Mr. Clappison: Before the Minister moves away from the point about different systems, and the capital allowances and reliefs that were available, I note that he has taken on board the fact that employees could decide whether they wanted to be dealt with under that system or to take advantage of other provisions. Can he tell us how many employees sought to claim capital allowances on their vehicles or relief for interest on loans? If he cannot, I would be grateful if he would write to me, but it would be interesting for the debate if he had the figures at his fingertips.
Mr. Timms: Unfortunately, I do not have the figures. I have asked the same question, and I believe that the information is not available because what the claimed capital allowances apply to is not always clear from self-assessment forms. If on further inquiry the information turns out to be available, I will ensure that the hon. Gentleman is provided with it.
The change will be a significant benefit to those driving between 4,000 and 10,000 business miles a year in small and economical cars, and to the many employees who drive up to 10,000 business miles in medium-sized cars. For any further business miles, the approved rate will be 25p per mile.
The hon. Member for Hertsmere rightly drew attention to the fact that as a further encouragement, to make business travel greener still, from next April employers will be able to choose to pay employees up to 5p a mile free of tax and national insurance for every fellow employee whom they carry on a business journey. Originally, in the pre-Budget report in November, we proposed a sum of 2p per mile. As a result of discussions with both business organisations and organisations such as Transport 2000, we decided that it would be better to increase that sum to 5p a mile, to provide a slightly greater incentive to employees to take fellow employees with them, and so drive in an environmentally friendly manner. We want people travelling on business to share their vehicles whenever they can, so as to reduce further the amount of unnecessary business miles travelled. I am a little disappointed that the Opposition amendments on the subject were not moved, so we have not been able to debate them. I think that those amendments reflected their welcome for the payments, which represent an important change for the better.
There will also be a tax-free accrued rate for business travel using motor cycles and bicycles. The rate for bicycles will be increased to a generous 20p a mile, to encourage their use whenever feasible. We are committed to protecting the environment for everybody. About 225 billion miles are travelled by car in the United Kingdom each year, and about one sixth of that distance is business travel, so it provides a significant proportion of the total mileage driven. Making those miles greener will substantially benefit the environment. We started the process with our reform of company cars. The measures in the clause, and those to follow, complete the picture. I commend the change to the Committee.
The hon. Member for Hertsmere is right: the change will increase the incentives for people who use their own cars for business purposes to drive more environmentally friendly vehicles. He made a point about the treatment of 1500 cc cars, although strictly speaking, the point applies to cars with engines of 1501 cc to 1549 ccin other words, the extra ones that we added in on Thursday. It is a fair point, but it applies only to a small number of cars at the margin. However, our aim is not to castigate anybody driving any particular kind of car, or to suggest that they should not do so. We are simply ensuring that the tax system provides incentives for people to manage their affairs in an environmentally friendly way. I hope I have demonstrated that the Bill's provisions will have that effect.
I point out to the hon. Gentleman that, according to the AA, the total running cost for petrol cars with engine sizes between 1401 cc and 2000 cc is 18.42p per mile. That is not the total costit does not include the cost of owning the vehiclebut the total running cost, which is significantly less than the sum in the schedule. So I hope that the hon. Gentleman will feel that what is proposed in the clause is by no means unfair to people driving such cars.
Mr. Clappison: I shall make two points to qualify what the Financial Secretary said. However, first of all, may I remedy my omission earlier in failing to welcome you to the Chair, Mr. O'Hara? I have quite rightly been pulled up on that by the Government Whip, in his usual charming way, and I hope that I can remedy the defect by giving you a warm welcome to the Chair now.
Two matters arise from the Minister's remarks: first, he described the incentive that the proposal creates for employees to downsize their vehicles. That should be put within the context of the Government's analysis in the environmental regulatory impact assessment, which, having taken into account the effects of the proposal and other changes, concludes:
Mr. Timms: The hon. Gentleman is right that the bulk of the vehicles that we are discussing are between 1501 cc and 2000 cc. I do not agree with him that the Government are giving a conflicting signal in that respect, but even if we were, only cars between 1501 cc and 1549 cc, a small proportion of the total, would be affected.
Question put and agreed to.
Clause 57 ordered to stand part of the Bill.
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