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Mr. Casale: If the hon. Gentleman will allow me, I will respond to the first intervention before I give way again. Did petrol prices influence competitiveness less under a Conservative Government than under a Labour Government? Opposition Members are displaying the same logical inconsistencies in approach all over again.
I hope that the hon. Member for South Holland and The Deepings (Mr. Hayes) will allow me to make progress. The decision to pursue the fuel escalator has been conditioned not only by history and by policies inherited from the previous Government but by Britain's international obligations to reduce emissions in line with agreements undertaken by the previous Government at Rio and by this Government at Kyoto. The policy has also been conditioned by the need to reach a balanced view about reducing pollution while seeking to protect the interests of an important and valued British industry.
It is true that I represent a London constituency and London, as no other city in Europe, knows the cost of road traffic pollution in terms of the quality of our environment, our urban landscape and, perhaps most importantly, in terms of our health and that of our children.
This Friday, the Wimbledon Civic Forum's Transport Forum will hold a public meeting to discuss how we can reduce traffic congestion and pollution in my constituency. Many of my constituents will attend that meeting to demand a change in the quality of the air that they breathe, a change in the transport system that still privileges the private motorist and road haulier at the expense of those who use the public transport network, and a change in the behaviour of those who use damaging, and ultimately dangerous, types of fuel. My constituents will not be indifferent to the needs of Britain's hauliers--neither am I--but they will point out that Britain's hauliers have an interest in ensuring a better environment and improved public health, too.
Sir Robert Smith:
Does the hon. Gentleman recognise that they do not tackle those problems on the continent simply by altering the price of fuel? They decide where lorries should go within European cities. If the quality of the environment is better without them, lorries are directed to avoid those areas.
Mr. Casale:
I welcome that intervention. One positive outcome of this debate is the constructive remarks from
As in other parts of the Bill, the Government must adopt a balanced approach, taking account of as many interests as possible before deciding what to do. The previous Government recognised that fact when they introduced the road fuel escalator, and this Government recognise it as well.
Mr. Hayes:
I noted the hon. Gentleman's remarks about the need to achieve a "balanced" policy. The point is that that policy must be sensitive to the different needs and approaches of different areas. Fuel tax is a relatively blunt instrument, so we must develop and evolve policies that are sensitive to rural areas as well as to cities and towns. I have lived in both rural and urban areas, and I understand the hon. Gentleman's point about the city environment. However, his arguments ring pretty hollow in sparsely populated areas where there is a lot of clean air but a diminishing number of jobs due to the crisis in the haulage industry.
Mr. Casale:
The hon. Gentleman intervened on me, but he seemed to be posing a question to himself. If he believes that the road fuel escalator is a blunt instrument, is he prepared to say that the previous Government were wrong to introduce it? Does he rule it out for ever and a day? He has had plenty of opportunities to clarify his position in this debate, but he has not done so.
Perhaps the balance between the different arguments and interests involved has shifted since the last election. But, if it has done so, surely the balance of the argument has moved in the direction of giving greater weight to people's concerns about their health and their environment, not less. Therefore, there is now even greater public awareness of the need for an integrated public transport policy, in which rail can partially replace road as a means of haulage transport, and of the need to discourage the use of inefficient and damaging fuels.
My main point, however, is that the fuel escalator, combined with other measures, is the right way forward. It was the right way forward when the Conservative Government introduced it, and it is the right way forward now, as this Government pursue the same policies for the same reasons with the same objectives and obligations in mind. Clause 2 should stand part of a Finance Bill that seeks to recognise the demands of a growing economy, a fair society and a sustainable environment in the interests of us all. I urge hon. Members to support clause 2.
Mr. Clifton-Brown:
I am glad to catch your eye in this debate, Mr. Butterfill. We have heard many facile speeches from the Government Benches this evening. Labour Members have referred to what has happened in the past, but my constituents are wondering what will happen to their businesses today as a result of the road fuel escalator.
Mr. Swayne:
Does my hon. Friend agree that the British electorate dispensed with the past on 1 May 1997?
Mr. Clifton-Brown:
I agree totally with my hon. Friend. Although he makes a jocular point, it has a serious edge.
