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Session 2006 - 07 Publications on the internet General Committee Debates Finance |
Finance Bill |
The Committee consisted of the following Members:David
Doig, Hannah Weston, Committee
Clerks †
attended the Committee Public Bill CommitteeThursday 7 June 2007(Afternoon)[Mr. Roger Gale in the Chair]Finance Bill(Except clauses 1, 3, 7, 8, 12, 20, 21, 25, 67 and 81 to 84, schedules 1, 18, 22 and 23, and new clauses relating to microgeneration)Clause 101Abolition
of PRT for fields recommissioned after earlier
decommissioning Question
proposed [this day], That the clause stand part of the
Bill. 1
pm Question
again
proposed. Mr.
Paul Goodman (Wycombe) (Con): Before lunch, I was about to
say a few words about the clause. I am tempted simply to ask the
Economic Secretary what it means and sit
down—
Mr.
Goodman: As the hon. Gentleman says, it is all in the
notes. I was simply going to observe, given the Committee’s
inexhaustible appetite for information, that the clauses dealing with
petroleum revenue tax are relatively uncontentious. They implement a
commitment that the Government made in last year’s pre-Budget
report to even up some discrepancies in petroleum revenue taxation. We
understand that the clauses are welcomed by the industry, and nothing
has been raised with us. I have no further questions or points to
raise.
Rob
Marris: Clauses 101 and 102 go together. I want to ask my
hon. Friend the Economic Secretary—he may need to write to me,
because we are pressed for time—whether the clauses on petroleum
tax will have an effect on carbon capture and storage, because in the
North sea, the old oilfields, the use of which has been discontinued,
may well be used as a repository for carbon dioxide to be pumped and
stored there for
ever.
The
Economic Secretary to the Treasury (Ed Balls): It is a
pleasure to serve under your chairmanship again, Mr. Gale. I
add my congratulations to those expressed earlier on the promotion of
the hon. Member for South-West Hertfordshire. My hon. Friend the
Financial Secretary is the Minister responsible for oil and gas
industry issues in the Treasury, but he is currently in the Chamber,
about to speak on another matter, so I have taken it on myself to answer
and to lead the debate in his
absence. As
the hon. Member for Wycombe said, the measure was first announced in
the 2006 pre-Budget report and will remedy a problem that arose during
discussions between the Government and the industry on the wider
strategic issues facing the North sea fiscal regime by providing for
the removal of petroleum revenue tax from oil and gas fields where full
decommissioning has been completed—that is, all infrastructure
has been removed and the fields in effect have been returned to bare
seabed—and the fields are subsequently
redeveloped. Under
current legislation, if a field on which PRT was chargeable was fully
decommissioned and later recommissioned, it could still be liable to
PRT. However, the challenge of redeveloping a previously decommissioned
field is closest in appearance to the challenge of developing a
completely new field. I am referring to fields on untouched seabed,
which are not liable to PRT; it was abolished for new fields in 1993.
Therefore, it is arguable that there is a disincentive to recommission
old fields. Clause 101 is designed to remedy that anomaly and create a
level playing field between old decommissioned fields and new fields.
As the hon. Gentleman said, the change has been welcomed by the
industry following consultation.
My hon. Friend the Member for
Wolverhampton, South-West raised the issue of carbon capture and
storage. As he will know, new technologies can potentially be used to
extract carbon dioxide from gas or coal during the energy production
process. Therefore, it will be possible to deliver carbon free, or
substantially reduced carbon, electricity from coal and gas and for
those carbon dioxide gases to be taken away and stored.
One option is to store those
gases in previously used oilfields in the North sea. The Government are
considering how to encourage and develop those technologies. My
assumption, though, is that if one of those fields is subsequently to
be used for such a practice, it would come under a different tax regime
to the one that would be applied here. In this instance, we are trying
to ensure that it is tax free for the development of new petroleum oil
production. If an incentive was needed to encourage gas fields to be
used subsequently, a different tax regime would be required. We are
currently looking at the nature of incentives that might be needed and
the legislative base within which that could occur.
I am very happy to keep my hon.
Friend and the House informed of any developments. The Financial
Secretary may be able to provide more details on that. The policy area
is at an early stage. Her Majesty’s Revenue and Customs is
considering what the legislative and tax framework would be. While the
clause corrects the anomaly, it would not make it more difficult for us
to use those fields for carbon capture storage in future. On that
basis, I commend the clause to the
Committee. Question
put and agreed
to. Clause 101
ordered to stand part of the
Bill. Clauses
102 to 104 ordered to stand part of the
Bill.
Schedule 25Amendments
connected with the Gambling Act
2005
Ed
Balls: I beg to move amendment No. 240, in
schedule 25, page 275, line 41, leave
out ‘charitable purposes only’ and insert
‘a purpose other than that of
private gain (within the meaning of the Gambling Act
2005)’. Clause
104 introduces schedule 25, which provides for amendments to tax
legislation as a consequence of, or in connection with, the Gambling
Act 2005. When it is fully implemented, the 2005 Act will repeal most
of the legislation that provides the regulatory framework for gambling
in the UK.
Schedule 25
is divided into six parts. Part 1 provides amendments to the 2005 Act
which will preserve the income and corporation tax exemptions that are
currently enjoyed by certain charitable lotteries. Part 2 provides for
amendments to the Act to be made in respect to general betting and
bingo duties. Parts 3 and 4 provide for amendments to lottery and
gaming duties. Part 5 deals with other miscellaneous amendments to the
Act in relation to bookmakers’ permits and the definition of a
“revenue trader”. Part 6 makes commencement provisions
for those amendments.
Amendment No.
