Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witnesses (Questions 280-299)


16 JULY 2008

  Q280  David Taylor: Was the department consulted on the proposed changes to vehicle excise duty which start in April next year, which have a disproportionate impact on rural areas?

  Jonathan Shaw: The department would have been involved. The Secretary of State and the Cabinet would have been discussing—

  Q281  David Taylor: Did the Secretary of State ask you?

  Jonathan Shaw: The Secretary of State is responsible for overall government policy. The Cabinet obviously discuss the Budget.

  Q282  Chairman: That was not quite the answer that Mr Taylor was hoping for.

  Jonathan Shaw: If you are asking me did the Secretary of State consult me on the Budget, no. That is his job as he is responsible for the department.

  Q283  David Taylor: The key work is being done elsewhere. We heard that the Rural Advocate—

  Jonathan Shaw: I am surprised that you ask me. It is a rather odd question.

  Q284  David Taylor: We heard right at the start of the session that the Rural Advocate and the Prime Minister are going to be in conflab on Southall beach, presumably with a box of corned beef sandwiches and a crate of Irn Bru or something next week. Why are you not involved more closely in this?

  Jonathan Shaw: The Cabinet make the decisions. My right honourable friend, Hilary Benn, would not have corned beef sandwiches, would he, because he is a vegetarian.

  Q285  Chairman: Let us not get into the Secretary of State's dietary requirements.

  Jonathan Shaw: It was not me who raised it. I was trying to respond to the very sensible question that Mr Taylor put.

  Chairman: There was a very serious point put to us.

  Q286  David Taylor: You are too distant from what is happening.

  Jonathan Shaw: I do not accept that at all. You are asking me whether the Secretary of State consulted me about the Budget. When you were a parliamentary under-secretary of state, Mr Jack, at MAFF, you were consulted about the Budget prior to it being published, were you?

  Q287  Chairman: I can tell you exactly how we did it when I was there. As Mr Scrutton may remember as a contemporary of mine in MAFF, we were as ministers asked at the time when the Budget was going to be done what our submissions would be from the department to go into the Treasury, so there was an element of consultation.

  Jonathan Shaw: We certainly do that but that was not what you were asking.

  Q288  Chairman: I did not ask the question.

  Jonathan Shaw: You added a supplementary and turned it round.

  Q289  Chairman: We heard evidence from Mrs Annison, one of our witnesses, who runs the rope making business in Hawes. I quote from her evidence: "The new car tax which is intended to deal with urban Chelsea tractors hits the people in this area who need these vehicles"—by that she meant 4x4 vehicles—"because we still have some snow." When we explore that a bit further, what we find is that the stock in trade of agricultural vehicles, Land Rovers, etc is crucial to the wellbeing of people in particularly the remote, rural areas. The point that was being made was: did anybody take into account the quite considerable additional on-cost, bearing in mind fuel price increases etc., and the impact it would have on the type of business there? Coming back to what questions were asked of Defra, did the Treasury ask you to give any kind of appraisal as to the impact on the rural economy of this proposal before the changes in Vehicle Excise Duty were enacted? Was a cost benefit analysis undertaken by your department?

  Jonathan Shaw: The cost benefit analyses are published in the Red Book at the Budget. We do it the same way as you did it. We put our suggestions up to the Treasury when they are considering how they want to present the Budget in terms of the priorities.

  Q290  Chairman: The point that people like Mrs Annison derive from that argument is that that analysis has contributed to the overall exercise.

  Jonathan Shaw: You will obviously want to interview the Treasury ministers.

  Q291  David Taylor: We are talking about rural proofing. You are there in the interests of rural areas.

  Jonathan Shaw: On Vehicle Excise Duty, that was a matter for the Chancellor. They obviously had a discussion in Cabinet prior to which we would have put forward our submissions for the policies, changes in tax, etc., in the same way that you did. You agreed that when you were a parliamentary under-secretary, Chairman, the Chancellor did not ring you up and say, "Okay, Michael. What do you want me to put in the Budget?" It does not work like that. To characterise it in a way that it does is rather odd.

