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House of Commons

Thursday 10 July 2008

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Private Business

London Local Authorities (Shopping Bags) Bill (By Order)

Order for Second Reading read.

To be read a Second time on Thursday 17 July.

Manchester City Council Bill [Lords] (By Order)

Order read for resumed adjourned debate on Second Reading (12 June).

Debate to be resumed on Thursday 17 July.

Bournemouth Borough Council Bill [Lords] (By Order)

Canterbury City Council Bill (By Order)

Leeds City Council Bill (By Order)

Nottingham City Council Bill (By Order)

Reading Borough Council Bill (By Order)

Orders for Second Reading read.

To be read a Second time on Thursday 17 July.

Oral Answers to Questions


The Chancellor of the Exchequer was asked—

Aviation Duty

1. Sir Nicholas Winterton (Macclesfield) (Con): If he will make a statement on his plans to introduce aviation duty. [217451]

The Exchequer Secretary to the Treasury (Angela Eagle): The Chancellor announced in the pre-Budget report 2007 that air passenger duty would be replaced by a per-plane duty in November 2009. A formal consultation that considered all aspects of the duty’s operation closed on 24 April. More than 160 responses were received, and Treasury officials are considering and analysing those in the policy design process. No decisions have yet been made about the duty’s design, and the Chancellor plans to make a further announcement about the policy in the autumn.

Sir Nicholas Winterton: Why would the Minister want to make United Kingdom airports less competitive and drive long-haul operators to European airports, thus depriving this country of business and inconveniencing
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travellers? We will drive long-haul flights to European airports. Is that what the Minister and the Government want?

Angela Eagle: Of course it is not the aim of the tax, but at the same time, aviation needs to make a fair contribution to the public finances and better reflect its environmental impact. I note that the hon. Member for Tatton (Mr. Osborne), the shadow Chancellor, is also an enthusiastic supporter of a per-plane aviation duty.

Mr. Julian Brazier (Canterbury) (Con): Yes, but while we need to move to a per-plane tax, does the Minister not understand that the Government’s proposal to increase hugely the long haul to short haul ratio of 4:1, will discourage long haul point-to-point flights, which reduce the carbon footprint, and will encourage people instead to take connecting flights to European airports, thus hitting our aviation industry and increasing the global carbon impact?

Angela Eagle: We have received a range of representations, some of which the hon. Gentleman echoes. We are examining those and modelling the potential impacts on transit, long haul and freight, but no decisions about precisely how to arrange the tax have yet been made.

Rob Marris (Wolverhampton, South-West) (Lab): Will my hon. Friend assure me that some of the moneys raised from aviation duty will be earmarked for another high-speed rail link in the United Kingdom, preferably up the west coast main line through one of the centres of Britain—Wolverhampton?

Angela Eagle: I hope that my hon. Friend will acknowledge the huge increase in investment in our railways since the Government have been in office.

Mr. Graham Brady (Altrincham and Sale, West) (Con): Given the widespread concern about the aviation duty proposal, will the Minister confirm that the retention of the current system of air passenger duty remains one option?

Angela Eagle: Perhaps the hon. Gentleman would like to talk to those on his Front Bench about their support for a per-plane duty.

Fuel Duty

2. Andrew Selous (South-West Bedfordshire) (Con): What plans he has to increase fuel duty in April 2010; and if he will make a statement. [217453]

The Exchequer Secretary to the Treasury (Angela Eagle): The Government understand the difficulties facing businesses and families as a result of record oil prices, which is why the Chancellor deferred the forecast 2p per litre fuel duty increase that was planned for April this year. Future duty increases will also be considered in the light of future economic conditions.

Andrew Selous: The Chancellor may understand motorists’ difficulties, but he is still about to clobber 9 million motorists with extra road duty and the Government are still taxing our fuel more expensively
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than anywhere else in Europe. With that in mind, what relief can the Government offer motorists who have no alternative but to use their cars?

Angela Eagle: The hon. Gentleman should also reflect on the fact that as oil duties rise, there will be more fuel efficient cars, which are cheaper to run as one gets more miles to the gallon. Given where oil prices are at the moment, they will concentrate motorists’ minds.

Mr. David Chaytor (Bury, North) (Lab): As the Government consider the pre-Budget statement and next year’s Budget, does my hon. Friend think that it would be better to use the tax system to reduce or to increase demand for oil?

