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Supply and demand clearly drive oil prices around the world. It impossible to say at this juncture whether oil prices are spiking. We do not know whether we are at the beginning of a longer-term trend or whether prices will be higher or lower a year from now. All we can say with some certainty is that the trends appear to be upwards. That is a logical inference; one need only look at the number of two-car or even three-car households in the UK compared with 10 or 20 years ago. One need only consider countries such as China and India: in the big cities there, most journeys were undertaken by bicycle 20 years ago; now a large number of vehicles are being driven daily. There is clearly rising global demand for oil, and in the short term it is hard to satisfy that steeply increasing demand. People around the world are wondering whether it will be hard in the medium to long term as well. The problem is not unique to the UK.
David T.C. Davies (Monmouth) (Con): The hon. Gentleman is making a genuinely interesting point, but surely he is aware of what Ministers in OPEC are saying, which is that there is no problem in meeting the world’s demand of 88 million barrels a day, and that the increase in price is due more to speculation. That suggests that his hypothesis that there is a continual upward trend is not correct.
Mr. Browne: We will have to agree to disagree on that. It is very hard to increase production capacity dramatically in the short term, yet there have been increases.
It might help the hon. Gentleman if I say that my hon. Friend the Member for Lewes (Norman Baker), who is a doughty campaigner on these matters, asked the Department for Transport a question and received a written answer on 25 June, a week ago. He asked about increases in petrol and diesel prices in all the EU countries. He was told the prices in January 2005 and April 2008, which was extremely helpful and interesting. They are a few months out of date, and of course prices have since risen further, but the trend between the beginning of 2005 and a third of the way into this year is interesting and informative.
In that time, petrol prices rose by an average of 36 per cent. in the UK. That is a sharp increase, and markedly more than the increase in wages in that time. However, it is fair to say that in the comparable large economies of western Europe, the rises were even greater, although I acknowledge that they started from a lower base. In France, the rise was 51 per cent., and in both Germany and Italy it was 44 per cent. By April 2008, the UK no longer had the highest petrol prices in Europe. The average price of a litre of unleaded petrol was higher in Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Portugal and Sweden.
That is not true of diesel, for which we still have the highest price per litre in the EU, but other countries began to catch up with us in that period. The increase in the price of a litre of diesel in the UK was 39 per cent. I acknowledge that that is way in excess of the rise in income and means that people driving the same mileage are having a larger percentage of their overall household budget taken up by fuel costs than in January 2005. Nevertheless, it is reasonable to consider what has happened in other large western European economies and put on
record the fact that prices went up by 60 per cent. in France, 56 per cent. in Germany and 52 per cent. in Italy.
Mr. Russell Brown (Dumfries and Galloway) (Lab): I thank the hon. Gentleman for giving way. I have written to two major supermarket chains and three major oil producers asking whether they can explain why the differential between unleaded petrol and diesel has risen to between 11p and 16p a litre, compared with between 2p and 3p a litre 18 months ago. Will he share with the House his views on why that may have happened?
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Mr. Browne: I am grateful for that intervention. I should declare an interest, in that my car has a diesel engine. Until about a year ago, I paid about 1p or 2p more per litre but—and this follows on from a point made in the previous speech—the greater fuel efficiency of diesel meant that the mileage was greater and that the cost differential was almost zero. The cost of diesel is quite a lot greater now, as a result of higher demand and restricted refining capacity. However, that prompts questions about whether the Government should introduce additional incentives for people to switch to diesel-fuelled cars, and that is territory that I do not intend to venture into in this speech.
Mr. Brown: I thank the hon. Gentleman for giving way again. Does he think that the Office of Fair Trading might look at this matter?
Mr. Browne: I thank the hon. Gentleman for that question, but I do not want to be distracted, as I do not believe that the question is about the fairness or unfairness of trading; rather, it is about demand and oil producers’ capacity to refine the product in the way that they need to if they are to bring it to market.
The rise in the oil price is the first reason why the cost of motoring is a high-profile issue in the country at large at the moment. The second is environmental taxation, and I shall say more about that as it forms the basis of most of the new clauses and amendments under consideration. The third reason is the squeeze on household incomes. That is worth mentioning, as the sizeable rises in fuel costs in the UK and other EU countries that I have just set out have been accompanied by increases in food, utility bills and council tax. All those rises are happening at a time when the income of most households is being held down; in many cases, it is even not rising as fast as the official inflation rate, which itself is not in line with most people’s experience. We are dealing with a live and important issue that will not go away. Unless the Government confront aspects of it today, I fear that they will find that their woes only accumulate.
However, the Conservative record is also less than glorious. The hon. Member for Putney (Justine Greening) accused the Government of a “complete” lack of transparency when it came to environmental taxation. The Conservative party likes to give the impression that it is environmentally friendly. To Friends of the Earth, it emphasises its new-found environmental credentials, but its speeches to road hauliers are rather different.
