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The hon. Gentleman seems to be almost unaware of what his Government are proposing. First, the rises that he discusses are quite stiff, although they are nothing compared with the rises that people who are currently in band F will face when they go up
to bands L or M by 2010. Then, they will face rises of £245. Secondly, he is probably not aware of the transition period, because he has demonstrated what I said originallythat the period was not mentioned at all. The Government are planning that people should be in transition across two years, precisely because they know how much the measure will hurt them.
Mr. Chaytor: I am looking at what the Government propose and reading from the chart in the Red Book. It is absolutely clear that new band J vehicles, with CO2 emissions ratings of 181 to 200 g per km, will pay £260 in 2009-10, which is a sizeable increase, but only a further £10 in 2010-11. I urge all Members who are concerned about the issue to look at the facts and at the increases.
It is true that from next year, 7.7 million will pay a higher rate, according to the Library analysis, but of those 7.7 million, the overwhelming majority will pay only a tinya marginalhigher rate. I return to the point that the real concern is the one-year increase next year, which is not carried through to 2010-11 to the same degree, in respect of new bands J and K.
Finally, the irony is that in respect of next years rate, new bands L and M will show an increase of only £15 and £40, or 4 per cent. and 10 per cent., respectively. The paradox is that under the Governments proposals, the two highest-rated bands will pay less than the two bands lower down the scale, so there is an opportunity to make the system more progressive, fairer and more efficient. I hope that the Government will take those specific points on board.
John Thurso: I rise to speak to new clause 14, which stands in my name and that of several of my hon. Friends. The debate has been fascinating and wide ranging. It would be very tempting to discuss some of the topics that have been debated, but I sense that the House may prefer me to confine my remarks to the new clause, and I shall do so.
I have a slight dilemma. As always, I have come well prepared with the detail of my arguments, but it would take a little time to expose, so I shall attempt to do the bullet-point version. I hope that if I skim across the detail, the House will forgive me but understand that the detail exists.
The genesis of the new clause was in an amendment that an hon. Friend tabled some years ago. My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) reprised it last year, and I have addressed it on a number of occasions. It is, namely, the fuel premium that is paid in remote rural areas. The premium has varied over the yearswhen I first looked, it was 6p or 7p, and it is now 13p or 14p. It is specific to remote rural areas, for which I have a definition; and although it is perhaps a small issue in the wider context of the debate about the impact of high fuel prices on the economy generally, for my constituents in rural areas it really is salt in the wound. I want to speak briefly about the principle and details of what I seek to achieve.
Mr. Roger Williams (Brecon and Radnorshire) (LD):
I am sure that my hon. Friend will make this point, but the issue is not only the increase in fuel prices in rural
areas, but the lack of a public transport alternative. That means that people have to have their own cars and feel the full effect of the higher prices.
The purpose of the new clause is to find a workable scheme for reducing but not eliminating the premium, to give some relief to people in remote rural areas, where, as my hon. Friend has just said, there is no alternative. In my constituency, there is a petrol station in Durness and in Tongue, which are about 50 milesor an hourapart. The average price of diesel on the north and west coasts is about 145p per litre; that is the scale of the problem.
In my intervention on the hon. Member for Putney (Justine Greening), I alluded to the principle behind why something should be done. If one is seeking to change peoples behaviour through taxation, people have to be able to make that changein this case, people still have to be able to go places. In the remote areas that I am talking about, there is no capacity to make that change and there will not be. As my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) pointed out, in many such areas the car is by far the most environmentally friendly optionfar better than buses carrying nothing but fresh air.
The second point is that, broadly speaking, taxation should be equitable. It is clearly inequitable that in an area where there is no choice the tax should be higher, by virtue of the VAT element, than it is in other areas of the country. It is perverse that fuel costs are lower in many areas with public transport than in many areas where there is none.
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): I support what my hon. Friend is saying and his new clause. Does he accept that the issue is not only fairness in taxation, but the impact that the disparity has on the people whom it affects? In his constituency and mine, in the highlands, peoples incomes are much lower than in the rest of the country. However, we ask those people to spend an awful lot more on their fuel and pay more tax on it, and fuel represents a greater share of their disposable income in the first place. The hardship caused is more real in such communities than almost anywhere else in the country.
Interestingly, the 30 per cent. rise in fuel costs across the country has resulted in a measurable percentage drop in car use. The theory of the impact of higher price has been tested. However, the interesting thing is that those drops are not reflected in remote rural areas because there people have no choice.
