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The combination would completely undermine the clarity of the carbon dioxide signal that the Government successfully introduced and that was supported by both Opposition parties, as well as creating a severe and costly administrative headache for the DVLA. In addition,
none of the changes would affect the VED reforms announced in the 2008 Budget, which are due to be legislated for and to take effect in next year’s Finance Bill.
These amendments serve one useful purpose, however: they highlight the inconsistencies in the arguments that have been advanced against the application of Budget 2008 changes to existing cars. Following the Committee of the whole House, the House voted on clause 15, which introduced new rates of VED for 2008-09, and these rates are currently in effect. They include an inflation-based uprating of most VED bands, and an increase of £100 on the most-polluting cars, and these changes apply to cars that were registered prior to the Budget this year. This is in line with standard Government practice: for example, when the Government introduced a new VED band for cars emitting less than 120 g/km in 2002, and a new band for cars emitting less than 100 g/km in 2003, these were applied to existing cars, giving them significant tax cuts, even though the owners had already acquired those cars.
Of course, on every occasion that the Conservative party increased VED between 1979 and 1997, it applied it to all existing cars. If the logic of the so-called “retrospection” had been applied to VED rates since 1979, we would currently have a system whereby those who purchased cars in 1980 would pay £60, those who purchased them in 1981 would still pay £70, and so on ad infinitum. Thus, vehicles that emitted more carbon dioxide but that were older would have lower VED rates. Where is the environmental signal in that?
It is entirely usual that the VED reforms announced at Budget 2008 will also apply to post-2001 cars that have already been registered. This is in no way retrospective. It is simply the way in which VED has always worked. As the debate on these new clauses and amendments has clearly shown, if it were decided to apply new VED rates only to cars registered after a certain date, it would not only be difficult to determine what that date should be, but it would be administratively complex, and, most importantly, would seriously undermine the environmental signal that is provided through the VED system, creating confusion, in particular in the second-hand car market.
New clauses 8 and 9 relate to fuel duty. If agreed to, they would introduce a mechanism that could lead to fuel duty reductions when international oil prices exceeded their forecast prices. This mechanism would, however, be very complex, involving very expensive changes to the road fuel duty and VAT systems with no guarantee of actually reducing prices at the pumps. These new clauses rely on the idea that higher fuel prices lead to higher overall receipts for the Treasury. This is simply not the case. As fuel duty is a fixed rate, increases in fuel prices will not lead to increases in revenue. Thus while petrol prices at the pump have risen 20 per cent. since the last fuel duty increase, fuel duty itself has not gone up. As it is expected that demand for fuel will fall as a result of higher prices, the Government’s revenues from fuel duty are, in fact, likely to fall as a result of the current conditions in the international oil market.
Stewart Hosie:
Although it is right that the duty is constant, I am sure the hon. Lady will concede that the VAT receipts increase as the price rises. Notwithstanding whether or not there is a VAT windfall—I explained, rather well I think, why I believe there is—there is most certainly an offshore windfall, as confirmed by the
Chancellor in a letter to my right hon. Friend the Member for Banff and Buchan (Mr. Salmond). That could be used to offset some of the increase in the price at the pump.
Angela Eagle: There may well not be a VAT windfall, because when people spend more money on one good or service, they tend to spend less on others. They have only a certain amount of disposable income.
On the hon. Gentleman’s point about offshore oil, we do not yet have the out-turn for this year’s oil receipts—the Treasury will not receive them until July—and he needs to remember that oil company profits can be offset against investment decisions in the North sea. We will not have proper knowledge of North sea oil receipts until the pre-Budget report.
Overall, the wider VAT effects mean that there may be no windfall, and that is the difficulty with the proposed amendments. I understand and sympathise with the worries that are driving Scottish Members on both sides of the House to suggest mechanisms that would provide relief. I have met some of them to discuss those ideas and we will examine them. However, those Members must understand and acknowledge the difficulties with their ideas. There are no easy solutions to the pressure that families everywhere are feeling because of the huge rises in the price of oil and the knock-on effects on family budgets and business profits.