The leader of the Conservative party has put a windmill on his house, changed his party’s logo to an image of a tree and bought some extremely expensive recycled
trainers that used to be old tyres. That is the entirety of Conservative policy on environmentalism. If he thinks that that will cut the mustard, he needs to have a higher regard for the intelligence of people in this country.
The speech by the Conservative spokesman, the hon. Member for Putney, contained a straightforward contradiction, and she may wish to intervene on me to clarify the point. She said that the Government were increasing the total VED tax take from £1.9 billion to £4.4 billion—a sizeable increase—but she then said that the policy was not working, as it would lead to emissions savings by 2020 of only 0.16 million tonnes.
The only logical inference from that observation is that the Government are not taxing fuel nearly aggressively enough. If the hon. Member for Putney believes that emissions are not being cut enough, and if she is in favour of environmental taxation, the presumption must be that she wants consumers to be even more incentivised to make greener choices.
Justine Greening: The hon. Gentleman seems to have completely missed my point. The tax is not having an impact on emissions because it taxes behaviour that has already happened—it is impossible for people to go back and change it. That is the primary reason for the tax not causing a greater decrease in motor vehicle emissions.
Mr. Browne: The hon. Lady is right, of course. That is why we agree with the Conservative party. It has wisely come to agree with us on the need to give people real choices about the environment. However, we disagree with the Conservatives’ attempt to hide from the electorate the consequences that would inevitably flow from their rhetoric. My party is in favour of differential VED rates, which were never introduced when the Conservatives were in government. The Conservatives seek to imply when they speak to environmental groups that they, too, want people to drive more fuel-efficient cars, but we do not hear a lot of that in their day-to-day discourse or in debates in the House.
If the hon. Lady does not think that the Government’s policy is doing enough to cut vehicle emissions, the logical position for her to take, which is my party’s position, is that VED differentials should be greater for all newly acquired vehicles and should take account of engine size, which would offer people greater incentives to pick more fuel-efficient vehicles.
This string of amendments contains some extremely interesting proposals about helping people who live in remote rural areas and about off-road working vehicles, and I am certainly disappointed that the Conservative party appears to take no interest in those subjects.
Mr. Chaytor: The hon. Gentleman makes a plea for greater differentials for new vehicles, but is that not exactly what the Government are planning for 2010-11, when the most-polluting vehicles will pay an additional first-year charge of £950? That answers his point exactly, and he should congratulate the Government on doing that.
Mr. Browne:
That is what the Government are doing, but our view and that of the Environmental Audit Committee, which, as we were reminded earlier, is chaired by the only Conservative who is allowed to follow the logic of his leader’s position on this matter, is that those
differentials must be greater to achieve the environmental benefits that my party wishes to achieve. In other words, people must be better rewarded for driving more fuel-efficient cars.
Mr. Chaytor: May I, as a member of the Environmental Audit Committee, correct the hon. Gentleman on that point? Our pre-Budget report last year called for an increase in the differentials on new vehicles. That is exactly what the Government have done in their Budget this year, as indicated by figures that appear in the Red Book. That response exactly deals with his plea for greater differentials on new vehicles in the future, so will he congratulate the Government on doing what the Environmental Audit Committee called for?
Mr. Browne: I will give way again if the hon. Gentleman can answer this question: did the Government introduce differentials as big as those recommended by the Environmental Audit Committee?
Mr. Chaytor: The Environmental Audit Committee did not recommend any size of differential; it gave an indicative range that is broadly reflected in the higher band figure that the Government have introduced.
Mr. Browne: We are in danger of going into a cul-de-sac. Everyone says that they are in favour of differential VED—so we can agree on that—but the question is how big those differentials must be to achieve environmental benefits. My view and that of my party is that they need to be bigger than Government propose and that they should not be imposed retrospectively.
Alan Simpson (Nottingham, South) (Lab): Let me try to help the hon. Gentleman and other hon. Members out of the cul-de-sac. Is not the great weakness of the Government’s position and the proposals before the House that the issue is not about what happens in relation to progressive VED on new vehicles, but about how we change the performance of existing vehicles and the behaviour of those who own them? In that sense, there is nothing green about either the Government’s position or these proposals. A greening of behaviour can come about only if there is some form of hypothecation of the taxes raised by the measure to allow and equip people to change the engine types of their vehicles to adopt lower pollution standards. Hypothecation is absent as a mechanism to allow existing vehicles owners to become lower carbon contributors in the economy that we are trying to construct.
Mr. Browne: That was an extremely widely worded contribution. I do not disagree with it, but I fear that I would end up in many different areas if I tried to answer it in detail, so I shall try to answer it during the remainder of my contribution.
My hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) has tabled new clause 14, which deals with the remote rural discount scheme. I hesitate to intrude on the cosy metropolitan consensus that exists within ministerial ranks, but it is worth explaining to the House that in many parts of the country it is hard to use modes of transport other than the car because there is very little public transport. People use their cars not for leisure purposes, but for everyday purposes such as travelling to work. My hon. Friend will explain the proposed effects of his new
clause in greater detail, but I urge the Government to look sympathetically on the circumstances of people who live in remote rural areas where there is no alternative to the private car.
