partnerships with local authorities and the development of community transport

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schemes. I am sure that the Deputy Prime Minister will be delighted to receive representations from the hon. Member for Cotswold, who made a very positive contribution, supporting the Government's strategy to achieve their environmental objectives.

Amendment No. 33 proposes that a lower duty be levied in rural areas than in urban ones. The hon. Member for North Tayside probably knows that, because of the way in which duty rates are charged on oil producers, such a system would be impossible to administer fairly. Once the fuel had left the oil producer, how would we determine whether it was destined for rural or urban use or whether people who purchased it rurally would use it entirely rurally?

The Office of Fair Trading, responding to the Trade and Industry Select Committee investigation of 1996, has now launched an inquiry into petrol retailing, including the effects of possible predatory pricing. It will also study the impact on rural areas, because if there is a problem there, it will be a much wider problem than the rate of duty. I hope that the hon. Member for North Tayside will want to follow that investigation very carefully.

I remind the hon. Member for North Tayside that there are many influences on rural businesses other than road fuel duty. The preliminary results of a Scottish Office study suggest that transport costs, in relation to the value of output, are no greater in the highlands than in central Scotland or other parts of the United Kingdom. The issue is therefore the pricing of companies in rural, as opposed to urban, areas.

It is important that people seek out more efficient ways of using their car and more fuel-efficient technologies for their cars, but that problem will not be solved overnight. The Government very much have in mind the express desire of the electorate that the Government should take positive steps to protect the environment; in doing so with these duties, there are extra costs to be borne.

Mr. Swinney: I am sure that many people in the rural community that I represent would reiterate that they share the concern that we all feel about the environment, but I believe that rural communities are also waiting for signs that the Government understand that their circumstances are very different from those in urban areas. Some of the--undoubtedly effective--initiatives to improve public transport in other areas are meaningless to communities where buses come once a week.

Dawn Primarolo: I confirm to the hon. Gentleman that the Government are very concerned about the experience of people living in rural communities, the absence of public transport and the problem of access to shopping. Those are far wider issues and need to be viewed in the round. The Government are committed to doing that in their study on public transport and, for example, in following closely the outcomes of the study being undertaken by the OFT. However, there must be a balance: motorists must bear more of the costs that they create on the environment. The targets for the reductions in carbon dioxide emissions and pollutants in the atmosphere are crucial to that.

In amendment No. 26--a rather confused amendment--the Conservatives cannot make up their mind whether they are in favour of measures for the environment. They seem to want to oppose the measure simply because the

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Government suggested it. As I said, it reflects the Government's decision to place the environment at the core of our objectives for the taxation system, by discouraging environmental pollution by road users. It will contribute significantly towards the carbon dioxide savings necessary to meet the Government's targets. Those targets will be discussed at Kyoto in December, when the Government are prepared to envisage substantial cuts in carbon dioxide emissions.

The convention for duty increases coming into force has always been 6 pm on the day of the announcement. The aim is to limit the disorder in the marketplace, and traders are used to dealing with it in that way. These proposals balance the Government's need to reach our environmental objectives with the need to create revenue for the Government as part of the balanced approach to the Budget, ensuring that we have a deficit reduction plan--something which Opposition Members sorely neglected to formulate when they had the opportunity to do so. I ask the House to reject the amendments.

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