Finance Bill

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John Healey: I assure the hon. Member for Fareham (Mr. Hoban) that we have considered the issues that he raises, but there are problems with his proposals. Amendments Nos. 41 to 51 would break the link between the tax relief that community amateur sports clubs will enjoy on their income and the condition that they should spend that income on their main purpose of providing facilities for, or promoting participation in, an eligible sport. The amendments would provide community amateur sports clubs with tax relief on their income, without ensuring delivery of the intended outcome of providing facilities so that local communities can participate in sport.

Clearly, the amendments would also open up some tax avoidance opportunities. I urge members of the Committee to consider the implications of the proposal. The requirement that the income should, as a condition of the relief given, be applied for the community amateur sports clubs' main purpose of providing sports facilities merely replicates the arrangements for charities, whose income is only exempt if it is applied for charitable purposes. There is no reason why such a condition should not apply to sports clubs, too. I hope that the hon. Gentleman will withdraw the amendments. If he does not, I shall ask my hon. Friends to reject them.

Mr. Hoban: I am disappointed by the Minister's response. I had hoped for a more substantive reason than that of simply mirroring the rules for charities. The vast majority of the spending of many community amateur sports clubs' is on qualifying purposes. Two clubs in my constituency to which I spoke said that 70 to 90 per cent. of their income is spent on qualifying purposes. Although that sample is small, I believe that it is representative of community amateur sports clubs elsewhere.

The clubs are under pressure from their members to ensure that membership subscriptions and income earned from bars are applied to the clubs' purpose, and to ensure that coaching and facilities allow members to enjoy the sports that they joined a club to participate in.

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I really think that the measure places a disproportionate burden on sports clubs. The vast majority of clubs will spend the greater part of their money on qualifying purposes. They are under pressure to ensure that that happens because members are a very demanding group and they will ensure that money is spent properly in the interests of the club rather than on non-qualifying purposes.

I do not intend to press the amendment to a vote, although the Minister's response was disappointing. It will disappoint treasurers and sports clubs throughout the country who want help from the Government rather than a further layer of rules and bureaucracy. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 18 agreed to.

Clause 58 ordered to stand part of the Bill.

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Schedule 19

Capital allowances: cars with low carbon dioxide emissions

Mr. Christopher Chope (Christchurch): I beg to move amendment No. 18, in page 246, line 19, at end insert—

    '(ia) is a car adapted to run on road fuel gas (with an applicable CO2 emissions figure not exceeding 240 grams per kilometre driven), or.'.

The Chairman: With this it will be convenient to take the following amendments: No. 19, in clause 59, page 39, line 31, at end insert

    'or

    (aa) it is a car adapted to run on road fuel gas (with an applicable CO2 emissions figure not exceeding 240 grams per kilometre driven) or.'.

No. 20, in schedule 20, page 249, line 29, at end insert—

    '''natural gas'' shall include ''road fuel gas'';

    ''road fuel gas'' has the same meaning as in section 168AB of the Income and Corporation Taxes Act 1988.'.

Mr. Chope: The amendments are important because they probe the Government's commitment to liquefied petroleum gas. The Government say in the Bill that there should be enhanced capital allowances for several low-emission vehicles, but not for others. I noticed that a press release issued at the time of the Budget said,

    ''100 per cent. enhanced capital allowances for low emission cars''.

As with so many things, when one examined the small print, one found that that applied only to cars with low emissions of CO2 but not other pollutants.

The amendments would bring cars that run on LPG within the 100 per cent. first-year allowance. It would not address all cars that run on LPG, but cars that run on LPG and produce relatively low levels of CO2.

At present, it is not possible for an LPG car to meet the 120 g per km test but it is possible for such a car to meet the 240 g per km test, which is why the amendment has been drafted in such a way. There is suspicion that the Government are paying lip service to green technologies. However, when the ordinary man in the street thinks seriously of investing in an LPG-fuelled car or a dual-fuel vehicle, the Government start to go cold on whether they will provide a long-term incentive for such investment in greener technology.

The suspicions are not wild. They are supported by the Government's refusal to confirm that the fuel duty differential between LPG and other fuels—diesel and petrol—will extend beyond 2004. That is a near time horizon. I recently renewed my House of Commons pass and noticed that it now extends to 2006. We are dealing not with the renewal of a pass but with people investing in new models of vehicle. We should encourage vehicles that use both LPG and diesel or petrol and we should encourage people to consider LPG vehicles as a serious option.

Having read the Budget day press release, we read with some amazement the small print of the Bill, which states that LPG vehicles will be excluded from the benefit of 100 per cent. enhanced capital allowances,

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notwithstanding the great benefits that accrue to the environment and people's health from LPG compared with diesel or petrol-powered vehicles. Box 7.1 of the Red Book shows the days on which United Kingdom air pollution is moderate or higher. UK air pollution is generated not by CO2 emissions, which impact on climate change, but by other pollutants that largely, especially in urban areas, result from the combustion of road fuels. In paragraph 7.7 on page 127 of the Red Book, the Government state:

    ''Poor air quality poses risks to human health, quality of life and the natural environment. It affects everyone, particularly children and elderly people . . . In general, air quality in the UK is improving . . . But much . . . remains to be done . . . exposure to air pollution continues to be associated with an unacceptable number of hospital admissions and premature deaths each year.''

