Commons Sitting of 24 April 2001

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  ENVIRONMENT, TRANSPORT AND THE REGIONS
  The Secretary of State was asked—

  Kyoto Protocol
  Mr. Nigel Griffiths: What further representations Her Majesty's Government are making to the US Administration on the ratification of the Kyoto treaty. [157180]
  Jane Griffiths: What discussions he has had with the Foreign Secretary regarding President Bush's recent statement on the Kyoto protocol. [157184]
  Mr. David Rendel: If he will make a statement on the future of the Kyoto protocol. [157190]
  The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): As the Prime Minister has said, we continue to believe that the Kyoto protocol provides the best framework to deal with climate change. The President of the United States has said that he accepts the need for global action to combat climate change, but he has declared that he opposes the Kyoto protocol. He has ordered a review of US policy on climate change and the next round of talks has been deferred from May to July to allow the US more time to prepare its position.
  We obviously want to hear the views and ideas of the US Administration, but for our part, we think that the Kyoto protocol is the right way forward. At meetings in New York last week, Ministers from the European Union and around the world reaffirmed their overwhelming support for the Kyoto protocol.
  I have discussed the issues with the Foreign Secretary and he has raised climate change with the US Secretary of State, Colin Powell. My Cabinet colleagues and I will continue to raise climate change in discussions with our US counterparts. I hope that we can find agreement on a way forward in July.
  Mr. Nigel Griffiths: Is my right hon. Friend aware of the Kyoto protest rally that will take place on 5 May at the American embassy and of the campaign to get Coca-Cola, which funded the toxic Texan, to persuade him to change
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  his mind on Kyoto? Will he confirm that it is vital that everyone who cares about the future of the planet does everything possible to get US policy back on track?
  Mr. Prescott: I am aware that a number of protests have taken place since the President declared that he was against the Kyoto protocol. Protests and discussions have taken place not only internationally—I have referred to the meeting that took place in New York last week—but in America itself. Debates, discussions and protests will no doubt take place, as will the one on 5 May to which my hon. Friend referred. They will undoubtedly be taken into account in the presidential review.
  Jane Griffiths: Will my right hon. Friend join me in being much encouraged by the talks that took place at the weekend and by the united front that has been presented by all countries except the United States? Will he also join me in hoping that the fool on Capitol Hill changes his ways before it is too late?
  Mr. Prescott: I am well aware of the extent of the protests against the President's statement on the Kyoto protocol and a number of measured statements have come out of the United States Administration since then. As the Americans have asked to delay the meeting of COP 6—the sixth conference of the parties—until July, we should wait to hear what they have got to say. The President has called a cabinet discussion and review on the matter, so I hope that we will know more in July.
  Mr. Rendel: Given that the Climate Change Bill, which has been introduced by my hon. Friend the Member for Bath (Mr. Foster), would do no more than put on a statutory footing the targets for CO2, emissions that were set out in the previous Labour party manifesto, will the Secretary of State ensure that no Labour Member will oppose the Bill's Second Reading on Friday?
  Mr. Prescott: The Government have made it absolutely clear that, in playing an active part in the Kyoto negotiations and in bringing to the House policies that would observe those objectives, we will fulfil our policy commitments. That does not mean piddling on the side as Liberals tend to do on such matters.
  Mr. Michael Jack: On the position of the United States on climate change, President Bush has suggested that there may be an enhanced role for nuclear power to help in the reduction of carbon dioxide emissions. What efforts are the Deputy Prime Minister and his Department making to enthuse others in the British Government about the contribution that nuclear power can make in the United Kingdom further to help to meet our Kyoto targets?
  Mr. Prescott: It is clear that, in the discussions at COP 6 and since Kyoto, the question of nuclear energy has been highly controversial in European nations and in developing countries. The overwhelming opinion is against the involvement of nuclear energy. As it forms part of the energy requirements of several countries, it is best to leave it out of such judgments. Decisions have not yet been taken.
  Mr. Simon Thomas: Does the Deputy Prime Minister agree that President Bush's decision has

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  nothing to do with the American economy—America is ideally poised to take advantage of renewable technologies—and everything to do with the money that was used to fund the Republican party's presidential election victory? Will the Deputy Prime Minister assure me and the House that this Government will never bow to such financial pressure? Will he also join me in saying that he will boycott all American products from companies that support the rejection of the Kyoto protocol?
  Mr. Prescott: I hope that the hon. Gentleman makes that point to the Welsh Development Agency, which is constantly over there asking for American investment in Wales. However, I take his point. We have set out our programme and, as I understand it, the climate change levy was somewhat controversial in certain business sectors. We have shown courage in getting on with our policy and in meeting the commitments that we have given. I wish the hon. Gentleman good luck with his policy.
  Mrs. Jackie Lawrence: On the environment, my right hon. Friend will be aware that former Tory MP Tony Marlow and his long-term partner Jill Chambers are about to trial genetically modified crops at Mathry in my constituency. Is my right hon. Friend aware of the concern that that is causing locally and will he agree to meet a delegation from my constituency to discuss those matters?
  Mr. Prescott: I note what my hon. Friend says.
  Mr. Archie Norman: We share the Deputy Prime Minister's support for the Kyoto protocol, but does he recall the comments of his spokeswoman before his trip to the United States? She said:
  "this is a crucial chance…the first meeting on climate change since the talks at The Hague."
  Does he also remember his intemperate attack on the US Administration when he said that its exports would be made to suffer and Anglo-American relations should be put into "deep freeze"? Was that all just macho man bluster? While in the United States, whom did he meet at a senior level of the Administration to discuss the matter? Exactly what sanctions did he have in mind?
  Mr. Prescott: The problem with the hon. Gentleman is that he believes too much that is put in the press. As I understand it, the same papers went on to say that discussions on the Kyoto agreement would not take place at the United Nations conference when, in fact, they took place on every day—on Tuesday, Wednesday, Thursday, Friday and Saturday. The hon. Gentleman is reacting to those press reports and took the chance to make a statement, but he is wrong. We got on with the Kyoto negotiations.
  Mr. Norman: I note what the Deputy Prime Minister says about the press and it might be useful if I quote from it. It reported:
  "'There will be a chance for bilateral talks' said a spokeswoman for Mr Prescott."
  The Times said:
  "Mr Prescott has issued a warning that American firms would see their European exports suffer if they persisted in rejecting Kyoto."
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  The truth is that the answer to my question is yes, it was all bluster—the same bluster that led to the fiasco of the Hague talks. The right hon. Gentleman's own officials said afterwards that he had no scheduled meetings with the US Administration and it was all a public relations exercise. When he looks back on the past four years, will he reflect on the facts that the Kyoto protocol is in disarray; the Hague talks collapsed as a result of his actions; Britain's carbon emissions are rising; and the Americans regard his contribution as ridiculous? Such diplomatic ineptitude might go down fine in old Labour, but it does not do much for our relations on climate change.
  Mr. Prescott: The hon. Gentleman continues to prove my point: he puts too much faith in press reports. I did not have a meeting with the Administration, nor did I seek one when I visited Washington. The meeting that I had was set up to talk to the Secretary of Transportation about the aviation deal. That is precisely what I said I would be doing. I did not have a meeting with the Administration because they had made it clear that they did not know what their policy was. Why should I have a meeting to find that out? Would it not be better to wait until July, which is precisely what I am doing? As to whether I have been inept, in my four years in government I am proud of playing a major part in bringing about the Kyoto agreement. Perhaps the hon. Gentleman will find things to be proud of in his political life, but he certainly has not yet.

