Finance Bill

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Mr. Jack: I wish to add to my hon. Friend's comments after reading paragraph 21 of the notes on clause 58 and schedule 19, to which the amendment refers. It says that part of the measure's purpose is

    ''to encourage a shift towards cleaner cars.''

11.45 am

In his reply, the Minister used the sort of logic that says that, because the clause only defines—in this context—a cleaner car as one with lower carbon dioxide emissions, all arguments that support help for other forms of cleaner cars are off limits. He then told us that he felt that he had done his bit on behalf of the Government to encourage LPG cars because he had put before the Committee a range of other measures. That is a slightly bent piece of logic. It says that we will not have a consistent policy across all areas

    ''to encourage a shift towards cleaner cars'',

in the words of the Treasury. We will do some things in some areas but not in others. My hon. Friend the Member for Christchurch put his finger on the lack of consistency in encouraging the uptake of cars that use embryonic technologies. In CO2 terms, perhaps the LPG car is marginally behind best practice in diesel or petrol. However, in cost-benefit terms, the LPG car has many benefits, if one believes the science on the relationship between air pollution and health.

The Economic Secretary says that he is happy to sustain only a partial package to support cars that do not cause certain health problems. I hope that his conscience is happy with that, because one advantage of LPG emissions is that, in many cases, they do not present the health risk to the public that are presented by the cars included in the Minister's measure on CO2. At a time when the Government have told us that their priority is the improvement of the nation's health, it seems odd that they are ruling out help to do exactly what they want to encourage—in their own words, a ''shift towards cleaner cars''.

Rob Marris: I would like to say for the benefit of the Committee—certainly for the benefit of the hon. Member for Christchurch—that, despite the hon. Gentleman's eloquence, I am not convinced. I am reassured by the comments of the Economic Secretary, because he has said that the measure is part of an overall package, and I accept that. I am also convinced that the Government will keep the matter under review as time goes by. That is what is necessary to reassure me, and I am reassured.

John Healey: In the first place, let me reassure the hon. Member for Christchurch that I am far too junior a Minister to have any spin doctors to tell me what to do. The right hon. Member for Fylde urged consistency across the board. We face different challenges in the environmental field, and different measures are required to deal with them. It is less a lack of consistency and more a question of judgment about

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the appropriate economic and fiscal instruments for particular environmental objectives that underpins the clause and my arguments this morning.

I am delighted that my hon. Friend the Member for Wolverhampton, South-West has resisted the sweet encouragement and temptations from Opposition Members. Finally, I say again to the hon. Member for Christchurch that the single focus and purpose of the clause is to tackle greenhouse gases and the global warming problem by reducing CO2 emissions from vehicles on the roads in this country. However, I shall pass on to my right hon. Friend the Chancellor the comments of TransportAction on the fuel differential duty and of the hon. Gentleman as very early representations for the Budget in 2003.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 15.

Division No. 4]

AYES
Chope, Mr. Christopher
Davey, Mr. Edward
Hoban, Mr. Mark
Jack, Mr. Michael
Luff, Mr. Peter
Pugh, Dr. John

NOES
Brennan, Kevin
Cruddas, Jon
Cunningham, Mr. Jim
Harris, Mr. Tom
Healey, John
Kelly, Ruth
Luke, Mr. Iain
McKechin, Ann
Marris, Rob
Pond, Mr. Chris
Ryan, Joan
Smith, Angela
Southworth, Helen
Sutcliffe, Mr. Gerry
Wright, David

Question accordingly negatived.

Mr. Chope: I beg to move amendment No. 85, in page 248, line 25, at end add—

    '7 In section 82 (qualifying hire cars), in subsection (1), in paragraph (b) substitute ''(3) or (4)'' with ''(3), (4) or (4A).''

    8 In section 82 after subsection (4) insert ''(4A) The fourth case is where the car concerned falls within subsection (1) of section 45D''.'.

This is a short point. The amendment would extend the 100 per cent. allowance for low-CO2 emission cars to companies that lease cars to members of the public. That would widen the scope of that benefit so that individuals, rather than just corporate owners, could benefit. That could be passed on to private owners via lower leasing costs. I should have thought that that would be consistent with the Government's objective of ensuring that there is a higher take-up of such vehicles on our roads.

