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Mr. Prisk: I do not like to presume what people will or will not do. My point is that without environmental restrictions people can make the choices I described. The hon. Gentleman may think that that is daft thing to do, but who are we to judge what the consumer wishes to do? It is not for us to make that judgment. It is important that the Government think about the vehicles that are available and how the scheme will work. After all, it is the only principal scheme of its kind in Europe in which people could do what I describe—people would not be able to do that in Germany, France or Italy. That is an important comparison. Whether I would make such a decision is an entirely different matter.
Let me turn briefly to some practicalities. The Minister told us that the scheme is due to start on 18 May. If that time scale slips for whatever reason—it is fair to say that we have seen Government schemes drift a little in recent months—and the 18 May timetable is not met, will the closure date be similarly adjusted?
What assessment have the Government made of the impact on the scrap metal market? I have had representations suggesting that the value of scrap metal in the EU has dropped by two thirds in the past year. How will that market work if prices fall even further? There will be a significant difficulty for car sales showrooms trying to operate the scheme if there is a collapse in that market.
In preparing for the scheme—my hon. Friend the Member for Gravesham mentioned this—what assessment have the Government made of the impact on the second-hand car market? After all, most people will buy second-hand cars, so they will want to know exactly how the scheme will work and whether they will be better or worse off as a result.
6.49 pm
John Hemming (Birmingham, Yardley) (LD): I welcome you to the Chair, Mr. Taylor. I must admit that I share the concerns of the hon. Member for Hertford and Stortford about the process of parliamentary scrutiny. It would be useful to start with the relevant information so that the debate is informed at the start, rather than having to draw things out of the Government bit by bit.
As a Birmingham Member of Parliament—Birmingham has historically had a much greater dependency on the motor industry—I am a strong supporter of steps to support the motor industry. The scrappage scheme is an interesting variation on the European schemes. Whether it will assist in ensuring that a higher proportion of the cars that qualify are manufactured domestically rather than internationally remains to be seen, but there are some interesting questions to answer.
Obviously, it is important for us to develop our manufacturing sector because we need to be able to trade throughout the world. The lack of support historically is sad. I admit that the Government are moving in the right direction now, but there has been a tendency to be a little bit slow.
There is also an issue with the funding of new vehicles. It is sad that the opportunity has not been taken to say that if people are to qualify for scrappage, they should at least have a more efficient car. That would have been quite a simple step. I am in a rather odd situation because my car qualifies for scrappage but, because it runs on vegetable oil, I am unlikely to change it, because newer vehicles do not run on vegetable oil. I would be interested to hear the Minister’s response to the questions that have been asked, and I welcome the measure.
6.50 pm
Colin Challen (Morley and Rothwell) (Lab): I mean to start with a complaint and an apology. Three hours ago, I went to the Vote Office to ask for the papers for the Committee and was given the papers relating to the Financial Assistance for Industry (Increase of Limit) (No. 3) Order 2009, which relates to a proposed increase in that facility by £600 million to £6,100 million, so somebody somewhere is clearly not providing Members with accurate information about what we are meant to be discussing this afternoon. Perhaps someone could offer an explanation before the end of the sitting as to why the Vote Office is giving out misleading information. I have the documents with me if anybody would like to see them. That meant that I came prepared for a different debate, and I apologise to the Whip, my hon. Friend the Member for Watford. I do not agree with the measure before us and I intend to vote against it. I could have consulted her before the sitting if we had been given accurate information in the first place.
On the substance of car scrappage schemes, I find the explanation for the measure lacking in any environmental detail and intent whatever. I am committed to tackling climate change—the Minister used to have responsibility for climate change issues and I know that he is deeply committed to the cause—and I find the measure incompatible with that overarching aim. An overarching aim is not something to be kicked into the long grass while we sort out some short-term problems. As somebody in President Obama’s Administration said, we should
“never waste a good crisis”.
The crisis of the recession is an opportunity, as many world leaders have said, to tackle climate change.
Interestingly, the car scrappage scheme would give someone who is buying a new Hummer or whatever top-end machine £2,000 to help with their purchase, which is slightly less than four times the differential level of vehicle excise duty that the Government impose on top-end machines, which—correct me if I am wrong—is around £450 per annum. Therefore, the buyer of a top-end machine, having been given a £2,000 grant to do so, is effectively banking four years’ worth of VED. Is there any logic in that proposal? There is not. It is like Peter and Paul. We are trying to reward good behaviour and penalising it. There is no sense in that.
We assume that the scheme will be taken up as quickly as possible to achieve the objectives of the motor manufacturers’ association but, of course, when a person buys such new machines, they lock themselves into a long period of petroleum use. I am surprised that the hon. Member for Birmingham, Yardley did not mention peak oil—he usually does. Some people say that it will occur in the next few years—it might have already happened—so where is the price of petroleum products going to go?
John Hemming: The hon. Gentleman and I share concerns about fossil fuel consumption. I do not mention peak oil all the time, but the opportunity under this scheme to say that we should have more efficient vehicles has been lost.
Colin Challen: Precisely. As the Minister said, there is no emphasis on efficiency. I might be in favour of the scheme if it was about scrapping cars and buying new ones in categories A, B or even C. There are discounts on vehicle excise duty for those cars because buying them is recognised as a good thing to do. However, the scheme does not do that. It is designed to lock us into business as usual with regard to climate change. It should therefore be opposed.
We could find better ways of spending the £300 million, or however much it is. Better than a car scrappage scheme would be a car sharing scheme, under which people are paid to share their cars for commuting or other journeys. That would have an immediate impact on climate change through a reduction in carbon emissions. Instead, the scheme imposes no environmental conditions, so it appears that it is about something that may happen in the future, but which we are not planning for.
