Stewart Hosie: The hon. Gentleman will be aware, given that he has been here for most of today's debate, that this has been a very sparsely populated debate, just as many of the parts of the country that we wish to help are sparsely populated. The amendments would not provide such help.
The hon. Member for Dundee, East (Stewart Hosie) made much of the difficulties that rural areas face in paying high fuel prices. I sympathise greatly with their situation, to which my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) also referred. I should however point out to the hon. Member for Dundee, East that money is fungible, and that although the people to whom he referred may be experiencing a disadvantage as a result of high fuel duty, if they have a corresponding and
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offsetting advantage through a reduction in vehicle excise duty, they will be free to spend that money as they like. That would deal with the problem, which is precisely what the amendments before us are meant to do.
The United Kingdom has a difficulty, in that the main instrument available for changing behaviour in terms of greenhouse gas emissions and climate change is green taxes. However, green taxes, of which two thirds comprise fuel duty, have fallen from 3.6 per cent. of gross domestic product in 2000 to 3 per cent., according to the latest figures. The Budget proposals will in fact lead to a further fall in green taxes as a percentage of GDP. One reason for the reluctance to rely more on green taxes and the price mechanism in providing an incentive to change behaviour is precisely those difficult cases such as rural areas. The relevance of amendment No. 21 is that it would deal with a specific set of problems and release a wider instrument to be used against greenhouse gases.
Rob Marris: The hon. Gentleman is speaking in favour of amendment No. 21, which, as I understand it, is not revenue-neutral. He is supporting an amendment that will cut green taxes, so he is speaking against his case.
Chris Huhne: The hon. Gentleman has participated in such debates for a number of years and is extremely well informed. He well knows that it requires a Minister of the Crown to table for debate an amendment that raises revenue. The Paymaster General seems to disagree, but that is my clear memory from last year. The amendments on self-invested pension plans were not selected for debate and the reason given was that they would raise revenue. The right hon. Lady was not prepared at that stage to table such an amendment, but I am pleased that by the pre-Budget report in October she had changed her mind, along with all the other Treasury Ministers.
Mr. Paul Goodman: So that we are all clear, may I ask the hon. Gentleman, who is making the second Front-Bench speech on behalf of his party, which is his preferred amendment for table B? Is it amendment No. 21 or amendment No. 26?
Chris Huhne: Thank you, Mrs. Heal. I shall speak about the amendment under discussion and highlight the difficulties faced by people in sparsely populated rural areas as a result of the high cost of fuel and of motoring.
In urban areas about 30 per cent. of households have no access to cars because they can rely on public transport. In rural areasnot even sparsely populated rural areasonly 8 per cent. of households are carless. That underlines how important the car is as a means of getting to work, getting to the GP's surgery, accessing basic services, accessing accident and emergency, doing the school run, and so on
My hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) pointed out that households in rural areas spend more than £70 a week
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on transport, compared with £45 a week in regional built-up areas. It is the operating costs of cars, including fuel, that make up the difference.That is why any reliance on green taxes to change behaviour must take account of the high dependency of all households, including poor ones, on fuel in rural areas, and why it is important to propose measures that can alleviate the costs of transport in rural areas as part of a package to encourage us towards more sustainable personal transport. We strongly support the Chancellor's intention to raise fuel duty in line with inflation in September, as announced in the Budget. Relief for rural areas makes that policy more robust and defensible because it takes the edge off for some of the worst losers.
The discount in the proposal is designed not for anyone living on the urban edge, but for areas where distances are important. Hon. Members are right to say that the Countryside Agency has defined the more sparsely populated parts of England, which are areas of Cornwall, Devon, Cumbria, Northumberland and the Fens. The definition covers the 5 per cent. least densely populated parts of England. It is easy to extend that to Scotland and Wales by regulation, as proposed. That answers the hon. Member for Dundee, East. The definition will be exactly equivalent. I look forward to replies from Treasury Ministers when they are in a more co-operative mood to honour written answers.
