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The Parliamentary Under-Secretary of State for Transport (Paul Clark): I welcome the work of the Transport Committee and its inquiry into taxes and charges on road users. I thank the Committee for its work over the year in helping to identify critical issues in transport matters.
We had interesting contributions from the Chair of the Select Committee, my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman), from the Opposition Front-Bench spokespersons, the hon. Members for Lewes (Norman Baker) and for Scarborough and Whitby (Mr. Goodwill), and from my hon. Friend the Member for Leicester, South (Sir Peter Soulsby), and the hon. Members for Kettering (Mr. Hollobone) and for South-West Norfolk (Christopher Fraser), as well as a number of timely if not well-informed interventions, to which I might return before the end of my speech.
It would be sensible for me to set out at the beginning the context in which the Government's decisions on transport taxation and spending are made. The core point is that Governments do not and cannot make transport tax or spending decisions in isolation. Many of the contributions to the debate today concentrated on one aspect, without considering the subject in the round. The report from the Transport Committee recognised that taxation and spending need to be considered in the round in order to get a fuller picture.
Each choice has to be seen in the wider context of the Budget and the spending review. As I said in the debate in Westminster Hall on Tuesday, it is essential to emphasise that taxes on motorists are primarily revenue-raising taxes that serve to support public finances and fund public services. It should be remembered that motorists are not just motorists; they are consumers of public services and, of course, taxpayers, like many other people. I set that out at the beginning so that people are absolutely clear about the basis for taxation.
Motoring tax revenues are combined with those from other taxes in the Consolidated Fund, where they support a range of Government spending priorities. It is therefore misleading to compare motoring tax revenues with road or transport spending. Hypothecating revenues to particular spending programmes imparts inflexibility and can lead to a misallocation of public resources, reducing the value of taxpayers' money. Some contributors said, "This was the revenue from vehicle excise duty and fuel duty, but it is not the money being spent on roads." As several speakers recognised, however, that money funds not only roads, but many other aspects of transport, and many other public services to which I have referred.
It is true, as the hon. Member for Lewes recognised, that when possible and appropriate we should structure revenue-raising taxes to support other Government objectives, a classic example of which is environmental policy. So, vehicle excise duty is structured to incentivise the uptake of lower CO2-emitting cars, while fuel duty gives added incentives for greater fuel efficiency. Decisions on tax are a matter for my right hon. Friend the Chancellor of the Exchequer, who considers each tax as part of his wider fiscal judgment within the normal Budget-making process. In taking those decisions, he considers all the relevant social, economic and environmental matters that must be taken into account.
On transport spending, we start not with a clear sheet, but with a structure and transport network that has been built up by incremental changes-some big, some small-over many decades. The choices and the drivers behind them have sometimes been local and sometimes been national, but more often than not they have been a combination of both. Sometimes the choices were uncontroversial, and other times they were far from it. From the creation of the Bridgewater canal in the 1760s, which led to the canal boom, to the building of Heathrow terminal 5, however, every change to our transport network has mattered.
Even seemingly small changes and decisions can have great implications. Changes to the railway timetable after some 40 years can shake up the working patterns of thousands of commuters, and the closure of a bus stop can trap an elderly person in their home and lead to social exclusion; but the opening of a new bus route can create new job opportunities, and opportunities for those in rural areas-a matter that was touched on earlier and to which I shall return specifically. All those issues place great responsibility on the Department for Transport, and there are certain things that we simply have to do. We have to maintain the roads-with record levels of investment, despite the comments from the hon. Member for Kettering-and we need to support local authorities, keep the railways running and stick to our contractual obligations.
I shall now address some of the issues that hon. Members raised. We have responded fully to the Transport Committee's recommendations, and that work helps to guide the Department's work. Let me assure hon. Members that we have a close relationship with the Treasury-as with all spending Departments, not surprisingly-and take part in proper discussions about spending commitments, value for money and taxation. As regards the issues of mistrust that were referred to by the Select Committee, let me put it on record in this House that we certainly recognise the importance of transparency on revenues and spending. That is why statistics are published as part of the Budget and pre-Budget report process.
The issue of rural communities is fundamentally important, and this Government have very much sought to reduce the exclusion and isolation that we recognise that rural communities can suffer from in comparison with urban communities. That is why we introduced the Local Transport Act 2008, which gave powers to local authorities to enable them to negotiate, discuss and take forward proposals with bus companies, for example, to provide for better schemes to cover rural areas. Indeed, we went further in helping to deliver a better system by improving the facilities and provisions for community transport schemes.
