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Petrol Duty
6. Mr. Nicholas Soames (Mid-Sussex): What recent representations he has received on the level of petrol duty. [116606]
The Paymaster General (Dawn Primarolo): Before the Budget, Treasury Ministers received a number of representations about the level of petrol duty. Representations were received from the AA, the RAC and the Petrol Retailers Association. In addition, many private individuals contacted their Members of Parliament, who then wrote to Treasury Ministers on their behalf.
Mr. Soames: The Paymaster General will recognise that all those people will have been gravely disappointed by the outcome of the Budget. Will she confirm that the average motorist is now paying more than £200 extra a year in petrol tax under Labour? Does she not realise that for many people, particularly in rural areas, a car is essential, not a luxury, as it is for her? Does she further agree that with the regrettable closure of banks and other rural services, old people are being put at a grave disadvantage, with inadequate means to support a car?
Dawn Primarolo: I am glad to see the hon. Gentleman in the House. I remind him that his party introduced the
escalator. In the Budget we made no real increase in the level of petrol duty--the lowest increase for nearly a decade. The Conservatives failed to match that in government. I take his concern for people living in rural areas with a pinch of salt, because when the Conservative Government had the opportunity to act, they failed to do so.
Mr. Christopher Leslie (Shipley): I welcome the decision to have no real increase in petrol duty this year. Will my hon. Friend take this opportunity to confirm that much of the recent price rise in petrol has been a result of profit taking by oil companies, perhaps including the oil exploration company Kerr McGee, to which the shadow Chancellor is a paid consultant?
Dawn Primarolo: The world price of oil has clearly contributed to the rise in prices at petrol pumps. That is outside the control of the Government. The AA welcomed the Budget, for the first time in a decade. It particularly welcomed the £280 million investment in the transport fund and the fact that there was no real increase in the price of petrol.
Mr. Eric Forth (Bromley and Chislehurst): Will the Minister explain why the penal rate of tax on vehicle petrol is justified on environmental grounds--presumably to discourage use--when the Government reduced the tax on domestic fuel, which causes even more pollution?
Dawn Primarolo: I am slightly surprised that the right hon. Gentleman seems to be staking out a policy on behalf of the Opposition for raising VAT on domestic fuel and returning to the habits of Conservatives when in government, which the shadow Chancellor continually denounces. The Opposition need to make up their minds. Do they or do they not agree with reaching the Kyoto targets? Do they or do they not agree that we should have environmental obligations? If they do, will they explain why they oppose every measure to meet these obligations and deny all the steps that they took to take us further away from them?
Mr. Lindsay Hoyle (Chorley): I welcome the removal of the fuel escalator--without doubt, its removal was welcomed throughout the country--but those of us who represent rural areas wish to see a way forward to reduce the cost of travel within our areas. Between now and the next Budget, what policies can be brought forward to make petrol cheaper and to ensure that rural petrol stations continue to survive?
Dawn Primarolo: I remind my hon. Friend that the Government took note of the particular problems for those living in rural areas and the transport difficulties that they experience, first with the transport fund and secondly with the reduction in vehicle excise duty, especially for the owners of smaller vehicles. The Government's policy across vehicle excise duty, petrol prices and investment in transport offers a balanced way forward both for those who live in rural areas and for those who live in our cities.
Mr. Howard Flight (Arundel and South Downs): Will the Minister confirm that by using the little trick of raising petrol duty by an inflation index of 3.4 per cent.
in comparison with the 1.2 per cent. inflation index for personal allowances, the Government have levied a further £500 million of tax on British working families?
Dawn Primarolo: I think that I am right in saying that the hon. Gentleman has never been in government, so I suppose he can be forgiven for not knowing how the tax system works. The methodology used for this year's increase is exactly the same as that which has been used in previous years. It is the same methodology that the Conservative Government used.
EU Structural Funds
8. Mr. Andrew George (St. Ives): What progress he has made in securing matching public funds for EU objective regions. [6608]
The Chief Secretary to the Treasury (Mr. Andrew Smith): Discussions are under way between Government and the English objective programme partnerships about identifying the match funding which regions need. Officials from the Department of Trade and Industry are taking the lead. My right hon. Friends the Minister for Trade and the Minister for Local Government and the Regions have undertaken to meet again the all-party parliamentary group on objective to discuss progress. I would describe that progress as very encouraging.
