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Mr. Bercow: I hope that the hon. Gentleman realises the political reverberations that his argument will cause. Is he aware that if he encourages the member states of the European Union to raise their excise duties, they will be doubly encouraged to exhort us to raise our income tax levels?
Dr. Cable: The hon. Gentleman knows perfectly well from previous debates that our approach to European integration does not include a belief that tax harmonisation in Europe is desirable in itself. That is why I did not lay emphasise on that recommendation when it was prompted by the hon. Member for New Forest, West (Mr. Swayne). I would be happy, as I am sure would the road hauliers, if European countries voluntarily moved towards harmonisation of rates at a higher level.
Mr. Clifton-Brown: Will the hon. Gentleman give way?
Dr. Cable: May I finish this point, and then I shall happily give way to the hon. Gentleman.
It is fine for the Government to accept the principle of environmental taxation and the escalator, but this sector needs a little bit of joined-up government. I have an example of a recent planning application on the borders of my constituency in south-west London. I am surethat hon. Members have similar examples in their constituencies. A nationalised industry, the Post Office, proposed to relocate its sorting office on a new site that was immediately adjacent to a railway line, the Feltham marshalling yards. Hounslow, the neighbouring planning authority, approved the application not as a rail-based sorting office, but as a road haulage project. There was no use of railways whatever.
I prompted Railtrack to do a study and it suggested that rail use would have been profitable, although not enormously. I and my local council protested to the Secretary of State, and asked him to call in this application specifically to establish how committed the Government were to shifting from road freight to rail. The request was turned down and the project has been approved. It will go ahead as a road haulage project despite the adverse economic and environmental impact that it will have. It is one thing to raise more revenue from the road hauliers, but it is quite another to have an integrated policy that is manifestly lacking in that department.
The hon. Member for Macclesfield (Mr. Winterton) has made some interesting calculations, demonstrating that if petrol duties had been linked to the retail prices index rather than the escalator, there would have been £5 billion less revenue from that source. We are talking about enormous sums, with no obvious return to the motorist. I believe that the Red Book shows a total of £70 million for rural public transport; that is a good gesture, but a very small one.
We suggest that, to maintain what is a diminishing amount of political support for a basically sensible proposal--the escalator on petrol duties--the Government must show more political commitment to channelling their revenues into public transport on the one hand and the reduction of vehicle excise duty on the other, especially duty on smaller cars. Some progress has been made in that direction, but we feel that it could be taken much further.
I want to say a little about the Government's new approach to energy taxation. It does not feature in the clause, but it is important to the debate, because in the long term, it will determine how much environmental taxation is raised from transport and how much is raised from other sectors of the economy. I am very worried--as, I think, are Members of all parties--about the way in which the new tax has been structured. I think that the system has been flawed from the outset, in that it exempts important sectors of the economy that could contribute to the carbon dioxide reduction targets to which the Government attach such importance.
Perhaps most understandably, the household sector is exempted. Such taxation is regressive as it affects households, but there are other ways of dealing with the problem. The Government are not deterred from increasing cigarette duties, for instance. We may understand the Government's reasoning, but the fact remains that they have exempted an important sector of the economy that could have been influenced.
Much less excusably, the Government have exempted energy-intensive industries. I believe that, in years to come, they will be severely questioned about their reasons for introducing a new round of environmental taxation that was so inconsistent and so flawed.
I reiterate my party's support for the principle of environmental taxation and the principle of the escalator, but urge the Government to think more clearly about the opportunities for hypothecating revenue and for offsetting it in other ways, particularly reductions in vehicle excise duty. We are evolving a taxation system involving relatively low taxes on labour and profits in comparison with the rest of the continent, and relatively high taxes on pollution. That balance is right: we should be trying to preserve it, and the Government should be thinking much more carefully about how to reassemble the political consensus in favour of environmental taxation--a consensus that they are in danger of losing.
Mr. Barry Gardiner (Brent, North):
One of the most strenuous attacks on clause 2 was made by the right hon. Member for Wells (Mr. Heathcoat-Amory) during last week's Opposition Day debate. In his speech he quoted one of his constituents, a haulier, who had complained to him that any more increases in fuel duty would be
Hon. Members will note that, while the Opposition have sought to make much of the fact that the Government have raised the escalator in three Budgets in two years, they forgot to point out in debate that it was they who had pioneered the practice. It was during the second Budget speech that the then Chancellor of the Exchequer and now "shadow Leader of the Opposition", the right hon. and learned Member for Rushcliffe (Mr. Clarke), declared:
Mr. Gardiner:
On that note, I willingly give way to the hon. Gentleman.
Mr. Swayne:
Does the assumption that the escalator does, indeed, constitute a coffin underlie what the hon. Gentleman has said so far?
Mr. Gardiner:
I concluded the last part of my remarks with the words
It has been argued that the extra 1 per cent. put on the escalator by this Government has made the crucial difference to the industry. I asked the House of Commons Library to provide me with the differential between the cost of diesel today and the cost that would have obtained had the Conservative's 5 per cent. escalator continued on target. The answer was just 4.29p per litre--but that figure relates only to the escalator, and, as hon. Members know, the escalator was on top of inflation. What, then, could the industry have anticipated under the Conservatives had they remained in office?
At the time of the last Conservative Budget, the underlying rate of inflation was 2.7 per cent.; today, under Labour, it is 2.1 per cent. That difference of 0.6 per cent. means that the true differential in the price of diesel between Conservative and Labour would be not 4.29p, but just 1.7p. The party which, during its term of office--according to the Library--imposed an increase totallinga massive 46.6 per cent. has dared to accuse this
Government of betraying the road haulage industry over an increase of just 1.7p. If that is betrayal, Goneril and Regan loved their father, Iago never stole a handkerchief, and Brutus was nowhere near Rome on the Ides of March.
My right hon. Friend the Chief Secretary spoke of a balance to be struck between environmental concerns and the industry--
Mr. Woodward:
I am sure that the hon. Gentleman will take us for an interesting and probably informative excursion through the reasons why the Conservative Government introduced the escalator, but I would like him to answer a question. If we now believe--the hon. Gentleman may say that he does not, of course--the evidence presented by the road haulage industry, and if we believe the evidence presented by a number of our constituents throughout the country that the escalator is causing severe problems, and if they are right in saying that some 26,000 jobs may be lost because of our failure to compete with our European counterparts--
"the last nail in the coffin".--[Official Report, 21 April 1999;Vol. 329, c. 915.]
The question which that prompts is not simply, "Who put in the first nail?", but "Who built the coffin in the first place?". The answer, of course, is that it was the right hon. Member for Wells himself, and his fellow Conservative Ministers, who, when in government, introduced the fuel escalator in 1993--first at 3 per cent., and, in December that year, at 5 per cent.
"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.]
Mr. Swayne
rose--
"sailing dangerously near to hypocrisy".
I used to work in shipping. It is clear to me from my professional experience that those who sail close to things usually end up with a shipwreck. Certainly, that is what has happened to the Conservative party since this whole misguided campaign began. Its integrity has gone down to Davy Jones's locker, hand in hand with its memory.
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