  Cycling
  Mrs. Anne Campbell: What action he plans to take to make cycling safer. [157181]
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Robert Ainsworth): The Government's road safety strategy, "Tomorrow's roads: safer for everyone", sets out our strategy to make cycling safer. It embraces measures that cyclists can take to protect themselves, including wearing cycle helmets, training and making it safer to cycle on the road through engineering measures. Further measures to educate drivers will also be of benefit.
  Mrs. Campbell: I thank my hon. Friend for that reply. Will he commend Cambridge university for its innovative park and cycle scheme that is due to open on Thursday? It offers not only secure cycle parking, but a safe and easy route to cycle into the centre of Cambridge. Does he agree that that is a commendable scheme that should be copied by others?
  Mr. Ainsworth: A great deal of good work on cycling has been done in Cambridge because it has a far higher proportion of cyclists than elsewhere in the country. Much of the town's work over the years is to be commended. Many of its initiatives have improved cycling safety in the city and set good examples for others to follow.
  Mr. Gerald Howarth: I hope that the Minister will acknowledge the splendid example set by my hon. Friend the Member for North Essex (Mr. Jenkin)

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  and the bicycling baronet, my right hon. Friend the Member for North-West Hampshire (Sir G. Young), both of whom have done much to promote cycling.
  Apparently, flashing lights on cycles are illegal, and one is supposed to have a steady light. However, a flashing light is much more readily seen by motorists, particularly in wet conditions. May I urge the Minister to change the regulations in that respect?
  Mr. Ainsworth: I congratulate anybody who tries to encourage more people to cycle. I am not sure how the 10-minute journey cycled by the hon. Member for North Essex (Mr. Jenkin) contributes to that cause, but I am sure that it is having an effect. I do not know whether the hon. Member for Aldershot (Mr. Howarth) chose not to mention his bowler-hatted cyclist colleague on the Back Benches.
  There are minimum standards for cycle lights, and there is nothing to stop cyclists having flashing lights in addition to steady lights that meet those minimum requirements. I shall look into the matter, and if we believe that a change would improve safety, we will consider it.
  Mr. Denis MacShane: All Tory cyclists are well known flashers, as the Minister knows. Is it not safest to cycle in a dedicated cycle lane, instead of using the little yellow lines that simply attract motorists to try to knock down cyclists such as me as I come to Parliament? Will the Minister talk to Westminster city council about having dedicated cycle lanes in the centre of London? We are the worst city in the world for cycling and it is a disgrace that that Tory council will not give London cyclists lanes to ensure that they can travel round the centre in safety.
  Mr. Ainsworth: As part of local transport plans we now expect local authorities to produce and update, a cycling strategy, which will include measures to make cycling safer. My hon. Friend knows that we have provided £8.4 billion in the local transport settlement, so there is no excuse for local authorities such as Westminster to continue to neglect that matter.

  Congestion Taxes
  Mr. Desmond Swayne: What recent discussions he has had with local authorities regarding the introduction of congestion taxes. [157183]
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): Through the charging development partnership, my Department is engaged in continuing discussions with a number of English local authorities about the role that congestion charges may have in relieving local traffic problems and promoting wider travel choice through improved public transport services and facilities. As the hon. Gentleman is no doubt aware, his county council of Hampshire, which I was pleased recently to designate a centre of excellence for integrated transport planning, is a member of the charging development partnership, and last
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  year was allocated £300,000 to carry out several studies into the implications of road pricing and workplace parking charges, to assist its decision making on those matters.
  Mr. Swayne: The Minister will be aware that not all local authorities can match the standards achieved by Hampshire county council. Will he assure the House that he will refuse any application to implement such a charge unless the local authority can demonstrate a clear and appreciable improvement in public transport prior to the application?
  Mr. Hill: I am happy, if slightly surprised, on this occasion to agree with the hon. Gentleman on both points. Any proposal for a charging regime is subject to the final approval of the Secretary of State, and one of the criteria that he will examine is whether there are already clear commitments to, and achievements in, improving local transport.
  Ms Hazel Blears: As chairman of the all-party motorcycling group, I am delighted that the Government, through the motor cycle advisory committee, have acknowledged the significant contribution that motor bikes and powered two-wheelers can make to reducing congestion and pollution. I appreciate that this is a matter for local authorities, but will the Minister encourage local authorities to consider exempting motor bikes and powered two-wheelers from congestion charges?
  Mr. Hill: I am grateful for that characteristic intervention from my hon. Friend, Blears the bike. The Government appreciate warmly the contribution that motor bikes and powered two-wheelers can and do make to the reduction of congestion and pollution on our roads. I am sure that local authorities contemplating charging regimes will want to bear in mind those important considerations.
  Mr. Robert Syms: Is this not another example of the Government's vendetta against the motorist? Not only do we have the highest petrol price in Europe as a result of the Government's policies but, in the London scheme, a motorist who has to travel in every day could end up paying £1,250 a year. Residents, including many who are council tenants, could end up paying a charge of £130 for owning a car, whether or not they use it. Is not the Minister ashamed that, yet again, Labour has broken its pledge of no new taxes?
  Mr. Hill: The hon. Gentleman does his best to make his point. In all seriousness, not only is congestion a cause of immense frustration to the travelling public, but it costs the economy billions of pounds every year. Every study has concluded that congestion charging is the most effective way to cut congestion, but essentially it will be for local authorities to make their own decisions. As I have indicated, the Secretary of State will have the final say and will look for evidence of local consensus and robust plans for local transport improvements. We have stipulated that, at least for the first 10 years, all proceeds of congestion charging must be ploughed back into local transport improvements.

  London Underground
  Mr. Mike Gapes: If he will make a statement on the future of the London underground. [157185]
  Mr. Prescott: The Government are fully committed to the public-private partnership, which will produce £13 billion over the next 15 years to refurbish and modernise the London underground—more long-term investment than ever before. The PPP will mean better safety and better value for money; it will guarantee that London Underground stays in the public sector.
  In that context, I regret the fact that Transport for London has initiated legal proceedings against London Underground. I understand that the board of London Transport expects to meet on 2 May to consider its decisions on preferred bidders, with which it plans to conclude negotiations for the two deep tube contracts once legal proceedings have been resolved.
  Mr. Gapes: Does my right hon. Friend agree with me and my constituents, who are increasingly frustrated by delays, which have continued for many years, in getting an adequate level of investment for our public transport in London? Is it not time that we just got on with the job of investing the resources that are needed in London instead of engaging in petty posturing, which is happening in some quarters?
  Mr. Prescott: The essential issue for the underground, as everyone who has looked at the problem knows, is long-term investment. Previous Governments, both Labour and Tory, have all been involved in giving inadequate resources to the London underground; those resources were even cut every two or three years. One cannot plan long-term investment in the underground by having an uncertain safety and investment programme. Our Government are addressing themselves to long-term investment which will bring in that £13 billion and will not be subjected to the cuts that Governments tend to impose on capital programmes once they are in office and face economic difficulties.
  Mr. Peter Brooke: After four years, what do Londoners have to do to achieve genuine activity and improvement on the London underground?
  Mr. Prescott: First, voting Labour is a good proposal, as Londoners will shortly do in increasing numbers. In the past four years, we have averaged £500 million of investment in the underground each year, while the record of the previous Administration was £360 million. We shall point out that comparison to Londoners when talking about our major and substantial contribution to long-term investment in London Underground.
  Mr. Jim Fitzpatrick: Does my right hon. Friend accept that he is engaged in a public relations war with the Mayor of London, and that
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  he is losing the war? To what does he attribute that failure, and what does he expect to have to do to win the PR battle?
  Mr. Prescott: I hope that the battle will be fought on the substance and the facts, rather than on public relations, although I agree that taking advertisements at £15,000 a time in the Evening Standard is one way of going about it. If I suggested doing that on Parliament's budget, the Mayor and his team would be the first to say that it was wrong. I have no intention whatever of doing that, but I have published a statement of the facts and made it available to the Evening Standard, which refused to print it. That is one of the difficulties, but I shall continue to make my case.
  Mr. Bernard Jenkin: When will the Deputy Prime Minister admit that the PPP represents four wasted years of failure? What does he have to say to Peter Bishop of the London chamber of commerce, who yesterday said:
  "London's transport system is failing on every front";
  or to the chairman of British Airways, who said yesterday that London faced being "left standing" by cities with a superior transport infrastructure; or to London First, which complains of
  "continued political interference and lack of leadership"
  over key projects?
  How many major transport projects has the right hon. Gentleman's Department initiated in London since Labour came to office? Has he the courage and honesty to admit that the answer is not one? Are not Labour's four wasted years on the wretched tube PPP the crowning failure of the Government's record on transport in London?
  Mr. Prescott: To be fair, I would have to include the investments started by the previous Administration. It takes a considerable time for the effects of those to be felt. That is an answer to those who say that we are not getting an improvement in London transport: it is a long-term process. The extension of the docklands light railway—[interruption.] I am not saying that that did not take place, but the fact that such investments have been made belies the statement that nothing is being done for transport in London—
  Mr. Jenkin: What have you done?
  Mr. Prescott: What we are proposing—[Interruption.]
  Mr. Speaker: Order. Let the Minister answer the question.
  Mr. Prescott: The charge is made that nothing is being done for London transport. An awful lot of money has been poured into London transport for such projects as the docklands light railway and the Jubilee line, which we had to continue to finance. We must now make sure that London Underground gets guaranteed long-term investment—not the sort of policy promoted by the hon. Member for North Essex (Mr. Jenkin), which would mean that the subsidy for the underground would have been reduced to £161 million, and by this year to zero. That is the priority that the Conservatives give to London Underground. We are looking to a £13 billion investment.

