HC Deb 04 April 1995 vol 257 cc1585-93

Amendment made: No. 69, in page 170, line 6, at end insert— 'Exemption for vehicles used between different parts of land 3A. In Schedule 2 to the 1994 Act the following shall be inserted after paragraph 20— "Vehicles used between different parts of land 20A. A vehicle is an exempt vehicle if—

  1. (a) it is used only for purposes relating to agriculture, horticulture or forestry,
  2. (b) it is used on public roads only in passing between different areas of land occupied by the same person, and
  3. (c) the distance it travels on public roads in passing between any two such areas does not exceed 1.5 kilometres.".'.—[Mr. Heathcoat-Amory.]

Mr. Heathcoat-Amory

I beg to move amendment No. 61, in page 176, leave out lines 45 to 49 and insert— '"(2) The annual rate of vehicle excise duty applicable—

  1. (a) to any rigid goods vehicle which is a showman's goods vehicle with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms, and
  2. (b) to any rigid goods vehicle which is an island goods vehicle with a revenue weight exceeding 3,500 kilograms,
shall be the basic goods vehicle rate.'.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

With this, it will be convenient to discuss also Government amendments Nos. 62 to 67.

Mr. Heathcoat-Amory

May I remind hon. Members of the background to this debate? At an earlier stage in the consideration of the Bill, I made it clear that the concession attaching to vehicle excise duty of island vehicles arose from the fact that no plating and testing stations existed on a number of offshore islands. Consequently, vehicles on those islands are relieved of the obligation to pay duty higher than £150 per year.

A change has been made in the Bill. The present system of plating and testing is being replaced by another system: revenue weight taxation. If we did nothing, therefore, all those vehicles would be subject to the full vehicle excise duty rates.

In an earlier debate, I undertook to return to the House with proposals to make some concessions in recognition of the fact that many of those vehicles are low-mileage vehicles and are essential to the well-being of the island communities in which they are based. I therefore met and corresponded with hon. Members representing those islands. I have agreed to continue to grant significant special treatment to lorries on those small islands.

The Government have decided to allow the £150 concessionary rate of vehicle excise duty to continue to apply to smaller lorries—that is, lorries up to 17 tonnes—provided that they are based on the islands, irrespective of the mainland mileage that they may also do. Heavier lorries—defined as being over 17 tonnes—that are based on the islands, but that visit the mainland only to collect or deliver goods from docks, will also be liable for the £150 per annum concessionary rate. The definition of "delivering to docks" will include loading or unloading within 5 km of those docks.

7.15 pm
Mr. Wilson

We have moved a fair distance since we had what became a famous little late-night debate on an amendment tabled by the hon. Member for Argyll and Bute (Mrs. Michie). To some extent, the Minister has educated himself in the ways of offshore islands. He knows of the existence of many islands that he might not have been terribly familiar with that night. He was not served very well by his briefing on that occasion.

Certainly, the proposal before the House is a distinct improvement, although the Minister has not gone as far as we would like him to have gone. That is evidenced by the figures that he supplied us with on the number of vehicles in various categories that will be exempt. In Arran, the main island in my constituency, there are 10 vehicles of 7.5 tonnes and 12 of 17 tonnes. Twenty-two vehicles will be exempt from normal excise duty.

However, there are nine 24-tonne vehicles, six 30-tonne vehicles and 13 38-tonne vehicles—28 in all. Those larger vehicles will for the first time be subject to the same vehicle excise duty level as vehicles based on the mainland. That will be a source of great disappointment to my constituents who operate the firms. They will face an on-cost running into many thousands of pounds, which will inevitably be passed on to islanders. I am sure that that will be the view of my colleagues who participated in the first debate and who will participate again this evening.

The Minister's reason for denying that concession was that it was not practical to work out with the ferry operators a scheme that would have identified the number of journeys that those larger vehicles made per year. He said that it was simply not feasible to give that concession.

I should like to record my disappointment about that. It would have been feasible to establish that those lorries were genuinely island-based and serving island communities. Therefore, the principle that the Minister has accepted in relation to smaller vehicles should have been applied to larger vehicles. We have, however, moved some part of way. For that much, I am grateful.