The particularly interesting aspect of my hon. Friend’s new clause is the provision whereby he seeks to enable the devolved Administrations in Scotland and Wales to implement and administer the scheme. That would be an interesting way for the Scottish National party in particular to demonstrate its commitment to such matters.
Mr. Russell Brown: New clause 14(5)(b) says, “define ‘remote rural areas’”. I appreciate that the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) will speak to the new clause, but would the hon. Member for Taunton (Mr. Browne) care to share with the House his vision of exactly what “remote rural areas” means?
Mr. Browne: They would have to be remote and they would have to be rural. The new clause deals precisely with that question, but as I am not the person who tabled it, it seems only fair and reasonable that the Member who did, my hon. Friend the Member for Caithness, Sutherland and Easter Ross, should deal with it in detail.
Andrew Selous (South-West Bedfordshire) (Con): The hon. Gentleman talks about issues in remote rural areas, but does he agree that even in urban areas where there are good bus networks, owing to the distances that many people travel to work and their shift patterns, there often are no buses, so the car is not a luxury and more people will be on the dole if the measures in the Bill go through?
Mr. Browne: I agree up to a point. I accept that many people use their cars in their everyday lives to take their children to school or to go to work, and that the car is not an option that they can easily drop even in some urban or suburban areas. I was only making the point—my hon. Friend will no doubt make it at greater length—that the situation is particularly problematic for people who live in remote rural areas, because less public transport is available, the distances travelled are typically longer and the price of petrol and diesel is often higher because of the cost of transporting it to those areas in the first place. There are particular concerns in remote rural areas, but in the spirit of consensus, there is a question about quantifying and qualifying who and where would be eligible for the discounts. That is the nub of the debate, and it is probably more appropriate if my hon. Friend leads it.
Mr. Alistair Carmichael (Orkney and Shetland) (LD): In an area such as the west side of Shetland, which by anyone’s definition is remote, rural and very sparsely populated, having scheduled bus services running around with nobody on them does not make environmental sense. In such an area, the private car is the environmentally sensible option.
Mr. Browne: I have a lot of sympathy with my hon. Friend’s point; he knows that part of the country better than I do. We have all observed that bus services can be underused, but I will avoid getting into a debate on buses, because that might take us too far off the beaten track.
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Amendment No. 9, tabled by my hon. Friend the Member for Argyll and Bute (Mr. Reid), deals specifically with off-road working vehicles. Let me touch briefly on that issue, which is also important. We are not talking only about farming vehicles; I shall give an example of the sort of company that would be affected. My constituency stretches right out into west Somerset and on to Exmoor, and it has a sizeable number of buildings that are not on mains water or mains sewerage systems. Companies go to such farms or remote cottages to fit sewerage and water systems for purification and to update the systems. Such buildings are often in inaccessible areas and those companies enable people to live there.
Such a company would not qualify for the discounts on fuel for which farming communities might be eligible, but it would still need off-road vehicles to get to remote rural farm houses or other dwellings, particularly during the winter. I will allow my hon. Friend the Member for Argyll and Bute—I should say that you will allow him, Madam Deputy Speaker—to speak about the issue later. However, as I understand it, we are talking about a small and tightly defined number of people who need vehicles with a greater off-road capacity to carry out their business. The vehicles that are suitable and necessary for that work incur higher costs; it is therefore only reasonable to seek to mitigate those costs.
I shall go quickly through two other issues. New clauses 8 and 9, tabled by the Scottish National party, can be seen jointly. My hon. Friends and I have some sympathy with the motivation of the new clauses; as I said, prices—especially of essential products such as food and fuel—have increased dramatically and squeezed family budgets. Petrol and diesel are essential products in rural communities. I have expanded on that point already and it is inescapably the case that a large number of rural communities are in Scotland. I understand why many of my hon. Friends who represent Scottish constituencies and MPs who represent other Scottish constituencies have a particular concern about these matters.
However, there are problems with new clauses 8 and 9. The Scottish National party appears to want to send out the signal that it is in favour of cutting petrol duty. I cannot see any intention behind the new clauses other than one to signify to the people of Scotland that the SNP wishes to help them at a time of rising petrol and diesel prices. However, if that is what it wishes to do, I have to ask SNP Members why they do not say it overtly. The Government can already make those changes. Why do SNP Members not ask the question about who should pay for them?
Stewart Hosie: We will answer the question of who pays for them when we move the new clauses. Why is the hon. Gentleman making these idiotic partisan comments? The issue has nothing to do with the Scottish National party in the run-up to some election that is two years away. It is about recognising the real increases that people are facing now. It is to do not only with Scotland, but with the whole of the UK. Will the hon. Gentleman withdraw his pathetic, partisan comments and listen to the argument and some of the evidence before he makes his decision?
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