Finance Bill

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Mr. Jack: May I press the Economic Secretary on whether clause 128 of the Energy Bill is one of those options?

John Healey: That clause, the consultation being conducted by the Department for Transport and the support of diversification of agriculture being led by DEFRA are all potential elements, alongside the strictly fiscal instruments that are my responsibility, that the Government are considering. On that basis, I commend the clause to the Committee.

Mr. Tyrie: Who is in overall charge of that policy?

John Healey: Clearly, the Departments have their own leading responsibilities for certain policy areas. The liaison between all Departments with an interest and a responsibility in the field under discussion is good. We meet regularly through the low carbon group and separately. It would be difficult to see how one Department could be given a lead responsibility, given the wide range of policy areas that will play a part in the future of the bioethanol market and industry in this country. That would not be the right approach, and it is not the approach that the Government are taking.

Mr. Jack: I found some of what the Economic Secretary said heartening. He has taken a particular personal interest in the matter, and I am glad that he has confirmed that to the Committee.

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I do not want to go over all the issues that the Economic Secretary said the Government were still considering, but perhaps I can persuade him to commit the Government to pulling together the results of all of the work on the issue when they publish their response to the Department for Transport consultation paper, or if that is too soon, no later than the pre-Budget report. He is right that people will want to think carefully about what he has said and about the clause, should the Committee agree to it. However, the United Kingdom still does not have a bioethanol plant, and people may want to see further documentation on the Government's thinking on the matter before they consider their investment proposals.

John Healey: As the right hon. Gentleman will know, the pre-Budget report and the Budget rightly concentrate on the economic instruments. However, they are part of a wider context in which the policy instruments that may bear on a particular issue are summarised. That was the case in the most recent pre-Budget report and Budget, in which the Government confirmed for the first time our interest in a potential biofuels obligation. I suggest that he looks to the autumn pre-Budget report for the summary and the overview in which he is interested.

The right hon. Gentleman appeared to be taking me to task when he said that this country did not have a bioethanol plant. This country does not yet have a bioethanol duty discount, and that is precisely what the clause introduces. If the Committee endorses the clause, and it becomes part of the Bill, it will still be eight months away.

Question put and agreed to.

Clause 10 ordered to stand part of the Bill.

Clause 11


Question proposed, That the clause stand part of the Bill.

John Healey: The clause is largely technical. It will ensure that biodiesel that is set aside or used for the production of bioblend is charged with duty. Bioblend is a mixture of biodiesel and heavy oil that has not been charged with the excise duty on hydrocarbon oil. Bioblend is made in-warehouse in duty suspension.

The clause is intended to make the charge to duty for biodiesel used in the production of bioblend accord more sensibly with warehousing rules. If immediately entered for warehousing, the duty will be suspended.

The change comes into effect on 1 January 2005, at the same time as the new reduced rate of duty for bioethanol. There will be a similar provision relating to bioethanol blends. On that basis, I commend the clause to the Committee.

Mr. Tyrie: This is a subject on which my right hon. Friend the Member for Fylde could wax lyrical at great length, but I hope that we will not allow him to do so.

Chris Bryant (Rhondda) (Lab): Tory discipline.

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Mr. Tyrie: It is improving.

I have one very narrow question. Is part of the purpose of the clause to discourage imports of bioblend?

John Healey: No.

Question put and agreed to.

Clause 11 ordered to stand part of the Bill.

Clause 12

Fuel substitutes

Question proposed, That the clause stand part of the Bill.

Mr. Tyrie: I have one brief question. It seems that the Minister will explain the measure to the Committee so I shall not do so. Is it an EU requirement that we pass the clause? The issue is a minor, technical one.

John Healey: The clause makes a necessary technical amendment to the Hydrocarbon Oil Duties Act 1979. It is not a requirement of the European Union that we do so. The purpose of the clause is to ensure the agreement of all Finance Bill provisions relating to biofuels. It is a necessary change to ensure consistency in the application of duty charges on fuels and it takes into account the current and future development of new fuels.

Question put and agreed to.

Clause 12 ordered to stand part of the Bill.

Clause 13


Question proposed, That the clause stand part of the Bill.

John Healey: This clause will allow regulations to be made to bring some new energy products under duty suspension procedures. That is a necessary change, which will allow for free movement of those products within member states, and it updates UK legislation in line with Council directive 2003/96, known as the energy products directive.

The clause provides for warehousing regulations to apply to petroleum gas and biodiesel, as well as animal and vegetable fats and methanol intended for use as motor or heating fuel. Those products reflect current and potential future developments in the production of new fuels. By introducing the clause, the Government are ensuring that UK legislation keeps pace with revenue and trade requirements.

The clause helps to provide a package of measures, which will implement parts of the energy products directive. The directive, of course, repeals two earlier directives, which are incorporated into UK legislation, and largely includes the provisions contained in those directives. In making the relevant practical and necessary changes the Government have taken care

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not to affect the scope or rate of duties in the UK. On that basis I commend this clause to the Committee as largely technical, but none the less necessary.

