Finance Bill

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Dawn Primarolo: As I understand it, that person would be spoken to should our powers of detection identify him. It would be explained to him that his action was unwise in terms of the protection of individual punters and that his friends and acquaintances might be a little cross if they then used such an advertisement and lost lots of money.

Mr. Luff: Tricky.

Dawn Primarolo: It is a tricky issue.

Question put and agreed to.

Clause 14 ordered to stand part of the Bill.

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Clause 15

Cars registered on or after 1st March 2001: rates of duty

Mr. Michael Jack (Fylde): I beg to move amendment No. 32, in page 10, line 20, at end insert—

    ''( ) In paragraph 1B(b) of Schedule 1 to the Vehicle Excise and Registration Act 1994 (c.

    22) the words 'or the premium rate' are omitted.''.

The Chairman: With this, it will be convenient to take the following amendments: No. 33, in page 10, line 21, leave out

    ''the Vehicle Excise and Registration Act 1994 (c. 22)''

and insert ''that Act''.

No. 3, in page 10, line 27, leave out column 5.

No. 34, in page 10, line 35, at end insert—

    ''(1A) In paragraph 1D of Schedule 1 to that Act, the words 'and is not liable to the

    premium rate' are omitted.

    (1B) Paragraph 1E of Schedule 1 to that Act is omitted.''.

Mr. Jack: I regard the amendments as probing amendments that are designed to establish the logic behind the premium rate column in the table for vehicle excise duties in clause 15. The explanatory notes tell us that the clause principally amends the structure of the present arrangements for vehicle excise duty for cars first registered after 1 March 2001 to create

    ''a new low tax band for vehicles with emissions of 120 grammes of carbon dioxide per kilometre or less.''

I strongly applaud anything that encourages the improvement of automotive technology and reduces emissions, effectively making cars more environmentally friendly.

However, the thrust of the explanatory notes is to advise us that the principal objective of the clause is to reduce carbon dioxide emissions. It is interesting and slightly odd that the Treasury has decided, for reasons that I am sure it will explain, to discriminate in financial terms against the vehicle of choice given that carbon dioxide reduction is the principal objective even if the differential in the duty rate is only £10 between standard rate petrol vehicles and premium rate diesel vehicles.

I declare a personal interest: I drive a turbo-charged diesel Volkswagen and I have been assisted in producing some of the information that I shall put before the Committee by kind representations made to me by Delphi Automotive Systems, which makes the fuel injection equipment for, among others, Ford diesel cars.

Rob Marris (Wolverhampton, South-West): Will the right hon. Gentleman let the Committee know whether his turbo-charged Volkswagen diesel has a particulate filter?

Mr. Jack: It does not have a particulate filter, but we will discuss particulates because the hon. Gentleman has some information about them. I am interested to hear his views on whether particulate measure PM10 or PM2.5 is the most appropriate to determine the

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impact of particulates on air quality and health matters. I am sure that we will come to that point in due course.

The Volkswagen engine is highly efficient, but it is not the latest design. As we shall see, it does not produce the lowest particulate emission. The hon. Gentleman draws my attention to an important point. In any cohort of motor vehicles, there will be old ones that have inferior technology, those that have modern technology and those that have advanced technology. The real question to ask is what strategic reason the Government have for discriminating against diesel cars that will make even greater gains in emission technology than they have done already. We ought to encourage the development of improved vehicle technology. Had there been a sixth column, which praised the more modern diesel engine in monetary terms, I might not have tabled the amendment. However, there is no sixth column, so we have to concentrate on the fifth column.

I want to return to my initial point about carbon dioxide. Diesel vehicles produce 30 per cent. less carbon dioxide than petrol ones. If 50 per cent. of cars on the road in the United Kingdom were diesel, we would effectively be able to deliver a full 1 per cent. of our contribution towards the UK's Kyoto target commitments. That is important because we are considering Kyoto target achievements against the background that one of the major contributors, the nuclear power industry, is seeing the lifetime of current stations coming to an end. When the advanced gas-cooled reactors start to close after about 2010 or 2012, there will be some real problems to be borne, but I shall not digress.