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  As to the Tories' position on the underground, one moment they want to privatise it, then they want to nationalise it, and once it is nationalised, perhaps they might put it back into private ownership. That is typical of the Tories: they never take a long-term decision.

  Mobile Telephone Masts
  Mr. David Amess: What recent representations he has received on the criteria for granting planning permission for the erecting of mobile telephone masts. [157186]
  The Minister for Housing and Planning (Mr. Nick Raynsford): Our Department has received a range of representations on planning arrangements for telecommunications over the past year. On 16 March, I announced a series of important changes to the planning system on the siting of mobile phone masts which significantly strengthen public consultation requirements.
  Mr. Amess: Why have the Liberal-supported Labour Government not yet acted positively on the recommendations of the Stewart report? Will the Minister explain to my constituents how, in a heavily populated, tiny urban area, these monstrosities are being erected all the time? Local residents protest, the council tries to intervene, the matter goes to appeal, yet the masts stay up. Can we have some action from this rotten Liberal-supported Labour Government?
  Mr. Raynsford: The hon. Gentleman is carried away by the flights of his own fantasies. I can assure him that the Government have acted on the Stewart recommendations. We have acted by strengthening the public consultation arrangements, and by ensuring that all base stations meet the international exposure guidelines; we have set in train an audit of base stations, starting with schools; we have set up a national database with details of base stations; and we are launching a new £7 million joint industry-Government research programme. Those are all actions undertaken by the Government to ensure that the public interest is safeguarded while we facilitate the continued roll-out of a mobile phone network on which 40 million people in this country depend.
  Mr. George Stevenson: Will my right hon. Friend confirm that the changes that he mentioned with regard to strengthening public consultation will remove the anomaly whereby a proposal for a mast of 15 m in height only requires prior approval from a local authority, whereas a proposal for a 20 m mast is subject to full planning permission?
  Mr. Raynsford: Under the new arrangements that we have announced, all applications for ground-based masts will be subject to a consultation period of 56 days, which is the period for all normal full planning applications. For masts under 15 m in height, there will be continuation of the prior approval procedure. Under that procedure, if the local authority does not reject the proposal within the 56 days, consent is deemed. In every other respect, the procedure will be the same as that for full planning approval.
  Mr. David Heath: Does the Minister accept that, although the improvement of
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  consultation measures is welcome, it does not bring radio masts into the normal planning permission regime? People throughout the country are asking why their local councils are incapable of enforcing the views of local people and communities because of the planning regime. That may have been good enough for the get-rich-quick 90s, but it is not good enough now. When will the masts be brought under proper planning control?
  Mr. Raynsford: Our procedures ensure that the public have as full an opportunity to comment on any new mobile phone mast application as that which they have under the full planning procedures, as the hon. Gentleman will be aware. The only difference is that if the local authority fails to reach a decision by the end of the 56-day period, consent is deemed. I hope that the hon. Gentleman would want all local authorities to deal with planning applications expeditiously, as we do. Provided that they do so, there is no difference.
  Mr. David Lepper: I welcome the announcements that my right hon. Friend made in March, as, I am sure, do others. However, when he lays the final regulations that relate to those announcements, will he take into account the experience of my constituents in Mitre House, a block of flats in my constituency? My constituents found that they and the local council were powerless to prevent the erection of a mast on the roof of the building. Nothing less than full planning permission would satisfy the need for proper consultation.
  Mr. Raynsford: I assure my hon. Friend that under the arrangements that we have announced, roof-based masts will also be subject to the 56-day procedure. Currently, a separate 28-day procedure applies in respect of such masts, so there is a significant improvement. The doubling of the consultation period should ensure that my hon. Friend's concerns in respect of his constituents' views about such proposals are dealt with satisfactorily.
  Mr. Damian Green: I cannot believe that the Minister is convincing even himself with this flannel. Clearly, he is not convincing any of his colleagues. On 31 July last year, he said that he was
  "minded to introduce a requirement for full planning permission."
  He reneged on that statement, and his alternative proposals were rightly shredded by the Select Committee on Trade and Industry, which had a Labour majority. The Committee pointed out that he planned to
  "entrench the unpopular and confusing prior approval regime"
  and
  "entrench existing perverse incentives to operators to put up masts below an arbitrarily chosen height limit".
  Does he agree with his colleagues on the Committee that his policy is perverse, unpopular and confusing?
  Mr. Raynsford: As I recall it, the Trade and Industry Committee described our proposals in its most recent report on the subject as a carefully crafted compromise. That is exactly what they are. [Interruption.] I hope that the hon. Gentleman will listen. They are a compromise because there are two conflicting pressures. There is concern among a very large number of our citizens who want to use mobile phones and want good reception. There are 40 million users. Equally, there is concern about

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  the adverse environmental and amenity impact, and about health matters. We have considered those concerns carefully and sought an appropriate compromise. I should like to quote the views of a particular person on this subject. He said:
  "people need reassuring and the planning guidelines do need changing. I don't think we need to smother the thing in bureaucracy and red tape, and mobile phone companies have to have the ability to put up the masts."
  I agree with those comments entirely. They come from the hon. Member for Tunbridge Wells (Mr. Norman), and I am sorry that he has not persuaded his colleague of the sense of his approach.