Angela Eagle: As a country, we certainly have to reduce our reliance on fossil fuels, and on oil in particular, in the medium to long term. It is therefore important—and this was discussed at the G8—that advanced economies such as ours wean themselves off their reliance on finite energy sources. The car duties have a role to play in that; as Professor Julia King said in her report, we need to be able to shift to cleaner engines and engines that reduce our carbon footprint.

Mr. David Heath (Somerton and Frome) (LD): At the moment, there is a considerable mismatch between the actual cost per mile of running a car and the cost per mile as assessed by Her Majesty’s Revenue and Customs for tax purposes. That is bad enough for everybody, but it particularly impacts on volunteer car drivers such as those for the hospital car service. They cannot claim the real cost of providing their service and are therefore no longer able to provide it. Is it possible to give any guidance on that matter to HMRC?

Angela Eagle: We understand the extra pressures that high oil prices are placing on many families in the UK at the moment. It is important to understand that volunteer drivers can claim their costs back, but they have to keep records of the mileage that they have donated for voluntary purposes. If they do that, they will not owe any tax on it. The approved mileage allowance payment—AMAP—scheme is a simplification. If such drivers wish to claim the actual costs of the miles that they drive, they can do that.

Mr. Philip Hammond (Runnymede and Weybridge) (Con): While the Labour party offers nothing more than government by nods and winks about what may or may not happen to fuel duty in the autumn, the Conservatives have proposed a fair fuel duty regulator that will cut duty when pump prices are soaring and that will be funded by the windfall to the Treasury from higher oil prices. The Government’s response has been to claim that there is no windfall to the Treasury. Will the hon. Lady now acknowledge that the National Institute of Economic and Social Research—the only independent body to have done any proper research on the issue—has concluded that, after taking into account all economic effects, there is a net benefit to the Treasury of £1.4 billion for every $10 increase in the price of oil? Why will the Government not agree to that plan to share the windfall, helping consumers and stabilising the public finances at the same time?

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Angela Eagle: The plan would destabilise the public finances because it seeks to distribute an oil windfall that does not exist. The leader of the hon. Gentleman’s party said, “To be fair to the Government, when the price of oil goes up, corporation tax profits tend to go down, so corporation tax goes down and they suffer in other ways.” There is no oil windfall tax for the hon. Gentleman to distribute. Actually, his so-called fuel stabiliser is merely a gamble with £3 billion of public expenditure. The Conservatives need to tell us what they would cut to deliver a cut in fuel duty that may not even make it through to prices at the pumps.

Climate Change

3. Anne Snelgrove (South Swindon) (Lab): What recent representations he has received about the effect on the economy of climate change. [217454]

The Chief Secretary to the Treasury (Yvette Cooper): Climate change will have a serious impact on the economy as well as on the planet. The Stern review found that the cost of inaction could be the equivalent of 20 per cent. of GDP. That is why we are working internationally and nationally to cut carbon emissions and why we welcome the steps forward made at the G8 summit.

Anne Snelgrove: I thank my right hon. Friend for her answer. She will be aware of my private Member’s Bill, which is designed to cut carbon emissions from Government buildings, and I thank my hon. Friend the Exchequer Secretary for her help with that Bill. What more does my right hon. Friend think can be done to improve the energy efficiency of the Government estate and what action can she take to achieve that?

Yvette Cooper: My hon. Friend is right to say that we need to improve the energy efficiency not only of the Government estate but of buildings right across the country. Overall energy efficiency on the Government estate has gone up by about 20 per cent. in recent years, but we need to go a lot further. I welcome the fact that my hon. Friend’s Bill raises these issues, which she feels very strongly about. We want to keep talking to her about this, and my hon. Friend the Exchequer Secretary will write to her with further information. I think, too, that we should be considering how we build zero carbon offices and schools and how we can substantially cut carbon emissions from our public buildings in the longer term.

Mr. Philip Hollobone (Kettering) (Con): To what extent does the Treasury welcome the recent hike in oil prices as an incentive to encourage more environmentally friendly vehicles?

Yvette Cooper: We have been very clear that the increase in oil prices is causing substantial problems for economies right across the world. It is causing difficulties for the UK economy as well as creating challenges for the global economy. That is why it is important for us to take action, working with the Saudis and people across the world, to try to address that increase and to bring those prices down in the short term. It is also why, in the longer term, we need to take more action to reduce world dependency on oil and fossil fuels in order to save the planet and to support the economy.

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Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): Does my right hon. Friend agree that climate change is both a challenge and an opportunity? Will she take further steps with her colleagues to get more eco-innovation in our universities and in the private sector? Some strong steps are being taken to make us a leading expert in this area, and a bit more encouragement from the Treasury would help.