The difficulty with the new clauses and amendments is that they seek to redistribute a tax windfall that does not exist. New clause 9 also suggests that reductions in fuel duty as a result of the proposed fuel duty regulator should be paid directly to road hauliers. I have great sympathy for road hauliers, especially the smaller companies that find it much harder to pass on their increased costs. I have spoken to many hauliers and their representatives, and I am not unsympathetic, but why should the provision apply to hauliers and not to other equally deserving essential road users? Who would be in the scheme and how would we decide? The Government recognise the road haulage industry’s concerns, and those of other businesses, over the current cost of fuel, and we continue to examine the position.
Requests for reduced duty rates for road haulage operators are often associated with the relative competitiveness of the industry compared with foreign operators. Studies have shown that European duty differentials are in many cases offset by other costs such as lower labour rates and other employer costs. Furthermore, a scheme would require the introduction of an administrative mechanism, with potentially high costs. Also any system would create significant compliance and fraud risks.
The Government have continued to support the industry through other policy measures such as the halving of, and subsequent freezes to, HGV vehicle excise duty rates, and the reduced pollution certificate scheme. Also the Government recently announced £24 million of funding for enforcement, in particular aimed at those conducting international trips. That will mean a 50 per cent. increase in the number of HGV checks carried out, including two new enforcement sites at key points on the road network.
I listened to the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) outlining his ingenious scheme, and he helpfully sent an explanation to the
Chancellor. We continue to look at the detail of his proposals, but I hope that he will acknowledge that it would cause practical difficulties that are not easily solved. However, I am not unsympathetic to his case, and I commend him on his ingenuity.
Amendment No. 9 deals with VED for off-road vehicles and also relates to rural areas. It proposes that existing alternative fuel discounts should be extended to cover off-road working vehicles. Those used in agriculture are already exempt from VED and authorised to use red diesel. The VED exemption permits vehicles to travel on public roads for a distance of 1.5 km in order to travel between different land areas. To have any effect, therefore, this amendment would require the Treasury to make, and the DVLA to enforce, a new definition of off-road working vehicle that encompassed a broader range of vehicles. However, it is unclear how that could be achieved, and the new clause does not help with the definition. It is difficult to imagine how that could be done without providing an incentive to fraud, and therefore the need for a costly enforcement regime. However, I am happy to keep talking about those ideas.
Finally, let me turn briefly to Government amendments Nos. 22 and 23, which make minor amendments to clause 75. The clause extends for a further five years the 100 per cent. capital allowances scheme for businesses that invest in the cleanest cars. The clause updates the carbon dioxide emissions threshold to maintain the focus on the cleanest cars and rewards people appropriately. The Government amendments are required because two small consequential changes were initially overlooked. They are needed to effect the transitional provisions and to exempt businesses that buy or lease the cleanest cars. I therefore commend the Government amendments and urge the House to reject the Opposition new clauses and amendments.
6.30 pm
Justine Greening: We have had an interesting debate. The hon. Member for Stoke-on-Trent, Central (Mark Fisher) talked about his hope and trust that his Government would remedy this unfair retrospective road tax in the the pre-Budget report, but we have had no indication from the Minister that that will happen. I do not share his confidence and I am sure that the public will not share it when they listen to the debate tonight and read about it in the papers tomorrow. The public will find it extremely difficult to understand how Labour MPs, who were so rightly concerned about the 10p tax rate fiasco, can dither tonight when it comes to tackling the vehicle excise duty that will hit twice as many people for up to twice as much money. The tax will hit older cars and lower income families, is deeply unfair and will not have any substantial impact on CO2 emissions. We should use new clause 3 to vote against that tax right now.
Question put, That the clause be read a Second time:—
The House divided: Ayes 240, Noes 303.
