I want to make two final points. The first is about the exemptions for classic cars. Although it is not a big issue in the overall scheme of things, it is important to
the people involved. Classic cars are environmentally inefficientcars produced many years ago did not perform well environmentally. Most classic cars are hardly usedthey are taken out on high days and holy days to shows and exhibitions. Their tax treatment is illogical because they have to be in a specific age range if they are to be exempt from vehicle excise duty, which is related to a particular date. When the regulation was first introduced, there was a sliding scaleif a car was more than 25 years old, it would be exempt. The amounts of money involved and the nature of the classic car movement mean that we should revisit the matter and revert to a sliding scale of 25 years rather than picking an arbitrary date in the 1970s.
I want to consider technology, which the hon. Member for Twickenham mentioned. We need to get further ahead of the game in promoting vehicles environmental performance. We need to redouble our efforts in areas in which we are already strong to make the UK a world leader in automotive-related transport and environmental technologies, whether for cleaning up diesel further, doing more with lightweight materials for use in vehicles, the use of intelligent vehicle systems or getting the mass production of fuel cells closer to reality. If we are to achieve that, and much has already been done, the Government must play their part.
If Conservative Members agree with environmental taxes in some circumstances but believe that they should be ring-fenced to reduce other taxes, do they rule out extra Government investment in those useful environmental objectives? A range of Government programmes already try to incentivise companies to invest in environmental performance, research, development and so on. I would like the proceeds of transport-related environmental taxation to be used not simply to reduce other taxes but to invest in the very things that will enable us to combat climate change as far as we are able. Conservative Members need to reconsider that point. Do they want to use environmental taxes only to reduce other taxes or do they want to invest in the technologies that I described? If the answer is the latter, they must find the money from somewhere.
I emphasise to my hon. Friend the Exchequer Secretary that we are doing much but we can do more, and I urge us to do more if we are to meet the challenge of climate change and allow the motor vehicle industry to play its full part in doing that.
Mr. John Redwood (Wokingham) (Con): The Government made an odd decision to produce a policy that masquerades as green, but that, on their figures and admission, will make almost no contribution to their green objectives, while taking much money from motorists, especially those on lower incomes and owners of older cars that are less fuel efficient.
What do we know about the proposal? We have learned in the debate that the best that we can say for it is that there might be a saving of one seventh of 1 per cent. of total carbon after the full effect of the measures has been felt. That is well within the rounding error or scope for mistakes in estimating. That is presumably the Governments best case, so we must assume that the worst case is that there will be no
improvement. That seems borne out by the other forecast, which we are more inclined to believe: that the tax revenue will more than double as a result of the proposals. That shows that most people will continue to own their older and less fuel-efficient vehicles and have to pay the tax. It shows that there will not be a huge change in the variety of vehicles that people buy new; a lot of people will opt to buy the less fuel-efficient vehicles because they like such vehicles, which may suit their purposes and be necessary for peoples businesses or the terrain over which they will be driven.
Mr. Redwood: I am afraid that I do not have time to give way. Other colleagues wish to join in this very short debate, and it would not be fair on them. My hon. Friend knows that I am normally very happy to give way.
The position is that there will be a colossal tax hit on people for no good green purpose. We have to conclude that on this occasion this is not a green tax, but a way of raising revenue. What is so sad is that all those who believe that the way to change behaviour in an environmental direction is to use taxation are building a strong feeling out thereon the doorsteps that we all saw in the run-up to 1 May, and on doorsteps in a by-election area that one could mention. People are saying that this measure is a cynical ploy by the Government and a new way of taxing us. There will not be any great green good as a result; the taxes are being used as an excuse.
I urge the Government, at this relatively early stage in the crisis that will undoubtedly occur in the next few months, as people realise what the issue is about, to think again. Not only are they very likely to have to back down because the politics of the proposal are so badthey will feel that in the marginal constituenciesbut they will discover that the proposal is bad for the green cause that they claim to espouse. The Government do not make proposals to curb their own carbon footprint by going a bit easy on the air conditioning and changing the heating systems in their offices. They do not make similar proposals on very old trains and buses, of which we have all too many in this country and which are heavy, fuel inefficient and do a lot of damage. Yet the motorist is always involved.
Why is that? It is because the Government have worked out that most people need a car, as they do not live on top of a railway station and do not have access to bus routes to all the places to which they wish to go. Most people need a car because they need to take things to work or carry their tools or equipment around when they are working. A lot of people need a car to take their children to school because it is the safest and easiest way and they then use it to go on to their own place of work, fitting everything into those difficult one or two hours early in the morning.
If Ministers wish to show that they have any connection with the world in which their constituents live, they should understand that the car is not a luxury but a working necessity for most people in this country, other than the privileged few who live in central London where there is good public transport.