I have heard what has been said about car use, with people arguing for a differentiated fuel duty in rural areas. Let me make the position very clear. Fuel duty is levied on the producer at the point it leaves the refinery-it is currently set at a rate of 56.19p per litre-and it is set according to where one is in the United Kingdom. I recognise the business about fuel being more expensive at the pump in some rural areas than in urban areas. That is not to do with fuel duty, but with market forces such as the additional transport costs that are involved to get the fuel to that particular petrol station and less competition among suppliers in a given market.
Even if we did have a rural fuel duty, we could not guarantee that it would be passed on to the consumer, as it could be absorbed in the bottom line of the commercial operator selling the fuel. Equally, it could have a perverse effect in that we ended up with people driving from what would be perceived as high-duty areas to low-duty areas and adding to congestion on the roads, and carbon emissions, in those areas. The level of tax is not the reason why fuel is more expensive in rural areas.
Mr. Hollobone: Her Majesty's Government could, of course, consider differential charging on vehicle excise duty whereby motorists living in rural areas paid a very low rate while those living in cities paid a far larger amount.
Paul Clark: I am delighted that the hon. Gentleman raises the issue of vehicle excise duty. We have introduced the 13-band system for vehicle excise duty, which is linked to carbon emissions. Of course, people in rural areas do not have to have vehicles that are in the highest band. As I believe the hon. Member for Scarborough and Whitby pointed out in the recent debate in Westminster Hall, not all large vehicles fall into the highest VED bands. The carbon emissions produced and the technology in the vehicle are the most important factors. Under the new VED rates, 68 per cent. of all vehicle owners will either pay no more or pay less than they did in 2009. The change is very much about the green agenda, and I am delighted that the hon. Gentleman recognises the work that this Government have done in that field. VED bands are not retrospective, and there is nothing new about introducing VED rates that apply to existing vehicles. That has been the case since day one of the tax.
Mr. Goodwill: Has the Minister given any consideration to having a sliding scale of VED rather than bands? That would incentivise people to select greener vehicles within a particular category. I have certainly received representations along those lines.
Paul Clark: There are always a number of schemes to be considered at any given time. We have introduced ours because we believe it will have the desired effect as part of our carbon reduction and climate change policies, and we will need to see how it works. I should say that VED raises some £5.6 billion annually.
Christopher Fraser: The Minister's point about tax bands is valid in relation to emissions, but even accepting that, somebody who lives in a rural area and has to use a four-wheel-drive vehicle is doubly penalised unless we have a scheme based on geographic area in the way that my hon. Friend the Member for Kettering (Mr. Hollobone) set out.
Paul Clark: There is not a three-line whip that requires people in any given setting to have the most polluting and largest vehicles. Equally, because of the technology under the bonnet, not all large vehicles fall within the higher bands. We have been incentivising vehicle manufacturers to work together in partnership to reduce emissions levels from any particular model.
To pick up on a point that the hon. Member for Lewes made, he suggested that abolishing VED and reducing fuel duty would make everything much better. He said that people would shift to the railways and so on. I recognise what he says, but I do not believe that it would work, and I am sure that he does not either. The first thing he said was that motorists deserve a fair deal, and I doubt whether they would recognise cutting 90 per cent. of the road budget as a fair deal.
The railways are undoubtedly a beacon, because of the investment and changes in the system. There are 49 per cent. more people travelling on our railways-the highest level since the second world war-and all the changes have made a real difference to people. The hon. Gentleman will know about the levels of patronage and use. There is still further work to be done, and it will be interesting to see what further developments the Government will suggest as we go forward.
Equally, however, I wish to point out that I attended an urban logistics conference this morning, and I am grateful to my hon. Friend the Member for Leicester, South for recognising my commitment to freight. It is absolutely essential that we have a strong freight logistics business in this country. That includes road, rail, inland waterways when that is sensible, and coastal shipping. I strongly believe that, which is why the Government will continue to invest money via the various modal shift grants that we provide. I must recognise, however, that there are limitations. Sixty-eight per cent. of freight moves within the same region. With the best will in the world, and given that we are geographically a relatively small country, it would not be common sense to shift that freight on to the railways or some other means of transport. We must take a balanced approach.
Norman Baker: I thank the Minister for answering my points, but I am looking at policy in the round. Of course most freight will need to go by road, and in fact, space for freight movement will be created by the introduction of a road-pricing system.
However, on the switch from the major roads budget to the rail schemes that we are proposing, the Minister will recognise the tremendous growth in the railways and the growth to come. Notwithstanding the announcement
on high-speed rail that I am anticipating tomorrow, the Government have not produced any new rail schemes for the localised reopening of stations and lines, for which many people in the country are clamouring. That has happened in Scotland with Stirling-Alloa and in Wales with Ebbw Vale, but it has not happened in England. The Minister will know that many schemes, such as Skipton and Colne, have a good economic case. Money must be found for them if we are going to find a space for the railways to grow and meet the needs of passengers in future.