I want to put the matter in perspective. The islands have not been given a great concession. If the Government want to hand out money through the taxation system, they are perfectly capable of doing so. I do not need to remind the Minister that on 1 April—just a few days ago—a spectacular reduction in taxation took effect which involves the communities that we are talking about.

I refer to the abolition of sporting rates, which will give a minimum of £2 million—or, according to the boast of one Tory Member of Parliament, £5 million—to sporting proprietors, mainly in the highlands and islands of Scotland. I guess that, in his other capacity, the Minister has probably personally gained more from that tax cut than any island haulier will gain from the small concession that has been made tonight.

Mr. Robert Key (Salisbury)

I thank my hon. Friend the Minister. The debate that we had late at night on another occasion was one of the most embarrassing experiences that I have had since I was elected to the House. I am grateful for the statesmanlike and practical way in which he has resolved the problem, which will be of enormous benefit to many islanders the length and breadth of the United Kingdom.

Mrs. Ray Michie (Argyll and Bute)

I am grateful to the Paymaster General for having agreed to reconsider the matter of a concessionary vehicle excise duty rate for island-based lorries. It had come as something of a shock to me and the island communities in my constituencies and those of other hon. Members that, after reassurances from the Department of Transport last year, we suddenly found that the Bill contained clauses that put an end to such concessions.

My impression on the night that we debated the matter at the end of January was that the Minister had had no consultation with the Department of Transport and was somewhat taken aback by—indeed, unprepared for—the strength of feeling expressed. I therefore appreciate the Minister's rethink and the useful meeting and subsequent exchange of letters which I and other hon. Members have had with him.

We now have a definition of an island goods vehicle which, as the Minister said, can be of any size if used only on the islands, or on mainland roads to and from the islands provided that it weighs less than 17 tonnes. I am glad that he agreed to my request to increase the size from 12 tonnes to 17 tonnes. That will be especially welcome to a number of farmers and crofters, because it will allow them, for example, to take cattle or sheep to market and to return with a load of hay from wherever they can get it on the mainland.

The definition of a small island—less than 230,000 hectares—caused a moment of panic, because I thought that the island of Mull must be bigger than that—but not so. The Minister kindly sent a list of islands that come into this category, and asked for any additions. I can tell him that we need to include the islands of Luing and Lismore. He must have been horrified when he saw the number produced by Ordnance Survey, but I can assure him that they do not all have lorries, at least not yet.

Amendment No. 61, subsection (2)(b), would allow the lorries coming off the ferries to travel 5 km without penalty to marshalling yards. That would cover the tractor units that simply ply back and forth on the ferries, which we discussed previously. It is welcomed by my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) because often, on the islands in his constituency, lorry loading and unloading cannot be carried out on the pier but has to happen at a nearby depot or yard.

There is, however, one problem that I should like to draw to the Minister's attention. A lorry larger than 17 tonnes and operating solely on an island may need to come off once in a while for special repairs. For example, I have a constituent on the island of Islay who has a Volvo lorry which can be repaired only at Barrhead near Glasgow. I hope that the Minister's officials will try to solve such problems.

I cannot sit down without making it clear to the House that island-based haulage contractors are deeply concerned by the loss of the concession for those who operate businesses on the islands. I am sure that many companies have written to Ministers. Such companies include Gordon Harper, the haulage contractor on Mull; the Trading and Transport company on Tiree; Rothesay Carriers on Bute; and G. and M. Porter, hauliers on Islay. They all provide much-needed employment which is vital for the prevention of further depopulation and for the protection of the fragile economies of those areas.

The Minister will be aware of the views expressed by the Freight Transport Association, to the effect that it is illogical not also to allow larger lorries the same concession when they are going to the mainland only to deliver goods from, or collect goods for delivery to, the islands. They are not in competition with mainland operators, who are not interested in this sort of work because they do not wish to bear the extra ferry costs.

