Examination of Witnesses (Questions 680
- 699)
WEDNESDAY 29 MARCH 2000
LORD WHITTY,
MS ANGELA
MOSS, AND
MR IAIN
TODD
680. So briefly that nobody noticed it. Before
Lord McDonald made a press statement, did you announce to the
House of Commons the amount of money that he intended to use as
his transport budget?
(Lord Whitty) It was announced at the same time as
we provided a written answer last Friday.
Mr Gray
681. Last Friday, the budget was Tuesday.
(Lord Whitty) The Budget on Tuesday allocated £280
million to transport.
Chairman
682. When did Lord McDonald make his statement,
on Thursday?
(Lord Whitty) On Friday.
683. On Friday? It seemed to get a lot of publicity
on Thursday.
(Lord Whitty) Not in the detail it was announced on
Friday, to be fair. It got some publicity on Friday morning but
not in the detail that it was announced on Friday.
Chairman: Perhaps you could take a little message
from this Committee that it might be rather nice in future if
these announcements were made through the House of Commons and
not just briefly in some passing mention which it might attach
in due course.
Dr Ladyman: I have a recollection of seeing
it in the Red Book following the Budget but I may be wrong about
that.
Chairman: It may be there was some mention in
the Red Book. We are told that the Chancellor was to announce
it.
Dr Ladyman: Well—
Chairman: I do not think you need worry about
his Lordship, he is a big boy he can look after himself. The Chancellor
is an even bigger boy.
Dr Ladyman
684. Given that you made the point about the
vehicles being more environmentally friendly, whether they are
or are not there are certainly improvements that can be made in
vehicles to make them better engines, et cetera. Can you just
tell me, what do you plan to do to encourage the industry to shift
those types of vehicles? The previous witnesses suggested that
far more effective than the stick would be the carrot and that
capital allowance to allow them to change their vehicles would
be a more appropriate way forward.
(Lord Whitty) The structure of the VED that we have
introduced in the Budget does in itself encourage a move to a
more environmentally friendly lorry, engine forms and fuels. Our
whole taxation policy on ultra low diesel also helps that, in
a sense they are carrots against the broader strike of taxation.
In addition, we have set the targets and we played a very positive
part in the European regulations relating to this in terms of
the development of Euro II, III and IV. I think it would be fair
to say that the British Government have taken a leading position
in relation to that and the British manufacturing industry and
the haulage industry has taken a lead from that. It is not just
a question of sticks. We use the sticks constructively and the
carrots are there too.
685. Have you looked at capital tax allowance
write-offs to encourage environmentally friendly vehicles to be
purchased?
(Lord Whitty) This would have to fit into a broader
approach to capital allowance, which would be a matter for the
Chancellor rather than for me. Could I just say, in your earlier
point Mr Todd referred to the Red Book and there is a specific
reference in the Red Book, however that does not obviate your
point.
Chairman
686. The message is still the same.
(Lord Whitty) I take your point.
Chairman: Good.
Dr Ladyman
687. Can we just carry on on the subject of
costs and environmental concerns? Would you agree with the evidence
that we have been given that the taxes the road haulage industry
pays only account for 70 per cent of the total costs that it imposes
in terms of roads, environmental issues, social factors, et cetera.
(Lord Whitty) The most recent study that we have commissioned
on the costs side would suggest it is not as low as 70 per cent
but it varies very much on some fairly heroic assumptions about
the costs of pollution and environmental damage and also on the
type of vehicle and the mix of vehicles you are talking about.
What is clear is the usual contention from the Road Haulage Forum
and the industry and from motorists that the tax they pay does
not go back into improving the transport system. That is the wrong
argument and you need to look at the total external and social
cost of road traffic transport. In that context the tax take is
very close to the total environmental damage. There will be some
vehicles where the tax take is as low as 70 per cent, possibly
even lower, but on average it would be nearer one hundred per
cent. Those figures are based on not entirely robust assumptions
and other people can make slightly different calculations but
they are of that order. I do not know whether you want to add
to that?
(Mr Todd) The Minister refers to some work we have
carried out in the last twelve months by consultants and this
Report will be published very shortly and it will be open to public
scrutiny very soon.
Chairman: You ought to put down some questions
on the amount of money you are spending on consultancy—I
am just being cruel.
Dr Ladyman
688. While we are on the subject of figures
that require some robust calculation, can I just bring you back
to your estimate of the amount of carbon that was going to be
saved as a result of the road fuel duty escalator, which is 1.2
million tonnes of carbon? Admittedly the road fuel escalator bites
on all forms of road use, rather than just road haulage, but I
recollect asking some Parliamentary questions last year, unfortunately
I have not brought them with me, and I asked questions about the
amount of fuel that was being used each year over the last ten
years, the types of vehicle that were being bought and the average
fuel consumption and the one thing that you could pick up from
those figures was there was absolutely no correlation whatsoever
between the trend growth of car use and the level of taxation
on car use. The only hypothesis that one could support with the
figures as they stood was not that the road fuel duty escalator
works and encourages people to drive less or road haulage to use
different vehicles, it was that people have a certain amount of
money they are prepared to spend on transport and they drive up
to that limit of their money. If that is true, how are you going
to justify your 1.2 million tonne estimate?