AYES
Afriyie, Adam
Ainsworth, Mr. Peter
Alexander, Danny
Amess, Mr. David
Arbuthnot, rh Mr. James
Atkinson, Mr. Peter
Bacon, Mr. Richard
Baker, Norman
Baldry, Tony
Barker, Gregory
Baron, Mr. John
Barrett, John
Beith, rh Sir Alan
Bellingham, Mr. Henry
Bercow, John
Beresford, Sir Paul
Binley, Mr. Brian
Bone, Mr. Peter
Boswell, Mr. Tim
Brady, Mr. Graham
Brake, Tom
Brazier, Mr. Julian
Breed, Mr. Colin
Brokenshire, James
Brooke, Annette
Browne, Mr. Jeremy
Browning, Angela
Bruce, rh Malcolm
Burrowes, Mr. David
Burstow, Mr. Paul
Burt, Alistair
Burt, Lorely
Butterfill, Sir John
Cable, Dr. Vincent
Campbell, rh Sir Menzies
Carmichael, Mr. Alistair
Carswell, Mr. Douglas
Chope, Mr. Christopher
Clappison, Mr. James
Clark, Greg
Clarke, rh Mr. Kenneth
Clegg, rh Mr. Nick
Clifton-Brown, Mr. Geoffrey
Cormack, Sir Patrick
Cox, Mr. Geoffrey
Crabb, Mr. Stephen
Curry, rh Mr. David
Davey, Mr. Edward
Davies, Mr. Dai
Davies, David T.C. (Monmouth)
Davies, Philip
Djanogly, Mr. Jonathan
Dorrell, rh Mr. Stephen
Dorries, Mrs. Nadine
Duddridge, James
Duncan, Alan
Duncan Smith, rh Mr. Iain
Dunne, Mr. Philip
Ellwood, Mr. Tobias
Evans, Mr. Nigel
Evennett, Mr. David
Fabricant, Michael
Fallon, Mr. Michael
Farron, Tim
Featherstone, Lynne
Field, Mr. Mark
Foster, Mr. Don
Fox, Dr. Liam
Francois, Mr. Mark
Fraser, Christopher
Garnier, Mr. Edward
Gauke, Mr. David
George, Andrew
Gibb, Mr. Nick
Gidley, Sandra
Gillan, Mrs. Cheryl
Goldsworthy, Julia
Goodman, Mr. Paul
Goodwill, Mr. Robert
Gove, Michael
Gray, Mr. James
Grayling, Chris
Green, Damian
Greening, Justine
Greenway, Mr. John
Gummer, rh Mr. John
Hague, rh Mr. William
Hammond, Mr. Philip
Hammond, Stephen
Hancock, Mr. Mike
Hands, Mr. Greg
Harper, Mr. Mark
Harris, Dr. Evan
Harvey, Nick
Hayes, Mr. John
Heald, Mr. Oliver
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Herbert, Nick
Hoban, Mr. Mark
Hoey, Kate
Hogg, rh Mr. Douglas
Holloway, Mr. Adam
Holmes, Paul
Hopkins, Kelvin
Horam, Mr. John
Horwood, Martin
Hosie, Stewart
Howard, rh Mr. Michael
Howarth, David
Howell, John
Hughes, Simon
Huhne, Chris
Hunter, Mark
Hurd, Mr. Nick
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Jones, Mr. David
Kawczynski, Daniel
Keetch, Mr. Paul
Key, Robert
Kilfoyle, Mr. Peter
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Kramer, Susan
Laing, Mrs. Eleanor
Lait, Mrs. Jacqui
Lamb, Norman
Lancaster, Mr. Mark
Lansley, Mr. Andrew
Laws, Mr. David
Leech, Mr. John
Leigh, Mr. Edward
Letwin, rh Mr. Oliver
Liddell-Grainger, Mr. Ian
Lidington, Mr. David
Lilley, rh Mr. Peter
Llwyd, Mr. Elfyn
Loughton, Tim
Luff, Peter
Mackay, rh Mr. Andrew
Maclean, rh David
MacNeil, Mr. Angus
Main, Anne
Malins, Mr. Humfrey
Maples, Mr. John
Maude, rh Mr. Francis
May, rh Mrs. Theresa
McCrea, Dr. William
McDonnell, John
McIntosh, Miss Anne
McLoughlin, rh Mr. Patrick
Mercer, Patrick
Miller, Mrs. Maria
Mitchell, Mr. Andrew
Moss, Mr. Malcolm
Mulholland, Greg
Mundell, David
Murrison, Dr. Andrew
Newmark, Mr. Brooks
O'Brien, Mr. Stephen
Oaten, Mr. Mark
Öpik, Lembit
Osborne, Mr. George
Ottaway, Richard
Owen, Albert
Paice, Mr. James
Penning, Mike
Penrose, John
Price, Adam
Prisk, Mr. Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Rennie, Willie
Rifkind, rh Sir Malcolm
Riordan, Mrs. Linda
Robathan, Mr. Andrew
Robertson, Angus