I have discussed the principle. As for the detail, I should say that I am grateful to Treasury Ministers. Until a year ago, whenever I raised this issueas a subject for a debate or even as an amendmentI was totally stonewalled. However, the Chancellor expressed his sympathy in the Treasury Committee and, in answer to my hon. Friend the Member for Argyll and Bute (Mr. Reid), the Financial Secretary, on behalf of the
Exchequer Secretary, expressed sympathy and a desire to look at the evidence. As a result, I wrote a paper, which I have circulated and sent to the Chancellor; I hope that the relevant spokesmen for all the parties have received it, because I arranged for it to be sent to them.
The paper points out that first there needs to be a workable definition of remote rural. My scheme is based on Scotland because I was able to get all the data on Scotland that I needed. I believe that similar data are available for England and Wales, but I do not have them. Scottish national statistics include what is called the eightfold urban-rural classification, which is shown on a very helpful map with very helpful definitions. For the example set out in my paper, I have chosen band 1, which covers about 2 and a bit per cent. of the population, and between a third and one half of the Scottish land mass. Other classifications could be used, depending on how exactly one wanted to target the scheme.
Stewart Hosie: In previous, similar debates, we have had a bit of fun on the issue of definitions, not least with the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), but the eightfold model is very good because it includes a total of only 150,000 people in the most remote parts. The definition was a problem in the past, but the definition that we are considering is very good. That is why we will support new clause 14 tonight.
John Thurso: I am grateful to the hon. Gentleman for making that point, and for clearly having read the paper that I sent him. The area is definable, but one needs a simple method by which the tax rebate can be passed through the system. I have discarded the concept of designating individualsthe proposal that was put forward last yearand the concept of designating vehicles. I instead suggest that we simply designate the retail filling station. That could be done very simply, because all the retail filling stations that one would want to designate clearly fall into the area in question. I am not concerned about the fact that a passing millionaire might benefit; if they happen to be passing through that part of the world, good luck to them. I do not think that we need make any difference according to who is in the area, whether tourist, visiting businessman or resident. The scheme works well, regardless.
If we agree that retail petrol stations should be designated, all that is required is a robust system of ensuring that the rebate is passed to the consumer, and is accounted for in a way that means that there is no fraud. My paper basically uses the VAT system of Her Majestys Revenue and Customs, and the supply chain. I shall not go into further detail, but ask the House to take it from me that the system provides for a robust audit, and will ensure that the rebate arrives at the pump, and does not have to be paid for out of the pocket of the motorist, who is to benefit from it.
The major criticism that the Treasury has always made of the scheme, and the criticism that the Chancellor of the Exchequer raised in the Treasury Committee recently, was on the issue of cross-border exploitation. In other words, the fear is that somebody might cross a border to get cheaper fuel. That simply does not apply, because the premium is not being got rid of; it is simply being reduced. That provides no incentive for anybody to cross a border who was not already intending to cross
it. It does give those who are thinking of crossing a border an incentive to recalculate and, as a result, not cross it.
In subsection (5)(g) of new clause 14, it is suggested that once the Treasury had agreed to the scheme, it might care to devolve it, and permit the Welsh Assembly and Scottish Parliament to operate it. There is clearly a difference of view on the importance of the scheme in different areas. I would encourage a UK-wide scheme, but if the Treasury would like to give us the ability to run the scheme in Scotland, I would certainly encourage that, too.
Mr. Russell Brown: If there is any disappointment on my part, it is that I have not managed to see the hon. Gentlemans paper. Despite what other Members may think, I have some extremely remote rural areas in my constituency. There are locations in the highlands and islands where people visiting hospital in the central belt are given special payments, but people in my constituency in the extreme south-west of Scotland travel even longer distances and do not qualify for that kind of payment. That is why remote rural areas need to be tightly defined. I suspect that parts of my locality may not be included in his document, but I would be delighted if they were.
John Thurso: I am delighted to tell the hon. Gentleman that according to the colourful map that I possess, parts of his constituency are included, while small parts of mine, and indeed of his, are not. The detail was published by the Scottish Executive; they are robust figures, and I ask him to take my word for that.
The Government propose to make changes to vehicle excise duty as from the Finance Act 2009, a year hence. It is right that they consult on that proposal, and that is happening. My views on the way forward are fairly well known. I think that the Government need to reconsider the VED proposalsI am fairly confident that they willin the context of the overall tax system and the part that green taxes play in that matrix. That point was well made by my hon. Friend the Member for Birmingham, Northfield (Richard Burden).
