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Julia Goldsworthy: The proposed changes illustrate the recognition of the fact that people in rural areas are likely to have higher transport costs and less access to public transport than people in urban areas, and should therefore receive a discount on the vehicle excise duty that they pay. The discount proposed in our amendments is 50 per cent. Of course, the changes should be accompanied by wider changes to ensure that the polluter pays, and to extend some of the changes proposed by the Chancellor, but I appreciate that it will not be possible to do that today, even though amendments on that issue have been tabled.

I shall focus on the impact that the amendments would have. People who live in sparsely populated rural areas often have poor access to public transport. The 2003 national travel survey for England showed that half the residents in rural settlements of fewer than 3,000 people lived within a 30-minute walk of a bus stop. That compares with 95 per cent. of the people living in larger urban areas.

Those rural residents are likely to spend more per week on transport than their urban counterparts. The expenditure and food survey for 2002–03 showed that households in rural areas with a population of fewer than 3,000 spent £70.60 a week on transport, compared with £45.50 for those living in urban areas. Half of their expenditure goes on operating costs, a large proportion of which is the cost of fuel. That is because they have to travel to work and they do not have the option to use public transport. Also, they often have to drive their children to school. The operating costs in rural areas are often much higher. For example, fuel in the highlands is 10 per cent. more expensive than elsewhere.

People in rural areas make a similar number of trips to those made in urban areas, but those trips are longer and more likely to be made by car. Many of those people are also likely to live in isolated and deprived areas.

Mr. Paul Goodman (Wycombe) (Con): Will the hon. Lady tell the House what definition of "sparsely populated rural area" she proposes to insert into the Bill?

Julia Goldsworthy: Of course I will come to that. Our proposals deal with sparsely populated rural areas as
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defined by the Countryside Agency—although they apply only to England and Wales. However, I hope that we shall be able to consider those criteria in relation to Scotland or, if necessary, table an amendment that would allow such a decision to be devolved to the Scottish Parliament.

My constituency is in the county of Cornwall. Cornwall's gross domestic product is less than 70 per cent. of the European average. Many people there live in isolated areas with very little access to public transport, and are therefore reliant on their cars. Many households in rural areas are isolated and deprived, dependent on a car and more likely to own an older car. I am not simply talking about farmers who rely on their 4x4 vehicles, but about people who are totally dependent on a car to get around.

The Paymaster General (Dawn Primarolo): I want to press the hon. Lady on the point made by the hon. Member for Wycombe (Mr. Goodman). In the south-west region, which she and I both represent as Members of Parliament, what percentage of the population officially live in a rural area as opposed to a town or city?

Julia Goldsworthy: The definitions in the amendment mean that it would affect hundreds of thousands of people who do not live in settlements of 10,000.

If the Government are to take seriously what the Chancellor has called the "moral duty" to tackle environmental change and make the polluter pay—in the direction of which the Finance Bill and Budget made the smallest possible gesture—it must be recognised that deprived and car-dependent households in sparsely populated and rural areas will be hit hardest by further changes to vehicle excise duty if the "polluter pays" principle is applied.

Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): I strongly support what my hon. Friend says on this point. In my constituency in the highlands of Scotland, the vast majority of people live in rural communities, a car is essential, few public transport alternatives exist and the price of petrol is much higher than in many other parts of the country. The amendment would enable pollution to be tackled through higher vehicle excise duty, while ensuring at the same time that those for whom a car is a necessity rather than a choice could be insulated from those costs.

Julia Goldsworthy: My hon. Friend makes his point well. Those people will be hit hardest by changes to vehicle excise duty if the Government are serious about following through their commitment to the "polluter pays" principle. However, they are also the people on whose behaviour the changes will have the smallest impact, as they have no alternatives to car use. Under the amendment, the attempt to alter behaviour through changes in vehicle excise duty can continue without crippling those people.

Mr. Goodman: As the hon. Lady apparently has a definition of people in rural and sparsely populated rural areas, can she tell the House how many people would benefit from her amendment?

Julia Goldsworthy: I certainly can. According to the rural and urban area classification 2004 and census data, we are talking about 398,249 households.
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Stewart Hosie (Dundee, East) (SNP): I am fascinated. Notwithstanding the fact that the Countryside Agency covers only England, not England and Wales, Scotland has two definitions of "rural"—one is the Scottish Executive's, under which 98 per cent. of the land mass and 18.7 per cent. of the people are covered, and the other is the Randall definition relating to sparsity, under which 89 per cent. of the land mass and almost 30 per cent. of the population are covered. Is the hon. Lady really trying to achieve an opt-out for 30 per cent. of the population?

Julia Goldsworthy: I am talking about households living in sparsely populated rural areas. As I have made clear, we wanted to set out a sparsity criterion in the amendment that could be applied across the UK. The criterion to which we worked was that provided by the Countryside Agency. We would be more than happy to accept an amendment to devolve that—

The First Deputy Chairman: Order. I know that the hon. Lady is relatively new to the House, but it is important to address the Chair.

Julia Goldsworthy: I apologise, Mrs. Heal. If the hon. Gentleman wants to table an amendment devolving that responsibility to Scotland, I would be more than happy to accept it later.

Sir George Young: I am not unsympathetic to the hon. Lady's point, but the tax that she proposes to amend is not on households but on cars. Can she confirm that any car registered in a postcode covered by her amendment would qualify for the reduced rate?

Julia Goldsworthy: I can confirm that. Cars must be registered to households, not just for vehicle excise duty purposes but for insurance purposes—were there any abuse, the insurance would not be valid.

Rob Marris: Following the point that has just been made, the form concerned—whatever it is called now—would give the address of the car's registered keeper, not necessarily that of its owner. The owner is entitled to insure the car, so an urban owner whose distant aunt living in the middle of nowhere is the registered keeper could get around the VED regime proposed by the hon. Lady. How would she avoid that?

Julia Goldsworthy: Quite simply: by ensuring that when someone paid vehicle excise duty, that person declared that he or she was also the main driver of the car.

Amendment No. 25 would provide a 50 per cent discount for cars registered before 23 March 2006 in households with a postcode that defined them as being in a sparsely populated rural area. Amendment No. 21 would sustain that discount for all cars registered after 23 March, except those that are most polluting. I think it desirable to retain the incentive for people to seek less polluting vehicles when purchasing new vehicles. However, I favour a much greater differential, as recommended by the Energy Saving Trust.

Even for those requiring a new 4x4 for work, there are less polluting alternatives. The Land Rover Freelander 4x4 Td4 Adventurer estate produces carbon dioxide
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emissions of 205 g per km, and the Subaru Forester 4x4 produces emissions of 220 g per km. Amendment No. 22 suggests that sparsely populated rural areas should be defined in terms that the Countryside Agency has already explored. The Agency may be able to establish criteria that could be applied to the United Kingdom more widely. Alternatively, as I have said before, I should be happy to accept on Report an amendment devolving this definition to Scotland.

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