Robertson, Hugh
Robertson, Mr. Laurence
Rosindell, Andrew
Ruffley, Mr. David
Russell, Bob
Salmond, rh Mr. Alex
Sanders, Mr. Adrian
Scott, Mr. Lee
Selous, Andrew
Shapps, Grant
Shepherd, Mr. Richard
Simmonds, Mark
Simpson, Mr. Keith
Smith, Sir Robert
Soames, Mr. Nicholas
Spelman, Mrs. Caroline
Spicer, Sir Michael
Spink, Bob
Spring, Mr. Richard
Stanley, rh Sir John
Steen, Mr. Anthony
Streeter, Mr. Gary
Stunell, Andrew
Swayne, Mr. Desmond
Swinson, Jo
Swire, Mr. Hugo
Syms, Mr. Robert
Tapsell, Sir Peter
Taylor, Mr. Ian
Taylor, Matthew
Teather, Sarah
Thurso, John
Timpson, Mr. Edward
Tredinnick, David
Tyrie, Mr. Andrew
Vara, Mr. Shailesh
Viggers, Sir Peter
Wallace, Mr. Ben
Watkinson, Angela
Webb, Steve
Weir, Mr. Mike
Whittingdale, Mr. John
Widdecombe, rh Miss Ann
Wiggin, Bill
Willetts, Mr. David
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Williams, Stephen
Willis, Mr. Phil
Willott, Jenny
Wilshire, Mr. David
Wilson, Mr. Rob
Wilson, Sammy
Winterton, Ann
Wishart, Pete
Wright, Jeremy
Young, rh Sir George
Younger-Ross, Richard
Tellers for the Ayes:
Mr. Richard Benyon and
Mr. Crispin Blunt
NOES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Allen, Mr. Graham
Anderson, Mr. David
Anderson, Janet
Armstrong, rh Hilary
Austin, Mr. Ian
Bailey, Mr. Adrian
Baird, Vera
Balls, rh Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Beckett, rh Margaret
Begg, Miss Anne
Bell, Sir Stuart
Benn, rh Hilary
Benton, Mr. Joe
Berry, Roger
Betts, Mr. Clive
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blears, rh Hazel
Blizzard, Mr. Bob
Blunkett, rh Mr. David
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brown, rh Mr. Gordon
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Burnham, rh Andy
Butler, Ms Dawn
Byers, rh Mr. Stephen
Byrne, Mr. Liam
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Challen, Colin
Chapman, Ben
Chaytor, Mr. David
Clapham, Mr. Michael
Clark, Paul
Clarke, rh Mr. Charles
Clarke, rh Mr. Tom
Clelland, Mr. David
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Cousins, Jim
Crausby, Mr. David
Creagh, Mary
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Curtis-Thomas, Mrs. Claire
Darling, rh Mr. Alistair
David, Mr. Wayne
Davidson, Mr. Ian
Davies, Mr. Quentin
Denham, rh Mr. John
Dhanda, Mr. Parmjit
Dobson, rh Frank
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Eagle, Angela
Eagle, Maria
Efford, Clive
Ellman, Mrs. Louise
Ennis, Jeff
Etherington, Bill
Farrelly, Paul
Field, rh Mr. Frank
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, rh Caroline
Flynn, Paul
Follett, Barbara
Foster, Mr. Michael (Worcester)
Gapes, Mike
Gardiner, Barry
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Godsiff, Mr. Roger
Goggins, Paul
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hain, rh Mr. Peter
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Hamilton, Mr. Fabian
Hanson, rh Mr. David
Harman, rh Ms Harriet
Harris, Mr. Tom
Havard, Mr. Dai
Healey, John
Henderson, Mr. Doug
Hepburn, Mr. Stephen
Heppell, Mr. John
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, rh Keith
Hillier, Meg
Hodge, rh Margaret
Hodgson, Mrs. Sharon
Hoon, rh Mr. Geoffrey
Hope, Phil
Howarth, rh Mr. George
Howells, Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Alan
Keen, Ann
