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Mr. Hawkins: Does my right hon. Friend agree that one of the most peculiar aspects is that, although the Government claim to be concerned about jobs and small businesses, their rejection of the constructive proposals made by the Opposition and the haulage industry shows that, when it comes down to brass tacks, the Government do not care about either of those things? They are putting a vast number of small haulage businesses into bankruptcy, which will cost all the people who work for those businesses their job. Two companies in my own constituency have written to tell me that they are on the verge of bankruptcy as a direct result of the Government's policy. As for the escalator, the Government do not understand that, when they get to the top of an escalator, they are supposed to get off.

Mr. Heathcoat-Amory: I agree with my hon. Friend.

What so annoys the haulage industry is that the entire issue is dressed up as an environmental issue--it is supposedly all about global warming. However, according to the Government's own booklet on climate change, if the escalator proceeds on its present course, the estimated annual carbon saving by 2010 will be between 2 million and 5 million tonnes. That same document enumerates far greater savings to be found in domestic fuel use, business fuel use and even Government fuel use for a fraction of the cost that the Government are loading on to the haulage

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industry. In other words, we have here a giant misallocation of resources: for colossal additional expenditure by the haulage industry, a small reduction in carbon emissions is gained; whereas, if a tiny part of that expenditure were applied to domestic heating and controls, the reduction in carbon emissions would be far greater.

Mr. Christopher Leslie (Shipley): If the right hon. Gentleman is proposing to forgo the saving of 2 million to 5 million tonnes of carbon that might be gained through the fuel duty escalator, which he says should be scrapped, what policies does he suggest would enable us to achieve the same saving, or does he not care about meeting our Kyoto commitments?

Mr. Heathcoat-Amory: One of the inconsistencies in the Government's position, and a reason why they are not taken seriously in respect of environmental matters, is that they are pulling in two directions by blocking gas-fired electricity generation and encouraging coal use, which puts more carbon dioxide into the atmosphere. The coal industry digs up carbon that has been underground for millions of years and sends it into the atmosphere; so the Government's energy policies pull in the wrong direction in terms of global warming.

Yvette Cooper (Pontefract and Castleford): Is the right hon. Gentleman saying that he would like to close coal-fired power stations, and so close down the coal industry?

Mr. Heathcoat-Amory: No, I am not saying that. I am saying that we should return to the policy of the previous Government, whereby the electricity generating industry made its own contribution to the reduction in carbon emissions. The current Government have blocked that policy, yet they pretend to have a coherent strategy to tackle global warming. Worse still, they are laying the entire burden of that global warming strategy on the British haulage industry, so crushing it. That is the cause of our complaint and that of haulage industry.

We want the Minister to tell us that the Government recognise the seriousness of the problems facing the industry. Will the Government confirm the damage that they are causing in terms of criminality through smuggling, loss of revenue, loss of competitiveness and loss of jobs? Will the Government commission and undertake to publish an independent report into the cost of haulage per mile for each tonne of freight for the various competing means of freight transport? Most important, will the Government at last drop their complacent and self-satisfied attitude and start to give us answers, instead of excuses?

4.25 pm

The Chief Secretary to the Treasury (Mr. Alan Milburn): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"believes that everyone, including hauliers, must play their part in reducing emissions of carbon dioxide from transport, and that the road fuel duty escalator first introduced by the last Government acts as an incentive to greater fuel efficiency; deplores the hypocrisy of the Conservative Party for doing one thing in Government and another in Opposition; calls on it to explain which areas of public spending it would cut in order to pay for the abandonment of the

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fuel escalator; welcomes this Government's commitment to promoting a more dynamic business sector, in particular the measures taken to help the road haulage industry, including cuts in the corporation tax rates, freezing the rates of vehicle excise duty for most lorries for two years running, doubling the maximum reduction in vehicle excise duty for cleaner lorries, and reducing duty rates on ultra-low sulphur diesel relative to ordinary diesel; notes that the UK haulage industry benefits from the total tax burden on business in the UK being lower than that of other major EU member states, and lower than the average for the EU and the OECD; believes that the environmental measures this Government has introduced will play an important part in encouraging use of more fuel-efficient vehicles, cleaner fuels and greener modes of transport; and welcomes the dialogue that is now taking place between the industry and the Government in the Road Haulage Forum."

This is an important debate about an important and extremely successful United Kingdom industry. Despite a problem of overcapacity, the United Kingdom haulage industry is extremely competitive by international standards and the best UK haulage fleets are better than any others in the world. However, there is enormous variation in performance. On the industry's own figures, the best UK haulage companies are almost twice as fuel efficient as the worst companies. No one disagrees with the fact that there is considerable scope for many British hauliers to reduce their fuel consumption.

The need to become more fuel efficient has been heightened by growing public concerns about the costs--especially the environmental costs--that hauliers impose through the use of their lorries. Inefficiency of the sort that I have described leads to unnecessary pollution and extra congestion. That is particularly true because of the environmental problems associated with diesel usage.

It is right and proper that everyone, including hauliers, should play a part in reducing such emissions. It is equally right that the costs that lorries impose in wear and tear on our roads should be reflected at least partly in the costs that their operators bear, particularly when the newest class of lorry does damage to the roads equivalent to that caused by at least 10,000 cars.

For those reasons, successive Governments have increased the duty on conventional diesel by more than the rate of inflation. The fuel duty escalator was formally introduced by the then Conservative Government in 1993 in an effort to meet the commitments they rightly made at the Rio Earth summit. This Government are continuing the escalator because it will help us to meet the commitments that we made at Kyoto.

Mr. Bernard Jenkin (North Essex): I should like to explore the right hon. Gentleman's argument that diesel prices should be increased. It is within his power and that of his Government to stop the French Government continuing a diesel duty rebate, which makes diesel even cheaper for French trucks, by vetoing the regulation that is currently before the Council of Ministers. Will the Chief Secretary undertake to do that, or will he allow diesel to be sold even more cheaply to French drivers so that they can continue to come to this country and take British jobs?

Mr. Milburn: It is odd to hear the hon. Gentleman, of all people, advocating tax harmonisation policies in Europe: I thought he was on the Euro-sceptical wing of the Conservative party. What the French Government decide to do is a matter for them. As far as Kyoto is concerned, I remind the hon. Gentleman--[Interruption.]

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He should calm down. There will be many opportunities to get excited in this debate, as I am sure he will demonstrate in his winding-up speech. I remind the hon. Gentleman that we are talking about legally binding international obligations that the previous Government entered into in all fairness, as have we. We must all play a part--hauliers included--in meeting those obligations.

I understand the concerns that the haulage industry has expressed about the implications of this approach. The Government openly acknowledge that a balance must be struck between environmental objectives and the needs of industry.

Kali Mountford: I thank my right hon. Friend for giving way and for providing the answer that I failed to secure from the Opposition spokesman, the right hon. Member for Wells (Mr. Heathcoat-Amory), about Rio. Could my right hon. Friend expand on the notion of polluter pays? Outmoded haulage vehicles have an effect not only on our roads but on the health of the population, and particularly children, who breathe in diesel fumes.

Mr. Milburn: My hon. Friend is correct. Until a month ago, polluter pays was a cross-party principle to which all parties subscribed. The then Conservative Government supported that principle when they announced their conclusions to the Rio summit, and we supported that policy in opposition. The Conservatives also supported the conclusions of the Kyoto summit that my right hon. Friend the Deputy Prime Minister managed to negotiate. The polluter pays principle is right and fair. It makes not only for environmental sense but for economic efficiency.

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