Stewart Hosie: Is the hon. Gentleman speaking of the 5 per cent. population in the most sparsely populated areas? Is it the bottom 5 per cent. only, based on sparsity of population? Is that the definition?
Chris Huhne: The hon. Gentleman may have misunderstood me. The Countryside Agency's definition of a sparsely populated rural area in England is of the least densely populated 5 per cent. of areas in England. If the same criterionthe same lack of densityis applied to Scotland, I have no doubt that it would apply to a substantially greater part of Scotland than of England, as Scotland forms 40 per cent. of the landmass of the United Kingdom. As this is a taxation matter, exactly the same definition should be applied in Scotland, Wales and England.
There is a very clear and robust definition, which is perfectly capable of handling the issue. I refer those hon. Members who would care to have more detail to the excellent paper of Messrs. Bibby and Shepherd, entitled "Developing a new classification of urban and rural areas for policy purposesa methodology", which is published on the Office for National Statistics website.
Some sparsely populated areas, unlike many rural areas, are still declining. About 600,000 people live in the sparsely populated English areas out of a combined rural population of some 9.5 million. Those areas have particular problems in achieving one definition of sustainabilitysomewhere that people want to live and workand the underlying problem is remoteness. There are dramatic differencesfor example, in broadband connectivity, with just 33.4 per cent. of households in villages in the sparsely populated rural areas having such access, against more than 75 per cent. in villages in the less sparsely populated rural areas. People are further from public services, such as those provided by GPs, hospitals and secondary schools. Bus transport is even less frequent. The economy is clearly
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less successful. Income poverty is clearly higher than in other rural areas, although it is still broadly in line with the national average. That is why it makes sense to introduce a discount that helps those areas in particular.
In cost terms, this is a modest measure, partly because there are relatively few households in those sparsely populated rural areas and partly because such a high proportion of them are recorded as a second or holiday homes and therefore would be ineligible for the discount. Indeed, in sparsely populated villages, the Countryside Agency reports that almost one in 10 household spaces is recorded as a second or holiday home; about five times the number found in similar-sized settlements elsewhere.
There is another mitigating factor on cost. There would be no discount on the new band G or the vehicles that emit most carbon. The cost of up to £50 million a year for England, using the most conservative assumptions about the size of vehicles, is small by the side of the extra revenue that the Chancellor can hope to gain with both the indexation of fuel duty and a more radical approach to the progressivity of vehicle excise duty.
Although other proposals that deal with revenue raising cannot be debated because of the rules of the House, it is worth pointing out that the £2,000 revenue raising proposal, for example, would more than adequately fund the rural discount. This is a sensible package that would enable green taxes to do their work in helping to change behaviour, without raising taxes overall. As the increases in vehicle excise duty would operate for new cars only, the impact on purchasing decisions is open and transparent. No one could claim that they had not been forewarned. Moreover, there is a benefit for those with existing cars in sparsely populated rural areas that recognises their circumstances, thus allowing greater weight on fuel duty and other green taxes than would be allowed otherwise.
I note that the Liberal Democrats are the only major party to attempt to grapple with the issue. If we consider what the Chancellor has done, as opposed to the spin that he likes to put on the Budget, the reality is that green taxes have been falling, year on year, as percentage of GDP and, indeed, as a percentage of the overall tax take. I am afraid that the Conservative Front-Bench spokesman, the hon. Member for Wycombe (Mr. Goodman) has confirmed that the Conservatives show no interest whatsoever in using the price mechanism to change behaviour in this direction, and it is matter of regret that, in their proposed amendment to the general motion on the Finance Bill, they did not mention the environmental objectives that are such a clear and important part of such policies; at least that is something that the Chancellor recognises in words, if not in deeds. I very much hope that the House will support the amendment, as it clears the way to a substantially more radical approach to other green taxes.