  Bus Travel
  Mr. John Grogan: What plans he has to encourage travel by bus. [157187]
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): We are encouraging bus travel by a combination of policy and fiscal measures. They include: strengthened powers for local authorities under the Transport Act 2000 to improve the quality of bus services; statutory requirements to ensure that buses are fully accessible; guaranteed half-fare reductions for elderly and disabled people; a major boost to capital investment through local transport plans; and enhanced funding for rural and urban buses. That accounts for some £230 million over the next 3 years—a 35 per cent. increase on the subsidy paid by local authorities in 1997.
  Mr. Grogan: Will the Minister congratulate all those in Selby district who are involved in implementing the half-fare bus pass scheme, which comes into force there, as in the rest of the country, on 1 June? More than 6,000 pensioners have applied for it already. The pass is valid not only in Selby but for destinations throughout North Yorkshire and parts of West Yorkshire. Given the huge success and popularity of the scheme in rural areas, is there not a case for considering whether such bus passes should be valid not only in pensioners' home areas but throughout the country?
  Mr. Hill: I am delighted to hear of the welcome for the concessionary fares scheme in Selby; it is reflected throughout the country. Indeed, 7 million elderly and disabled people stand to benefit from the introduction of the guaranteed statutory half-fare travel concessions.
  My hon. Friend's second point was about the interchangeability of concessionary passes. That subject has frequently been raised with the Government, and we have asked the Confederation of Passenger Transport UK to consider it. We look forward to receiving its recommendations in due course.
  Mr. Don Foster: Does the Minister agree that if we are to encourage bus travel, it must be reliable, and decent travel information should be provided? Will he therefore explain why, since November 1999, when the Secretary of State set a target for reducing bus cancellations, they have rocketed to four times the target figure? Why has the Department published only a summary of the report that it commissioned about its plans for improving travel information? Is it because the
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  full report points out that many of the proposals are unrealistic? Will the Government publish the full report, with realistic proposals to reduce bus cancellations and improve transport information?
  Mr. Hill: Obviously, the report is available to the hon. Gentleman; he has his own arcane means of acquiring such documents. I do not dispute that some cancellation figures have worsened, hut they need to be set in the context of overall growth in the use of buses, especially in south-east England. All the signs are that the long decline in bus use which resulted from privatisation and deregulation under the previous Administration is coming to an end. We are confident of achieving our 10-year transport plan target of 10 per cent. growth and more passenger journeys.
  Mr. Jonathan Shaw: Does my hon. Friend know that later this year, pensioners in Medway will be able to travel for a 20p flat rate fare? Will he join me in welcoming that? It is not surprising that, while Liberal Democrat councillors were able to support Labour councillors in Medway, the Tories voted against the proposal.
  Mr. Hill: I am not in the least surprised to hear of that Conservative opposition to an extremely positive measure. One of the great satisfactions of the half-fare concessionary scheme is that, for the first time, senior citizens and disabled people in Conservative-run local authorities will be able to benefit from half-fare concessionary schemes. Because of the rural bus grant, some rural bus services—2,000 nationwide—are running for the first time in Conservative-controlled areas. That is a commitment to the countryside that the Opposition never contemplated in their 18 years of misrule.
  Mr. Nicholas Winterton: However attractive concessionary fares are—and I support concessionary fares for the disabled and the elderly—does the Minister accept that, whatever resources the Government put in to bus services, they will be inadequate to provide an acceptable quality of service in the more remote rural areas, and that the people who live in those areas will have to rely on their own cars? Does he accept that in many areas of the country, sufficient buses are not available to provide people with the quality of life that we all expect?
  Mr. Hill: I certainly accept that bus services are not extant in many areas of the country. That is why recently, in Cornwall, I was delighted to announce the parish transport fund initiative, which will provide £15 million for parishes to originate their own transport schemes. Those could take the form of shared car schemes, of hiring in bus services for villages that have heretofore not been served by them, or of new taxi schemes in those localities. The announcement has been widely welcomed by the parishes, and I hope that the hon. Gentleman will take the message about this opportunity back to his own locality.
  Ms Rosie Winterton: I am sure that my hon. Friend is aware that many companies are considering ways of persuading their employees to make more use of public transport, especially buses, for getting

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  to and from work. Will he support those companies, and will he discuss with Treasury Ministers whether financial incentives could be made available—for example, to enable companies to make season ticket loans to their employees?
  Mr. Hill: I am grateful to my hon. Friend for that suggestion. The Government are, of course, open to any proposal that serves to enhance the provision of public transport services. I know that many companies run their own coach services, which play an important role in a public transport context, although they are run specifically for the companies' own employees. The Commission for Integrated Transport has considered the issue of fuel duty rebates in connection with coach services, and I know that it will certainly take such matters into its future remit.

  Council Tax Benefit Subsidy (Worcestershire)
  Mr. Peter Luff: If he will make a statement on the council tax benefit subsidy payable to Worcestershire county council. [157188]
  The Minister for Local Government and the Regions (Ms Hilary Armstrong): Council tax benefit subsidy is paid by the Department of Social Security to billing authorities. Therefore, as a major precepting authority, Worcestershire county council does not receive council tax benefit subsidy.
  Mr. Luff: That disingenuous answer from the Minister covers up the truth, as she well knows. She knows that her Government have monstrously cut the subsidy payable to Worcestershire, and that the roots of the huge increase in council tax—[Laughter.] I am sorry that Labour Members find a 45 per cent. increase in council tax in Worcestershire over the past four years a laughing matter. It is not a laughing matter at all. The roots of that increase lie in the incompetence of the Lib-Lab pact that runs Worcestershire, and in the Government's rigged funding for all shire counties. Is not the cut that the Minister knows her Government have made in council tax benefit subsidy a stealth tax on a stealth tax, which the very poorest can least afford?
  Ms Armstrong: The hon. Gentleman is clearly very disappointed that more people in Worcestershire are now working, and are therefore not eligible for council tax benefit. The amount going to all districts in Worcestershire is £12.8 million. That is not a reduction. There is a slight decline in the percentage, because there is a decline in the number of people out of work and benefiting from the subsidy. The hon. Gentleman rails about council tax, and he is right: in Tory counties, council tax is higher than in any Labour county.

  Planning (Chelmsford)
  Mr. Simon Burns: If he will make a statement on the impact of his planning criteria in the Chelmsford local authority area. [157189]
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): The Government's policies are designed to promote more sustainable patterns of development,
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  reconciling the need for new development with the need to conserve the countryside and the character of our cities, towns and villages. It is for Essex county council, in its replacement structure plan, and Chelmsford borough council, through its borough local plan, to ensure that policies in national and regional planning guidance are taken into account in their areas.
  Mr. Burns: Is the Minister aware that people living in the village of Boreham, in the Chelmsford local authority area, are appalled at the thought of having 2,000 houses imposed on them by Liberal Democrat-controlled Chelmsford borough council—part of the overall amount of housing that the Government are inflicting on Essex and the south-east? Is the Minister also aware that there is bitter resentment of the fact that 2,500 of the 12,500 houses that Chelmsford must take are intended not to meet Chelmsford's housing needs but to relieve pressures in the south of the county? People in Boreham—in my area—are asking why the Thames gateway cannot take the 2,500 houses which, although they are being inflicted on them, are needed because of the increased employment and industrial building in the Thames gateway that the Government require.
  Ms Hughes: The hon. Gentleman will know my responses to those questions, because he asked them during an Adjournment debate not long ago. He will also know that the question of the land allocated for housing in his constituency is still open to consultation—and that in the regional planning guidance just published by the Government, the annual housing figures for Essex as a whole during the first five years of the relevant period are lower than they were in the 1994 regional planning guidance. Furthermore, he will know that the previous Government directed three councils in Essex to increase their housing numbers, and imposed 20-year figures through their regional planning guidance procedure. Ours, by contrast, is a bottom-up process, involving redistribution of housing on a regional basis.
  The people of Chelmsford will know that the Tories' policy on these matters is in complete disarray. On the one hand—as we saw today, when they launched their bus—they propose a Nimbys' charter, giving every local authority the right to veto and to renege on its housing responsibility. On the other hand, the hon. Member for Tunbridge Wells (Mr. Norman) told Show House magazine only a few months ago:
  "We all live in the real world. I've been involved in development myself and I recognise that unfortunately it is inevitable we will lose some countryside…We're not in any sense anti-housebuilding, we're the friend of housebuilders".