Paul Clark: The record investments that have been going into the railway system at a national level have been made to ensure that, for example, we have a decent west coast main line that is reliable and punctual. We must have investment in that. Further investments have been made, including, for example, in Reading station. We have always said that the case for the reopening of stations can be made through the regional funding allocation process and via other routes. If there is a case for the schemes and if resource is available, they could move forward, but each case must be considered on its merits.
Rosie Cooper (West Lancashire) (Lab): I wonder why we are discussing that kind of thing if we cannot bring to the Minister's attention two cases in my constituency. First, Skelmersdale has no railway station at all-there is low car ownership among its 38,000 or 40,000 people, but they have no access to the rail service. Secondly, the Burscough curves proposals would make such a major difference at the north end of my constituency.
Paul Clark: I recognise my hon. Friend's arguments. It is about striking a balance in our transport infrastructure, which might involve investment in the railways or in the bus network, in which we have put some £2.4 billion. That investment, free local travel for older people across the country, ensuring that the roads are safe and secure enough for people to walk or cycle, and ensuring safety for motorcyclists make a difference.
Let me move to one or two other matters that were raised in the debate. My hon. Friend the Member for Leicester, South said that further road building is not the answer. I recognise his arguments, and he referred to a very good publication by Dr. David Metz. It is about getting the balance right. We must recognise that bottlenecks appear because of, for example, engineering set-ups and lights. Let us take as an example the Hindhead tunnel under the A3, a project in which we have invested some £376 million. The tunnel goes under a major environmental area, and will make a great difference to air quality, people's quality of life, and motorists, for whom it will save time and money. It is right that we look at how we can best use the assets that we have, and that is why we announced a £6 billion programme, to be rolled out in coming years, to accommodate traffic better and improve flow on motorways, including hard shoulder running and active traffic management.
We need to get the balance right, and that is why we have invested in the west coast main line. People wanting to travel further now have a decent rail service to choose,
because of that investment and the improved reliability. High Speed 1 will be critical, and I suspect that further high-speed opportunities will take us a long way.
The Chair of the Select Committee and my hon. Friend the Member for Leicester, South both mentioned continued investment. We are clear that if we cut back on investment in our infrastructure, it will not be good for UK plc, including business and enterprise, as well as individuals trying to go to work, visit relatives or go on holiday.
The hon. Member for Kettering raised the issue of a European tax on fuel, but no such thing is in the pipeline. The Government are clear that tax is a matter for member states, and there is no case for harmonisation. Nor has any proposal been tabled for such a tax, and I put that clearly on the record. The hon. Gentleman said that for every £1 collected only 20 to 25p goes on building the road network. That is the whole point. He does not take into account the externalities involved, including the policing of the highways, clearing up after accidents or the cost of lighting, let alone addressing the effect of road use on the environment.
I hear what hon. Members have said about potholes. It is interesting that when it suits them, people want diktats from Whitehall, but the rest of the time they want local decision making. It is obvious that local authorities are best able to assess the damage to their roads that was caused by the winter weather. The costs for February last year are only just being put together. It was claimed that the cost would be £50 million, but we expect the final figure to be some £12 million. The Local Government Association has suggested that this year's bill will be £100 million, but its letter also recognises that it is far too early to say what the cost will be and that current estimates are very broad figures. We are considering that issue, as well as some specific claims that we have received.
The hon. Gentleman referred to house building and the fact that we had far too many people in this country. The actual growth in vehicle numbers over the past 50 years has been steady and has not peaked or fallen in connection with various events. The whole idea of regional funding allocations is to bring together programmes such as those for house building with transport requirements, and the Government are investing in schemes such as Fast Track to help to ensure that transport systems are in place for people.
We have had a wide-ranging debate, and time is too short to allow me to respond to all the points that have been raised, but we will continue to take on board the work of the Transport Committee. I am grateful for the ability to debate some of the issues relating to taxation and spending. One of the things that this Government are certain off is that investment in infrastructure and our transport system is important for business, individuals and UK plc.
That, for the year ending with 31 March 2010, for expenditure by the Department of Health-
(1) further resources, not exceeding £969,893,000, be authorised for use as set out in HC 257,
(2) a further sum, not exceeding £606,272,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
(3) limits as so set out be set on appropriations in aid.
That, for the year ending with 31 March 2010, for expenditure by the Department for Transport-
(1) further resources, not exceeding £606,268,000, be authorised for use as set out in HC 257,
(2) a further sum, not exceeding £257,734,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
(3) limits as so set out be set on appropriations in aid.
That, for the year ending with 31 March 2010, for expenditure by HM Revenue and Customs-
(1) further resources, not exceeding £242,822,000, be authorised for use as set out in HC 257,
(2) a further sum, not exceeding £212,951,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
(3) limits as so set out be set on appropriations in aid.- (Mark Tami.)
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