As I am sure the Minister knows, the cost of living on many islands is very high. For example, on Tiree, petrol is £3 a gallon. There are only three ferries a week in winter, and the return ferry cost for a 32-tonne articulated lorry carrying 20 tonnes, made up of groceries, beer and household goods, or a load of coal, is £416 plus value added tax.

On the island of Mull, the haulage contractor's business depends on the taking of loads to and from the mainland. He also transports timber and granite and returns with animal foodstuffs, fish food for the fish farms, building materials or coal. He does not compete with mainland operators, and is fearful that any increase in the cost of the produce coming from the island will lead to mainland buyers saying that it is too expensive and that they will no longer buy such commodities.

Of course, the islands have recently suffered another blow. The Secretary of State for Scotland announced that the Government were withdrawing the tariff rebate subsidy given to the boats and ships which succeeded the puffers which plied the islands carrying salt and coal. The subsidy is to be withdrawn, so more goods will be hauled on the roads.

I should like to point out that, in terms of Treasury take, the amount that we are debating is peanuts and of no consequence in the larger scheme of things, yet, on the islands, it is the difference between surviving and going out of business, between staying on the islands and leaving. I am not exaggerating when I say that I have absolutely no doubt that some island haulage contractors will have to close.

Although there was some abuse, which was deeply resented by islanders who carry on a legitimate and honest business, it was not widespread. I suggested to the Minister how enforcement could be properly policed. Caledonian MacBrayne in fact records the registration numbers of lorries, and lorries carry a tachograph which record where lorries leave from, where they are going and the distance they travel. I hope, therefore, that the Minister will hold further discussions, especially with the Freight Transport Association, because the problem will not go away.

Finally, I am sincerely grateful to the Paymaster General for having listened, and I appreciate the support that I have received from hon. Members from all parties. From nothing, sensible discussion has yielded a significant change of heart, and I ask the House to support the amendment.

Sir Patrick Cormack (Staffordshire, South)

Gratitude is a very rare commodity in politics, and it is a pleasure to be able to tell my hon. Friend the Paymaster General that I am extremely grateful to him. The debate that took place on that January night was embarrassing. I felt deeply sorry for him, because he was taken unawares in a gale that would have done credit to any island. He has, however, emerged from it a stronger and tougher man, and has listened carefully. I shall not make any churlish comments at all, but wish simply to express my gratitude to him for taking on board a very important case that was made with great eloquence by hon. Members of all parties.

I am delighted that my hon. Friend the Member for Salisbury (Mr. Key) is present—he was Banquo at the feast in the previous debate—and that he has been able to utter on this occasion. The solution that has been reached, while not perfect, will bring enormous benefit to some of the finest citizens in the British Isles.

7.30 pm
Mr. Calum Macdonald (Western Isles)

I congratulate the hon. Member for Argyll and Bute (Mrs. Michie) on moving the amendment which caused the initial debate some weeks ago, and on pursuing the case so tenaciously since. I also thank those Conservative Members who supported Opposition Members when this case was raised, especially the hon. Member for Salisbury (Mr. Key). Without his initial flexible attitude while he was a Minister, we would not have had the opportunity to return to the matter again. The Paymaster General must also be thanked for having agreed to reconsider this issue after what must have been quite a painful night for him.

I am afraid, however, that thanks have to be limited, because it is not a question of benefits being conferred on the islands, but of damage being limited on them. The concession made by the Minister is still much too limited from my point of view and that of my constituents. It will cover only less than half the lorries which were previously exempt. As the hon. Member for Argyll and Bute said, there is no reason in principle why the concession could not have been extended to the whole range of lorries which were previously exempt.

It is also important to note that the initial defence mounted by the Minister on behalf of the Treasury was that taxation had to be absolutely uniform in all circumstances throughout the United Kingdom. It is welcome that the Treasury has been forced to acknowledge that that principle cannot be applied inflexibly or stupidly, and that, indeed, there are profound differences between different parts of the United Kingdom. The position of the islands is very special, and we must take account of it.

