HC Deb 24 June 1999 vol 333 cc1273-4
3. Mr. Christopher Chope (Christchurch)

What was the level of road fuel duty per litre of diesel in 1998–99 in (a) the United Kingdom, (b) Ireland and (c) other countries of continental Europe. [87058]

The Economic Secretary to the Treasury (Ms Patricia Hewitt)

The rate of duty on ultra-low-sulphur diesel in this country is 47.21p per litre, and on standard diesel the rate is 50.21p per litre. In other countries of continental Europe, the rates range from about 18p per litre in Luxembourg and Greece to 28p per litre in Italy. In the Republic of Ireland, the rate is 23.47p per litre.

Mr. Chope

I am grateful to the hon. Lady for that factual reply. What message does she draw from those facts? Surely the message is that our road haulage industry and all those who use diesel are being priced out of business by the uncompetitive tax burden imposed on them by the Government. What message does she have for people such as Mr. and Mrs. Martin, who run Dorset Heavy Haulage and have written to me to say that they are threatened with being put out of business by the Government's tax policy on diesel? Will she accept that one of the verdicts to be drawn from the recent European elections, in which five times as many people voted Conservative in my constituency as voted Labour, is that the Government have got their policy on the taxation of diesel totally wrong?

Ms Hewitt

My message to the hon. Gentleman is that, in the Budget, we froze the rates of vehicle excise duty for most lorries; we doubled the reduction in VED for the cleaner lorries; and we cut the duty on ultra-low-sulphur diesel relative to ordinary diesel so that that differential is now the widest in the European Union, with the beneficial result that very soon all diesel bought in this country will be cleaner diesel. I remind the hon. Gentleman that it was the Conservative Government who introduced the road fuel duty escalator—in the days when they believed in doing something about environmental pollution. They have now become such an extreme party that they have abandoned that policy and their commitment to improving air quality.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

My hon. Friend the Economic Secretary is right to say that it is unrealistic to look at only one element of road hauliers' overheads. However, will she continue to keep a close eye on the effect of environmental taxes? I know that the Conservative Government introduced those measures, but I still have the strange, old-fashioned idea that the Conservatives often do things wrong. Might it not occasionally be helpful if we did not pick up the debris that they left behind?

Ms Hewitt

My hon. Friend is right to point out that, to assess the position of the British road haulage industry, we must look at total business costs, not just one element. For a typical road haulage firm, business costs could be nearly £600,000 a year higher in the Netherlands than in Britain. In Belgium, they would be nearly £820,000 a year higher than here.

We continue to keep under review the impact of all taxation, including environmental taxes. In line with our statement of intent on environmental taxation, we pay special attention to the impact on income distribution and on international competitiveness. With my right hon. Friend the Minister for Transport, we are having very useful discussions with the road haulage industry through the road haulage industry forum that we have established.

Mr. Graham Brady (Altrincham and Sale, West)

The Government remain committed to increasing levels of duty on diesel, thus making it difficult for hauliers to run their fleets on that fuel. They have also introduced some commendable incentives for the use of compressed natural gas and other alternative fuels. However, does the Economic Secretary agree that one of the reasons why businesses are reluctant to spend huge sums of money to convert to the use of compressed natural gas is that they are not confident that the fiscal incentives will remain in the long term?

Will she guarantee that those fiscal benefits will remain in the long term and that the Government will continue to cut costs for using compressed natural gas, just as they are increasing them over time for diesel?

Ms Hewitt

I am grateful to the hon. Gentleman for his welcome for the measure in the Budget cutting the duty on road fuel gases by 29 per cent. Of course we shall continue to ensure that fuel duties, and road transport taxation in general, contribute to our goal of achieving cuts in CO2 emissions, improving local air quality and thereby people's health.