  Rail Freight
  Mr. Jim Dobbin: What progress he has made in transferring freight from road to rail. [157191]
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): Our policy is to help to establish an integrated, sustainable freight distribution system to support economic growth and bring social and environmental benefits. Our 10-year transport plan sets out our long-term plans for rail freight. We have already provided over

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  £100 million in grants to move freight from road to rail or inland waterways; we have issued guidance to local authorities to facilitate more use of rail for freight; and we have established a Strategic Rail Authority with a duty to promote rail freight.
  Mr. Dobbin: Does the Minister accept that there is an imbalance in a process that allocates the equivalent of about £7 billion in Government funds to the road haulage industry over 10 years, and £3.4 billion to rail freight? That makes it difficult for rail freight to compete. The Treasury should consider creating a level playing field; that would help the funding process, and would also help the Government to achieve their environmental and economic targets. It would enable much more freight to be transferred from road to rail.
  Mr. Hill: I recognise my hon. Friend's powerful commitment to the expansion of rail freight. The Government fully support that objective where it provides value for money.
  There is good news. My hon. Friend will recall that on 5 April the Rail Regulator published his provisional conclusions on rail freight charges. His proposals halve access charge revenues paid by freight operators to Railtrack, and bring greater transparency to the charging regime. Over the next five years, the bill for that income reduction will be about £450 million. As part of the announcement on Railtrack earlier this month, the Government have agreed to fund that through the Strategic Rail Authority. That is in addition to the massive £4 billion in public and private funding set out for rail freight in the 10-year plan, and represents a significant further contribution to the Government's objective of achieving 80 per cent. growth in rail freight traffic by 2010.
  Miss Anne McIntosh: The Minister will be aware of my personal interest in Railtrack and FirstGroup, and will probably have received representations from the Potter Group of Melmerby in Vale of York, which is particularly anxious for its businesses at Selby and Ely to benefit from rail freight grants. Would the Government see fit to extend such grants to smaller operators such as the Potter Group, rather than to big players such as English Welsh and Scottish?
  Mr. Hill: I am genuinely grateful to the hon. Lady for drawing my attention to the opportunities. The Government are eager to take up any opportunity for the extension of rail freight facilities. The grants vary in scale. They range from £60 million recently allocated to a major port rail freight development in Bristol, to less then £1 million. I will take the hon. Lady's words away and look at the opportunities that they represent.
  Mr. David Watts: Does my hon. Friend agree that the development of a north-west direct freight line to Europe is crucial to the well-being of the north-west? Will he assure me that he will do all he can to promote that development, and that he will help with parliamentary time to ensure that a Bill gets through the House to make the scheme viable? [Interruption.]
  Mr. Hill: "Before the election," my hon. Friends mutter. If my hon. Friend is talking about the re-use of
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  the Woodhead tunnel, the Government are enthusiastic to see that development. In much of my transport life over the past quarter of a century, I spent the whole of my time campaigning for that reopening. I am aware that it is part of the Northern Spirit franchise bid, which is now before the Strategic Rail Authority.
  I think that my hon. Friend was alluding to the Central Railway proposal. The Strategic Rail Authority is carrying out a review of the scheme. Until we know the result of that, it would be inappropriate for the Government to comment on the company's proposals, and in particular its request for a hybrid Bill.
  Mr. Michael Fabricant: Does the Minister accept that the wrong way to drive freight on to rail is by having the highest fuel prices in Europe? Is he aware that freight companies in the west midlands are filling their lorries up in Belgium, Holland and France? Does he know that diesel in Britain is twice the price of diesel in Croatia, for God's sake?
  Mr. Hill: I cannot imagine what the hon. Gentleman has against poor little Croatia, but the costs of motoring and road haulage need to be taken in the round. Innumerable costs are imposed on our continental counterparts, including social costs and toll road costs, which are not imposed on British road hauliers. Taken in the round, there is a level playing field in that regard.
  Angela Smith: May I draw my hon. Friend's attention to the proposed development for a new container port in my constituency, which has the potential to create up to 10,000 new jobs? Although that has been welcomed by many people, there is still some concern about the amount of extra traffic, particularly freight traffic, that it will generate. Given that there is already a direct rail link from the site to the main rail network, will my hon. Friend consider meeting the company concerned, and Railtrack, as proposals progress, to ensure that as much freight as possible travels by rail?
  Mr. Hill: I am grateful to my hon. Friend. As Britain's shipping Minister, as well as a junior transport Minister, I am well aware of the proposals for major new port installations. Of course I will be happy to meet the promoter of the scheme. I will have the opportunity to look at those matters more thoroughly tomorrow morning when I visit Thurrock district council.

  Second Homes
  Mr. Andrew George: What recent assessment he has made of the operation of the council tax system with respect to second homes. [157192]
  The Minister for Local Government and the Regions (Ms Hilary Armstrong): In the rural White Paper, which was published in November 2000, the Government proposed, subject to consultation, to give local authorities discretion to charge the full council tax on second homes. We are currently preparing a consultation paper, which we intend to issue later this year.
  Mr. George: I am grateful to the Minister for that reply, but is she satisfied that, after four years of this Government, my constituency still contains communities

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  where homeless people live cheek by jowl with those who are the owners of second homes? Does the Minister agree that it is no longer acceptable that £200 million of taxpayer's money should be spent on subsidising the second homes of wealthy people when many thousands of rural folk do not even have their first homes? If so, why do the Government not get on with the task and introduce legislation now, instead of issuing consultation papers? Four years on, let us see some action.
  Ms Armstrong: As I am sure the hon. Gentleman knows, the Government have a statutory duty to consult. There are many reasons why some homes will remain empty. We want to make sure that we give people incentives to bring back into use homes that have been empty for a long time. We also want to look at the problem of homes that are empty because of this year's flooding. We want to be sure that the exemption scheme can be administered by local authorities, so that issues of local importance can be dealt with. For that reason, the consultation process must go further than the issue of second homes. At present, the exemption regime extends beyond second homes. We must get that matter right, so that all local authorities have the exemptions that meet the needs of people in their areas.
  Mr. Ian Bruce: Surely the Minister knows that such a scheme has operated successfully in Wales for many years. Can she not get on and do something about this matter? We all know that the consultation that she announced to change the council tax funding formula has been delayed again and again. Is it not time that she either took action or left office and let us do so?
  Ms Armstrong: I am always grateful for advice from the hon. Gentleman, who was so successful in persuading the previous Conservative Government to act that his party judges his seat to be one of the most vulnerable in the country. The Government will get on with doing things, and we will make sure that we take people along with us. That is why we will consult—to ensure that we produce legislation appropriate for the introduction of the necessary changes.
  Mr. Dafydd Wigley (Caernarfort): Does the Minister accept that the council tax system that operates in Wales remains a fairly blunt instrument when it comes to controlling the over-development of holiday and second homes in some communities? Given the Minister's commitment to give local authorities the maximum freedom in such matters, will she consider creating a new planning category for such homes? That would give local authorities control over granting or withholding planning permission if there is to be a change of use.
  Ms Armstrong: The right hon. Gentleman goes way beyond the question. As he knows, Welsh local authorities can exercise discretion over council tax in their areas, but the planning regime is a different matter. The rural White Paper contained announcements on council tax, but not
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  on planning. We are concerned that all local authorities should be able to act in the interests of the residents for whom they have responsibility. That is why the Government have been moving forward the agenda for local authorities in England. I hope that the right hon. Gentleman will push the Welsh Assembly to do the same in Wales. As he knows, I have no responsibility for that.