Ministers should understand that many have to struggle with out-of-date and old vehicles. Such people would dearly love to have new, fuel-efficient modern vehicles such as those that they see around them that belong to the rich. However, they cannot afford to change their cars today, because of penal taxes and the pressures on their incomes, and they will certainly not be able to do so once the swingeing tax increases come in through the proposals for a massive hike in vehicle excise duty.
Any Government with any political feel or any understanding of how people lead their lives and of the reality of the situation would back off from these proposals now. This Government, of course, usually play silly political games and try to claim that everything is about the Conservative Opposition and not them. That is not how the public see it; the public understand that the Government have the powerthey make the proposals and decisions, and whether our lives are good or not is very influenced by the impact of their proposals.
It is extraordinary that the only point that the Government have made in the debate has been to ask how the Conservatives would pay for cancelling the penal element of these tax proposals. Well, how are the Government paying for £100 billion of liabilities that they have taken on to our books through Northern Rock? That is never explained. How are the Government paying for the recently announced £50 billion special assistance for the banking industry? That puts us all at risk. How are they paying for the £2.7 billion of tax reductions announced only yesterday to deal with their political difficulties?
The Government have blown their cover on this argument. They believe that anything can be added to the borrowing requirement; in the past nine months, they have added more than £150 billion to the contingent liabilities and borrowing of this country. How dare they say, then, that the Conservatives could have a problem in wishing to forgo a bit of prospective revenue in 2009-10, based on the laughable assumption that these proposals can stand and that a Government who wished to be re-elected would go all the way in legislating for them and imposing them on people? We have seen how electrifying the impact on the electorate was when the 10p band was taken away and millions of people on low incomes discovered that they were paying for the tax chicanery of the previous Budget. This is almost exactly the samethe only difference is that even more people will experience that hit in the wallet and the pocket-book. They will not need to read their pay cheque to discover what has happened to themthey will physically have to go into a post office or go online to pay this massive and swingeing tax. It will be extremely visible and in your face.
The Government are trying to pretend that all people with normal cars will not experience any pain, but that is simply not true. In 2009-10, the duty on a vehicle emitting 162 g to 165 gfor example, a Citroen C5will go up from £145 to £175, which is a 20 per cent. increase. On a 201 g to 224 g vehiclesay, a 2-litre saloon for the larger familyit will go up from £210 to £300, which is a whopping 43 per cent. On the really big supercarsthe over 225 g modelsit goes up by only 10 per cent. from £400 to £440. How can the Government argue that that is just or that it makes
environmental sense? How can they say that they have any shred of credibility when they whack the people with the family saloon and do not produce such a big increase for the people with supercars who may be a little more tolerant of these large increases in taxation?
I believe that the way to change behaviour is to offer incentives and encouragement, just as we did to get to rid of lead in petrol when we made unleaded petrol cheaper. This Government are doing it wrong. They are trying to clobber people, and in this case the tragedy for them will be even bigger because there is no environmental gain at the end of it.
Martin Salter (Reading, West) (Lab): Although I am critical of the Governments proposals, I will not join the Conservatives in the Lobby tonight, as they will not be surprised to hear. That is not just because this is an Opposition day debate but because of the sheer hypocrisy of their position. They accuse the Governments proposals for graduated vehicle excise duty of being dressed up as an environmental measure but solely designed to increase and raise tax revenue, yet when the Conservatives propose precisely the same policy it is apparently the work of environmental visionaries that we should follow and that should lead the debate.
I do not think that the right hon. Member for Wokingham (Mr. Redwood), for whom I have great affection, has claimed to be an environmentalist, but he has claimed not to be a climate change denier. That rings rather hollow if one reads his blog of 4 April 2008my excellent researchers have fetched it for me. The opening paragraph begins:
Anyone in power who believes that global warming is happening.
Those are not the words of someone at the forefront of the environmental movement. I remember the right hon. Gentleman saying, Who believes its happening?, as if it is not. I remember public quotes from himI have not been able to dig them out so I will have to rely on my memoryabout not being able to identify the 4x4s that are allegedly responsible for contributing to global warming. There is a deep brand of scepticism about the entire climate change agenda in parts of the Conservative party, and we need to recognise that.
You can see the very strong commitment to the environment and yes, green taxes, as a share of taxes do need to go up. Thats not necessarily popular, but I think its right.
He is absolutely rightit is not necessarily popular but it is the right thing to do. The question for the Opposition, if they want to walk the walk and look like a Government in waiting, is this: when will it be the right thing to do and time to come off the fence? At the moment, the Conservative party has an interesting and comprehensive documentI will give it that. It is the quality of life document, which was put together by Zac Goldsmith and the right hon. Member for Suffolk,
Coastal (Mr. Gummer), and it has three specific proposals that relate to the matters we are debating. It says:
It is therefore necessary to be much more subtle in the way we design taxes so that they achieve their ends with the least possible pain...Fiscal incentives for environmental improvement can be highly flexible, applied to industry, as in the case of the Landfill Tax, or aimed at directly influencing consumer behaviour, such as the banded system of Vehicle Excise Duty.
