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Mr. Malcolm Bruce: Will the Financial Secretary give way?
Dawn Primarolo: The hon. Gentleman chose not to speak in the debate; I shall give way to him later if there is time, but, in fairness to hon. Members who did participate in the debate, I should address their points.
My hon. Friend the Member for Workington (Mr. Campbell-Savours) spoke about market definition in respect of super unleaded, but he appears to have been
misled by the name of that product. He is right to say that there is a higher duty level on super unleaded, but that is because of the damage caused by the much higher benzine emissions. Super unleaded is used by a very small section of the community and is being phased out, as is leaded petrol.
My hon. Friend went on to refer to the availability of ultra low-sulphur diesel--
Mr. Clifton-Brown:
Will the Financial Secretary give way? She is wrong again.
Mr. Clifton-Brown:
The Financial Secretary might not have understood her brief. The higher the lead levels in petrol, the lower the benzine levels, so super unleaded has a lower level of benzine than ordinary petrol.
Dawn Primarolo:
I am clear on the fact that super unleaded contains more carcinogenic compounds. If the hon. Gentleman would care to debate the point with me in the Tea Room tomorrow morning, after I have been to the Select Committee on the Environment, I should be happy to oblige.
My hon. Friend the Member for Workington went on to refer to the availability of ultra-low-sulphur diesel. He is right to say that the Government's strategy of increasing the differential is designed to encourage wider availability of ultra-low-sulphur diesel. However, there has already been improvement: the Sainsbury supermarket chain, which started making ultra-low-sulphur diesel available in response to the previous Government's introduction of the mechanism, now provides it at more than 200 petrol stations and plans to extend that. Obviously, the Government are keen to ensure the availability of that product.
Elsewhere in the Bill, the Government have tightened the definition of ultra-low-sulphur diesel to ensure that the Bill delivers on the environmental objectives that we set out.
Several hon. Members said that there should be a reduced vehicle excise duty rate for rural areas alone, to recognise dependence on cars in rural areas because of the lack of public transport. A specific reduction for rural motorists would be incredibly expensive and cumbersome to administer within the system, but wide open to abuse, because other people could register in rural areas. The Government took the view--confirmed in today's
announcements by my right hon. Friend the Minister of Transport--that we should invest in a transport fund for rural areas.
Hon. Members may complain that that is not enough, but it is a huge increase on the money made available specifically for rural transport projects under the previous Government. The previous Government made available only £1 million. For all their concerns and worries about rural communities, and despite the fact that they had a 5 per cent. escalator--as opposed to our 6 per cent.--they made available only £1 million for rural initiatives, and now they have the cheek to say that we are not doing enough. As many hon. Members said, car owners buy approximately the same amount of fuel regardless of where they live. We have sought to ensure that all car users are making a contribution to the attainment of our environmental objectives.
The United Kingdom is taking a lead internationally in promoting action to reduce greenhouse gases, and duty must be a vital element in that strategy. We have put forward, in the Budget and in the Bill, a duty rate regime that recognises the damage that leaded petrol does, and increases pressure against its use. It recognises the damage that diesel does to the environment, and the need to encourage ultra-low-sulphur diesel, and therefore to adjust the duty rates for those two fuels.
We have ensured that gas oil and heavy fuel oils have increased by the same percentage as petrol and diesel. Duty for fuel gases is frozen again. We are considering commitments to introduce a vehicle excise duty regime that encourages people to have smaller vehicles which are more efficient, less polluting and better for the environment. That consultation is proceeding, but it takes time.
When there was criticism of the escalator, the previous Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), said:
The Government have ensured that the increase in the escalator is part of our environmental objective, and that we have a twin strategy to tackle the problems of transport in rural areas. Amendment No. 12 does not live up to the Conservatives' professed commitment to the environment. They have not told us how they would achieve the necessary reduction in CO 2 emissions if the amendment were accepted. Simply, they must decide whether they want to be committed to the environment and the difficult decisions that must be taken to deliver on that commitment, or whether they want to continue to make cheap political points across the Chamber. I had hoped that, given Conservative Members' commitments to the environment when they were in government, they might recognise the importance of this measure in the Government's strategy.
I ask the Committee to reject the amendment, not only because the revenue lost to the Government would be crucial, but because--most important--it would undermine our commitment to reach our CO 2 emission target, a Kyoto target which is steep, and, under the Government's commitment to the 20 per cent. reduction in particulates, very demanding. The strategy must start now, and clause 7 makes that start. I urge my hon. Friends to reject the amendment and to support the clause.
Mr. Malcolm Bruce:
As the Financial Secretary was not willing to give way to me, I thought that I would speak briefly on the issues.
The Government appear to be making a strong case for increasing the tax in order to deliver what they regard as environmental benefits. It has been powerfully argued that many people in rural areas have no alternative to using the car, so they are obliged to pay more and continue to create the same amount of emissions. The Financial Secretary well knows that transport initiatives between towns and in cities are needed to reduce those emissions, and that, if the extra revenue were diverted to such initiatives, it would make a much more substantial contribution than it will if it is pocketed by the Treasury.
In the unamended version of the Red Book, it was projected that, by the year 2002-03, the escalator effect of the petrol increase would take the Government's receipts as a percentage of gross domestic product to more than 40 per cent.--the highest, apart from one year, that we would ever have achieved.
Two questions hang in the air. First, if the Government are so keen on the environmental benefits, why are they not using the money for the necessary transport? Secondly, if they are arguing that they need the revenue, how come they are finishing the year in which the forecast public sector borrowing requirement of the previous, Conservative, Chancellor was £19 billion in the red, and the out-turn is just under £1 billion? The Financial Secretary tells us that the Government are desperate for the revenue. Obviously, the position is improving, and the Government are simply taking more taxes from the taxpayer, neither offsetting them with tax cuts elsewhere nor delivering measures that would provide real help for people, many of whom have no alternative to the car.
We support amendment No. 12, because the Government must balance their claim that fuel duty is a green tax with real green measures, which will bring about the desired changes; and, potentially, they must offset a reduction in taxes elsewhere for the very substantial extra revenue that they are enjoying.
Mr. Heathcoat-Amory:
It is obvious from the Financial Secretary's response to the debate that this tax-raising measure has little to do with protecting the environment and everything to do with increasing the Treasury's tax revenues.
The Financial Secretary has failed to answer our questions about the environmental consequences of the tax increases and the perverse incentives that are being introduced that could, in some cases, damage the environment. She has broken her promise to bring forward an environmental Green Book with the Budget statement. It is up to the Opposition to protect the British people and British industry from a wholly unnecessary and damaging £9 billion tax increase during this Parliament from the
increases in road fuel duties alone. The measure will raise taxes, damage competitiveness and hit all of those who rely on transport. I urge my right hon. and hon. Friends and others to support the amendment.
"Any critic of the Government's tax plans who claims also to support the international agreement to curb carbon dioxide emissions will be sailing dangerously near to hypocrisy."--[Official Report, 30 November 1993; Vol. 233, c. 939.]
Post Kyoto, to deliver on our commitments, we need to increase the escalator to deliver the cuts in carbon dioxide. We were asked whether it would have an effect. Institute of Petroleum figures show that, in the first nine months of 1997, inland demand for petrol fell. It did so only slightly, but it fell, and the escalator is feeding through into results.
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