  M6 Motorway
  Mr. Stephen Day: What plans he has for widening the M6 motorway. [157193]
  The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): I should point out that after years of confusion and delay under the previous Administration, work has now started on the Birmingham northern relief road. That road will relieve congestion on the M6 motorway through Birmingham between junctions 4 and 11.
  However, I presume that the hon. Gentleman's primary concern is with the section of the M6 between Birmingham and Manchester. That transport corridor is at present the subject of a multimodal study that is looking into capacity problems and possible solutions, including scope for modal shift. Widening the M6 is certainly one of the options being considered. At this juncture I cannot comment further, as the study has yet to report
  Mr. Day: The Minister gives no comfort whatever to my constituents, either about the M6 or about other schemes such as the Manchester airport eastern link road and the Poynton bypass, all of which the Government have put away into multimodal transport study schemes. People in the area want action. Congestion is solved by building the roads that have public support. Will the Minister please get them built?
  Mr. Hill: If the hon. Gentleman and his constituents feel so passionately about these matters, I am rather surprised that they were not carried further forward under the previous Government. [HON. MEMBERS: "They were."] I am aware that there have been—[Interruption.]
  Mr. Speaker: Order. Let the Minister answer. The hon. Member for Macclesfield (Mr. Winterton) should know better.
  Mr. Hill: I am aware that there have been proposals at various stages of development for the widening of the M6 between junctions 11A and 19, and for the A556(M)/M6/M56 link, which have been remitted to the multimodal study. Work on phase 2 of the study is well under way, with a number of options under consideration including road schemes, metrolink, railbus, use of road space, and freight and transport charges. The steering group is engaged in consultations with local authority members to inform them of the initial results and to seek views and guidance on the development of the preferred strategy, which, as I have indicated, will be reported to the Government in due course.

Points of Order
3.31 pm
Mr. Michael Fabricant: On a point of order, Mr. Speaker. The House will know that on 10 April the Prime Minister held a 15-minute telephone conversation with Motorola's president, Chris Galvin, in an attempt to stave off the closure of the Motorola plant in West Lothian. You may know, Mr. Speaker, that Motorola has now confirmed that it is to close the plant, with the loss of 3,000 jobs. Has the Prime Minister or any other Minister come to you wishing to make a statement to the House?
Several hon. Members rose—
Mr. Speaker: I shall call the constituency Member of Parliament the hon. Member for Linlithgow (Mr. Dalyell) on that point of order.
Mr. Tam Dalyell: Further to that point of order, Mr. Speaker. It is in sorrow that I ask how any of us can understand—I wonder whether it is for reasons of devolution—the fact that there is neither a statement nor a private notice question on Motorola, where 3,200 people lost their jobs this morning. It is beyond comprehension.
Mr. Speaker: I am very sorry that so many people are facing job losses in the hon. Gentleman's constituency. However, it is not a matter for the Chair as to whether a Minister makes a statement.
Sir Patrick Cormack: Further to that point of order, Mr. Speaker. If a Minister did ask to make a statement on this devolved issue, would you allow him to do so?
Mr. Speaker: Will the hon. Gentleman please repeat his question? I was distracted.
Sir Patrick Cormack: I asked whether, if a Minister did request to make a statement on this devolved issue, you would allow him to do so.
Mr. Speaker: Of course I would not stop a Minister making a statement—I would not dream of doing so.
Mr. Alex Salmond: Further to that point of order, Mr. Speaker. As someone who was born within a few miles of the Motorola plant, I know that your expression of sympathy for the area will be much appreciated. I am glad of your clarification, because although I would be delighted if the Scottish Parliament were responsible for all these matters, there are a number of aspects, not least those relating to social security and the Prime Minister's intervention, that could properly have been raised by the constituency Member of Parliament if a Minister had deigned to make a statement.
Mr. Speaker: That is a not a point of order. However, no one is more experienced in finding the time and means to raise a matter such as this before the House than the hon. Member for Linlithgow. I am sure that he will make every endeavour to see that it is debated or that a Minister comes before the House.

Protection From Smoking (Employees and Young Persons)
3.34 pm
Mr. David Taylor: I beg to move,
That leave be given to bring in a Bill to require employers to reduce or eliminate the exposure of their employees to passive smoking in the workplace; to protect children and young persons from such exposure in public places; and for connected purposes.
The Government's Advisory Scientific Committee on Tobacco and Health has confirmed without equivocation that passive smoking causes cancer, heart disease and respiratory diseases. A seminal report on passive smoking and heart disease, published in 1997 by the British Medical Journal concluded that
"the effect of environmental tobacco smoke is not trivial, as is often thought. It is a serious environmental hazard and one that is easily avoided. The evidence on ischaemic heart disease warrants further action in preventing smoking in public buildings and in enclosed working environments."
My purpose is to respond to that recommended action. The Government have made great strides on their public health agenda. In late 1998, they published an excellent White Paper, "Smoking Kills", which observed that around 2,500 people die each week from illnesses directly related to smoking. Included in that horrifying figure are a sizeable number of people—the passive smokers—who contracted their illness from environmental tobacco smoke.
Passive smoking seriously damages the health and welfare of non-smokers. While the voluntary approach to reducing or eliminating dangerous exposure to noxious and toxic fumes has worked in numerous places, it has failed in many others. It will continue to fail unless the Government take action along the lines suggested in my Bill.
The House clearly believes that all employees deserve protection from the harmful effects of passive smoking while they are at work. Some 155 right hon. and hon. Members have supported early-day motion 173, on smoking in the workplace, which was tabled by my hon. Friend the Member for Rother Valley (Mr. Barron). Those signatories noted
"the recent survey of the Office for National Statistics showing that 89 per cent. of the public favour restrictions on smoking at work",
and that
"three million non-smokers are frequently or continuously exposed to second hand smoke at work".
The Health and Safety at Work, etc. Act 1974 already requires employers to ensure the health, safety and welfare of their employees so far as is reasonably practicable. More than a quarter of a century after that Act's passage, however, and despite the progress made in recent years, the legal obligations and expectations placed on employers remain as hazy as the air that many of their non-smoking employees have to inhale.
The Government seem to have responded to that uncertainty. Within the range of measures to drive down tobacco fatalities, the 1998 White Paper encouraged the approach taken by the Health and Safety Commission in producing a draft approved code of practice—an ACOP—on smoking in the Workplace. That code would at last enable the 1974 Act to bear down on passive smoking,

