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EU Budget Abatement
3. Mr. Graham Brady (Altrincham and Sale, West): If he will make a statement regarding the British abatement from the EU. [79446]
The Chancellor of the Exchequer (Mr. Gordon Brown): The Berlin European Council concluded that the UK abatement will remain. Our objective was secured: we said that the Government would maintain the abatement, and we have done so.
Mr. Brady: I thank the right hon. Gentleman for his reply, although he has put a very positive gloss on a deal that will cost Britain nearly £200 million a year. Did the Government agree in Berlin that the rebate mechanism would also apply to other member states and to new member states? If so, who will foot the bill?
Mr. Brown: The conclusions of the Berlin summit, which I hope that the hon. Gentleman will not question, say that the UK abatement remains. The Berlin summit's conclusions also say that, in all the other matters on which we were pressing for advantage for the United Kingdom--whether on regional policy, on the highlands and islands or on Ireland--we got what we wanted. As for any other speculation on possible decisions of the Berlin summit, the decisions are as announced; there is nothing in them about what the hon. Gentleman is suggesting.
Mr. Bill Rammell (Harlow): Given the irredeemably split nature of the Conservative party on Europe, is my right hon. Friend aware of any independent commentator, anywhere in Britain or even in Europe, who believes that, had the Conservative party been in government, it would have brought back from Berlin a better deal than we have done? If he cannot find such independent
verification, is it not time that, in their own interests, Conservative Members stopped scratching that open wound?
Mr. Brown: I hope that the Conservative party will have a proper period of reflection on what went wrong under the previous Government. It is absolutely clear that our policy of constructive engagement has achieved far greater results--on the budget, on regional policy, in advantages for Ireland and the highlands and island, as well as on the abatement--than the Conservative party's carping and narrow isolationism ever could have done. My hon. Friend asked whether I have some advice for Conservative Members on what they might do. I simply refer them to the manifesto issued by the Conservative party in Scotland for the Scottish parliamentary elections. It starts by saying:
- "On May 1st 1997 the people of Scotland told us what they thought--we got it wrong."
Mr. Brown: I can give the hon. Gentleman an absolute assurance that there was no horse-trading on the matter that would have been in any way damaging to Britain--[Hon. Members: "Ah!"] Well, there was no horse-trading on the matter, if he wants that assurance. I can also say that--in preference to the Conservative negotiating tactics that would have left Britain completely isolated in Europe on that and on every other issue--we shall get the best deal for Britain on the matter, as we did at Berlin.
Mr. Dale Campbell-Savours (Workington): I congratulate my right hon. Friend on his negotiations on the abatement. However, is not the reality that the existence of the abatement--which was negotiated by a former Prime Minister--over many years, has undermined our negotiating position within the European Community, particularly in CAP reform?
Mr. Brown: No, I do not accept that. The abatement is wholly justified, and we have defended it. Conservative Members said that we would give away the abatement--we did not. The conclusions of the Berlin summit accept that the abatement continues, and Conservative Members should be congratulating us.
Millennium Compliance
4. Dr. Vincent Cable (Twickenham): If he will make a statement on the Government's contingency plans in respect of a failure of systems at the new millennium in major financial institutions. [79447]
The Financial Secretary to the Treasury (Mrs. Barbara Roche): The Treasury has a wide range of contacts with both the Financial Services Authority and the Bank of England on the year 2000 issue. The FSA regards the issue as a major supervisory priority and has made it clear that firms that fail to implement appropriate measures face regulatory intervention. The memorandum of understanding between the Treasury, the Bank of England and the FSA sets out the role of each institution in the field of financial stability, including where there are exceptional circumstances.
Dr. Cable: Why did the Minister not mention in her reply the recent report of the FSA's director of supervision--which suggested that a significant number of high-impact financial institutions are so negligent that they have not even started to make preparations for millennium compliance and may well be required to close their doors in the new year, with incalculable consequence for individuals and small businesses? Will she explain more precisely what the Government, in addition to the FSA, plan to do to prevent that disaster from occurring?
Mrs. Roche: The Government are working closely with the FSA, and daily meetings are taking place. It is well acknowledged that UK financial institutions are perhaps the leading institutions in terms of year 2000 compliance. The hon. Gentleman mentioned the statement about those firms. Those figures were for the end of 1998. The authority has challenged those firms that appear to be less ready than others either to show that the assessment was out of date or rapidly to produce a plan for remedial action. Updated figures will be produced next week.
Self-employed (National Insurance)
5. Mr. Richard Page (South-West Hertfordshire): What estimate he has made of the increase in national insurance to be paid by the self-employed in 2000-01 as a result of the March 1999 Budget. [79449]
The Financial Secretary to the Treasury (Mrs. Barbara Roche): For 2000-01, it is estimated that the self-employed will pay £420 million less in contributions as a result of the March 1999 Budget.
Mr. Page: That figure is not an accurate reflection of the increases. Will the Minister give the House some calculation of what the effect may be on unemployment?
Mrs. Roche: On unemployment, I am a little disappointed that the hon. Gentleman did not congratulate the Government on the fact that, since the 1997 election, unemployment in his constituency has gone down by over 22 per cent. The changes will mean that self-employed people who pay class 2 contributions will benefit by £4.55 a week. We are the party that supports the self-employed and small businesses.
Mr. Nick Gibb (Bognor Regis and Littlehampton): What is the Minister's justification for raising the national insurance upper earnings limit next year and the year after by almost three times the rate of inflation? Is that not yet another stealth tax rise on middle Britain--a tax rise that the Government hoped that no one would notice? Will the Minister give an assurance that the Government
will propose no further increases in the upper earnings limit beyond the rate of inflation for the remainder of this Parliament?