It is also important to note that this damage limitation exercise on behalf of island hauliers takes place against a background in which the Government are imposing swingeing cuts in other forms of support for transport and communications to the islands. The abolition of the freight subsidy, which will involve losses of million of pounds to island communities, has already been mentioned. As has been pointed out, the abolition of that subsidy will force more haulage on to the roads and away from direct travel by ship. Hauliers will then, of course, incur the additional costs of carrying freight in lorries which now pay an additional tax.

There is also a continued squeeze on Caledonian MacBrayne and the support that it receives from the Scottish Office. All in all, the picture is very much of island communities continuing to be hit by a combination of measures introduced by the Government in reducing subsidy and imposing new levies and taxes where there was none before.

It has to be emphasised that communication is a vital lifeline to fragile and vulnerable island communities. I do not think that we as representatives of those communities can be satisfied completely with the concession from the Government, and I have no doubt that we shall return to the question in future.

Mr. Heathcoat-Amory

I am grateful for the remarks made by my hon. Friends the Members for Salisbury (Mr. Key) and for Staffordshire, South (Sir P. Cormack). We have indeed tried to meet the legitimate needs and concerns of the smaller islands. We are supposed to be an island race, but I had never realised how many islands there were with small numbers of roads on them. The hon. Member for Argyll and Bute (Mrs. Michie) has just listed a couple more, which we shall undoubtedly add by secondary legislation. We shall consult freely to ensure that they are all on the list, and then there can be no doubt about which islands qualify for this special treatment.

On the question of the servicing of the vehicles, I shall write to the hon. Member for Argyll and Bute about the particular point that she raised.

On the issue of proving that a lorry is island-based and the hon. Lady's other request that all weights of vehicles should be given the £150 concession, we asked ferry companies whether they reliably recorded the registration numbers of vehicles, and it seems that some do but some do not. There is the additional problem that, if an operator were applying for a licence for the year ahead, he would be providing documentation, if that system were accepted, for the previous year, which of course is not exactly the same thing.

Therefore, I think that we have got it right, to give the smaller vehicles an essentially unlimited mileage on the mainland, if drivers wish it, for the £150 concession, provided that they can show that they are island-based.

Larger vehicles—articulated lorries and vehicles which weigh more than 17 tonnes—may, as I outlined initially, make trips on the ferries to the mainland and may unload and load in the environs of the port, which is defined as being within 5 km. But if we were to agree that they could cover unlimited mileage on the mainland in addition, they would start to provide a form of unfair competition to operators based on the mainland, because they would be in receipt of a considerable and valuable concession. The difference between£150 and—possibly—up to £5,000 for the biggest articulated lorries would start to give them a considerable advantage.

Mr. Wilson

I would like to clarify which objection prevails. If the main objection is about the ferries, then, as the Paymaster General has indicated, it is a very flimsy ground on which to refuse to extend the concession.

I shall not take the time of the House, but it could be very easily established whether there was a pattern of regular travel between an island and the mainland. As the Minister recognises, some of the ferry companies keep such records. We are talking only about a handful companies at most, and certainly every hon. Member present is talking only about one company—the state-owned Caledonian MacBrayne. There is not the slightest difficulty in establishing the required information.

If the main objection is based on the other grounds that the Minister has given, I would challenge it differently. Since the amount of money involved is bigger with larger lorries, the real economic cost to the islands will be paid through that higher excise duty. I ask the Minister to look at that case in the same constructive spirit that he has applied to smaller vehicles.

Mr. Heathcoat-Amory

I am describing to the House how we have looked at it in great detail, and I have given a practical objection to what was a good and original idea—to use the receipts from the ferry tickets as a way in which to show that a vehicle is genuinely island-based.

Although, of course, the ferry operator Caledonian MacBrayne is familiar to the hon. Gentleman, I must remind him that other islands are not off the coast of Scotland. We are also referring to a number of English islands which are reached through a different operator, and it is our information that not all the operators reliably record the vehicle registration numbers. In addition, I cited the problem that documentation is retrospective, whereas the award of a concession is prospective: for the year ahead.

