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Mrs. Anne Campbell: Will my right hon. Friend confirm that the Inland Revenue recommended rate for mileage allowance has not increased for several years? It has remained stationary.

Mr. Hain: Yes, I understand that that is the case.

I recognise that the proposed change represents a significant reduction in car mileage allowance and that this will have a significant impact on those Members
 
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who are heavily dependent on car transport, particularly those with large rural constituencies. I also recognise that the immediacy of the changes—by 1 April—could put some Members in real difficulties if they have entered into leasing or purchase agreements that go beyond that date.

The hon. Member for Macclesfield (Sir Nicholas Winterton) and others have quite properly tabled an amendment that would freeze the current rate until the Inland Revenue rates catch up with the House rates. That could be many years, however. The effect of the amendment is therefore firmly to reject the SSRB recommendation, which I have put before the House.

Sir Nicholas Winterton: I am putting this marker down now while a number of Members are present. The Inland Revenue rate seems to fail entirely to take into account, as the right hon. Gentleman has said, the size of a constituency and the need for a Member to use his car in that large area to undertake constituency duties. There is no difference between an inner-city seat and a large urban seat, which surely is grotesquely unfair. It could be a disincentive to Members properly and fully undertaking constituency duties and, in some cases, travelling to London when there is not adequate public transport to enable them to do so.

Mr. Hain: I know the points that the hon. Gentleman is making. I dare say his constituents and mine would want to make the same points if they travelled a lot on business, but may I make this point? Some Members feel that the Inland Revenue rates are too low to reflect the true costs of motoring. The Government do not accept that. The 40p rate, which was set in the Income Tax (Earnings and Pensions) Act 2003, covers the full costs of using a car for business travel for a wide range of types and size of car, including cars that are safe and comfortable for long business journeys. It is advantageous to drivers of small, environmentally friendly cars. It has been set at a level that will not subsidise all the standing costs of owning a larger, more fuel-hungry car, so that it does not encourage drivers of larger cars to drive unnecessary business miles. It is, however, still generous enough fully to cover the marginal running costs of such cars.

In any case, if the House feels that the Inland Revenue rates are inadequate, that is an argument for reviewing those rates, not for diverging from them. I hope that the House will reject the amendment.

Nick Harvey (North Devon) (LD): The Leader of the House has just referred to what the Inland Revenue reckons that 40p covers, which is the marginal cost of using the vehicle, whereas our current motor mileage allowance purports to cover the capital cost of the vehicle as well, so we are considering two fundamentally different things. What is being proposed is a change of policy dressed up as a recalibration of some comparative figures. If we are to debate what is being proposed, we should do so with our eyes open, rather than confuse two completely different things.

Mr. Hain: The hon. Gentleman makes a valid point, but the SSRB has considered this in the round and
 
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considered what applies to our constituents, saying that we should be treated in the same way as they are. That is what it is arguing.

The hon. Member for Lewes (Norman Baker), by contrast, has tabled an amendment that would strike out the proposal to allow hon. Members to claim for parking charges. While I sympathise with his wish to encourage the use of other forms of transport, the fact is that many hon. Members rely on cars in their constituencies and for at least part of their journey to and from this place. That point was made by the hon. Member for Macclesfield.

A problem has arisen in respect of the withdrawal of free car parking provision by BAA, as a result of shareholder action. That has placed a lot of Members of the House who rely on air transport in Scotland, north-west and north-east England and elsewhere in real difficulty, because if they have to leave their cars for the best part of a week a huge additional cost is incurred. I would point out that the provision that we recommend applies to motor cycles and bicycles as well as to cars.

Norman Baker (Lewes) (LD): I have looked through the SSRB report and I can find no recommendation relating to parking. Have I missed it or is it a subsequent invention as part of the motion?

Mr. Hain: I think the hon. Gentleman has missed it. If he looks more carefully, he will see it.

Mr. McLoughlin: On the parking issue, previously there was deemed to be an element of profit in the motor mileage allowance. That was one reason for deciding that no allowance should be made when congestion charging was introduced. If we accept this proposal for parking, should not we also accept it for congestion charging if the profit element has gone from the motor mileage allowance?

Mr. Hain: The Inland Revenue does not provide for congestion charging to be met in such a way. I should say to the hon. Member for Lewes that if the amendment tabled by the hon. Member for Macclesfield is carried, I will recommend that we support it, because built into the costs of the mileage rate of the House of Commons is provision to meet such costs. For example, if I travel across the Severn bridge I pay a toll. I do not think that that should be provided for by the House authorities, because the mileage rate is fairly generous. The same applies to parking.

Sir John Butterfill (Bournemouth, West) (Con): The Inland Revenue figure is for the calculation of tax liability; it is not said that a higher allowance should not be paid by an employer. Simply, if an allowance is given above that figure, it is taxable. That is already the case with Members' existing allowance—it is taxable above 40p. That is a matter for the Inland Revenue to decide, but the fact that this does not accurately reflect modern costs of running a motor car is well known throughout the nation. The AA says that, as do all the motor car magazines that publish the costs of running a motor car. The Inland Revenue point has nothing to do with the real cost of running a car, but it relates to a threshold for taxation.
 
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Mr. Hain: There is a lot of substance to the hon. Gentleman's argument, but the public in our constituencies are treated by the Inland Revenue in a certain way. [Hon. Members: "So are we!"] Well, we are not, because we get a higher rate than is generally given. Anyway, this is ultimately—[Interruption.] Look, I understand the concerns. For goodness' sake, I acknowledged the concerns earlier by saying that I    understand the points that are being made, particularly the sharp change— [Interruption.] Hon. Members ask why I am proposing what I am proposing. It would be a serious departure if the Leader of the House did not put before the House recommendations from the SSRB.

It is for the House to decide what it wishes to decide—that is our sovereign right—but asking an independent body such as the SSRB to look at this dispassionately and then not putting its proposals before the House would be a serious breach with tradition and practice in respect of independent advice from such a body.

Mr. John Greenway (Ryedale): The fact that there is a tension between the amendment tabled by the hon. Member for Lewes and that tabled by my hon. Friend the Member for Macclesfield, which I have supported, shows that the review body's recommendation does not suit all hon. Members. Despite the fact that we could have been consulted on the matter, this recommendation has come to many of us as a complete surprise, out of the blue. It is grossly unfair to those of us with large rural constituencies some distance from London. I agree that the provision can be unfair to people who have to use airports, but surely the matter should be referred back to the Members Estimate Committee if the amendment is not carried.

Mr. Hain: I understand that point, but I have an obligation to put before the House recommendations from the SSRB. It would be a serious breach of practice adopted by previous Leaders of the House were that not done.

I will now take what must be the final intervention.

Mr. Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): Does my right hon. Friend agree that when Members vote on the matter they should bear it in mind that it is difficult to explain to the public why we are prepared to accept SSRB recommendations when they increase our pay and allowances, but not so keen to accept them when they lead to a reduction? Without wishing to be pious, does he agree that at a time when every party talks about the need to combat climate change, we should at least set some example in relation to the mileage for which we claim and the vehicles that we operate?

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