Angela
Eagle: Will the hon. Gentleman give
way?
Mr.
Gauke: I am about to sit down. I might well be satisfied
by the Exchequer Secretary’s arguments for the introduction of
this process, but it appears to have cost £10 million. We could
just have returned to the system we had before. It would be helpful if
she could explain that point. Subject to those questions and given that
we debated VED at some length in the Committee of the whole House, I
have no further
remarks.
Angela
Eagle: Clause 13 will change vehicle excise duty rates for
cars and vans from 1 May 2009. It follows the introduction of a system
of banding for VED on the basis of carbon dioxide emissions that
provides a signal to motorists about the environmental impact of using
cars. The system applies to cars registered from 1 March 2001 onwards.
The signal has succeeded in contributing to a fall in the CO 2
emissions of new cars of 17 per cent. since 1997. Other things
have contributed to that such as new engine technologies and new
regulations. Road transport still accounts for 20 per cent. of all UK
emissions. By
the 2008 Budget, there was a clear case for further reform of VED. We
therefore announced the increase in the number of VED bands from seven
to 13 in 2009 to strengthen the incentive to choose the best in class.
The 2008 pre-Budget report confirmed those reforms to the
structure of CO 2-based VED, but announced that to help
motorists during the economic downturn, rates for all cars would go up
by no more than £5 in 2009 and that rates for cars emitting less
than 140 g of CO 2 per kilometre would be frozen. Budget 2009
confirmed the announcements in the pre-Budget
report. The
Government are committed to moving towards a low-carbon transport
system through the introduction of measures that support the
development of green technologies and that provide the right signals to
encourage efficiency overall. The reforms to CO2-based VED
will allow the system better to reflect changes in the fuel efficiency
of vehicles and will provide a greater incentive to drivers to choose a
lower carbon car. It is estimated that the reforms will save about 1
million tonnes of CO2 by 2020. That will support the
UK’s broader aim of reducing transport
emissions. The
measure does not apply to cars and vans registered before 1 March 2001
because comprehensive data on CO2 emissions are not
available for those vehicles. Instead, VED will be set at two rates
based on engine size, as under the old system. There will be a higher
rate for vehicles with larger engines and a lower rate for those with
smaller engines. The clause will increase both rates by £5,
which is in line with changes to VED rates for post-2001 cars. That is
the basic structure of what we are
doing. We
are introducing VED bands because we believe that it is the right
structure to move towards. However, because we recognise that people
are under pressure during the recession and we do not want to add to
it, we have made modest changes this year, such as the
£5 increases and the real-terms freezes. In future
there will be a role for the 13 bands, but a more stable and simple
approach is appropriate in this year’s economic
conditions.
Mr.
Gauke: The Exchequer Secretary said that the changed
approach to VED was a consequence of the economic conditions. Another
Government response to the economic conditions that relates to motoring
is the car scrappage scheme. If Mr. Atkinson indulges us,
will she clear up the confusion over VAT and car scrappage that seemed
to undermine the scheme on its first
day?
Angela
Eagle: First, there is no confusion over VAT and car
scrappage. The problem, as I understand it, is that two companies, Ford
and Nissan—
The
Chairman: Order. I am sorry to stop the Exchequer
Secretary, but this whole issue is very wide of the clause.
Angela
Eagle: It is frustrating to have to answer the question
asked by the hon. Member for Fareham without being able to go into
it.
The
Chairman: Answer it quickly.
Angela
Eagle: I will. The confusion, as I understand it, was
about whether the manufacturer could demand that its dealership made
part of the £1,000 payment, which the manufacturer was meant to
make. The Government and the manufacturer pay £1,000 each, but
there was some dispute about how that should work out for the
dealerships. It was not a VAT issue and the problem has now been
resolved. The scrappage scheme is going ahead, and it is attracting a
great deal of interest. We hope that it will support the car industry
at this very difficult time.
With that
quick explanation, I hope that hon. Members will support clause
13.
Question
put and agreed to.
Clause 13
accordingly ordered to stand part of the Bill.
Schedule
4 agreed to.
Clause
15Rates
and rebates from Spring
2009 Question
proposed, That the clause stand part of the
Bill.
Mr.
Gauke: Fuel duty was debated at some length on the Floor
of the House, and I have no intention of running through the whole
argument again. However, I should like once again to put on record our
concern at how the Government address it. Sometimes, fuel duty
announcements are postponed and postponed again, and it is then
unexpectedly increased. We have seen a great deal of evidence of that
in the past couple of years.
