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6.7 pm
Mr. Owen Paterson (North Shropshire): One industry is being devastated by the Government's policies. The state of that industry underlines all that Conservative Members have said about the fact that the Government do not understand business, and do not understand the impact
that their policies are already having throughout the country. I refer to the road haulage industry, which employs 500,000 drivers and another 500,000 staff in warehouses and offices.
In a debate on Tuesday this week, much was made of the fact that the fuel duty escalator was introduced by the last Government at 3 per cent. The haulier named in the now infamous KPMG report which, since last Wednesday's debate, the Government no longer mention--it was not referred to on Tuesday--has given me figures showing that in 1994 only Spain and Luxembourg had cheaper fuel than the United Kingdom. That is a startling contrast with the present situation. The United Kingdom now has easily the most expensive diesel in Europe. The difference is astonishing. Let us consider the cost of filling a 1,200-litre lorry with two tanks. The difference between the cost here and the cost in Luxembourg is £350.40; the figures for Belgium and France are £330 and £267.60 respectively.
Since last week's debate, the haulier named in that famous report has been taking steps to move his whole business to Luxembourg. During our debates, several senior members of the Government told us that the fuel duty did not really matter, and that vehicle excise duty did not matter, because we had lower business costs, lower insurance costs and lower corporation tax.
I shall show the House that the Government are completely wrong. The Deputy Prime Minister, who may not be the brightest, gave us figures during Prime Minister's questions showing that Belgium and Holland had business costs that were unaccountably £800,000 and £600,000 more expensive that ours. [Interruption.] I should be most grateful to the Minister if he would listen while I explain the difference.
Vehicle excise duty in Luxembourg is £226 as against £5,750 in this country. This man runs 90 trucks, so that is a £497,000 difference. He buys 4.5 million litres of diesel a year, and the difference on that is more than £1.3 million. The savings on fuel and VED by operating trucks in Luxembourg is £1,811,160.
Set against that is the savings on a driver paid £330 a week, his pension and national insurance contributions, and the insurance on the vehicle, which would give an advantage over Luxembourg of about £14.20 per week per driver. This man generously told me that he made a profit last year of £400,000, so the saving on corporation tax, which is 30 per cent. in this country and 33 per cent. in Luxembourg, is only £12,000.
The total United Kingdom saving is £78,456, giving this man the benefit of a £1,732,704 saving by moving his entire business to Luxembourg. If my figures are wrong, I should like the Minister to prove it. He should put in the Library the back-up figures for the Deputy Prime Minister's claim that cheaper social and running costs outweigh the disadvantages of more expensive VED and petrol duty.
It is sad that such a successful export business is moving abroad. The man was quite clear. He said that the Chief Secretary's comments in the debate the other night were stupid, and that they showed that the Government were not going to listen--"therefore I'm off".
As for the impact on other hauliers, I shall quote my constituent, Dave Yarwood from Maesbury. He said:
Mr. Paterson:
The Conservative Government. I am a total supporter of cabotage, because I believe in free trade. Cabotage will work only if there is a level playing field. The Government have manacled our hauliers behind both ankles, so they cannot compete.
Ms Claire Ward (Watford):
With his reference to a level playing field, is the hon. Gentleman suggesting that there should be tax harmonisation across Europe?
Mr. Paterson:
I am in favour of taxes being as low as possible in all countries. I salute the socialist Government in France. I have a cutting from Figaro of 29 September 1998, which says that the French Government introduced a rebate so that French truckers could compete with truckers in Luxembourg.
Mr. Bercow:
Does my hon. Friend agree with me that it would be helpful to the debate if the hon. Member for Watford (Ms Ward) were to understand that we want lower taxes here? We do not think it our business to encourage other member states of the European Union to make their taxes higher. It is a blindingly obvious point, and I hope that the hon. Lady can grasp it.
Mr. Paterson:
I am grateful to my hon. Friend for making that point. However, as other hon. Members wish to speak, I shall move on to deal with another matter.