(Mr Todd) I think that refers back to point I made
earlier about the difficulty in proving the evidence. There are
all kinds of societal changes taking place. People travel more
now than ever they did, as in the figures you refer to, traffic
is increasing, travelling is increasing. We do have to make an
estimate of how much carbon would have been saved through these
measures, but it is an estimate, it is based on some information
we have about how people's behaviour changes in the face of fuel
prices. That is one change in amongst a number of other societal
changes that are going on simultaneously.
689. Given we accept now that this is just a
wish figure, this saving? Would it not be worth looking at the
possibility of giving some sort of refund to the road haulage
industry for the duty they are paying linked to measures for them
to change to much more efficient vehicles? That would deal with
the social problem of the road fuel escalator as well as the environmental
problem.
(Lord Whitty) This proposition has been put to us
by the industry, we are talking about very substantial figures
here. We think that the tax system that we are now introducing,
both on the fuel and VED encourages more environmentally friendly
forms of lorry. A rebate would be an extraordinary crude way of
achieving an objective unless you had a very sophisticated offset
to it, to some extent on a straight rebate, which is more or less
what the industry was advocating, you would be subsidising the
less efficient vehicles more than the more efficient vehicles.
You would have to have a lot of offsets to that to make it work.
I think the other thing, of course, in terms of the objective
evidence of change is that the issue is not the amount of tax,
the issue is the price. We have been through a period of falling,
until very recently, until the last fifteen months or so, crude
oil prices and pump prices in real terms. You would not necessarily
find in figures up until the end of 1998 a positive movement as
a result of behaviour change because it is the price that affects
behaviour not the level of tax within that price.
690. If you will not contemplate a rebate to
the road haulage industry, how about hypothecating some of that
income by spending on the railways to deal with the infrastructural
problem that would stop the railways taking extra capacity?
(Lord Whitty) The Chancellor indicated that if we
do increase the fuel duty escalator beyond the level of inflation
all that money will be ploughed back into transport infrastructure.
Chairman: That is not beyond the rate of inflation.
Mr Gray
691. Surely if there was any evidence of behavioural
change at all it would be logical that the revenues, which are
listed in the back of the Red Book, would slightly ease off or
go down, but that is not the case and the revenues for fuel duty
go straight up in a straight line in direct proportion to the
amount by which they increased in last year's Budget and this
year's Budget, thereby saying there is no evidence at all of any
behavioural change.
(Lord Whitty) You have to take out the effect of the
economic growth and the overall growth. If after that there is
absolutely no change, then you might be right but I do not believe
that is the case.
Mr Gray: I think it is if you look at the figures.
Mr Bennett
692. Enforcement, in respect of both working
hours and vehicles, it is a joke, is it not?
(Lord Whitty) No, I do not think it is a joke. I think
that the Vehicle Inspectorate and the regulations are very important
in the industry and the deterrent effect of Vehicle Inspectorate
powers do have an effect. Having said that, I would accept that
there are a number of vehicles on the road—I have been out
with the Vehicle Inspectorate myself and found a fair level of
noncompliance both in relation to tachographs and in relation
to vehicle safety. Nevertheless the deterrent effect is there.
Regrettably there is a significant part of the industry which
tries to get by those regulations. The responsible bodies do not
like that and they press us for better enforcement to ensure that
that systematically illegal element is penalised.
693. What are you doing to improve that enforcement?
(Lord Whitty) We have already switched the VI approach
to targeting the worst offenders to a large extent. We have improved
the information system for VIs so they use a roadside electronic
information system which will give them the background on the
vehicle.
694. Is that working?
(Lord Whitty) Yes.
695. Oh.
(Lord Whitty) As compared to other Government IT projects.
696. As compared to the one they have had for
sometime, is it working? I do not find it surprising if Government's
computers do not work, I find it astonishing if they do. I do
happen to know they were in need of a considerable amount of improvement.
(Lord Whitty) Not the system, it was how they were
used on the roadside needed some improvement and that has largely
been done, I think.
697. Is there a disincentive for police to stop
those vehicles which are more likely to fail?
(Lord Whitty) A disincentive? No, there is an incentive
to do so.
698. If they have to do so many checks a day,
is it not better to do checks where the person speaks good English,
where the vehicle looks as though it is in good order so you get
all the ticks in the right place?
(Lord Whitty) I think precisely the opposite. The
intelligence led approach does tend to identify those where there
is likely to be a problem, that includes foreign lorries.
699. Does that include police officers as well
as the special inspectorate?
(Lord Whitty) The police are the only people who can
stop the lorry and in order to stop the lorry the police have
to pull the lorry across, if we are talking about taking it off
the road, and that involves cooperation with the VI. There are
occasions inevitably where the police have other priorities where
the VI would like it. That has nothing to do with discrimination
between those who are likely to pass or those who are likely to
fail. The police will pull across those lorries which the VI identify
for them or in some cases the police identify themselves.
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