Clearly, the
Government feel that they have the political ability when oil prices
are lower to raise fuel duty, but it is difficult for them to do so
when oil prices are
higher. Mr.
Jeremy Browne: I differentiate future duty
increases and those that have already been implemented. What cumulative
losses would the Exchequer have incurred, and what consequent increases
in public debt would have resulted, if the Conservative-Scottish
National party vote on the Floor of the House not to proceed with the
April 2009 duty increase had been successful? The policy would
obviously have had an impact on the public finances as a
whole.
Mr.
Gauke: We voted that way on the Budget resolutions, as was
made clear by my hon. Friend the Member for Runnymede and Weybridge
(Mr. Hammond), because the way in which the Government
addressed fuel duty was lacking a coherent structure. They have
increased it and decreased it, and not implemented previously announced
proposals. We have advocated, as we said on the Floor of the House, a
fair fuel stabiliser. Given that we have debated the policy before, I
have no intention of offering another detailed
explanation.
Mr.
Browne: I am not seeking to debate that Conservative
policy again, but I wanted to make this specific point: the Government
may or may not have a coherent policy for fuel duty increases, but
surely any Opposition party that is even vaguely serious about assuming
office would have made an estimate of the adverse impact on the public
finances of voting against a duty increase that had already taken
effect. It would have cost the Exchequer a certain amount every day,
had the joint Conservative-SNP policy been successful. I cannot believe
that anyone who wished to be in office would not have made that
calculation and shared it with the
Committee.
Mr.
Gauke: I am somewhat confused by the hon.
Gentleman’s position, given that his party voted against the
September increase. I am not going to question him as to what the cost
to the Exchequer of that would be. Our position on the Budget
resolution reflected our concern about that lack of a coherent
framework. I put that again on the record as an explanation for our
vote
on that Budget resolution. We have debated fuel duty before and, given
the time, I have no intention of reopening that debate
again.
Mr.
Browne: I shall make an extremely brief point because
these subjects have been discussed at length. I wanted to expand
briefly on the two interventions that I have just made. There is a
difference between April 2009 and September 2009. In May, April has
already happened and September has yet to happen. I do not know what
the price of fuel will be in September, but I certainly knew in May
what the price of fuel was in April. The decision, or otherwise, not to
go ahead with September 2009 duty increases is not costing the
Exchequer anything today, whereas it would have done if the
Conservative-SNP amendment had been passed, because every single person
at the pump today would be contributing less in
taxation.
Angela
Eagle: The ready reckoner is that every 2p rise is
£1 billion a
year.
Mr.
Browne: The patterns of demand could vary slightly
throughout the year, but if one divided the figure by 365 one could get
a daily clock running on the level of extra public borrowing that the
Conservative party supports through this measure alone. I note that the
SNP has lost interest in the subject, but the concern is that when we
have a public deficit of £175 billion, no serious political
party should vote with minority parties, from Scotland or anywhere
else, to produce good publicity for election leaflets without regard
for the public finances. I do not doubt that there are people in the
Conservative party who have honourable intentions to go with their
burning ambitions, but I fear that unless they have coherence to go
with them they will end up being
disappointed.
The
Chairman: Order. I think that the hon. Gentleman is
referring back to a debate that we have already had. I shall be
grateful if he can limit himself to the
clause.
Mr.
Browne: I had no more to add, Mr. Atkinson. We
have managed to get to a figure. It is helpful to cost the Conservative
proposals, and we will now bear those in mind every time we hear any
lectures or concerns expressed about the state of the public
finances.
Angela
Eagle: I suspect that we have just had the outline of a
Lib Dem Focus leaflet. I am sure that hon. Members will look forward to
seeing it coming through their doors soon.
The main fuel
duty rose by 1.84p per litre on 1 April this year. Duty on rebated oils
rose in proportion to the main fuel duty increase on the same date,
while duty on road fuel gases increased such that the duty differential
for compressed natural gas was maintained, but the differential for
liquefied petroleum gas was reduced by 1p per litre. The clause also
increases the duty rates for leaded petrol and aviation gasoline, with
effect from 1 May 2009. Duty on leaded petrol will increase
on that date by 1.84p per litre and duty on avgas will increase by 2.31
pence per litre. I felt that I had to get that on the record.
Question
put and agreed to.
Clause
15 accordingly ordered to stand part of the
Bill Ordered,
That further consideration be now
adjourned. —(Mr.
Blizzard.) 4.5
pm Adjourned
till Tuesday 2 June at half-past Ten
o’clock.
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