240 modifies the scope of the exemption to gaming duty that is provided
by paragraph 17. It ensures that gaming duty is not charged on gaming
when players’ payments are put to a purpose other than for
private gain. That very minor change maintains the policy intent of the
current legislation and is slightly less restrictive than the exemption
in paragraph 17 which would apply when the proceeds of the gaming are
used for charitable purposes only. Therefore, I commend the amendment
and the schedule to the Committee.
Amendment agreed
to. Schedule
25, as amended, agreed
to.
Clause 105VED:
exempt
vehicles Question
proposed, That the clause stand part of the
Bill.
Mr.
Goodman: The debate on this clause was prefigured in the
debate on clause 11, which the Economic Secretary may remember. That
was about vehicle excise duty in relation to non-working vehicles used
by people in rural or remote rural areas. This clause concerns working
vehicles. As the Financial Secretary reminded us in the debate on
clause 11, agricultural vehicles are currently exempt from vehicle
excise duty. That inevitably raises the question of when, if at all, a
working vehicle becomes a non-working vehicle, and vice
versa. The point was
raised on clause 11 by my hon. Friend the Member for Ludlow, who may
have a word or two to say about it in a moment. He said:
“My understanding is
that previously
it”— the
exemption— “applied
to tractors and other very heavy equipment, and the proposed exemption
would extend it to 4x4-type vehicles.”
The Financial Secretary replied:
“The sort of detailed
discussion that the hon. Gentleman is tempting me to have on this
clause is better stayed until we reach clause
105.”——[Official Report, Finance Public Bill
Committee, 10 May 2007; c.
99.] Now we are here,
and I hope that we can have the detailed discussion, because were I in
a meeting with my local branch of the National Farmers Union, I am sure
that its members would be able to provide me with an exhaustive list of
circumstances in which 4x4s and other vehicles that might at first
sight appear to be non-working vehicles are, in fact, working vehicles.
I think that that was the point that my hon. Friend was getting
at.
The clause is
clearly in the Bill for a purpose. It provides circumstances in which
further categories of vehicles can be exempted. Is it the
Government’s intention to introduce measures exempting further
classes of vehicles fairly soon? Can the Economic Secretary provide us
with a time scale? With reference to the detailed discussion, can he
suggest how the Government’s thinking on the matter is
developing, and whether 4x4s might fall into the relevant category?
Finally, will we be able to have a debate about the matter by way of
statutory instrument? Will the affirmative rather than the negative
procedure be used?
Mr.
Philip Dunne (Ludlow) (Con): I am pleased that my hon.
Friend has reminded the Committee of our debate on clause 11. I could
not allow our proceedings to draw to a close without an opportunity to
remind members of my entry in the Register of Members’
Interests, which is in connection with agriculture.
I raised with the Financial
Secretary, more in hope than expectation, the question of whether the
clause could be used to extend vehicle excise duty relief for
agricultural vehicles used solely for the purpose of agriculture,
forestry and horticulture. He did not give my hopes much succour, and
it is a great shame that he is not here to respond, but I have looked
in more detail at the explanatory notes and accept that the aim is to
give the Secretary of State flexibility and discretion to redefine
tractors and vehicles used for the purpose of agriculture, forestry and
horticulture, to reflect technological advance and the development of
new machinery in the future.
However, there are two aspects
of agricultural practice that need to be drawn out and on which I
should like the Economic Secretary to reflect. This is a missed
opportunity. As the costs of vehicle excise duty rise—and they
are likely to rise in future, given the environmental and behavioural
changes that I think hon. Members on both sides of the House
anticipate—the challenge for the agriculture and forestry
industries in particular is that they require a disproportionate use of
vehicles just to be in business. That becomes more, rather than less,
apparent as mechanisation continues to develop apace. It is no longer
the case that a farm gets by with one tractor. A multiplicity of
vehicles of different types are used in agriculture. It is therefore
entirely appropriate, in my view, that there should be an exemption and
that there should continue to be relief from these duties.
The vehicles involved are not
only specific-purpose vehicles; they are often adaptations of other
vehicles. I think that that is where there is some difficulty with the
wide-ranging discretion that the Secretary of State has, and I will come
back to that. The
other relevant aspect is that the use of vehicles by these industries
is also increasing significantly. That is partly as a result of
pressures within the industry to aggregate holdings, and therefore
farmers, to continue in business, need to take on other land that is
perhaps some way distant from their existing holding. Obviously, they
have to use the roads to get to that land. As a result, a lot of
vehicles that were previously confined to off-road use are now also
being used on-road, and therefore duties might start to apply where
they did not previously apply.
1.15
pm For example,
many farms use adaptations on quad bikes to provide specialist
applications. Quad bikes are not normally registered for road use.
However, as Members of Parliament are increasingly aware, they have a
number of uses, not least for Members of Parliament. Another example
would be motorised hydraulic lift vehicles, such as the well known
JCBs. Those are now used for many purposes on farms and must be taken
on the roads more than they used to be. It is difficult to see that a
description of vehicles can be adequately encompassed to take account
of differing uses. It would be a missed opportunity not to use the
definition of “use of vehicle”, rather than just
“type of vehicle”, when it comes to drawing up these
exemptions.
Briefly—Members will be
relieved to hear—clause 105(1) includes the power for
the Secretary of State to repeal any of the relevant paragraphs of
schedule 2 to the Vehicle Excise and Registration Act 1994.
What reassurance can the Economic Secretary give us that he or his
colleagues have no intention at present to repeal any of those
paragraphs, and that any future attempts to repeal them will be subject
to affirmative procedure? Can he also assure us that he supports the
arguments that I have outlined in favour of a continuing vehicle excise
duty exemption for the industries that I mentioned, all of which have
high vehicle use and are, in most cases, trading in fragile
circumstances?
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