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Mr. Heathcoat-Amory: If what the right hon. Gentleman says is correct, why has KPMG not made a public statement on the matter?

Mr. Paterson rose--

Mr. Heathcoat-Amory: I shall give way to my hon. Friend the Member for North Shropshire to get to the bottom of the matter, but nothing alters the fact that the Government have used the report in a way that was not intended by the original authors. That is my clear understanding and it has not been contradicted by KPMG.

Mr. Paterson: I simply reported a telephone conversation that I had yesterday with the project manager in charge of preparing the report, which is a comparison of all business costs in G7 countries and Austria. I can find no mention of Belgium or the Netherlands, although the Deputy Prime Minister cited figures for those countries in Prime Minister's Question Time last week. Mr. Mair told me that the Dutch and Belgian figures could not possibly be from the KPMG report. Even the Deputy Prime Minister can recognise flags, and neither the Dutch nor the Belgian flag is on the front cover.

Dr. Reid: On a point of order, Madam Speaker. As you know, I enjoy the robust exchanges of the House.

Mr. Tom King: That is not a point of order.

Dr. Reid: It is a point of order and honour, if the right hon. Gentleman will allow me to make it. The clear

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imputation of the hon. Member for North Shropshire was that I had misled the House and the country by my references to KPMG. I have assured the House not only that I did not do so, but that the KPMG personnel present at the press briefing that I gave, when asked specifically whether my representation of the report was accurate, said that it was. Through you, Madam Speaker, I once again ask the hon. Member for North Shropshire, if he is an honourable gentleman, to withdraw the imputation that he has made.

Madam Speaker: This is barely a point of order for me. It is a matter of very ferocious argument, but hon. Members are responsible for the statements that they make in the House and the debate will have to continue on that basis. The statement that has been made will be challenged on the Floor of the House in the debate, and no doubt for some days to come.

Mr. Heathcoat-Amory: I have no doubt that my hon. Friend the Member for North Shropshire accurately described a telephone conversation that he had, and he has relayed the substance of that conversation for the benefit of the House. I find nothing improper in that. It remains the case that, if the only study that the Government can produce is one drawn up for the Canadian Government using data that are two years old, that shows how threadbare is this Government's case. Nothing has altered that.

Mr. John Bercow (Buckingham): Before my right hon. Friend leaves the subjects of disingenuousness and of taxation by stealth, will he recall, for the benefit of the House, the letter that appeared in The Times of 15 March from Mr. David Green, the director-general of the Freight Transport Association? It was signed by many other business leaders, who complained that the Chancellor of the Exchequer had signally failed in his Budget speech even to refer to the massive increase in diesel fuel duties. Is that not entirely emblematic of the Government's approach to these important matters?

Mr. Heathcoat-Amory: I agree: it is entirely in character for the Government and for the Chancellor to refuse to reveal, in a long Budget statement, many matters of substance, including these colossal tax-raising measures. They have rendered an entire British industry uncompetitive with Europe.

Ms Joan Walley (Stoke-on-Trent, North): Does the right hon. Gentleman agree that we have to be honourable if we are to proceed with the debate? The right hon. Gentleman was Paymaster General in the previous Government when the vehicle fuel escalator duty was introduced. Is the House not entitled to know the reasons for that introduction, and the direct relationship with carbon dioxide emissions?

Mr. Heathcoat-Amory: The hon. Lady is going back a long way. I have dealt with the fuel escalator and given our reasons for ending it. The hon. Lady will have to accept that it is this Government who persist with an escalator that is long past its sell-by date. Indeed, they have increased it, despite representations from the haulage industry. The industry has a rock-solid case, but the Government have blocked their ears to it. That is a

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standing indictment of the Government's attitude to business. The hon. Lady's question would be better directed to Ministers.

Mr. Nick Hawkins (Surrey Heath): Will my right hon. Friend give way?

Mr. Heathcoat-Amory: I hope that my hon. Friend will forgive me, but I want to make some progress before I give way again.

We are entitled to ask who the beneficiaries of the policy are. We have heard already that the French Treasury is benefiting from British firms taking lorries to the continent to fill up with diesel. However, I regret to say that the paramilitary organisations in Northern Ireland are the beneficiaries of the massive and continuing smuggling of duties from the Republic.

That problem was also pointed out to the Government in plenty of time for the Budget. The Petrol Retailers Association wrote to the Treasury last year, and stated:


In a reply from an official, all that the Government did was to state that, although £100 million is a great deal of money, it is not necessarily very large compared to the total yield of £20 billion from hydrocarbon oils. That is utterly complacent and irresponsible. It is reported that that smuggling operation is not being conducted by legitimate traders--almost by definition such an operation is illegal--and that at least some of the profit is finding its way into the hands of the paramilitaries.

When in opposition, the Prime Minister was fond of saying that he wanted to be tough on crime and on the causes of crime. Here we have a cause of crime: a large and growing differential between the United Kingdom and the rest of the European Union. We should be concerned not only by the loss of revenue, but by the continuing erosion of British jobs in a British industry that is caused by that differential.

What is strange is that the Government are committed to tax harmonisation in the European Union. The Paymaster General chairs a committee in Brussels that deals with what is described as "unfair tax competition". That amounts to raising United Kingdom taxes to EU levels, when those taxes are alleged to be unfair. Why are the Government doing that, when, in this country, they are creating unfair tax competition between our haulage industry and that on the continent? Will the Chief Secretary refer the whole issue to that committee, chaired by another Treasury Minister, to find out what can be done about the unfair tax competition being suffered by British hauliers?

We have another suggestion--that we should tackle the question of the vignette, or road charge, that British hauliers pay when they travel on German roads, in the Benelux countries or in some other countries of the EU. We propose that a similar or equivalent charge, called a Brit disc, be levied on British hauliers and foreign lorries visiting the UK, the revenue from which could be used to reduce vehicle excise duty. That would not solve the

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whole problem, and it would certainly not solve it quickly. However, the idea has received the support of the trade associations and individual hauliers; I ask the Government to take it seriously.

Mr. Michael Fabricant (Lichfield): My right hon. Friend clearly points out what happens in Europe. However, about an hour ago, during Prime Minister's questions, the Prime Minister said that European directives prevented us from adopting that system in this country. Why can other European countries get away with it, while, according to the Prime Minister, we cannot?

Mr. Heathcoat-Amory: I do not for one moment accept that it is impossible. There may be a limit on the amount of revenue that can be raised through a vignette system. However, that is a matter of detail; the fact remains that a substantial amount of revenue could be raised from hauliers visiting the UK--this year, about a million trucks will visit this country--who pay not a penny towards the maintenance or construction of British roads. The revenue from their visits could be recycled in order to reduce vehicle excise duty and erode the differential that disadvantages British hauliers.

When our suggestion was put to the Deputy Prime Minister at Prime Minister's questions last week, he turned it down flat. My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) asked him:


The right hon. Gentleman answered:


    "No, we will not do that."--[Official Report, 14 April 1999;Vol. 329, c. 222.]

It could well be that he thought that we were talking about the poll tax, but it hardly excuses his turning down, from the Dispatch Box, a constructive suggestion that has the support of the British haulage industry.


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