§ Mr. David Heathcoat-Amory (Wells)
I beg to move amendment No. 48, in page 3, line 43, leave out £0.4499 and insert £0.4358'.
It was noted at the time of the Budget that the Government were using road fuel tax simply as a way of raising extra revenue without any genuine environmental reasons. To do that, they increased the annual escalator, or rate of increase, to at least 6 per cent. above the rate of inflation. By bringing forward the increases by the earlier dates of their Budgets, the Government have further added to the burdens on the motorist. The House of Commons Library has confirmed that at the present rate an extra £9 billion will be extracted from motorists over the life of the Parliament. That is over and above the inherited pattern of increases from the previous Government.
Most disturbing, the Government have singled out diesel for especially high increases. Diesel is the fuel of industry, so increasing the fuel tax in the way proposed is inflationary because the price of all goods is affected. It is also uncompetitive because it will widen the gap with the continent. It is anti-environmental because firms, especially small ones, will be less able to invest in new engines and fuel monitoring systems. After those two increases, which have already taken effect, under this Government, diesel in the United Kingdom is 70 per cent. more expensive than in the European Union on average. That gap is set to widen. The beneficiaries will be foreign haulage firms whose lorries will arrive in this country with cheap fuel in their tanks and take business from British haulage firms and jobs from British truck drivers. Another beneficiary will be the French Treasury, because British lorries travelling to the continent will fill their tanks with cheap French diesel.
The amendment cuts the increase to the rate that applied until the election. We want the Government to revert to the previous increase rate, so that the £9 billion hit on British motorists will disappear. The Government's policy is short-sighted, damaging to employment and bad for business, and we should like them, even at this late stage, to change it.
§ Mr. Christopher Leslie (Shipley)
I listened with interest to the right hon. Member for Wells (Mr. Heathcoat-Amory). I, too, consulted the Library and was told that the financial implications of his amendment would be £180 million-plus a year, especially for 1999–2000—indexed, of course.
It is curious that the Conservatives again propose measures that they claim will be popular, but do not say where the money will come from to meet the loss to public revenue. The amendment would cut the price of diesel by 1.5p a litre, but the consequences for the public 371 services of losing £180 million a year would be significant. The Conservatives do not say whether they would add that amount to public sector borrowing; whether they would increase taxes, such as income tax, to compensate; or whether they would cut vital public services, such as the health service or education.
Conservatives have not clarified their policy, but throughout proceedings on the Bill they have played the game of making rather profligate proposals that leave a black hole in the nation's finances, which so far totals about £5.9 billion. They have not said where that money is to come from. In the context of the amendment, it is important to note that the escalator principle was introduced by a Conservative Government, for environmental and anti-pollution reasons. The Government's measure may not have popular acclaim, but it probably has a degree of public acceptance because people appreciate why increases in the price of such fuels are necessary. They are to discourage excessive use of such fuels, to ensure that the tax base is protected and to force environmental concerns to the forefront of people's minds.
The Government's proposal is a responsible measure, which helps to protect the integrity of public finances. I urge the Government not to accept the amendment. As I said, there is a gaping black hole in the Opposition's proposals.
§ The Financial Secretary to the Treasury (Dawn Primarolo)
I urge hon. Members to reject the amendment. The Government's commitment to raise road fuel duties by 6 per cent. a year above inflation has been clearly stated. It is only by increasing rates that the United Kingdom can make a sufficient contribution to placing the environment at the core of the Government's objectives for the tax system and further discourage environmental pollution by road users. That includes hauliers as much as private motorists or other road users whose vehicles run on diesel.
I remind the right hon. Member for Wells (Mr. Heathcoat-Amory) of the damage from emissions from diesel, especially particulates. The Department of Health suggests that 8,000 deaths are triggered by particulates and that, nationally, road transport produces 26 per cent. of those particulates and 46 per cent. of nitrogen oxide. The figures are considerably higher in congested urban areas, where, as we know, the health consequences are all the greater.
Unlike the previous Government, this Government are taking a lead internationally in promoting action to reduce greenhouse gases. The duty increase on diesel is a feature of that. Right hon. and hon. Members will be aware, although the Opposition constantly want to try to forget it, that the United Kingdom has now agreed to its share of the European Union target following Kyoto. That represents a 12.5 per cent. cut in emissions. Hon. Members claim that they want to reach that target and honour that commitment, and then do everything that they can in the House to undermine and vote against the very measures that will deliver it. Of the six greenhouse gases, diesel is a significant contributor to emissions of carbon dioxide and oxides of nitrogen.
§ Sir Robert Smith (West Aberdeenshire and Kincardine)
Does the hon. Lady recognise that there is 372 concern that the Government's motivation is not so clear cut when it comes to the environment, given the damage that they are doing to the North sea oil industry that produces gas, which reduces carbon dioxide emissions, and their threat to gas generation in the electricity industry? Thus the Government's arguments that they are motivated by environmental policy tend to be thin. They seem to be motivated far more by the desire to raise money, as a Back-Bench Labour Member admitted earlier.
§ Dawn Primarolo
That demonstrates just how little the hon. Gentleman understands about the complexities of dealing with the carbon dioxide emission target and ensuring that we deliver national air quality targets, and ensuring that, in undertaking those activities, the Government have a balanced approach.
The amendment would effectively remove the duty differential between diesel and unleaded petrol. Conventional diesel has a greater energy and carbon content relative to petrol, which gives diesel a litre for litre duty advantage. The higher duty increase for diesel was put in place to offset that advantage and because diesel is worse than petrol in respect of particulate and nitrous oxide emissions.
§ Mr. Leslie
I should just like to ask my hon. Friend's opinion. A recent study was done in my constituency, where I have been recently advocating the completion of the Bingley relief road, because we are trying to achieve a reduction in pollutants and traffic emissions in town centre areas. One recent study showed that particulate levels were increasing at an exponential rate, particularly in areas of high congestion. If the amendment were passed, would not particulate levels be kept high, which would have significant consequences? Are there not great environmental benefits to her cause?
§ Dawn Primarolo
My hon. Friend is correct about the impact of the amendment and the likely increase in particulate emissions, but of course the Opposition are not bothered about that. They want only to say that they are interested in the environment. They do not want to pursue the policies that would deliver that.
The right hon. Member for Wells made the point that the proposal was damaging to the haulage industry, but he refuses to acknowledge the other measures that the Government have undertaken to assist the industry, including, in particular, concessions on vehicle excise duty of up to £500. He has refused also to acknowledge the Government's review of the current system for calculating vehicle excise duty rates for lorries; that, in this Budget, vehicle excise duty rates have again been frozen; that, overall, the Budget has cut the corporation tax rate for those businesses; and the introduction of quarterly payments for large companies, replacing advance corporation tax. The list goes on.
When the Government's proposal—with the Government's strategy—is seen in the round, it is clear that it is fair to the haulage industry, to the environment and to our constituents. I ask the House to reject amendment No. 48.
§ Amendment, by leave, withdrawn.