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Mr. Christopher Leslie (Shipley): Is the right hon. Gentleman making a pledge that the Conservative party
manifesto for the next general election will include the aim to work towards reducing fuel duty to American levels?
Mr. Heathcoat-Amory: I am making the point that if the Government are so keen on American business practices they should start introducing some American- style costs. The European Union has to put up with the spectacle of the Prime Minister telling it to adopt American business regulation, or the lack of it, while at the same time he is converging on European costs or, as in the case of fuel duties, increasing them above European levels. As usual with him, it is very much a case of, Do as "I say, not as I do". Our pledge to the British people is to get off the fuel escalator, which is damaging and uncompetitive.
It is crass hypocrisy for the Government to talk about competitiveness and productivity while undermining them through their tax policies. It is the economics of the madhouse. There was a time when the Labour party knew something about industry, but these days very few Labour Back Benchers know anything about manufacturing. I do not think that a single Treasury Minister has ever had hands-on experience of that sector, so perhaps we should not be surprised at Ministers' not understanding the case put to them by the haulage industry, but that does not entirely excuse them.
The Government are penalising the industry not only by higher fuel taxes but by higher vehicle excise duty. Anyone can understand that raising British vehicle excise duty to make it not only the highest, but almost twice as high as the next highest in Europe, is tantamount to delivering a body blow to the industry.
For the 40-tonne articulated lorry--the workhorse of international haulage--our hauliers have to pay £5,750 a year. The figure for France is £486; for Italy, £634; and for the Netherlands, £670. The duty that the Government have imposed on the industry, in addition to the fuel escalator, is staggeringly higher.
The forum with which the industry was fobbed off at the time of the Budget has met only once, and despite what the Government said, there is no independent study on which we can rely to give an accurate comparison of costs here and on the continent.
It is wrong to say that no one will benefit from the Government's road tax policy, however: foreign hauliers certainly will. About 1 million foreign lorries will visit the United Kingdom this year and their operators cannot believe their luck. They are puzzled, amazed and in many ways delighted at the spectacle of a United Kingdom Government who are signed up to a code of conduct on unfair tax competition but create unfair competition against one of their own industries. They have created and are widening a gap that renders the British road haulage industry uncompetitive in Europe.
Mr. John Bercow (Buckingham):
Does my right hon. Friend agree that in describing the Government's policies on these matters as "crackpot, cock-eyed and ridiculous" on 19 March 1999, the president of the Freight Transport Association, Mr. Lawrence Christensen, might conceivably have been guilty of understatement?
Mr. Heathcoat-Amory:
Yes. The gentleman concerned was in fact being rather restrained: he is a great
I said that several people and sectors will benefit from the policy. I mentioned foreign hauliers, but we must not overlook foreign Treasuries. The Treasuries of France and Belgium, in particular, are massive beneficiaries, as British lorries go overseas to fill up with foreign diesel. When they make trips abroad, drivers leave the United Kingdom with empty tanks and fill up on the continent. Before they return to this country, they make sure that they fill up at foreign ports. There are five haulage firms of significant size in my constituency, one of which is Frampton's. Mr. Frampton tells me that more than half his diesel is now purchased abroad. That is a huge and continuing drain on the British Exchequer, but the Government either are unaware of it, or do not care about it.
Another group to benefit from the policy are the smugglers in Northern Ireland. The Province has a land border with another EU member state, so smugglers do not have to take a trip by ferry or the channel tunnel to reach it: they need only drive across the border and fill up their tanks. The association representing petrol retailers has estimated that the Government lose about£100 million a year through the smuggling of diesel and other fuels across that land border.
The Inland Revenue has not produced an estimate of the amount lost through that smuggling. I have asked the Government to make a stab at an estimate and to do something about what is a real problem, but to no effect. Given that much of the smuggling is done by paramilitaries, it is odd that the Government's tax policy should put illegal funds in their hands.
It has been reported that the Government are having second thoughts about the fuel escalator. Trailing changes of policy in the press instead of announcing them to the House is not unusual for the Government, but I hope that the Economic Secretary, when she replies to the debate, will confirm that the Government have changed their mind. That would be welcome, but it would be too late for many haulage firms. However, the House would have something to celebrate if the Government were to repent, even at this late stage.
Another fiasco is developing for next year--the possibility of a climate change tax. That threatens to do to the rest of industry what the fuel tax escalator has done to the haulage industry. Perhaps the Government have decided to attack only one sector of industry at a time, and will drop the fuel escalator to concentrate damage, through the climate change tax, on the rest of manufacturing industry.