John Healey: As the hon. Gentleman explained, the amendment would ensure that cars with low carbon dioxide emissions that are for hire to, or for carrying, members of the public are excluded from those special rules that apply to cars that cost more than £12,000. I can confirm that the Bill will achieve that result, and will widen the benefit that the hon. Gentleman is keen on. The effect of the measure will be that all new business cars with low carbon dioxide emissions that are registered or purchased on or after Budget day will be excluded from the special rules that generally apply

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to cars costing more than £12,000. That includes low-emission cars for hire to, or for carrying, members of the public.

I hope that the hon. Gentleman will regard his amendment as unnecessary and be prepared to withdraw it.

Mr. Chope: I am grateful to the Minister for that explanation, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 19 agreed to.

Clauses 59 and 60 ordered to stand part of the Bill.

Schedule 20 agreed to.

Clause 61

Expenditure on green technologies: leasing

Mr. Chope: I beg to move amendment No. 17, in page 40, leave out lines 14 and 15 and insert—

    '(5) General exclusion 6 shall not apply to expenditure incurred on or after 17th April 2002.'.

Again, this is a small issue, but it is important nevertheless. Many small and medium-sized enterprises make little or no profit, and so cannot use the capital allowances that are available. Giving those allowances to lessors would make cheaper finance available to small and medium enterprises that do not make big enough profits, as they could then ''sell'' their capital allowances to leasing companies. That would be helpful for small companies seeking such finance. I do not know whether such a provision is also incorporated within the Bill, but if it is not, it should be, which is why I tabled the amendment.

John Healey: This amendment would include expenditure on assets for leasing in all the first-year allowances schemes. Therefore, it significantly widens the rules introduced in clause 61, which target the special schemes that encourage investments in ''green'' technologies, to help the environment.

It might be helpful if I explain why we have introduced clause 61. Some Committee members will recall the discussions of the Finance Bill that took place last year. Since then, we have continued to listen to representations, and considered carefully the case for extending the scheme to include assets for leasing. We are now satisfied that extending those special allowances to ''green'' equipment for leasing will ensure the widest assistance to the uptake of those technologies, for increasing environmental gain. That is the key aim of the ''green'' technology allowances.

The change will encourage all businesses to look towards ''green'' alternatives when they make their equipment investment decisions. That choice may be made by the user of the equipment, but it might also be made by the person who will lease, let or hire the equipment.

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The amendment misses the point and focus of the clause. If adopted, it would include expenditure on assets for leasing in all the first-year allowance schemes, some of which have different purposes—for example, schemes that encourage investment by specific kinds of businesses, such as SMEs.

I wish to explain why we remain unconvinced that there is a clear case for extending these schemes to include assets for leasing. If a lessor were to receive first-year allowances, he or she might pass much of the benefit to the lessee by reducing the rentals that the lessee must pay to use the asset, but the effect on each payment is likely to be small, as the value of the benefit would be spread over the term of the lease. It has not been convincingly shown that a reduction in rents would have any real impact on investment decisions by the businesses targeted by the schemes. Therefore, the costs would almost entirely be dead weight.

However, the Inland Revenue is continuing to have constructive discussions with representatives of the leasing industry, who have indicated that they generally welcome the Bill's proposals impacting on asset finance. I understand why lessors also want first-year allowances more generally, but at present the case for that has not been proved. I advise the Committee to reject the amendment—but I hope that, having heard my explanation, the hon. Gentleman might agree to withdraw it.

Mr. Chope: I am grateful to the Minister for that explanation. I am pleased that the Inland Revenue is considering further some aspects of the matter, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr. Peter Luff (Mid-Worcestershire): I rise in search of information, and nothing else, because anything that reduces taxation and encourages ''green'' technologies is to be welcomed.

Will the Minister say what are the qualifying energy-saving technologies that the clause deals with? The notes on clauses refer us to a website, but we cannot communicate with websites during Committee proceedings. We are told that, currently, there are investments in eight technology groups that are set out in the energy technology list, which was issued by the Secretary of State for Environment, Transport and the Regions—that takes us back a while. It remarks that, subject to state aids, further technologies will be added in late 2002. This clause is specific about the impact on cars and gas refuelling equipment, which are already dealt with in earlier clauses, but it is vague about what those other energy-saving technologies might be. How comprehensive do the Government intend the assistance to be?

I might need to continue for longer to allow the Minister to get assistance from his officials. I shall sit down and hope that he has the answer in front of him.

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12 noon

 
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