Question put and agreed to.

Clause 13 ordered to stand part of the Bill.

Clause 14

Treatment of certain energy products

Question proposed, That the clause stand part of the Bill.

John Healey: The clause amends section 10 of the Finance Act 1993 to provide a power to treat energy products in the same way as hydrocarbon oil or road fuel gas is treated under the Hydrocarbon Oil Duties Act 1979. The clause will update the legislation to take account of current and potential development of new energy products, which are made from animal and vegetable fats and non-synthetic methanol. The change is a consequence of the introduction of the European energy products directive, which gives a unified framework to the treatment of motor and heating fuels. The change will ensure that when new energy products are used as motor or heating fuels they will be dealt with under the 1979 Act.

Mr. Tyrie: I have one brief remark to make, which could equally have been made on the previous few clauses. There is nothing the matter with the clause, as far as we can tell. The trouble is that it is not clear that the Government have a coherent and easy-to-understand policy on the new energy products. Policy seems to be moving along in a makeshift way in different parts of Whitehall.

Not that long ago we were talking about bioethanol, and several times the question was raised of who is in charge with respect to issues concerning the new products. The reply was, ''There's some liaison going on.'' The word ''liaison'' reminds me of other words, often French, such as ''modality'', which lack content. I am guilty of that myself, I am sure. However, I do not think that there is much liaison going on in that area. If there is, it seems to be generating more heat than light.

3.15 pm

We need joined-up government and we need somebody to think through the policy. To do that, someone must be put in charge of it. In my experience, that nearly always ends up having to be the Treasury, because the Treasury holds control over the key levers. Those are, of course, fiscal. That is what will decide how the industry develops. I strongly urge the Minister to build up his political muscles as quickly as possible to try to bring some clarity to bear.

The industry does not think that there is a coherent policy. It thinks that the Government are moving along on an ad hoc basis. I suspect that if we do not get this sorted out we will pay a price. It is, I acknowledge, difficult. Technology is constantly challenging any settled understanding of the area. I urge the Minister to give consideration to how he might, with the

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honesty and integrity that he always demonstrates, answer the question of who is charge with something better than ''liaison''.

John Healey: I am grateful for the hon. Gentleman's concern for my political muscle. I am not sure how welcome a fitness and development programme would be with my colleagues. I am content that the arrangements in Government are working well. I am particularly content that we in the Treasury, and I as the Minister responsible, have the scope to make the decisions that we need to make and to propose the sort of legislation before us.

Question put and agreed to.

Clause 14 ordered to stand part of the Bill.

Clause 15

General betting duty: pool betting

Question proposed, That the clause stand part of the Bill.

Mr. Richard Bacon (South Norfolk) (Con): I welcome you to the Chair, Sir John. I said on Second Reading that I was an undergraduate student of Finance Bills and I think that that has been demonstrated amply. My hon. Friend the shadow Paymaster General is, of course, delirious about the subject of betting duty in general, and pool betting in particular, but unfortunately he has been unable to join us this afternoon, so he asked me to comment on the clause. It provides for all pool betting, on both dog racing and horse racing, to be brought under the general betting provisions.

As online betting exchanges have developed in recent years, there has been growing concern that they provide not only an innovative and convenient way for clients to place a bet, but a way for some people to establish themselves as, in effect, unlicensed bookmakers, and therefore escape the 15 per cent. tax on profits incurred by traditional bookmakers. It certainly appears that there has been a broad welcome for the clause from the industry, at least from the traditional industry, because it has become increasingly clear that there has not been equal tax treatment of traditional bookmakers and those who act as bookmakers on betting exchanges.

I have just one question for the Minister. At present, the liability of certain types of pool betting to general betting duty depends on where and by whom the betting is being provided or promoted. Although the Government's proposed changes will mean that any pool betting, at least on dog racing and horse racing, will fall within the scope of general betting duty, so long as the promoter or the totalisator is in the UK, an obvious question arises. As proposed new section 12(4A) of the 1981 Act, in subsection (8), says:

    ''A bet is an on-course bet for the purposes of this Part of this Act''

if it is made

    ''with a bookmaker present at the meeting''

    ''by means of a totalisator situated in the United Kingdom''.

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That raises concerns about what assessments the Government may have made of the potential size of the shift towards offshore online betting as a result of such changes. If an individual who currently practises as an unlicensed bookmaker through a betting exchange were to move his activities offshore, there could be considerable scope for abuse of the rules on UK residency. I can imagine that it would be quite easy for someone to seek to avoid the effects of the proposed changes by locating outside the UK, or at least purporting to do so, while actually continuing to spend significant periods of time here.

In conclusion, the clause is broadly welcome, but there are concerns about whether it may result in some unintended consequences. I look forward to hearing what the Minister has to say about that.

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