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but the Government have appeared slow to introduce it. The purpose of part I of my Bill is to require its introduction without further delay.
It is surely not unreasonable or impractical to require employers to do all that is reasonably practicable to comply with the 1974 Act, which so many of them seem slow or unwilling to do when it comes to passive smoking. In addition to possible prosecution under the 1974 Act, employers may be exposed to passive smoking legal proceedings through personal injury actions under common law. In addition, they can face proceedings through employment and contract law at industrial tribunals.
My Bill would provide employers with guidance on compliance. In essence, it would provide a series of defences against unpredictable legal actions brought under ambiguous and loosely defined law. We might expect widespread support for that from employees, the general public, the medical profession and lobby groups such as Action on Smoking and Health, and it is unsurprising that many employers are themselves beginning to call for measures of the type encapsulated it the Bill, not only to show that they comply with the existing law, but because there are wider benefits for them.
One such benefit is employee welfare. Firms already take care to provide appropriate working temperatures, comfortable work stations, adequate lighting and so on. The provision of clean air would be a further expression of a desire to improve working conditions. Improved productivity is another benefit. American estimates indicate a typical minimum productivity gain of 3 per cent. from a smoke-free place of work. There are further benefits from reduced cleaning costs and fewer fire risks: smoking causes one in eight accidental work fires. All in all, an approved code of practice on passive smoking at work will save money and increase profitability, so it achieves the triple target of making economic sense, as well as being environmentally imperative and socially desirable.
I turn briefly from part I to part II—moving from addressing the effects of passive smoking in the workplace to tackling its impact in public places. Most people think that more should be done to restrict smoking in public places. In restaurants, for example, the seven in 10 people who do not use cigarettes should not—if they do not wish to—have to breathe in smoke from the three who do use them. However, as the "Smoking Kills" White Paper observes, it is a question of balance; if a smoker wants to spend an evening in a bar or pub with friends who smoke or who do not mind other people's smoke, so be it.
As with an approved code of practice for workplaces—many of which are of course public places—the key to a better code for public places is what is reasonably practical. No code can force employers—such as those in the licensed hospitality trade—to do things that would cause them serious financial pain, or even drive them out of business.
The Government are to be congratulated on agreeing with the hospitality trade the broad principles of a public places charter. The charter envisages increasing provision
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of facilities for non-smokers, a written policy on smoking—available to customers and staff—and a range of sensible, practical improvements to ensure that consumers are better able to choose whether to eat, drink or socialise in smoky atmospheres. The charter is welcome as far as it goes, but it is really the continuation of a voluntary approach, aimed at keeping legislation at bay—compliance levels are still low.
Part II envisages much tougher targets and tighter time scales, requiring those who provide services in public places to recognise non-smoking as the general norm where children and young people are important parts of their clientele. At present, the serious effects of environmental tobacco smoke on the young include childhood induction and exacerbation of asthma, bronchitis and pneumonia, middle ear infection and chronic respiratory symptoms.
In view of that litany of the health effects of passive smoking on the young, we really must take more vigorous action on their behalf. A major public health objective must be further measures to restrict smoking in indoor environments frequented by the young. That is precisely what my Bill aims to do.
We appear to be in the run-up to a general election and manifestos—like spring—are in the air. In my home area of Leicester, Leicestershire and Rutland, a health promotion alliance has written a "Smoke Free Manifesto" as part of its campaign for that most basic right—the right to enjoy clean air, free of tobacco smoke. Two of the key ways of meeting that goal are to introduce more no-smoking policies in offices, factories, schools and other workplaces, and to introduce more no-smoking areas in public places such as leisure facilities, restaurants, buses and shopping centres.
The Government have indicated their broad support for an ACOP in workplaces and for consumer charters in public places. My modest measure aims to add thrust and teeth to the Government's warm words. Bryan Ferry was only partly right: smoke gets not only in your eyes, but also in your hair, on your clothes, in your lungs and bloodstream and on to your death certificate. It is especially important for us to protect innocent bystanders at work and play—passive smokers—from that tragic tobacco toll. I therefore commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Taylor, Mr. Kevin Barron, Mrs. Liz Blackman, Mr. Ian Davidson, Mrs. Janet Dean, Dr. Ian Gibson, Dr. Brian Iddon, Mr. Gordon Prentice, Mr. Andrew Reed, John Robertson, Dr. Phyllis Starkey and Dr. Howard Stoate.

PROTECTION FROM SMOKING (EMPLOYEES AND YOUNG PERSONS)
David Taylor accordingly presented a Bill to require employers to reduce or eliminate the exposure of their employees to passive smoking in the workplace; to protect children and young persons from such exposure in public places; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 8 June, and to be printed [Bill 86].
Orders of the Day

  Finance Bill
  [2ND ALLOTTED DAY]
  (Clauses 1 to 3 and 16 to 53 and Schedules 4 to 11)
  Considered in Committee [Progress, 23 April], pursuant to Order.
  [SIR ALAN HASELHURST in the Chair]

Clause 1

  RATES OF DUTY ON HYDROCARBON OIL
  3.45 pm
  Mr. Alex Salmond: I beg to move amendment No. 27, in page 1, line 18, leave out "0.4582" and insert "£0.4392".
  The Chairman of Ways and Means (Sir Alan Haselhurst): With this it will be convenient to discuss amendment No. 28, in page 1, line 20, leave out "£0.4582" and insert "£0.4392".
  Mr. Salmond: I take great pleasure in moving amendment No. 27 and in speaking to amendment No. 28, both of them proposals tabled by my hon. Friends and me. This matter, too, may be relevant on Friday 8 June, unless the Government choose to accept the amendments and to change course on a very important issue that affects large areas of the country, but especially Scotland—the fifth largest oil producer in the world—which suffers from the highest petrol prices in Europe.
  During yesterday's debates on the Finance Bill, I was struck by the Treasury team's complacency in the face of a world economic environment that is moving into much stormier waters than the benign conditions enjoyed over the past four years. Given that the Treasury team, and the Chancellor in particular, were so quick to claim the credit for the past four years, they will, no doubt, also want to accept the responsibility for the economic difficulties that we are approaching.
  Earlier today, I saw the Chancellor making a speech, and he said that he was not complacent. He sounded pretty complacent to me, and I should have thought that the Treasury team would do well to understand that, although they may still have boom conditions in the south-east of England, they now have bust conditions in Bathgate.
  We also discuss the Finance Bill against the background of the Minister for the Environment yesterday making the point about the impact on the rural economy. Although these amendments would have an impact on every petrol consumer in the country, they are also designed to benefit the rural economy, which is hit first and foremost by high fuel prices. Yesterday, the Minister for the Environment told the House that the current estimate of losses caused to the rural economy by the foot and mouth outbreak amounts to some £140 million every single week, against which the Government's package of £200 million, as he claimed it to be, looks devastatingly inadequate to stem the economic impact on those important areas of the country. I make that point because the rural economy is hurt first and foremost by high and rising oil and petrol prices.
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  It is obvious that the Government's transport strategy—eventually unveiled only a few months ago by the Deputy Prime Minister—has still to make any serious impact on making alternative means of transport available to people in the rural economy. It is also obvious that, although oil and petrol prices are high across the country, in the rural economy, especially in the highlands of Scotland, we have the highest petrol prices of all. For a range of reasons, although the amendments would help every motorist and every petrol user, and hence every person who depends on goods purchased—fuel is a significant component of the costs—they are also designed to help the hard-pressed rural economy in particular.
  Under amendments Nos. 27 and 28, the duty would be reduced on ultra-low sulphur petrol and diesel by 2p a litre—about 10p a gallon. That would be in addition to the small but welcome reductions announced by the Chancellor in the Budget.
  It is time for the Treasury team to come clean about what they believed a couple of years ago petrol prices were likely to be in 2001. Two years ago, we in the Scottish Grand Committee debated a range of matters that affect petrol prices, and the late Donald Dewar made a clear statement about what the Government's expectation then was on the price of oil:
  "The oil price is likely to stay at about $10 to $12 a barrel at least in the foreseeable future. Therefore we are worlds removed from the oil prices and production levels of the mid-1980s."—[Official Report, Scottish Grand Committee, 1 February 1999; c. 8.]
  We can take it from such an authoritative source that that was the Government's expectation just two years ago.
  At that time, the Chancellor of the Exchequer assumed that oil revenues would be £1.2 billion in the current financial year. In fact, the latest forecast is for oil revenues to be £5.9 billion, rising to £6.2 billion next year, and £5.4 billion and £5.7 billion in the two years after that. Even that forecast was based on the assumption that oil prices would be much lower than those prevailing at present. Two years ago, the Government expected oil prices to be roughly $10 to $12 a barrel, but the price is now $27 a barrel. The Chancellor has benefited massively in terms of the exploitation of Scottish resources and filling the Treasury's coffers, so it is entirely reasonable for these modest but important amendments to seek a further concession for consumers at the pumps.
  Mr. John Bercow: I understand the hon. Gentleman's argument, but in the name of transparency, does he not agree that it would be helpful if the proportion of the purchase price of petrol that is represented by tax and excise duty were displayed at the pump or on the bills that customers receive?
  Mr. Salmond: I very much agree with that. As the hon. Gentleman knows, three quarters of the price of every gallon of petrol or diesel is made up of the various levies imposed. They include the specific fuel taxes and VAT. One important factor is that, as the price of fuel increases, the VAT obtained from every gallon of petrol also increases. Although I agree with the hon. Gentleman that such information should be displayed on every petrol pump—that would be excellent for the transparency of fiscal policy—I suspect that the Treasury team would be not too keen on the idea.
  The Scottish National party produced a helpful pledge card and we distributed 500,000 of them last September during the fuel tax protests in Scotland. I would willingly