I want to consider some of the key factors that are laid down concerning the parameters of emission outputs and their contribution to air quality. A number of European standards detail and guide us through what is happening in the world of diesel engines. In terms of emission standards, Euro II, introduced in 1997, Euro III, now currently being used, and Euro IV, a more advanced emission standard that comes into force in 2006, all clearly contain more demanding requirements for improved emissions of petrol and diesel. If we look at Euro II and its requirements on carbon monoxide—one of the key gases affecting air quality—we find that diesels are required to adhere to a standard of 1 g per km. In Euro III, that figure goes down to 0.64 g, and in Euro IV to 0.5 g.

What is interesting—this relates to the point made by the hon. Member for Wolverhampton, South-West (Rob Marris)—is that the latest technology, common rail diesel car engines, has already attained a rate of 0.3 g per km. Today's modern diesel engine cars are already beating the most stringent European standards on carbon monoxide, which are required to be introduced by 2006. The owner of a Ford Focus TDCi, the latest car from Ford with a common rail diesel engine, would pay a £10 premium. That is rather odd, because the car delivers a substantial advance in carbon dioxide reduction, makes a significant contribution to the conservation of hydrocarbon fuels

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and more than beats even the most stringent carbon monoxide standard. On the measure combining hydrocarbons and nitrous oxide emissions, the figures—again, in grammes per kilometre—are 0.7 for Euro II, 0.72 for Euro III and 0.3 for Euro IV. The Ford Focus for 2006 is nearly there at 0.38.

The hon. Gentleman mentioned also mentioned particulates. If I understood the Financial Secretary's comments correctly when we were discussing biodiesel, we are dealing with a matter of considerable concern, and I recognise that. I do not want another long, detailed debate about air quality, given that many factors other than vehicle emissions affect it. However, it is evident that the measure of PM10, which describes particulate size and is currently used to delineate that aspect of vehicle performance, is a matter of debate even among the expert panel on air quality in this country. There is a question as to whether larger or smaller particulates have the worst health effects, but PM10 is the measure that is used at present.

The modern diesel car has made substantial progress in reducing particulate emissions. The table lists the standards—using the same nomenclature as before of grammes per kilometre—as 0.1 for Euro II, 0.05 for Euro III and 0.025 for Euro IV, which is the most exacting standard and will be introduced in 2008 for vehicles of up to nine seats. Already, the Ford Focus is at 0.03. The Ford diesel engine with the new common rail technology beats all the current standards and is just about at the technology for 2008. Again, if we are trying to encourage technological improvements so that we can deal with particulates, it is odd to discriminate against that particular technology.

There may be extremely good reasons to discriminate against the diesel engine. I hope that the Financial Secretary will provide the detailed analysis that justifies discriminating against an engine that achieves the principal objective of this clause, which is the reduction of carbon dioxide. My analysis shows that modern engines are already beating the standards.

Chris Grayling (Epsom and Ewell): My right hon. Friend is making important points about the benefits of the latest generation of diesel engines. Does he share my anxiety that Government fiscal policy in recent years has removed—indeed, reversed—the price advantage that diesel once had at the pump, adding a further incentive for people to turn from diesel to petrol cars, which are less environmentally friendly?

Mr. Jack: I am certainly concerned about the matter. I have become somewhat of a diesel fuel price anorak since I acquired a vehicle with a diesel engine. In fairness, what is more of a problem than the Government's taxation on diesel is the way in which the oil companies maintain a 5p or 6p standing difference between petrol and diesel—that is the interesting issue. I have probed it with them. They tell me that it is all to do with the spot price of diesel on the Rotterdam market, but it is amazing that the

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differential never seems to change. I sense an element of cross-subsidisation between diesel and petrol. It is not for this Committee but for the competition authorities, perhaps, to examine how diesel is priced. Anyone who crosses the channel will be in for a feast of low-price diesel.

10 am

On particulates, notwithstanding the technological aspects of the more exacting European standards that I mentioned a moment ago, I am reminded that today's cohort of diesel cars produces only 5 per cent. of the PM10 particulate measure that existed five years ago. Even without the benefit of common rail technology, diesel cars are becoming substantially better on perhaps the most sensitive of their emissions. For those reasons, I find it difficult to understand why the Government currently seek to discriminate financially, albeit in a modest way, against the diesel engine. I look forward to the Financial Secretary giving us a robust justification of the Government's position and an insight into why diesels have been singled out for that treatment.

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