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Lord Lea of Crondall: I am grateful to my noble friend for his response. The key point about the amendment is not so much the promotion of green transport plans per se but is in the context of the introduction of either a congestion charge or a workplace levy.

I suggest that when those two measures are brought forward priority must be given to discussion with the workforce. That is best done in the context of green transport plans. I hope that the Minister will consider what I have said and I shall obviously want to read carefully what the Minister said. I hope it means that we may be able to produce an appropriate form of words for Report stage. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 190 agreed to.

Schedule 12 [Road user charging and workplace parking levy: financial provisions]:

Lord Dixon-Smith moved Amendment No. 264:

("and includes the amount of any VAT charged on road user charges or workplace parking levies").

The noble Lord said: The noble Lord, Lord McIntosh of Haringey, will recognise immediately why this question was asked. He answered a question from the noble Lord, Lord Islwyn, as to whether the Government have any plans to introduce VAT on toll charges. The first purpose of tabling this amendment is to find out whether the workplace parking levy or congestion charges are tolls within the meaning of the Bill. But I suspect that when he replies the Minister will tell us that under the definitions in Euroland they must be so. I shall be interested in that point.

If that is so, when we introduce those charges we are not simply introducing a local charge or levy in order to support local schemes and produce local benefits. They are also producing a nice little 17.5 per cent supplement on behalf of the Treasury. Most people do not think initially that that is what is happening. It is extremely important that we should be quite clear that that is what the situation is.

A congestion charge of £1 per day, or whatever it may be, is not a congestion charge of £1 per day because you happen to be in that town and that is what the charge is. It is £1.17½ and the 17½p will go to the Treasury, although we say that the benefit should remain a local one.

I suspect that in his response the Minister will say that the amendment is not practical politics because VAT is VAT and belongs to Customs and Excise. That may well be the reality. However, if by a freak of good fortune the Minister can tell me that I am completely wrong in my presumptions, those charges will not be subject to VAT, and that therefore I need not concern

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myself, or that VAT will be payable, the Government will make arrangements to see that the effect on the local chargepayers of the VAT will be returned to the local transport authority, in both instances I shall be delighted. Dare I say that the public will be rather less concerned at what is going on? I shall not say that we would all go on our way rejoicing. I do not think we are in that situation. However, at least we would be in a better situation than the one in which I suspect we are. I suspect we are in one of those lovely situations where the taxpayer pays and nothing can be done about it. I beg to move.

Lord McIntosh of Haringey: I am not sure that I am necessary. The noble Lord, Lord Dixon-Smith, puts up his case and demolishes it straightaway. I do not think I need to intervene. Perhaps I shall.

Let us make clear the position on VAT. At present we have the advice of the Advocate General; that is, that VAT should be charged on tolls. The European Court will make its judgment on 12th September. As the noble Lord, Lord-Dixon Smith knows, because it was raised in this House, with four other countries concerned we have been strongly arguing the case against imposing VAT on road tolls.

We do not yet know the judgment of the court. However, it is the case that normally it is in line with the advice of the Advocate General. We will not know the position about road tolls and congestion charges until we hear the terms of the judgment. I refer not just to the effect of the judgment on road tolls but the way in which it is expressed and whether anything is said which guides us as to whether congestion charges will come under the same judgment. We shall have to consider carefully the text of the judgment of the European Court before we decide what has to be done in this country to implement it.

However, I can tell the noble Lord, Lord Dixon-Smith, that we agree that the revenue from charging schemes should be hypothecated to transport projects. The imposition of VAT, if it were to happen, should not reduce the funds available to authorities. We shall be working on the exact mechanism for that as schemes are developed. In other words, the Treasury will not take the 17.5 per cent; it will go back to local transport schemes. Bearing that in mind, the local authorities will make decisions about charging levels in the knowledge that if that is to be the case, VAT will have to be part of the charge.

The amendment also covers VAT charged on workplace parking. We do not expect workplace parking levies to be subject to VAT. If the noble Lord, Lord-Dixon Smith, wants to go away rejoicing, I am happy for him to do so.

