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Mr. Clifton-Brown: Will my hon. Friend also take into account the fact that people in rural constituencies such as mine are further affected because not only is an 85 per cent. duty imposed on their petrol and diesel, but the
amount of the local government revenue support grant settlement that is spent on roads is decreasing each year? The standard of roads in the shire county of Gloucestershire, for example, is getting worse year by year.
Mr. Whittingdale: My hon. Friend is absolutely right. I say that from experience, because my county of Essex has had much the same experience under this Government.
Most motorists have no choice but to pay the tax increase. However, as the hon. Members for South Down (Mr. McGrady) and for East Antrim (Mr. Beggs) pointed out, in Northern Ireland it is comparatively simple to cross the border to fill up with fuel. In the Republic of Ireland, petrol costs about 50p a litre, and that has led not only to cross-border shopping, but to smuggling on a huge scale. That problem has developed only in the past two years, with all major fuel suppliers reporting a significant drop in sales--in some instances, up to 40 per cent.--since the 1997 Budget, and as many as half of Northern Ireland's filling stations are now believed to be selling smuggled fuel.
The lowest estimates put the loss of revenue at over £100 million a year, and there is little doubt that the IRA is heavily involved in that trade. However, the Government's response, in a letter from the Financial Secretary's office, was that, although £100 million is a great deal of money, it needs to be viewed in the context of a total yield from oils of about £20 billion. That problem will be made worse by these increases, and the Government's complacency on the matter is simply not good enough.
The increase in fuel duty of more than 7 per cent. is bad enough. However, the clause also increases the duty on fuel oil, not by 7 per cent., but by nearly 22 per cent. Although that will add only 0.5p in tax to the cost of a litre, for some businesses the impact of that increase will be enormous.
I recently received a letter from Dengie Crops Ltd. in my constituency, which is owned by a group of local farmers. They point out that one part of their business uses almost 4 million litres of medium fuel oil a year as a prime energy source to process crops. The increase in duty will increase their costs by almost £20,000 a year, and they say that
Much has been said about the impact on the haulage industry of the increase in the cost of diesel, but it is not just hauliers who are faced with a huge increase. As my hon. Friend the Member for Billericay (Mrs. Gorman) said, taxi drivers are also up in arms. In the £10 star letter in the latest issue of Taxi Globe, a taxi driver in Sidcup writes:
Mr. Whittingdale:
We have already made it clear that we oppose the continuation of a road fuel escalator, and that we shall vote against these increases tonight.
In November 1998, in an Adjournment debate, my hon. Friend the Member for North Shropshire (Mr. Paterson) drew attention to the huge damage that the level of diesel duty was doing to the haulage industry. He reported at that time that Ministers had refused to meet a delegation from the industry. A few weeks later, I attended a rally at Westminster of 2,000 truck drivers, who had come to London to try to persuade the Government of their case. Instead of listening to them, the Government raised the duty on diesel, not by 6 or 7 per cent., but by 12 per cent. What is more, the Chancellor did not even mention it in the Budget speech, and the full scale of the increase became clear only when we looked at the Red Book. It was a kick in the teeth to the haulage industry, whose anger is entirely justified.
A large number of Members who have spoken have given examples of how the increase will affect firms in their constituencies. The hon. Member for North Tayside (Mr. Swinney) told us that the Labour candidate for Galloway and Upper Nithsdale has called it a poll taxon wheels. The hon. Member for Workington (Mr. Campbell-Savours) made an excellent speech, based on considerable knowledge of the industry and its concerns. I really hope that, even if the Economic Secretary is not prepared to listen to us, she will listen to her hon. Friend.
By contrast, the hon. Member for Twickenham(Dr. Cable), speaking for the Liberal Democrats, appeared to support the escalator; but perhaps that is less surprising, given that his Chief Whip, the hon. Member for North Cornwall (Mr. Tyler), told us in the Western Morning News two weeks ago that
I finish by quoting from a letter that I received from a firm in my constituency, D. Fisher (Farms) Ltd. in Southminster. It says:
The Economic Secretary to the Treasury (Ms Patricia Hewitt):
This is my first Finance Bill Committee and I have to confess that I was rather puzzled that no amendments to the clause had been tabled by the
Conservative Members do not know what is their policy on health and education, they do not know what is their policy on the environment and they have given us no answer at all to the question asked repeatedly by my hon. Friends: if they succeeded in defeating the clause this evening, how would they fill the black hole in the finances?
The right hon. Member for Horsham argued--as did his colleague, the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale)--that the fuel duty escalator, which the Conservatives introduced in 1993 and increased in 1995, was somehow right then, but is wrong now. As my hon. Friend the Member for Harrow, East (Mr. McNulty) pointed out in a thoroughly robust contribution, the right hon. Gentleman's argument, which was based on diesel prices when the fuel duty escalator was introduced, was quite simply wrong.
The right hon. Gentleman also argued that the fuel duty escalator was needed by the Conservative Government because our diesel prices were so much lower than those everywhere else in the European Union. Quite the opposite was the case. As the figures produced by the House of Commons Library have established, diesel prices in the United Kingdom in 1993 were the second highest in the EU. Only Italy's were higher.
The hon. Member for Maldon and East Chelmsford referred to petrol. Only Ireland and Denmark had petrol prices higher than ours in 1993, and they were higher by only 1p.
Mr. Whittingdale:
On the price of petrol, is the Economic Secretary aware that, when he delivered his 1995 Budget speech, two years after the escalator was introduced, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said:
Mr. Clifton-Brown:
I draw the Economic Secretary's attention to the Road Haulage Association document and, in particular, to table A-5 on page 12. It shows that, in 1993, the UK had almost the lowest petrol prices of all EU countries.
"there is a limit to the amount of additional costs that companies will bear".
I ask the Economic Secretary to say tonight how she can possibly justify an increase of 22 per cent., and how she expects business to absorb a cost increase on such a scale.
"Maybe one of our overpaid Ministers could tell us why our diesel is taxed so much higher than anywhere else in Europe. When I voted for this Labour Government I was certain that I was doing the right thing. Now I know I made a mistake. They are worse than the Tories ever were, with no care at all for the working classes".
Mr. Leslie:
So that we may judge the hon. Gentleman's commitment on this matter, will he now take the
"There is a case for road freight to be taxed more heavily."
The Chief Secretary, in opening the debate, showed breathtaking complacency. He told us that there was overcapacity in the industry, that too many firms are inefficient and that, in any case, the Budget is helping the haulage industry. No wonder the hauliers are so angry.
"We have literally come to the end of the road. We cannot continue to operate lorries, as any income or earning potential has been killed off by the increase in fuel prices. Our lorries will be off the road at the end of the month. It is the end of an era after some 30 years in the haulage business".
That is what the Government's policy is achieving. It is crippling British hauliers and pushing up the costs of British business. It is helping our foreign competitors and doing nothing to help the environment. That is why we oppose the escalator and why we shall vote against the clause.
9.45 pm
"I intend to stick to my commitment to raise road fuel duties . . . Despite those increases, petrol prices in this country should remain lower than in any other major European country."--[Official Report, 28 November 1995; Vol. 267, c. 1064.]
Ms Hewitt:
The hon. Gentleman was a member of the previous Government. When they introduced the fuel duty escalator in 1993, petrol prices were higher in this country than they were in every other country except Ireland and Denmark, and diesel prices were higher than in every country except Italy. The right hon. and learned Member for Rushcliffe (Mr. Clarke) was simply wrong on that issue.
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