FUEL AND POWER (Hansard, 12 July 1989)

§ Madam Deputy Speaker (Miss Betty Boothroyd)
With this it will be convenient to take Government amendments Nos. 53 to 55.

§ Dr. Marek
We should perhaps say a little about this amendment, because, again, some congratulations to the Government are in order. They have looked at the problems of the distribution of liquefied petroleum gas that we discussed in Committee and they have made certain changes, which I believe will be considered correct. Unfortunately, the hon. Member for Tatton (Mr. Hamilton) is not in the Chamber.

§ Mr. Neil Hamilton (Tatton)
I am.

§ Dr. Marek
I apologise, but I did not see the hon. Gentleman. I wonder whether he could tell us whether he feels that the changes are right. Will they mean that there will be much less administration for small holders and sellers of LPG?
Perhaps the Minister could elaborate a little on amendment No. 55, where it talks about quantities of fewer than 2 tonnes. Is that a realistic limit—too large or too small? I presume that the Government believe that it is about right.

§ Mr. Neil Hamilton
I know that Opposition Members often wish that I were not here, but I am sorry to disappoint the hon. Member for Wrexham (Dr. Marek) by being here now.
I thank my hon. Friends on the Front Bench for going so far to meet the concern that I expressed in Committee. I heartily endorse the Government's amendments. I hope, therefore, that the spirit of comradeship which has now broken out in the Labour party will spill over on to this side of the House, and that the hon. Gentleman will find it possible within his breast to compliment the Government, as I do.

§ Mr. James Wallace (Orkney and Shetland)
The hon. Member for Tatton (Mr. Hamilton) has raised some of the issues that I wished to discuss. It appears that the Government have gone a considerable way to meeting a number of the points raised in Committee. However, I hope that the Minister will say a few words of explanation. Certainly he will recognise—as I have had correspondence with him on this point—that in my constituency a large number of people are dependent on cylinder gas. In particular, one of the community co-operatives on the small island of Papa Westray expressed its concern about the possible damage to business, the adverse effects on cash flow and the general administrative costs. It should be borne in mind that for the domestic consumer liquefied petrolum gas is VAT zero-rated, so there is no net gain to the Treasury when one considers input and output VAT. I would be interested to hear from the Minister whether he believes that the amendments will ease the burden that it is feared will fall on many small retailers, especially those in rural parts of the country.

§ Mr. Lilley
I am grateful to the hon. Member for Wrexham (Dr. Marek) for his tribute to the amendment. I pay tribute in turn to my hon. Friend the Member for Tatton (Mr. Hamilton) for raising the issue so forcefully in Committee and causing us to look again. That has resulted in the amendments, which I believe will meet the two principal objections. The first was that in various parts of the United Kingdom—Ulster, Scotland and especially the west country—a lot of liquefied petroleum gas is distributed by very small distributors in small quantities. Therefore, they are not registered for VAT and they might give up carrying out that useful service if faced with the requirement to register for VAT, even though that would enable them to claim back any VAT on the cylinders. I believe that we have got round that to the satisfaction of the industry by zero-rating consignments of 20 cylinders or fewer. I understand from my discussions with the Liquefied Petroleum Gas Industry Technical Association and others that that meets its concerns about those small distributors, and that it settles that problem.
1031 Secondly, there was the question of whether the normal minimum requirement should be in terms of delivery size or tank capacity. Again, after discussions with the industry, I am persuaded that the tank capacity requirement, as a measure of what is a normal delivery to a final consumer, is appropriate. In response to the specific question from the hon. Member for Wrexham, I can tell him that the 2 tonnes mentioned in the amendment was decided after discussion with the industry and meets its requirement. I am glad that that has all-party support.