I was about to describe a more general and separate objection, which is that, if a large, valuable vehicle based on an island is given the right to undertake unrestricted mileage on the mainland for the payment of only £150 per annum, it would begin to compete unfairly with the mainland hauliers. I therefore think that we are right to restrict the concession to small vehicles for the unlimited mileage, with larger vehicles having to be either for island use or for undertaking journeys to and from the mainland.

I hope that we have met the main objections. I was certainly genuinely impressed by the case that was made. Of course we shall keep the matter under review, but I am not willing to make any further concessions now, because I believe that we have reached a sensible conclusion to a difficult and complex issue.

Amendment agreed to.

Mr. Deputy Speaker

I understand that it will be for the convenience of the House if I put all the remaining amendments together.

Amendments made: No. 62, in page 177, line 2, leave out 'with a revenue weight exceeding 44,000 kilograms' and insert

'which has a revenue weight exceeding 44,000 kilograms and is not an island goods vehicle'. No. 63, in page 178, leave out lines 22 to 26 and insert—

'"(2) The annual rate of vehicle excise duty applicable—

  1. (a) to any tractive unit which is a showman's goods vehicle with a revenue weight exceeding 3,500 kilograms but not exceeding 44,000 kilograms, and
  2. (b) to any tractive unit which is an island goods vehicle with a revenue weight exceeding 3,500 kilograms,
shall be the basic goods vehicle rate.'. No. 64, in page 178, line 28, leave out 'with a revenue weight exceeding 44,000 kilograms' and insert

'which has a revenue weight exceeding 44,000 kilograms and is not an island goods vehicle'. No. 65, in page 179, line 5, at end insert—

'(19) The following shall be inserted after paragraph 17— "Meaning of 'island goods vehicle' 18.—(1) In this Part 'island goods vehicle' means any goods vehicle which—

  1. (a) is kept for use wholly or partly on the roads of one or more small islands; and
  2. (b) is not kept or used on any mainland road, except in a manner authorised by sub-paragraph (2) or (3).
(2) The keeping or use of a goods vehicle on a mainland road is authorised by this sub-paragraph if—
  1. (a) the road is one used for travel between a landing place and premises where vehicles disembarked at that place are loaded or unloaded, or both;
  2. (b) the length of the journey, using that road, from that landing place to those premises is not more than five kilometres;
  3. (c) the vehicle in question is one which was disembarked at that landing place after a journey by sea which began on a small island; and
  4. (d) the loading or unloading of that vehicle is to take place, or has taken place, at those premises.
(3) The keeping or use of a goods vehicle on a mainland road is authorised by this sub-paragraph if—
  1. (a) that vehicle has a revenue weight not exceeding 17,000 kilograms;
  2. (b) that vehicle is normally kept at a base or centre on a small island; and
  3. (c) the only journeys for which that vehicle is used are ones that begin or end at that base or centre.
(4) References in this paragraph to a small island are references to any such island falling within sub-paragraph (5) as may be designated as a small island by an order made by the Secretary of State. (5) An island falls within this sub-paragraph if—
  1. (a) it has an area of 230,000 hectares or less; and
  2. (b) the absence of a bridge, causeway, tunnel, ford or other way makes it at all times impracticable for road vehicles to be driven under their own power from that island as far as the mainland.
(6) The reference in sub-paragraph (5) to driving a road vehicle as far as the mainland is a reference to driving it as far as any public road in the United Kingdom which is not on an island with an area of 230,000 hectares or less and is not a road connecting two such islands. (7) In this paragraph— and references in this paragraph to the loading or unloading of a vehicle include references to the loading or unloading of its trailer or semi-trailer."'. No. 66, in page 179, line 36, after 'weight', insert—

'(ba) the place where the vehicle has been or is normally kept,'. No. 67, in page 181, line 4 at end insert—

'. In section 60(2) of the 1994 Act (orders subject to annulment), after "section 3(3)" there shall be inserted ",paragraph 18(4) of Schedule 1".'. No. 70, in page 194, line 41, leave out 'that Schedule' and insert 'Schedule 1 to the 1994 Act'.—[Sir George Young.]

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