The House would benefit from an explanation of the Government's intentions. One supposed virtue of the tax escalator has always been that it gives industry some warning of changes to duties and that car manufacturers and others can plan design and production. If the Government are having a rethink, as reported in the press, it should be made explicit and clear.
Mr. Stephen Dorrell (Charnwood):
I support the amendment, and I agree with every word that my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) said about the way in which the Government have introduced their road fuel duty policy and its perverse effect on the environment and competitiveness.
Like my right hon. Friend, I seek from the Economic Secretary to the Treasury a clear statement of the Government's policy but I think that matters are even worse than he suggested. There is press speculation, presumably stimulated by loose talk in the Treasury, that the Government are rethinking their unpopular policy, but the Economic Secretary, at Treasury questions on 13 May, implied not that the policy was being rethought but that the Government intended to pursue it until 2010 if they were re-elected often enough. The price of unleaded petrol would then reach £6.90 a gallon, and diesel would be more than £7. Is that the Government's policy? Are we on an escalator from which there is no exit for a further 11 years if the electorate continue to elect the Government? Or should we believe the press speculation?
The Economic Secretary's first duty as a tax Minister is to set out clearly the Government's policy. The policy as last expounded by the Chancellor of the Exchequer--a commitment to the 6 per cent. ratchet--is misguided. It sits badly, to put it no stronger, with the implication that the Government want to reduce the tax burden, an impression that various Ministers, from the Prime Minister down, create, and that was the reason for the income tax rate cut on Budget day. The Government's rhetoric is about low tax, but they are piling on tax by stealth as fast as they dare in parts of the economy that they hope the public will not recognise or in ways that the public will tolerate without too much noise.
The Government's approach to taxation of petrol and diesel is a perfect example of stealth tax. The tax is deniable, and it need not be justified year after year because it has been pre-announced. The Government clothe themselves in the garments of tax cutting, but they have made a clear commitment to increasing the burden of taxation paid year after year by a section of the community. That is objectionable.
Mr. Leslie:
As the right hon. Gentleman is talking of matters deniable, can he deny that he was in the Cabinet when the fuel duty escalator was his Government's policy? How does he reconcile the previous Government's view with his statements today?
Mr. Dorrell:
I find no difficulty in reconciling the two things. To be on an escalator is not to deny the possibility of getting off. We announced a series of tax measures, but, in the present circumstances, we believe that the process has gone far enough, and I have no difficulty whatever in saying so. Presumably, the person who has gently speculated to the press that the Government may rethink the proposal equally finds no such difficulty.
My first objection to the Government's policy is that it relentlessly increases taxation on identified sections of the community. Secondly, it reveals a deep-seated prejudice against car ownership that runs right through the Government. I am not opposed to public transport, but I am vehemently against those who oppose in principle the development of private transport.
The motor car has been a huge source of wealth creation for those who build and sell cars and a huge source of freedom for those whose horizons have been widened by its flexibility. Surely the challenge to policy makers is not to dress the motor car up as a public enemy, but, through tax and regulation, to create circumstances that make it a good neighbour.
I do not understand how relentless increases in the tax on fuel redeem the obligation that rests on the Government. It is a form of intellectual slovenliness on the part of Ministers to think, "We can pander to a prejudice against the car" and that it is somehow a cost-free option. Ministers owe it to the House to be more direct and analytical and to discharge their responsibilities more seriously.
The third and perhaps the most immediate reason why I object to the Government's policy on road fuel duties is the reason that my right hon. Friend the shadow Chief Secretary emphasised in his remarks--the effect that the policy is having on the competitiveness of the British road haulage industry and of wider British industry as well. In that connection, I should probably declare an interest as a director and shareholder in a manufacturing business. The manufacturing sector perked up during my right hon. Friend's speech. It is true that all manufacturing businesses rely, at least to some degree, on the haulage sector, and I therefore have an indirect interest in the issue.
The tax policies that the Government are pursuing mean that every British road haulier is at a gradually increasing disadvantage compared with continental competitors. Year after year, the Government are creating a set of circumstances in which there is an increasing incentive for British hauliers to tank up and, in some cases, to register their vehicles overseas. Continental hauliers increasingly have the opportunity to undercut their British counterparts on journeys that involve transport between one British destination and another.
The British road haulage industry is being crucified by the Government's hostility to road transport and the use of the road vehicle is a key part of the British economy. Beyond that, it is not merely the road haulage industry but all those parts of British industry that rely on the transport of goods that are affected. In a modern economy, the link between one part of the supply chain and another is a key cost element in the build-up of total costs that is charged to the eventual consumer.
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