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House of Lords

Monday, 20th November 2000.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Chichester.

Cleaner Vehicle Fuels

Lord Ezra asked Her Majesty's Government:

    Whether, in the light of the measures proposed in the Pre-Budget Report to encourage the use of cleaner fuels for road vehicles, they can estimate the rate of reduction in air pollution caused by road traffic over the next five years.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, we expect that the take up of ultra-low sulphur petrol, which will increase considerably as a result of the Chancellor's announcement, will result in a reduction in urban areas in 2004 of 1 per cent of emissions of oxides of nitrogen, 1 per cent of volatile organic compound emissions and 4 per cent of carbon monoxide emissions.

We are not able to carry out a comprehensive review of the impact on air quality and some of the other measures announced because the detail requires further work. The Deputy Prime Minister announced today the publication of the Government's response to the final report of the Cleaner Vehicles Task Force, which contains further measures to improve air quality and reduce carbon dioxide emissions, including £69 million of funding to accelerate the take up of cleaner fuels and cleaner, more fuel-efficient vehicles.

Lord Ezra: My Lords, I thank the Minister for that encouraging reply. Perhaps I may ask him two questions. The first relates to ultra-low sulphur petrol, which he has indicated will be available in increasing quantities. Can he state whether the price at which that petrol will be sold will be in line with the price of normal unleaded petrol? What will be the designation of such petrol? I understand that filling stations label it under different names. That could be confusing for the motorist.

My second question relates to the promotion of road fuel gases, to which I believe the Government are also committed. To what extent are liquid petroleum gas and compressed natural gas already used? What are the prospects for the future? Does the Minister accept that a determined effort to convert lorries and taxis to compressed natural gas would have a major impact on the reduction of noxious emissions, especially particulates, which cause respiratory diseases?

Lord Whitty: My Lords, I believe that the noble Lord asked more than two questions, but I shall

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attempt to reply. Somewhat to the surprise of many people, one-third of all petrol delivered is already ultra-low sulphur petrol. It is labelled in different ways in different garages. Certainly by April we would expect there to be a pretty comprehensive supply. The branding is obviously a matter for the oil companies. However, I have no doubt that they will take account of recognisability, to which the noble Lord referred.

As regards price, although the Government are not into price controls, we have had an indication from UKAEA, the trade association for the oil companies, that the price of ultra-low sulphur petrol will follow the tax reduction and there will be relativity, therefore, with other unleaded petrol. As regards gas fuels, the market for LPG in particular is growing. Over 20,000 vehicles already use LPG and the infrastructure for that is developing, as is, to a lesser extent, that for compressed nitrogen gas. There is scope for considerable benefits from cleanliness of petrol and fuel efficiency. As regards conversion, through the Powershift programme, the Government already provide significant support for the retrofitting of buses and taxis in particular. In some cases, particularly for cars, conversion tends to be expensive. There may be other appropriate routes. However, the Government already support such conversions.

Lord Dubs: My Lords, does the Minister agree that a more rapid usage of gas and electric powered vehicles would have significant environmental benefits over and above those of ULSP? Does he further agree that incentives such as exemption from congestion charging and abolition of parking charges would be a quick way of doing that? Will he discuss such proposals with local government?

Lord Whitty: My Lords, as my noble friend knows, there are a few broad national exemptions. However, exemption from road user charges and car park charges would be a matter for local authorities. I believe that there are more direct ways of encouraging a shift to electric cars, which provide a niche market and for which VED is very low, and of trying to ensure that the environmental benefits of LPG and CNG for both cars and lorries are more widely understood. Certainly, both can make a significant contribution towards improving air quality and reducing noise and carbon dioxide emissions.

Baroness Oppenheim-Barnes: My Lords, does not the Minister agree that, as the labelling of petrol is very misleading at present, ordinary consumers will not know whether or not the 3p reduction is being passed on to them because they will not know the name of the fuel which is supposed to be reduced?

Lord Whitty: My Lords, I suspect that the oil companies will now ensure that branding is more apparent. In any case, over recent weeks it has been clear that the motorists' consciousness of petrol pricing has significantly increased and, were petrol stations not to indicate the better bargain as a result of the Chancellor's changes, consumers would move to

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other suppliers which did brand clearly. However, noble Lords may be aware that BP and Jet are already introducing branding and advertising for those petrols.

Baroness O'Cathain: My Lords, in response to the question of the noble Lord, Lord Ezra, on the pricing and supply of low sulphur fuel, the Minister said that up to one-third of present supplies were in fact low sulphur fuel. If that is so, and if the tax reduction of 3p per litre will be available once all supplies of low sulphur fuel are available, should not at least one-third of the 3p--that is, 1p--be deducted from the 81.9p a litre that we are all paying for unleaded fuel at the moment? That would bring the price down to 80.9p per litre.

Lord Whitty: My Lords, the Pre-Budget Statement did not immediately introduce the change in tax. That change will come into effect in April. At that point ultra-low sulphur petrol which is going through the general system will be charged at the lower rate of duty.

Tax Complexity

2.44 p.m.

Baroness Noakes asked Her Majesty's Government:

    How they intend to respond to the Tax Manifesto published recently by the Institute of Chartered Accountants.

Lord McIntosh of Haringey: My Lords, as with other representations he receives on tax, the Chancellor of the Exchequer will give due consideration to those proposals in making his Budget decisions.

Baroness Noakes: My Lords, I am grateful to the noble Lord for that reply. I should declare an interest as a council member of the Institute of Chartered Accountants.

Does the Minister agree, to select one of the institute's 10 tenets for a better tax system, that the tax rules should be simple, understandable and clear in their objectives? Does he agree also that, with Finance Acts of 600-plus pages as we had this year, the current tax system is far from simple, understandable and clear?

The Government introduced a system of setting out their main objectives, aims and targets in public service agreements and service delivery agreements covering what they are trying to achieve. Will the Minister please explain why no mention of achieving simplicity, understandability or clarity in the tax system can be found anywhere in those agreements for either the Treasury or the Inland Revenue? Does this mean that the Government are not in any sense committed to simplification?

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Lord McIntosh of Haringey: My Lords, I agree with several of the 10 tax tenets set out in the appendix to the ICA report. It is an interesting, worthwhile and constructive report. However, the length of a Finance Bill is not necessarily an indicator of whether or not it is a good Bill. The first project of the tax law review body chaired by the noble and learned Lord, Lord Howe of Aberavon, is the draft capital allowances Bill, which is substantially longer than the legislation it replaces. But that is not necessarily a bad thing if it is also much clearer.

Lord Goodhart: My Lords, as a member of the tax law review committee, can I ask the Minister whether he agrees that, although sheer length may not be a test, what we have had in the past three Budgets and seem likely to get in the next is a great many pages taken up with little bits and pieces with no specific theme behind them? Does he agree that items such as little reliefs for, let us say, venture capital tend to be largely useless and clutter up the statute book appallingly?

Lord McIntosh of Haringey: My Lords, I cannot accept any assumptions which the noble Lord, Lord Goodhart, may make about the next Budget. But it is true that there has to be a trade-off. If we are responsive to those who point out defects in the tax system and try to deal with such defects quickly, inevitably some of that will add to the existing tax structure without a fundamental reform. We have to make a choice as to whether it is important to be responsive to legitimate pressure, or whether we say that we cannot do anything because we have a longer-term project to simplify taxes. There is no ideal solution to this problem.

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