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Miss Melanie Johnson: As well as being unnecessary, amendment No. 6 sends out entirely the wrong environmental signals. It seeks to delay our attempts to ensure that cleaner fuels are available from all United Kingdom petrol stations as soon as is practicable.
Clause 1 cuts the duty rates on the main road fuels used in the UK. The Government have a record of using duty differentials to good effect, as I said earlier today. We
successfully introduced ultra-low sulphur diesel across the UK five years ahead of the European Union deadline, and we have now built on that success. By using duty incentives in the case of ultra-low sulphur petrol, we have ensured that this cleaner fuel will be available to every petrol station in the UK by June this year. Clause 1 is an important part of that strategy.I am not sure that the Opposition have thought out what they are proposing, or the reasons for their proposal. I agree with the hon. Member for Truro and St. Austell (Mr. Taylor) that they have come up with no evidence in favour of either the date that they suggest, or the extension.
Ultra-low sulphur petrol offers environmental benefits over and above those of ordinary unleaded petrol when used in modern cars meeting Euro I/II emission standards--that is, cars fitted with catalytic converters. Research suggests that its widespread use in such cars could reduce emissions of nitrous oxides by up to 6 per cent., emissions of hydrocarbons by up to 14 per cent., and emissions of carbon monoxide by up to 11 per cent.
As well as ensuring that emissions from the latest generation of cars remain low, ultra-low sulphur petrol allows the use of new fuel-efficient technologies, as the hon. Member for Truro and St. Austell pointed out. Gasoline direct injection engines, for example, can deliver substantial carbon dioxide savings. The early introduction of GDI and other fuel-saving technologies in new petrol cars is being strongly encouraged by the Government's carbon dioxide-based reforms of graduated vehicle excise duty and company car tax. The early introduction of ultra-low sulphur petrol ensures that fuel quality is not a barrier to the introduction of such technologies.
Mr. St. Aubyn: The Minister said that the Opposition had provided no evidence in favour of the later date in April next year. She has not yet given us a jot of evidence in favour of the date in June. I hope that we shall hear some.
Miss Johnson: I trust that the hon. Gentleman will be more generous with his patience than he appears to have been with his research before arriving in the Chamber.
Clause 1 completes the introduction of the ultra-low sulphur petrol duty differential by cutting duty by a further 2p per litre, providing a total incentive of 3p per litre in relation to ordinary unleaded petrol.
The Government recognised that the final stages of transition to ultra-low sulphur petrol had the potential to create competitive distortions in the market, and that short-term constraints on the capacity of UK oil refineries might have meant that it took longer for independent retailers to complete the transition. The Government want to ensure that everyone has access to the environmental benefits of ULSP and the associated duty cut. To ensure a smooth transition to 100 per cent. ULSP across the United Kingdom and to guard against any competitive distortions in the final stages, clause 1 also provides for a temporary cut of 2p per litre in the price of ordinary unleaded petrol.
The reason that that will be withdrawn on 14 June 2001 is that it will no longer be needed by then, as the market shift to ULSP will be virtually complete--in fact, complete.
Miss Johnson: It will be complete.
Mr. Letwin: Will the Minister give way?
Miss Johnson: I will, but I am trying to answer the points that have been raised.
Mr. Letwin: The Economic Secretary has just told us, in terms, that the market shift will be complete by 14 June. Will she now, in slightly more serious vein, offer the guarantee that I mentioned earlier in relation to the Liberal Democrat spokesman, on behalf of the Government? Will she give an undertaking that any motorist who fails to find ULSP as of that date will be reimbursed--paid the difference--by the Government?
Miss Johnson: I will not respond to the hon. Gentleman's points. I want to respond to the substantive points made by members of the official Opposition, which I must say were rather limited.
By 14 June, ULSP will be available to all UK forecourts. One reason why I will not answer the more trivial point made by the hon. Member for West Dorset (Mr. Letwin) is that, although it will be up to petrol retailers to decide whether to make ULSP available, it will be available to them. I understand that 14 June was picked because it matches the oil companies' accounting period, thus minimising compliance costs. It was chosen during discussion with the industry on a practical timetable following the point at which the policy was announced.
Mr. Letwin: Will the Minister give way?