Lord Swinfen: Before the Minister sits down, perhaps I may ask whether the local authorities will get

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back the whole of the amount or will the Treasury make an administration charge and keep some for themselves?

Lord McIntosh of Haringey: They will get back the whole amount.

Lord Dixon-Smith: I am genuinely grateful to the Minister. He has given a most helpful reply which, for once, sends me on my way rejoicing. If we had not tabled the amendment and I had not pressed the question, we would not have received his well-defined answer. That helps us all forward. Perhaps the Minister would like to have a word with me afterwards. I wonder whether we will have the benefit of the judgment of the European Court before we meet to consider the Report stage of the Bill, which I take it will be in early October, or might just be in the last day or two of September.

Lord McIntosh of Haringey: My understanding is that the court will deliver its judgment on 12th September.

Lord Dixon-Smith: Then when we have the benefit of the judgment, the Minister will understand if we find some way of persuading him to reveal what its consequences might be in relation to this Bill.

Lord McIntosh of Haringey: I was cautious to say that we will have to consider the judgment carefully. I cannot promise that we will have reached a firm conclusion as to what the judgment means and how we interpret it before we come to Report stage.

Lord Dixon-Smith: I am grateful to the Minister. I do not want to spoil what I can only regard as a happy occasion. But he will understand if we are anxious to receive the answer.

This has been a useful discussion, for which I am extremely grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.45 p.m.

Lord Dixon-Smith moved Amendment No. 265:

    Page 221, line 34, leave out paragraph 9 and insert--

("9. The appropriate national authority may by regulation make provision for paragraph 8 to apply with the substitution for the number for the time being mentioned in sub-paragraph (5) of that paragraph of a number of years greater than ten.").

The noble Lord said: This is simply another of my consistent moves to try to increase the time for which money is available to local authorities when they have taken the initiative in raising it. The amendment provides that the number of years should be greater than 10, which is what the Bill states. I believe that is perfectly reasonable. But I suspect that the Minister, in his response, will tell me that, though the Government will produce a 10-year plan, 10 years is longer than they foresee it being needed. It will therefore all need to be reviewed before that time is up.

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This is an important amendment. It is consistent with what we have been arguing elsewhere. I beg to move.

Lord Macdonald of Tradeston: I am grateful to the noble Lord for those words of explanation in support of his amendment. While I am not able to accept the amendment, it is clear that we are agreed that the hypothecation arrangements set out in Schedule 12 to the Bill are important.

Amendment No. 265 would provide that regulations under paragraph 9 of Schedule 12 could only provide for the extension of the guaranteed period of hypothecation beyond the 10-year period if the revenues raised were spent on improving local transport. The effect of the amendment would therefore be the indefinite hypothecation of the revenues raised for new charges for local transport spending.

The arrangements that we included in our Greater London Authority Act and have extended to this Bill, represent a breakthrough by guaranteeing hypothecation. We recognise that that is a crucial factor in the success and acceptability of each and every scheme. The Bill therefore provides that every penny of the net revenues raised from local authority charging or licensing schemes brought forward within 10 years of the commencement of this schedule will be retained locally and ring-fenced for transport spending for each scheme's initial period.

The expectation is that the initial period will be 10 years from the implementation of a scheme. But Schedule 12 also enables the appropriate national authority to guarantee the hypothecation of charging revenues for more than 10 years for individual schemes. That flexibility could be particularly valuable if the local authority wants to undertake a PFI deal and the private sector required a guarantee that a revenue stream would be available for more than 10 years.

The Bill allows for the arrangements for the retention and use of charging revenues to be reviewed in 10 years' time. That is for the simple reason that spending charging revenues on transport in perpetuity might not deliver value for money improvements in the medium to longer term once substantial improvements to local transport have been put in place. It may well be that the review recommends that 100 per cent hypothecation of charging revenues for transport spending should continue for all schemes for a further period. I can assure Members of the Committee that the Bill explicitly allows for hypothecation for transport spending to continue after the review, though clearly I cannot pre-empt the outcome of the review.

I hope therefore that the noble Lord will reconsider and agree not to press his amendment.

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