All Committee members would agree wholeheartedly with those sentiments. However, now the Government have the chance to give an incentive for people to invest in LPG-powered vehicles that also have low CO2 emissions, and they have missed the opportunity—unless they take that which the amendments present.

I remind the Committee of some of the benefits that flow from LPG compared with diesel and petrol, the significance of which is sometimes ignored. Although LPG vehicles tend to emit less carbon dioxide than do conventionally fuelled vehicles, no LPG vehicle can yet meet the 120 g carbon dioxide test. If that is the sole criterion for what constitutes low-emission vehicles, LPG vehicles will be unable to meet it. However, LPG engines are 50 per cent. quieter than diesel engines and marginally quieter than petrol engines. As we know, noise is a big issue for many of our constituents. LPG emissions of benzene are about one thirteenth those of petrol and half those of diesel. Petrol emits about two and a half times the amount of carbon monoxide emitted by LPG.

The health implications of particulates are the most significant factor. Recent tests have shown that LPG emits 99 to 99.8 per cent. fewer ultra-fine particles than even ultra-low sulphur diesel. For every 1,000 parts that enter the atmosphere as a result of burning ultra-low sulphur diesel, LPG results in only between about two and 10 parts. That is an amazing improvement in terms of reducing particulate emissions, and the Government and the Committee should take note of that. Also, vehicles that run on LPG emit one fifth of the level of sulphur dioxide that is emitted by petrol vehicles, and one ninth of the level that is emitted by diesel vehicles. With regard to oxides of nitrogen, LPG engines offer a 90 per cent. reduction of NOx compared with diesel, and a 40 per cent. reduction compared with petrol.

Therefore, if the Government truly mean to provide 100 per cent. enhanced capital allowances for low-emission cars, there is a case for including all LPG vehicles within that enhanced capital allowance scheme. In that regard, this amendment goes part of the way. It says, ''Let us go along with the overriding objective of reducing carbon dioxide emissions because of the impact of that on global warming, but let us also include LPG vehicles, which are reducing carbon dioxide to a slightly lesser extent, but which are

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also producing corresponding and much larger benefits by reducing pollutants of other kinds that impact on the health and environment of our people.''

I hope that the Government will take these amendments seriously, and that the Minister, in his response to the debate, will say something about why the Government are refusing to say anything about making a commitment with regard to extending the fuel duty deferential for LPG beyond 2004—which I hope that he will accept is a short-term horizon.

I hope that the amendments will find favour with the Committee.

Dr. Pugh: I hope that you will forgive me, Mr. Benton, if my contribution ranges over several aspects of this schedule—and if it also, perhaps, refers to amendments that are yet to be discussed.

The Minister said that I had been mealy-mouthed in my praise of his recommendations about community sport, and so on. I shall not be mealy-mouthed in this case. I shall not accuse the Minister or the Government of being insincere in their attempts to produce good behaviour by fiscal measures. They want us to use vehicles that produce less pollution, and thereby to create a better environment.

However, we must test what is being presented to us to discover whether it is a real improvement or simply a cosmetic improvement, and to see whether the recommendations, as they are currently framed, offer a sufficiently refined instrument to do the job.

There is a lot of premature optimistic talk about the environment and the absence of pollution. The Automobile Association states that, by the agreement of car makers alone, the Kyoto protocol's demands on motorists will be met in this country, and the Government White Paper of 1998 stated that there would be a 70 per cent. reduction in particulate emissions between 1996 and 2010.

All of that is good news and, in the Government's defence, we must accept that what we have before us is not an isolated recommendation, but part of a package—it does not stand alone, as I am sure that the Minister will say. However, we must ask ourselves whether the instrument is sufficient do the job that it is intended to do.

The Government have every encouragement to do a little more than they are doing at present. The recently published European Transport White Paper encourages Governments to go beyond the minimum goals. It states that the new Community rules

    ''will help member states create the necessary economic and legal conditions for exceeding objectives.''

In other words, Europe is giving a green light—and a rich menu to choose from. However, the Government appear only to be encouraging purchasers of cars to choose a car that has a low rate of CO2 emission, with the intention of encouraging manufacturers to produce more of them. In one sense, that is a sensible strategy, because the vast majority of people will buy standard petrol cars that have CO2 emissions, and it is far better that they buy cars with low CO2 emissions. However, the legislation does not sufficiently benefit or highlight alternatives, to which the amendment refers. The European Commission set

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targets of 2 per cent. for the use of biofuels to be reached more or less now, and 6 per cent. by 2010. It also set a target of 20 per cent. for replacing conventional fuels with substitutes by 2020. The legislation seems a long way from producing that by itself—it is not sufficiently hard-edged. The Government have an opportunity to offer severe fiscal encouragement to alternatives such as biofuels and natural gas, and, in the long term, hydrogen.

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The Government say that they are looking ahead, and propose in clause 60 to encourage imaginative developments, but there are things that they could do now which, especially in the case of LPG and biofuels, could be done at little cost. On our way here today, few of us would have passed many LPG or biodiesel vehicles, and I assume that none of us passed a hydrogen-driven vehicle or would have recognised one had we done so. In offering fiscal encouragement, the Treasury is hardly hampering its finances but, in the long term, it could send an enormously important signal as to where the future lies. The Government have missed the opportunity to do so in this legislation, and I should like the Minister to tell us how they might do so.

 
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