We need to consider what green taxes are. There has been a rather glib assumption that we are all talking about the same thing, and I am not sure that that is the case. Green taxes have a role to play in changing behaviour. The VED proposals that are on the table and out for consultation will have an effect on changing behaviour,
but I am not sure that it is an effect that I would always wish to see. The proposals will, if implemented, lead to lower second-hand values for vehicles. That might mean, paradoxically, that an owner of such a vehicle, which might by next year be up to eight years old, may keep the vehicle instead of trading it in because they cannot afford to change it. The proposals might change behaviour as regards the earlier scrapping of vehicles that entered the fleet between March 2001 and the Finance Act changes in 2009. In the medium term a car might be scrapped when it is, say, 12 years old, because the VED changes would make it less economical to run than if they had not been introduced.
There may also be a change in behaviour that is exemplified by my mate, Steve Smith, who runs a 1990 Ford Granada. Some hon. Members will remember thosethey are a right boat of a car. Steve is saying to me, If these vehicle excise duty changes go through, because I have got a pre-2001 car I think I might just keep it a bit longer even though I know its causing pollution. Another effect that the proposals would have in changing behaviour is that they would devalue the currency of and support for green taxes, which would be rather undesirable.
An aspect of green taxes that has not been mentioned is the polluter pays principle, which we already have indirectly through the emissions trading scheme. If an industrial plant pollutes a lot, it has to pay more for its carbon dioxide allowances through the European emissions trading scheme, and those prices will be ratcheted up in the future. That is a green tax, made on the polluter pays principle. Those who have been driving vehicles that pollute more, such as private motor cars or company cars, havesometimes in all innocencepolluted our atmosphere, contributed to climate change and contributed to greater Government expenditure on addressing the effects of climate change.
For example, quite laudably, the Government have doubled spending on flood defencesboth inland and coastal sea defences. One of the reasons that such increased expenditure is needed is that the climate has changed because it has been polluted, and it has, in part, been polluted by those who have, for the past seven years or moreand I suspect almost every Member is guilty in this regardbeen driving polluting vehicles. The Government have to spend more money. We are going to have to spend more money on things such as reservoirs, and we have started to. The Government are spending more money on medical research because we are getting diseases such as malaria because of the changed climate. The Government are spending more money on biodiversity research, and on trying to prop it upit is under considerable stress and pressure because of the pollution that has led to climate change.
It is not only a question of changing future behaviour with green taxesdesirable though that isbut a question of the polluter pays principle and the price that we have to pay as a society, often refracted through the medium of taxation, for tackling the effects of climate change. Research on plant biology and the sort of crops that we grow in this country has to be carried out. We need research on the re-engineering of our railways and roads. That is already under way and it will become a lot more necessary as the climate continues to change.
Climate change causes changes in temperature, which means that such re-engineering is necessary, and it is driven, in part, by the pollution caused by people driving around in these cars.
I am not at all convinced by the Conservative position on new clause 3. There are problems with its technicalitiesits need for a statutory instrumentto which my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher) so ably adverted. I do not like the technicalities. Moreover, the suggestion that the current proposals, which I hope the Government will reconsider, are in some way a stealth tax is one of the stupidest criticisms I have ever heard, given that vehicle excise duty is one of the few taxes where people get a bit of paper through their letterbox in advance, which says, This is what the tax will be if you undertake this behaviour. It cannot be a stealth tax. I do not like the idea of stealth taxes anyway, but that really is a silly criticism of vehicle excise duty, of all things.
Although I find the hand-wringing of the Conservatives and their new-found concern for the poor heartening on one level, I hope that the hon. Member for Putney (Justine Greening) will forgive me when I say that I am rather suspicious about it. It seems rather opportunistic in this context. An early-day motion was introduced by my hon. Friend the Member for Blyth Valley (Mr. Campbell). I understandand I stand to be corrected on the figuresthat there are 69 signatories, 12 of whom are Conservatives. That is an example of why I am somewhat suspicious of their new-found concern for the poor.
Rob Marris: I am quite confident that the Government will have a majority because the wording of new clause 3 does not address the issue at all, and because there is plenty of time for the Chancellor to reconsider.
Anne Main: May I draw the hon. Gentlemans attention to the fact that some Membersfrom all partiesdo not sign early-day motions on principle, preferring instead to put the effort into legislation. An early-day motion, as the hon. Gentleman is well aware, is merely a statement, and some hon. Members prefer to campaign and make arguments in the House, rather than sign a piece of paper that does not have much thought behind it. I am not decrying early-day motions, but please do not say that because someone has not signed one, they do not care. That is hardly a fair statement and the hon. Gentleman knows it.
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