Kelly, rh Ruth
Kemp, Mr. Fraser
Kennedy, rh Jane
Kidney, Mr. David
Knight, Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, Mr. David
Laxton, Mr. Bob
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Lucas, Ian
MacShane, rh Mr. Denis
Mactaggart, Fiona
Mahmood, Mr. Khalid
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Marshall-Andrews, Mr. Robert
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McFadden, Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGuire, Mrs. Anne
McIsaac, Shona
McKenna, Rosemary
McNulty, rh Mr. Tony
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh David
Miliband, rh Edward
Moffat, Anne
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Moran, Margaret
Morden, Jessica
Morgan, Julie
Morley, rh Mr. Elliot
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
O'Brien, Mr. Mike
O'Hara, Mr. Edward
Olner, Mr. Bill
Osborne, Sandra
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Prescott, rh Mr. John
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, rh James
Rammell, Bill
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Reid, rh John
Robertson, John
Robinson, Mr. Geoffrey
Rooney, Mr. Terry
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, rh Joan
Sharma, Mr. Virendra
Shaw, Jonathan
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Simpson, Alan
Singh, Mr. Marsha
Skinner, Mr. Dennis
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Angela E. (Basildon)
Smith, rh Jacqui
Smith, John
Snelgrove, Anne
Soulsby, Sir Peter
Southworth, Helen
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Straw, rh Mr. Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Thomas, Mr. Gareth
Thornberry, Emily
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Ussher, Kitty
Vaz, rh Keith
Vis, Dr. Rudi
Walley, Joan
Waltho, Lynda
Ward, Claire
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, Mr. Michael
Wilson, Phil
Winnick, Mr. David
Winterton, rh Ms Rosie
Woodward, rh Mr. Shaun
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Noes:
Alison Seabeck and
Mr. Sadiq Khan
Question accordingly negatived.
‘(1) HODA 1979 is amended as follows.
(2) In section 6 (excise duty on hydrocarbon oil) after subsection (1A) (as substituted by section 11 of this Act) insert—
“(1AA) In every Budget Statement and pre-Budget Statement the Chancellor of the Exchequer must provide a forecast for oil prices and set out anticipated yield from fuel duty and VAT on fuel for that price and for a range of prices up to 50 per cent. above his forecast.
(1AB) The Treasury must, following each such statement, by regulations made by statutory instrument reduce the rates of duty specified in subsection (1A) in direct proportion to the increase in the costs accounted for by VAT.
(1AC) Whenever international oil prices rise above the level estimated by the forecast made in accordance with subsection (1AA), indexed fuel duty increases shall not take effect until the international oil prices return to the forecast level or the forecast price is amended by the next Budget or pre-Budget Statement.”’.— [Stewart Hosie.]
Brought up, and read the First time.
Motion made, and Question put, That the clause be read a Second time:—
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