In contrast, an emissions-related tax directly at the point of purchase would increase the price differential between clean and polluting new cars more steeply. Such a tax could be phased in over time as automakers respond by bringing a greater range of efficient cars to market.
We recommend more modest changes in VED, aimed primarily at influencing the used car market where annual running costs comprise a larger proportion of total costs. These levels of VED may also lead to slower depreciation rates for cleaner cars, thus indirectly influencing new purchase decisions. On this basis we propose increasing the VED differential between the top and bottom bands of emissions performance, capped at a maximum of £500.
That £500 figure is considerably more than the Government are proposing. There will come a time, as my hon. Friend the Member for Birmingham, Northfield (Richard Burden) said, when the Conservatives will have to come off the fence, grasp the bullet and adopt some policies rather than make interesting suggestions.
The motion shows that the Conservatives are prepared to will the end but not the means, and I look forward to a time when they come up with clear, substantial and coherent policy. I believe that the motion misses the point. It calls for the abolition of increases in vehicle excise duty instead of addressing the point of concern for those in my party and elsewhere in the country, which is the retrospective nature of the policy. For Labour MPs, it is the retrospective nature of the measures, with the abolition of the 2006 exemption, that is the nub of the argument.
I agree wholeheartedly with the graded vehicle excise dutyin fact, I was one of the Back Benchers who lobbied for the proposal when I first came to this place. It has made a difference by informing consumer choices. I agree with incentives to make green choices pay. I would go as far as loading purchase taxes quite heavily on new gas guzzlers, with bans of 4x4s from residential streets, if necessary, and higher charges for the most polluting vehicles. I have no problem with incentivising green choices and with making it more expensive to do the wrong thing by the environment. However, I do not agreeand I hope that this came across in the interventions that I and other colleagues madewith denying to the people who can least afford it the opportunity to make an informed and empowered choice in favour of the environment and their family budgets.
We saw the problems concerning the 10p tax, and we have seen the steps that the Government were rightly prepared to take to put £120 back into the pockets of
basic rate taxpayers. Some of the increases in vehicle excise duty rates are in line with that £120 figure; people will certainly be forced to pay £90. It is quite simple to me: we can talk about choice, but choice is always an option for the rich. People on low incomes do not change their car every year or two. They need longer than from now until 2010 to make the changes necessary to cut vehicle emissions without being penalised by higher car tax. I speak as patron of the Berkshire Multiple Sclerosis Therapy Centre, which the right hon. Member for Wokingham will know of. I see constituents of mine and his who scrimp and save to run an old Ford Transit van into which they can run a wheelchair to get the dignity that mobility gives them. Do we really want to hit those people? Do we not want to give people with large families, people on low incomes and people with mobility or disability problems an opportunity to make the informed choice that the time scale currently envisaged in the measure simply does not allow?
That is why I urge my hon. Friend the Exchequer Secretary to reflect carefully on representations on the issue from people who truly are her friends, because there is time to put things right. There is time to phase in, if necessary, the different bands. There is time to end the retrospective nature of the measures, which is fundamentally wrong.
My final point is about the publics capacity to accept green taxes. In this cynical age, we should all be wary of destroying the credibility of green taxation as an environmental tool, if the public consider the measures that we propose to be either unfair or unclear. I do not often do this, but I commend to hon. Members a bit of reading from the Department for Environment, Food and Rural Affairs website, which is a snappily titled document called A Framework for Pro-Environmental Behaviours. It makes depressing reading for those of us who genuinely believe in climate change and who want to lead the public debate and change public attitudes.
Sadly, only 18 per cent. of the public fit into the category of committed environmentalist. That might be okay when it comes to voting in local elections, but it is certainly not okay when it comes to doing the right thing. What we learn from the survey is that the public are prepared to recycle more, take a tough line against manufacturers that produce excessive packaging and use recycled light bulbs, because they can see that doing so will save them money. But are they prepared to drive less, fly less or be unnecessarily penalised in their pockets? Sadly, they are not at this stage. However, they need to be, and we need to get them there, because climate change is one of the most serious issues facing our planet.
If we want to undermine the necessary measures in the Climate Change Bill to cut our carbon emissions by 60 or even 80 per cent. by 2050, which we all support, we will do so by being unclear or engendering opposition or a sense of unfairness and cynicism about the policies that we put forward in favour of that agenda.
In conclusion, let me say this to Conservatives Members. You have been shallow and opportunistic, because once again you have been found out willing the ends, but not the means. But you are not all wrong
We should accept that there is merit in reforming the proposals. I ask the Government please to reflect carefully on the sheer unfairness of the retrospective nature of the proposals. There is time to make amendments and do the right thing by the environment without hitting some of the people whom we all came into politics to help and support.