Select Committee on Transport, Local Government and the Regions Minutes of Evidence



Examination of Witnesses (Questions 760-779)

RT HON PAUL BOATENG AND MR CLIVE MAXWELL

WEDNESDAY 6 MARCH 2002

  760. In terms of making the urban renaissance actually happen, which would encourage people to live closer to their work, those sorts of things, which of your tax policies is going to make an impact on the urban renaissance and make a contribution to the 10 Year Plan?
  (Mr Boateng) I think that certainly in relation to the work that is being done to underpin with fiscal incentives travel plans, that has the potential to make a contribution. I think too in relation to the cost of using a vehicle in relation to VED, for instance, and rural areas, that can make a contribution, and similarly in terms of the tax on fuel. All of those have a potential. If the question is, should we be doing more, then what I think I would want to say is that there may well be other things that we can do by way of fiscal incentives to encourage that sort of desirable objective. Certainly in terms of what we are doing to reduce pollution and the changes that we have made in relation to fuel duty, the green fuel challenge and the like, all of those have a capacity to improve the urban environment and the quality of life.

  761. Any prospects of any changes to VAT in terms of new build, old build and where it is?
  (Mr Boateng) That is an issue over and above the specific issue of transport.

  762. No, it is very fundamental to transport, is it not?
  (Mr Boateng) Yes.

  763. Because if you can reduce the amount of travel, then it actually reduces congestion, which is a fundamental part of the 10 Year Plan.
  (Mr Boateng) Sure, and I think it is undoubtedly the case that amongst the range of options to be considered in relation to—

  764. I did not ask you for a range of options. Has there been any progress?
  (Mr Boateng) I think there has been some progress, but I do think that again—and I know it may well not be what the Committee wants to hear, but I do think it is the truth—a balanced judgement has to be made, and it takes into account—

  765. It is not a question of a balanced judgement, it is finding out what the judgement is.
  (Mr Boateng) No, I am afraid it is. It is a question of a judgement.

Chairman

  766. What is the judgement of the Treasury in relation to the question that is being put to you, Minister?
  (Mr Boateng) I think what I would say is this. All decisions around changes in levels of taxation require a balanced judgement. That is something—

Andrew Bennett

  767. All right, I accept it is a balanced judgement. But if you are making a balance, you have something on one side of the scales and you have something on the other side. All we would like to know as a Committee is what is on both sides of the scales? Is a change in VAT going to make a significant contribution to the 10 Year Plan? And I might as well add, since I am not sure I am going to get an answer, stamp duty. Do changes in stamp duty make a contribution to encourage people to live closer to their work—in other words, part of the Government's urban renaissance?
  (Mr Boateng) The changes proposed and being implemented in relation to stamp duty and to deprived areas, the changes proposed and being implemented in response to Lord Rodger's recommendations, all of those have the potential to contribute to the wider objectives outlined in this 10 Year Plan.

  768. How much?
  (Mr Boateng) I will certainly write to the Committee to give the figures. They will indicate that some progress has been made. No doubt there is more progress which could be made. The scale of that progress and its rapidity will depend on the balance judgment to which I have referred the Committee.

  769. On a different topic, motoring costs, if they are coming down over the next ten year period significantly what is your estimate of the impact that will have on carbon dioxide emissions, congestion and traffic?
  (Mr Boateng) We are on target to meet our Kyoto obligations.

  770. That is not the question I asked you.
  (Mr Boateng) It is the answer I am giving. We are on target to meet our Kyoto obligations. I do believe that you will find in relation to any audit, and it is early days yet, of the steps we have taken in relation to the green fuel challenge, the steps we are taking in order to address issues of congestion and the environment, that in all those areas there will be some progress made. If your question is, is there more we can do, my answer is yes.

  771. I would have thought it would have been reasonable for you as a minister to have a set of graphs which showed you the impact of each of these policy decisions, so you could see what the implications would be of motoring costs staying constant, motoring costs going up. Are those figures available?
  (Mr Boateng) I am not sure I can give you a set of graphs but Mr Maxwell can refer you to a table.
  (Mr Maxwell) Table 7.2 of the PBR for November 2001, but also previous Budget and PBR documents, sets out the environmental impact of different tax measures. The point that is useful is that it is not just the level of the tax, it is often the structure of it. Take company car tax or vehicle excise duty, for example, it is possible to restructure those taxes to create extra incentives for more efficient vehicles which would have CO2 benefits and also benefit local air quality.

Chairman

  772. And you can demonstrate those in your table?
  (Mr Maxwell) Table 7.2 gives a list of measures introduced most recently.

  Chairman: Thank you, Mr Maxwell, that was almost a constructive answer.

Helen Jackson

  773. This is simple as well. How much overall by vehicle-related tax do you collect in a year?
  (Mr Boateng) I can give you these figures. For the last year, 2001-02, on fuel duties, 22.5 billion; on vehicle excise duty, 4.5 billion; on company cars and the revenue we raised from that, 2.36 billion. That compares, going back to 1998-99, to 21.6 billion, 4.7 billion and 2.18 billion respectively.

  774. So you take in tax a substantially greater amount of income than you invest in public transport or the transport infrastructure?
  (Mr Boateng) It certainly is not revenue-neutral. There is not any direct read-across and there never has been any pretence that there was.

  775. What I am wondering, you see, is that the 10 Year Transport Plan is based on significant investment, but significant investment which will not necessarily all be at the beginning of that spending programme but will be across the whole timescale. Can you tell us that the investment plans are absolutely secure even though the tax-raising powers may vary?
  (Mr Boateng) The commitment is absolutely clear.

  776. I can see you writing us little notes on this!
  (Mr Boateng) The commitment is absolutely clear. The commitment is for that level of public investment over that period. If you ask me to anticipate the read-across between that and what we raise in revenue from those duties that I have just outlined to you, there is not any direct read-across, because it is not dependent on that. There is a clear public spending commitment contained in this 10 Year Plan that is not dependent on the levels of those revenues, but as you yourself have appreciated, it does in fact need to be, because those are not hypothecated revenues.

Chairman

  777. The Secretary of State did tell us today that many of the new costs would be front-loaded. Are you aware of that?
  (Mr Boateng) I am not going to—

  778.—discuss money, no, no, no.
  (Mr Boateng) I am not going to seek to provide a commentary on the Secretary of State's evidence.

Helen Jackson

  779. No, but if there is a shortfall in the investment required, which needs to be raised from the Treasury, how prepared are you? What linkage might there be with the tax-raising powers you have?
  (Mr Boateng) If there is a shortfall, that will be a matter that will need to be picked up in successive Comprehensive Spending Reviews. It is not linked to the amount of revenue that is raised with fuel duty, vehicle excise duty and company cars.

 


 
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