III. THE PRE-BUDGET REPORT
57. The Pre-Budget Report was published on 8 November
2000. The Chancellor told the House that he recognised and understood
the "very genuine concerns that motorists and hauliers have".[197]
He announced an across-the-board duty freeze on all fuels, to
last initially until April 2002. If the oil price remained high
by then, there would be a duty freeze for a further year. He also
announced his intention to cut the duty on Ultra Low Sulphur Diesel
(ULSD) by 3p per litre in Budget 2001, to maintain the existing
balance between duty rates on the most commonly available petrol
and diesel, to cut the duty on Ultra Low Sulphur Petrol (USLP)
and widen its differential with standard unleaded petrol by a
further 2p per litre in Budget 2001.[198]
Amongst other measures announced were:
— support for scrapping
or converting older lorries;
— the introduction of a 'vignette' system
by which non-UK companies and lorries pay for using UK roads;
— reform in vehicle excise duty for lorries
consolidating the existing 100 separate rate bands into 7;
— freezing red diesel tax at the current
rate and the abolition of VED on tractors and agricultural vehicles.
58. In oral evidence to the Committee prior to the
Pre-Budget Report, Mr Malcolm Brinded, Country Chairman of Shell
UK pointed out that "where fuel taxes are essentially important
is to think about the distinction of different levels of fuel
tax between different products".[199]
Differential rates of taxation have, for example, been helpful
in bringing unleaded petrol much more extensively into the market
than a decade ago. Mr Jones of Total Fina Elf remarked "we
have seen that certainly last year with the introduction of ULSD
in the market with a 3p a litre differential on the old derv diesel.
We have seen almost complete movement of this cleaner burning
product in the marketplace".[200]
Some concern has been expressed as to how quickly the oil companies
will pass on the cut in duty. The Minister for Energy told us
during oral evidence on 14 February 2000 that he had recently
met with all the oil companies "and they have assured me
they will pass on the duty and cuts whenever they are implemented,
and they are determined to do that".[201]
59. The Treasury calculate that the Pre-Budget package
would cut hauliers' costs by the equivalent of 8p per litre in
the price of diesel.[202]
The RHA responded by stating that the proposals "are worthy
of careful consideration". They welcomed the consultation
on a 'Brit disc' whilst wishing to know how it would affect the
reduction in VED rates, and welcomed the VED reduction. The RHA
would, however, have preferred a reduction in fuel duty.[203]
The FTA welcomed the tax reductions in the Pre-Budget Report as
a "good overall package", although they would have preferred
the Chancellor to go further.[204]
The Financial Secretary told us in oral evidence in February "the
industry has warmly welcomed the package of measures that the
Chancellor announced in November. Hauliers I have spoken to have
welcomed it very warmly".[205]
197 HC Deb, 8 November 2000, col 322 Back
198 Cm
4917, p127 (On 21 February 2001, the Government announced that
any reduction in duty on ULSP in the Budget will be matched with
a reduction in duty on 'ordinary' unleaded petrol for a temporarily
period until 14 June 2001) Back
199 Q3 Back
200 Q3 Back
201 Q469 Back
202 Cm
4917, p131, para 6.72 Back
203 RHA
Press notice, 08/11/00 Back
204 www.freighttaxes.com Back
205 Q435 Back
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