Yvette Cooper: My hon. Friend is right to say that we need to recognise the opportunity to develop leading-edge environmental technologies. That is why we are thinking particularly about carbon capture, which could have an impact right across the world, and about making the most of the UK science base in that respect. We have some great expertise and innovation in this country, and we need to ensure that that is supporting new environmental technologies.

Barry Gardiner (Brent, North) (Lab): My right hon. Friend is aware that 20 per cent. of global emissions come from deforestation. Will she therefore ensure that her Department resists the blandishments of the Office of Government Commerce, which would undermine the Government’s new policy on timber procurement, to ensure that all timber used on the Government estate is sustainable and legally harvested?

Yvette Cooper: As my hon. Friend will know, my hon. Friend the Exchequer Secretary has been engaged in some detail in how we can improve sustainable procurement, and a new document was published yesterday to support that. We are working to ensure that we can get the most sustainable procurement possible within the legal framework that we have.

Low-Income Households

4. Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): What estimate he has made of the amount of tax paid by low-income households in the last 12 months. [217455]

The Financial Secretary to the Treasury (Jane Kennedy): A single-earner family with two children on earnings of £16,750 per year, which is half male average earnings, will pay no net tax in 2008-09 because tax credits and child benefit more than offset income tax and national insurance liabilities. In 1997-98, that family’s net tax burden was 9.3 per cent. of gross income; in other words, they would have been £1,557 a year worse off.

Mr. Crabb: The Chancellor left 1 million people uncompensated even after he tried to clean up the mess following the abolition of the 10p tax band. Can the Minister confirm that the people in many of those households, who drive older, often larger cars and have children, will be precisely those hardest hit when his changes to vehicle excise duty are forced through? Why is it that every time the Chancellor fiddles with tax rates the working poor are the hardest hit?

Jane Kennedy: I completely disagree with the hon. Gentleman. He knows that my right hon. Friend the Chancellor will consider all these matters for the pre-Budget report. He should have a look at the transformation that low-income families have seen in their incomes and
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their share of the nation’s wealth since 1997. It was a completely different experience when his party was in government.

John McFall (West Dunbartonshire) (Lab/Co-op): The Treasury Committee report on the 10p tax issue noted that the 13 May announcement ensured that fewer low-paid people will be paying income tax, and we described that as bringing simplicity, transparency and greater incentives to work. The Government must ensure that every effort is made not to return those people into the tax system. In that respect, the Committee recommended a poverty commission in which an analysis of the root causes of poverty would be made for the Government to consider so that we can make advances in slashing poverty and ensure that the 2020 abolition targets are achieved.

Jane Kennedy: My right hon. Friend knows that we welcomed his Committee’s report, and we are considering all the recommendations that he made in detail. I hope that he accepts that we will make a full response in due course.

Sir Patrick Cormack (South Staffordshire) (Con): Does the right hon. Lady know how many low-income households will be affected among the 45 per cent. listed in The Daily Telegraph this morning who will, based on Treasury figures, suffer as a result of the vehicle excise duty hike?

Jane Kennedy: Clearly, low-income families who have motor vehicles will be among those affected, but I do not have exact figures for the hon. Gentleman today.

Mr. Brian Jenkins (Tamworth) (Lab): My hon. Friend will be aware that in recent years many low-income households have been those of pensioners, so may I on behalf of pensioners pass on my thanks to the Government not only for the winter fuel allowance and for pension credits, but for raising the threshold to £9,000—which is more than 87 per cent. higher than it was in 1997? Having used that route to raise those households out of poverty, can we please now look at non-child households, and consider using the same strategy with regard to their tax threshold?

Jane Kennedy: The tax burden for single-earner families without children on half of average male earnings—the figure that I used earlier—is still less than it was in 1997-98. Those families are £167 a year better off than they were. I am grateful to my hon. Friend for his comments about pensions, and I was pleased that this year’s Budget was able to increase the full basic state pension by £3.40 a week to £90.70 a week, which is the biggest increase in the basic state pension since 2001.

Sir Peter Viggers (Gosport) (Con): Does the Financial Secretary realise that many people are baffled by the Government’s policy towards low-income households? Did the Prime Minister intend to damage their interests in last year’s Budget? How many of those families remain disadvantaged, and how many does she think live in Glasgow, East?

Mr. Speaker: Order. We will leave out references to Glasgow, East—I know the place well.

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