The Government should be examining the facts of the case. The economic circumstances are different every year and in every Budget. My right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) made it perfectly clear that the economic circumstances in this Budget did not warrant such a huge increase in duty.
Mr. Clifton-Brown:
I will develop my theme and then give way happily to the hon. Gentleman.
Mrs. Gorman:
The hon. hon. Gentleman had loads of time in which to speak and many other hon. Members are waiting to contribute.
Mr. Clifton-Brown:
I would be grateful if my hon. Friend will allow me to develop this point.
The economic circumstances are such that we have by far the highest priced diesel in the European Community. The current price is some 68p per litre, or £3.9p per gallon. The Budget introduced a staggering increase of 28p per gallon, which brings the total rate of taxation to £2.28 per gallon. That amounts to a rate of duty of 84 per cent. in this country compared with Belgium, which has a rate of 66 per cent. Let us look at our major world rivals, because that theme has not been developed in this debate. Siren voices from the Liberal Democrat Benches want the whole of Europe to increase road fuel duties. However, if the whole of Europe becomes less competitive with the rest of the world, there will be less and less trade in the European Union and more and more trade in the rest of the world, and unemployment in Europe will go up and up.
Mr. Derek Twigg:
The hon. Gentleman made a distinction between what is right today and what was right yesterday, and said that he did not think that it is now right to have the fuel escalator. Will he confirm that he would never again vote for the introduction of a fuel escalator or an increase to it?
Mr. Clifton-Brown:
The hon. Gentleman obviously has not been listening to my speech. If he had, he would have heard me say that one should consider the rate of fuel duty in the light of the economic circumstances of the time. I cannot tell him what will be the economic circumstances after the Government have had a go at our economy. The economy may well be considerably worse off than it is now and, under those circumstances, we would probably be unable to increase the fuel duty as much as it would be prudent to do at the present time.
Mr. Edward Davey (Kingston and Surbiton):
The hon. Gentleman seems to oppose the idea that other European countries should increase their petrol taxes. Why does he think that? Has he not met road hauliers who argue--they have put this argument to me--that all they that seek is a
Mr. Clifton-Brown:
That argument is totally fallacious. We should be encouraging our European partners to put taxes down, not up, because we would then gain a greater share of world trade, and the number of unemployed people in Europe--18.5 million--would start to go down. Unless we consider those 18.5 million people, their lives will be made a misery and, if we are not careful, so will those of many more people who will also be unemployed as a result of higher taxation.
The Government have increased the road fuel escalator by 6 per cent. but that is not the only increase. There is VAT on top of that, so the increase is 6.2 per cent., and if that is compounded over 10 years, the rate of duty on a gallon of diesel will double over 10 years. The Government have a duty to tell the haulage industry when they will end that ridiculously high real increase in diesel duty.
Much has been made of history. Almost all contributions by Labour Members have been set in the context of how the road fuel escalator operated when we were in power. However, I recall that, when the whisky industry was subject to similar duties, we froze the escalator because the industry was in difficulty. I should have thought that the road haulage industry was facing similar difficulties, so the rate of increase should be reviewed, and I look to the Government to do so.
We can contrast the fuel duty escalator to the tobacco escalator. One of the Government's first moves was to increase the tobacco escalator from 3 to 5 per cent. The Government have a record of increasing customs duties. The effect of the fuel increase in the road haulage industry alone will push up the retail prices index by 0.25 per cent. When all the other increases are taken into account, the RPI will no doubt increase by considerably more.
The Chief Secretary made great play of the overall costs to hauliers, but the fuel element of most hauliers' business is about a third of their total costs. That means that all the other costs are much lower by comparison. When one considers that the price of a litre of diesel in the United Kingdom is 68p, compared with 39p in Belgium and, perhaps significantly, 44p in Ireland, one begins to realise how uncompetitive British haulage is compared to some of our competitors.
If Ministers, who are laughing, doubt the truth of what I am saying, they should consider the example given by the hon. Member for Workington (Mr. Campbell- Savours). He pointed out that one of this country's largest haulage companies, Eddie Stobart, is thinking of flagging out some 100 lorries to Luxembourg or Ireland. Those companies know their business backwards; they are voting with their feet as an indictment of the Government's Budget measure.
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