Mrs. Roche: The hon. Gentleman has a bare-faced cheek. The Conservative party raised taxation and broke its promises to the British people 22 times. [Hon. Members: "Answer the question."] Conservative Members are shouting because they do not like the facts--but they are going to hear the facts. Under the Conservatives, a small business went bust every three minutes. That is why middle-income families up and down the country voted with the rest of the British people for this Government at the last election, and why they will vote us in again.
Environmentally Friendly Road Transport
8. Mr. Richard Burden (Birmingham, Northfield): If he will make a statement on the impact of the measures in his recent Budget statement to encourage more environmentally friendly road transport. [79452]
The Economic Secretary to the Treasury (Ms Patricia Hewitt): This year's Budget contained the most far-reaching package of environmental tax reforms ever seen in our country. In particular, my right hon. Friend the Chancellor announced a number of measures designed to encourage the use of cleaner fuels and vehicles and to discourage unnecessary journeys. Those included a £55 reduction in vehicle excise duty for small cars, a fundamental reform of company car taxation, changes in fuel duties to encourage cleaner fuels and seven new tax relief measures to encourage employers to promote environmentally sensitive commuting. Those measures will help to reduce congestion and emissions of both greenhouse gases and local air pollutants.
Mr. Burden: I thank my hon. Friend for that reply, and I welcome the cut in duty for liquid petroleum gas. Will she go further and encourage the use of more environmentally friendly fuels--for instance, ultra-low sulphur diesel? On vehicle excise duty, I welcome the step along the way in relating that to engine size, but does she agree that engine size is not the best measure of environmental performance? We need to look at much more exact measures, such as carbon dioxide emissions.
Ms Hewitt: The Budget cut duty on road fuel gases, including liquid petroleum gas, by 29 per cent., and we have widened the differential for ultra-low sulphur diesel. That differential is having such a beneficial effect that we expect that, by the end of the year, virtually all the diesel sold in this country will be the cleaner ultra-low sulphur type.
As my right hon. Friend the Chancellor announced in the Budget, from next autumn we will introduce a new system of vehicle excise duty for new cars, graduated according to their emissions of carbon dioxide. That will give a very clear signal to people who are buying new cars to choose cleaner cars that do less environmental damage.
Mr. Owen Paterson (North Shropshire):
The Minister trumpets the environmental gains in the Budget, but the measures will drive British hauliers into bankruptcy. British freight will be carried by foreign hauliers. Hauliers
Ms Hewitt:
The hon. Gentleman is wrong as well as xenophobic. It was of course the Conservative Government who introduced the road fuel escalator, which he now apparently opposes. It was the Conservative Government who drove 5,000 British hauliers into bankruptcy. In the Budget, we froze the rate of vehicle excise duty for 98 per cent. of lorries for the second year in a row; doubled the VED reduction for cleaner lorries to £1,000; increased the differential on ultra-low sulphur diesel; cut the duty on road fuel gases; made it easier for hauliers to down-plate, as the industry has long requested; and introduced cuts in the rate of corporation tax, from which all businesses, including hauliers, will benefit.
Mr. Ben Bradshaw (Exeter):
I warmly welcome the imaginative measures in the Budget to promote cycling, including the tax breaks for employers and employees to encourage cycling to work, which will go a substantial way towards helping us to achieve our target of quadrupling cycling by 2010. What is my hon. Friend doing to publicise those measures and to increase the take-up?
Ms Hewitt:
I know that my hon. Friend sets an excellent example by riding his bicycle to work. We have responded to the pleas of various companies and the environmental lobby by introducing seven measures in the Budget to promote environmentally friendly commuting. Those have been warmly welcomed by both business and the environmental lobby, with which we are working closely to ensure that employers and employees know of the measures and take full advantage of them.
Mr. David Heathcoat-Amory (Wells):
Will the Economic Secretary confirm that the further 12 per cent. increase in diesel duty in the Budget has made diesel nearly twice as expensive in Britain as on the continent? Is she aware that it enrages the British haulage industry that the Government dress up that huge revenue-raising measure as an environmental measure? How does it help the environment to drive British haulage firms out of business; raise the cost of all manufactured goods that have to be transported; encourage foreign lorries to come into this country using cheap foreign diesel and taking away British jobs; and to encourage British lorries to travel to the content to fill up with cheaper fuel?
Ms Hewitt:
The right hon. Gentleman was a Treasury Minister when the previous Government introduced the road fuel escalator. It was he and his colleagues who described the road fuel escalator as an environmental measure. Less than 1 per cent. of road miles in this country travelled by lorries are travelled by foreign lorries. International competitiveness is simply not the issue.
In the context of the total tax and cost burdens on business, this country is the favoured environment for road hauliers, as for other businesses. A typical road haulier setting up in the Netherlands would face costs £600,000 higher than those in this country, and, for Belgium, that figure would be £800,000.
We are helping the road hauliers by freezing VED--[Interruption.] Tory Members clearly prefer to support the disruption caused by extremist lorry drivers instead of supporting us in our policy of discussion with the road hauliers through the new industry forum that we have set up. We took several steps in the Budget to help hauliers--by freezing VED, by widening the differential for cleaner fuels and by doubling the VED cut for cleaner lorries.
Will the right hon. Gentleman tell us whether the Conservative party supports the policy of disruption by lorry drivers, or our policy of discussion--
Madam Speaker:
Order. It is not for the Minister to ask the Opposition what their policies are.
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