Miss Johnson: I will give way once more.
Mr. Letwin: I am doubly grateful to the Economic Secretary. Now that we understand her logic--which is perfectly rational--may I ask her to adopt a slightly different formulation? Will she guarantee to refund the differential to any retailers who cannot find ULSP to service their own forecourts?
Miss Johnson: Let us go through the figures--a process that has been notably absent in the contribution of Opposition Members.
DTI figures show that from early April ULSP was available from 81 per cent. of retail sites--up from 68 per cent. in late March--and made up 94 per cent. of unleaded sales, up from 77 per cent. in late March. By 1 June, 98 per cent. of the network should be covered. By the middle of June, ULSP will be available to every petrol station in the country. Of the oil majors, Esso and Shell already have ULSP at 100 per cent. of their retail sites.
BP has it at 99 per cent., TotalFinaElf at 98 per cent. and Texaco at 87 per cent. All the oil majors will achieve 100 per cent. by 1 May.
Mr. Clappison: Did not the Government claim that those major oil suppliers would have the arrangements in place by the end of March?
Miss Johnson: The reason for the 14 June date is that that is when it needs to be done by, and that is when we are saying it will be done by. The figures show that we are very close to being 100 per cent. there already. I realise that the hon. Gentleman may be a little embarrassed, having come to the debate with no evidence in support of an amendment asking for a postponement, and no real justification for the date that he has selected.
Mr. Peter Atkinson: Will the Minister give way?
Miss Johnson: I will give way one last time.
Mr. Atkinson: I came to the debate with some evidence. I spoke to the Petrol Retailers Association today. The DTI figures given by the Minister do not take into account the consequences of the explosion in the Texas refinery the other day, which will have a substantial effect on United States demand for petrol from Europe. All we are asking the Minister is this. If she is wrong, the DTI figures are not reliable and the oil companies do not meet that target date, what will happen? Who will reimburse the motorists, particularly those in rural constituencies, who will lose out?
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Miss Johnson: I have already explained that ULSP will be available to all retailers. Obviously, it is up to retailers whether they retail it or not, but the fact is that it will be available to all retailers, and that is the point.
The hon. Gentleman mentions the problems of refinery supply. There was a recent explosion at the Conoco refinery on Humberside, but we believe that that should have a negligible impact on supply as the refinery was preparing for shutdown for maintenance shortly. Indeed, the DTI figures anticipate the shutdown.
The amendment is unnecessary. I have placed very good evidence before the Committee that we have made extremely good progress in implementing the commitment and that we are well on target to meet the 14 June deadline. We do not believe that it is necessary to extend a duty reduction for a fuel which will not be in use after June and which carries with it environmental disbenefits that I am sure hon. Members would want to see minimised.
Mr. Clappison: I have listened carefully to the Minister's response and I think that the Government are in retreat. She is not prepared to back up her words and the assurances of the past with the guarantee that my hon. Friend the Member for West Dorset (Mr. Letwin) has sought. Nor have the Government been able even to make good the claim by the Financial Secretary that the major oil companies were
- "on track to meet their target to supply ULSP nationwide at their retail sites by the end of March"--[Official Report, 26 February 2001; Vol. 363, c. 511W.].
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The Minister has made it clear that that target has not been met by the major oil companies, let alone the independent retailers that often serve the rural communities to which my hon. Friend the Member for Hexham (Mr. Atkinson) adverted.
Secondly, if that scenario transpires and we have people from parts of the country complaining that they cannot obtain ULSP and that the 2p that was taken off on 7 March is coming back on 7 June, the first people to denounce the Government will be the Liberal Democrats, who will say that they argued against this all along and warned the Government of the danger of a 2p increase. We know the Liberal Democrats well. That is one thing that is absolutely certain.
We are not satisfied by the Minister's response. It would appear that there is a risk of motorists facing a 2p increase on 14 June after the Chancellor had made a reduction of 2p on 7 March--2p off on 7 March, 2p back on on 14 June, when fuel taxes are already at a very high level because of the Government's fuel taxation policies. We think that there is that risk, perhaps especially in rural areas, and we intend to press the amendment to a Division.
Question put, That the amendment be made:--
The Committee divided: Ayes 126, Noes 324.
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