The Government also claim that the measure--by providing a rebate for converting engines to use ultra-low sulphur diesel, for example--will create great environmental benefits. However, it costs £4,000 to convert a euro 1 engine, and £3,500 to convert a euro 2 engine. It is therefore not surprising that very few hauliers are tempted by the Government's offer of a £1,000 rebate as compensation.
One haulier said:
Mr. Derek Foster (Bishop Auckland):
I agree with the hon. Gentleman's case on fuel. I think--as I said in my speech immediately after the Budget--that our Government made a big mistake in taking that action, which is also undermining our making work pay strategy for the working poor in my rural constituency. However, is this not an unreal debate? Successive Governments have perpetrated a deception upon the electorate--that it is possible to have superb public services and to reduce taxation. The truth is that the taxation burden has increased year after year--under the Thatcher Government, under the Major Government, and now under our own Government. Why do we not tell people the truth--that we cannot have good education and good health without paying for them? Why do we not get them to pay for those services by the most just means--by increasing personal taxation?
Mr. Paterson:
I am most grateful for that intervention by the right hon. Gentleman, who has made the most pertinent point--that the Government think that they have found a golden-egg laying goose that will not bite back. The Government are taking £36 billion from road users, but are reinvesting in roads a paltry £6 billion.
Ms Ward:
The hon. Gentleman mentioned golden eggs. Has he perhaps forgotten that the previous Government introduced the fuel duty escalator?
Mr. Paterson:
With deepest respect, had the hon. Lady been listening to my earlier remarks, she would know that I said that, at that time, only two other countries in Europe had lower diesel costs than ours and that the policy worked. Now, we have by far the most expensive diesel in Europe, but are not achieving environmental benefit because of it.
We are trying to achieve, based on 1990 figures,a 12.5 per cent. reduction in carbon emissions. According to the Library, the 1990 emissions total was 159 million tonnes, of which only 30 million tonnes were caused by road transport--of which only 16 per cent. came from freight. Therefore, eliminating the freight element would reduce carbon emissions by a maximum of only 5 million tonnes. The Government's policy does not make any environmental sense.
In our debates on the issue, the Government have also trumpeted their creation of a forum. We were told that the Government had listened, and understood that industry was in crisis, and that they had consequently instantly reacted. However, the facts paint a somewhat different picture. The forum has met only once, and under some duress. Three senior members with trucking businesses--the chairman of the Road Haulage Association, the president of the Freight Transport Association, and another senior haulier--were banned from the meeting. There was no agenda for the meeting, of which no minutes were published. No further meetings or agendas were planned. All we know is that, today, a meeting has been announced between civil servants and one of the senior members of a trade association.
"Companies are in business to make a profit, nobody minds paying tax on profit. Indirect taxation however is making it impossible for some businesses to make a profit in the first place."
29 Apr 1999 : Column 571
Figures from the Library show a dramatic increase in the number of foreign-registered trucks leaving this country. In 1997, there were 597,000, and for the four quarters ending quarter three 1998 there were 690,000. That is an astonishing increase, and it is due to the benefits of cabotage, which as free traders we welcome. However, the Government have not taken on board the impact of cabotage. Foreign trucks with the benefit of cheaper VED and dramatically cheaper fuel can come to this country and will wipe out our hauliers. Our hauliers will go.
Mr. Stevenson:
Will the hon. Gentleman remind the House which Government agreed to remove cabotage restrictions in the United Kingdom for road haulage?
"We have been given a £1,000 reduction per vehicle annually if we fit a particulate trap to reduce emissions. This will cost £2,500 per vehicle, is guaranteed for 12 months only, is unreliable and may not be compatible with our vehicles. It is not cost effective."
The measure is also not environmentally effective, as more crude oil has to be cracked to create ultra-low sulphur diesel than ordinary diesel. Worse still, Mobil CNG estimates that ultra-low sulphur diesel is 4 per cent. to 7 per cent. less efficient. A large haulier in Sheffield converted 130 38-tonne trucks and reported an 8 per cent. increase in fuel consumption, costing him £250,000 in the
first year. It is yet another case of the Government not getting their facts right, not understanding how things work, and creating extra costs for a successful British business.
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