I regret that I was not able to give advance notice to the Whip that I oppose the scheme, but I was not told that we would discuss it this afternoon. I was told by the Vote Office that something else would be discussed.
The Chairman: In response to the remarks of the hon. Member, the motion can be found under “Future Business C” on the Order Paper and in the Chamber today. Although the motion is not a statutory instrument, under the business of the House order of 30 April, it is to be treated as such and dealt with by affirmative procedure. I hope that that is helpful and that he will take up any further comments or concerns with the Vote Office.
John Hemming: I am relatively new to this place, but I understand that the motion states that we have discussed the delegated legislation. In the unlikely event that the motion failed and it was concluded that we had not discussed it, would the original resolution fail? I would have thought not. On that basis, we are unable to vote on the substantive issue at this meeting.
The Chairman: The answer to the hon. Gentleman’s question was in the tail-end of his statement. The proposal would not be invalidated.
Colin Challen: May I have further clarification? Committees are often given the assurance that we have discussed the matter and that we are expressing an opinion. It seems that we are devaluing that opinion. When the opinion is reported back, it will be taken more or less as a decision or a recommendation.
The Chairman: Whether the Committee votes aye or no, the matter will be reported to the House at the appropriate time.
6.58 pm
Ian Pearson: I will address the points made by the hon. Members for Hertford and Stortford and for Birmingham, Yardley, and my hon. Friend the Member for Morley and Rothwell. I understand my hon. Friend’s concerns over environmental issues. He has long campaigned on such issues and I hope that I can reassure him about the Government’s intentions.
I welcome the recognition of the hon. Member for Hertford and Stortford of the need for tax-efficient and economically effective schemes. We have tried to develop a scheme that will help the automotive industry through this incredibly difficult time as efficiently as possible. That is why it has taken some time. There has been extensive dialogue with the industry and significant research into how schemes in other member states have operated. We believe that the scheme we are offering in the UK has the right balance. I will explain in more detail why that is the case.
Mr. Prisk: Does he therefore think that it will be as successful as the German scheme?
Ian Pearson: I will talk about the German scheme in a moment. Let me first address the claim that consumers will be no better off. I appreciate that this is a probing question. Manufacturers taking part in the scheme will, as I have indicated, be required to commit to a matching discount against their published list prices. It is not for Government to regulate car prices, but we have made it clear to the industry that we would not expect to see prices increased deliberately to offset the scrappage discount. There were some increases earlier in the year because of the pound-euro exchange rate, but at the moment most manufacturers are offering additional incentives on top of the matching one. The size of the incentive and its matching element make it more attractive to those seeking to buy smaller, more fuel-efficient cars and new vehicles are on average 30 per cent. more fuel-efficient than their 10-year-old counterparts.
John Hemming: To what extent has the Department considered making it a condition of the scheme that the replacement car be a more efficient one?
Ian Pearson: We did consider that as part of the scheme design but we believe that the current EU4 standards are appropriate. That goes to the point made by my hon. Friend the Member for Morley and Rothwell. We are seeing in the automotive industry a concerted drive to lower carbon emission standards, which are being set at a European level. He will be aware of the direction of travel at the moment. Some member states—not Germany or Austria—are seeking to put environmental limits on their scrappage schemes. We have chosen not to do so for this short-term measure that we are introducing in the UK. We believe it is right to follow the EU4 standards. As I have pointed out, new vehicles are on average 30 per cent. more efficient than the cars of 10 years ago that we are talking about scrapping. I would not want to stop somebody who had an old polluting Volvo from buying a new Jaguar, but I think experience will be that they will want to buy smaller, more fuel-efficient cars. That is certainly the experience in Germany and I will say more on that in a moment in response to the hon. Member for Hertford and Stortford.
Colin Challen: The European Commission is trying to drive down emissions from vehicles, but the motor industry itself, as we all know, has worked night and day to try to prevent emissions limits going far down. The limits are usually applied across a fleet rather than on one particular vehicle. Even though it could be said that vehicle emissions have gone down across the fleet, it would still be possible to buy a high-emission vehicle and think that somehow it is greener when it is not. This measure does nothing to change people’s behaviour.
Ian Pearson: My hon. Friend needs to understand what we are trying to do with this measure—that is, to give a kick-start to the automotive industry at the moment when it has seen a catastrophic decline in the number of new car sales. The direction of travel for the automotive sector is very much towards low carbon. Whether we are talking about big cars or smaller cars, all the research and development means that the new models that are coming out are far more fuel-efficient and carbon-efficient than their predecessors, as the hon. Gentleman knows.
I am not surprised that the hon. Gentleman takes the position that he does, because he has long since championed environmental issues very strongly indeed. However, I ask him to understand that what we are trying to do here is not only to give a boost to the car industry at a very difficult time, but to work within the general direction that the automotive industry is heading in. For example, if he looks at the forward R and D programme on engines of any of the major domestic UK car manufacturers—such as Jaguar Land Rover, or Ford—he will see that the direction is very much in the development of more fuel-efficient engines.
Mr. Holloway: I may or may not accept the points about stimulating the manufacturers. Certainly, however, the dealers really are struggling at the moment. The manufacturer may be seeking to recruit some of the £1,000 from the dealers and then the customers themselves may be trying to get a further discount, because they think that the scheme is costing the dealer less. Many of these distributors have very poor cash flow at the moment. If they then have to wait to get the money back from the manufacturer, who in turn gets it back from the Government, that really does not help a lot of these dealers, who are in an awful lot of trouble at the moment.
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