Mr. George: In the unseemly scramble to claim credit for securing objective status, will the Minister agree that there is an urgent need to ensure that there are adequate public match funds in place? Given that his colleagues in both MAFF and the DTI do not have sufficient and adequate match funds and that there are three other Government Departments with responsibilities in this area, does he agree that it is imperative that the Treasury steps in, takes the lead and at Cabinet level ensures that this golden opportunity is not mishandled?
Mr. Smith: As I have made clear to the House previously, we are in touch with all the Departments concerned and in close discussions as part of the spending review. My right hon. Friend the Minister for Trade, who wrote to the partnerships on 24 March, was able to report good progress on precisely the issues that the hon. Gentleman is raising. There is progress on helping partnerships to identify a full range of match-funding sources, exploring the possibility of adjusting matching rates between programme measures and years; the use of some regional selective assistance as match funding; MAFF funding; on-going discussions with the Commission on increasing the flexibility between the private and public sector contributions to match funding; and the announcements in the Budget of the venture capital fund, which will greatly assist the regions, and also the £50 million for clusters. I can assure the hon. Gentleman and other right hon. and hon. Members who are concerned about objective 1 in the English regions, west Wales and the valleys that every effort is being made in government to ensure that match funding is secured.
Mr. David Watts (St. Helens, North): I congratulate my right hon. Friend and other Treasury Ministers on the work that they have done over the past few months to resolve the immediate problem of match funding for
objective 1 structural funds. However, does not he agree that the long-term problem can be resolved only by changing the Treasury rules, achieving more joined-up government and finding more inventive ways to ensure that we do not have to look for match funding every year?
Mr. Smith: I thank my hon. Friend for his support for what we have achieved with regard to objective 1 funding. We should not forget that it was the Government's success at Berlin and subsequently that secured objective 1 boosts for Cornwall, south Yorkshire and Merseyside worth £300 million, £700 million and more than £800 million, respectively.
We are continually looking at how we can improve the arrangements for securing match funding but, as I said, I am greatly encouraged by the progress that we are making. I shall keep in close touch with my hon. Friend, and with other hon. Members who are concerned about this matter, to ensure that the regions get the benefit that they need and which they were denied by the Conservative Government.
Corporate Tax
9. Mr. Bill Tynan (Hamilton, South): If he will make a statement on corporate tax rates (a) in the UK and (b) in other European Union countries. [116610]
The Chief Secretary to the Treasury (Mr. Andrew Smith): Our main rate of corporation tax is the lowest among the major industrialised countries and our small companies rate is one of the most competitive in the European Union. We have cut both by three percentage points since taking office. I am pleased to say that our new starting rate of 10 per cent., which was introduced this month specifically for small companies, is the lowest rate in the EU. About 270,000 companies will benefit from the starting rate. By means of that and other measures, we have established a stable, low-rate, competitive tax environment, in which business can thrive.
Mr. Tynan: On behalf of the business community in my constituency of Hamilton, South, may I thank my right hon. Friend for his promotion of business-friendly policies. Does he agree with the director of the Institute of Directors who, the morning after the Budget, said that the Government were creating an enterprise culture in this country? Does he also agree that the Conservative Government's policy of increasing taxes, promoting boom-and-bust economics and amassing large debts created bad conditions for business?
Mr. Smith: I thank my hon. Friend for his welcome for the measures in the Budget. He is quite right: the Institute of Directors applauded the Budget for what it did to establish an enterprise culture. Those measures include our capital gains tax reforms, the 10p tax rate, the shortening of the tapers, the help for unquoted companies and the promotion of employee share ownership, which we discussed earlier.
It was, indeed, a Budget for enterprise. It will foster stability, to replace the boom and bust that did so much damage under the Conservative Government.
Mr. Nick St. Aubyn (Guildford):
Under this Government, business in this country has learned the hard
Mr. Smith:
That is absolute nonsense, given all the charges that business in Germany and France has to pay. Instead of talking down this country and its achievements, Conservative Members should be praising the amount of European Union investment into this country. They should acknowledge that, thanks to the enterprise culture that the Government have fostered, inward investment into this country rose by 32 per cent. last year, and that the stock of inward investment in the United Kingdom has risen by 60 per cent. since the general election. Business has given the Labour Government a vote of confidence, in contrast with the economic failure of the previous Conservative Government.
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