  Q292  Chairman: I do not think that is what we are trying to seek.

  Jonathan Shaw: What are you trying to seek?

  Q293  Chairman: Let me spell it out and make it clear.

  Jonathan Shaw: This is a strange line of questioning.

  Q294  Chairman: It is not a strange line of questioning. Mr Taylor asked for some demonstrations of rural proofing where other departments would have modified their policy to take into account the specific needs of rural communities. We took evidence to indicate that the people we spoke to felt that there had not been much note taken of the impact on rural communities of the additional burden of VED, taking into account that the types of vehicle concerned were very central to the running, particularly, of an agricultural community in a remote part of England. If you are saying to me that your department contributed to the Treasury an analysis of what the impact on rural communities was of that proposal, and the Chancellor took a decision overall not to make a specific exception or to provide help for those communities, people will draw their own conclusions.

  Jonathan Shaw: I think I have drawn my conclusions that you are drifting into party politics here.

  Q295  Chairman: I fundamentally resent being told that we are drifting into party politics when I have read out to you what one of our witnesses said to us, who asked the question whether due note had been taken. It is not a party political point. It is relaying to you verbatim what a witness said to us and asking whether your department had acquainted the Treasury with the economic impact of that particular policy proposal. We are not asking to put you on the spot, as to whether you agree or disagree. It is to find out whether you provided factual information to the Treasury to acquaint them about the impact of their proposal on those parts of the rural community that I have described. That is a factual piece of information, not a party political point.

  Jonathan Shaw: Okay. I will write to you in terms of what the government and the department did in terms of that particular area of policy.

  Q296  Mr Gray: The Minister made an interesting remark the other day when raising this matter in the chamber. She said she has looked into it and there are some categories of 4x4 which account for a lower level of VED. I could not think of any. That might be where Defra could have taken a keen interest as to whether or not farmers and others could have conformed to lower VED while still using their 4x4s.

  Jonathan Shaw: We are only too well aware that many organisations and businesses have considerable pressures on them because of the increase in fuel prices. As I said earlier, an industry which is coastal and rural, the fishing industry, has seen huge increases. I was having a debate in Westminster Hall last week and many Members were speaking about their concerns about the fishing industries within their constituencies. I reminded the MPs who were there, because most of them were at the pre-December council meeting debate that we had, that the issue of fuel was not raised then. It was not something that was a central feature. It has come upon us very quickly.

  Q297  Mr Gray: Road tax, not fuel.

  Jonathan Shaw: Many businesses, in terms of the costs of transport, are finding it particularly difficult.

  Q298  Mr Gray: One of the Treasury ministers in the chamber said it, on this question of road fund tax. Presumably one of the Conservative Members said, "This is going to have a terrible effect on farmers because they need to have 4x4s." In response to that, the Minister said, "I understand that there are makes of 4x4 which will fall into categories which will actually reduce road tax." The reason I ask the question is that would seem to me to be an area where, without getting into a head to head with the Treasury, Defra, representing rural interests and in the context of rural proofing, could reasonably have said to the Treasury, "What categories of 4x4 are these? Are there ways we can get round this so that farmers, game keepers and others can continue to run their vehicles without being hammered?"

  Jonathan Shaw: I will have a look at that.

  Q299  Chairman: Can we move on to one other part of the question of intermediate objectives or the outcomes? The second one is about economic growth being supported in rural areas with the lowest levels of performance. The Commission for Rural Communities indicated to us that they believed that this DSO focuses the economic ambition of Defra and wider government too narrowly on "areas" and on "lowest levels of performance". Could you explain to us why you selected something which clearly is at odds with what the Commission feel ought to be done?

  Jonathan Shaw: We want to focus the priority on areas that are performing at a low level because of all of the social issues that will accompany that.

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