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  send such a pledge card to the hon. Member for Buckingham (Mr. Bercow). If he would like to distribute SNP publicity in England, I would be very pleased—as long as he promises not to advertise the fact too much.
  The hon. Gentleman made a fair point about transparency, but I suspect that the Treasury team are desperate, despite the rising price of oil, to prevent people from realising that 75 per cent. of the price of every gallon or litre of petrol is made up of Treasury charges of one kind or another. That fact clearly places responsibility where it belongs: on the Chancellor and his Treasury team.
  Two years ago, the Government expected a very different oil price environment and they have benefited massively from Scotland's resources pouring into the London Treasury. The Government expected the current price of petrol to be considerably lower, and that fact gives the lie to the suggestion that we sometimes hear—including from the previous Govertment—that the fuel price escalator and the approach taken to the price of petrol are entirely due to international obligations and the Kyoto summit. If the expectation that the price of a barrel of oil would be $10 had been realised, the price of petrol would obviously be much lower than it is. But it is not, and the Government have reacted incredibly slowly. It was only the pressure of the massive fuel price protests last September that led them to make any significant concessions at all and to fine-tune their fiscal position to take account of reality and the price that people paid at every petrol station in the country.
  The Treasury team would do well to recognise that, when the fuel price protests were under way, the country of England was so anxious that, if we believe the opinion polls, even the Conservatives, for a very brief period, looked like a tenable option for voters. Such was the public anxiety—and people would have to be extremely anxious to turn to the Conservatives—that pressure was brought to bear on the Government when the average price at the pumps was 80.9p a litre. The average price today is 78.9p a litre, with price rises expected in the next few weeks. It is not beyond the bounds of possibility that the Government will have to fight the election campaign with the price of petrol approaching £4 a gallon and a public who are extremely sensitive to the issue. Although it might be against my electoral interests to argue that the Government should accept the amendments, they would be wise not to take for granted the public's tolerance of current petrol prices and the increases in the pipeline.
  We know that last September the Prime Minister telephoned the oil companies to persuade them not to increase prices at the pumps, and there was a small delay. We saw again today the limitations of the Prime Minister's telephone calls when it comes to affecting major policy decisions. I dare say that the Prime Minister and the Deputy Prime Minister—the man who has suggested, against the backdrop of a major industrial closure in Scotland, that it is appropriate to slash public expenditure there—are probably on the telephone to the oil companies pleading for the increases to be delayed until after 7 June. The public will not be fooled, because they do not find it acceptable that we have the highest petrol prices in Europe. They have seen through the Government's claim that prices reflect an environmental imperative rather than a fiscal accumulation, which is what actually lies behind the petrol price strategy, just as
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  surely as they saw through the previous Government who made the same claim when they kicked off the vast petrol price increases.
  The public's tolerance is now such that they will not accept the same cavalier attitude as was displayed until last September. The Treasury will be wise to have a damascene conversion in the next few hours and to accept our amendments, so that the price of petrol is reduced as it should be, given the vast accumulation of revenues in the Exchequer and the fact that oil costs $27 a barrel. I suspect that if the amendment were put to the population at large to determine, there would be vast support for it.
  We are debating the issue as we enter an election period. When it comes to the Division, all hon. Members will be wise to vote for a more reasonable attitude to the price of petrol at the pumps. That will help every motorist, every consumer who relies on purchasing goods for which the price of transport is important, and our rural areas that are especially hard pressed.
  Mr. Kenneth Clarke: I have great respect for the hon. Member for Banff and Buchan (Mr. Salmond), but I cannot recall taking part before in a debate initiated by the Scottish National party. I have no objection to doing so now. I congratulate him on tabling an amendment on an important subject. However, I am not totally persuaded by its literal terms, so I am not sure that I will join him in the Division Lobby.
  Nevertheless, the hon. Gentleman raises an important topic for most of our electorate, certainly those who live in rural areas. A short discussion about tax levels on petrol and diesel is justified. I decided to speak in the hope that the Minister would take the opportunity to explain the Government's policy on that. This subject, above all other aspects of their economic policy, is something on which they have no consistency. Their most recent primary motivation has plainly been panic in the face of public opinion. They have been buffeted by events and give no inkling of the direction of their policy should they be returned to power.
  4 pm
  The explanatory notes to the Bill give the last great pronouncement of our Chancellor on his considered policy on this subject. They say:
  "In November 1999 the Chancellor announced that the appropriate level of fuel duties would be decided on a Budget by Budget basis, taking into account the Government's economic, social and environmental commitments."
  That seems to me largely to depend on the dates of an election, newspaper reaction to recent decisions and the public reaction to the levels of taxation which have been imposed, and that is not very satisfactory.
  The hon. Member for Banff and Buchan said that we are having this debate against the background of an interesting change in the economic climate, which affects all our discussions on the Bill. The Chancellor has at last recognised that he has not abolished the economic cycle. A marked slowdown is taking place in the American economy; there is some slowdown in the eurozone economy and some economic slowdown will take place here.
  A question should be asked of a Chancellor who has been very lucky in the past four years. I shall not talk about his inheritance, but I certainly think that he has been

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  lucky in the state of the world economy. He has managed to produce reasonable results by following fairly aberrant policies. He taxed too much when he did not need to, putting taxes on business, savings and pensions. He savagely restrained public spending for his first two years, and he now promises for the next three years massive increases unrivalled in this country since the days of the Heath Government which he thinks can be sustained by continued growth. All that may be changing, and I agree with what the hon. Gentleman just said about the Chancellor's apparent complacency about that—it fits in with my theme on fuel taxes. The time has come for a clear policy and a clear statement of where we are going, and I am not sure that that is what we will have.
  The Chancellor's approach to fuel prices when he came to office was very straightforward. It was very flattering of him to adopt what he said was my policy. Indeed, for some time I had been following the fuel tax escalator, having introduced it when we had the cheapest petrol and diesel in western Europe, a situation that, in my opinion, we had arrived at slightly by accident and without anybody really noticing or asking why. I made it clear when I stuck to the escalator during my time as Chancellor that I was doing so first because I needed to raise the revenue to deal with the state of the public finances. That is a matter for which the Chancellor should be grateful because he inherited very healthy public finances as a result of the tax and spend policies to which he had succeeded. Secondly, the escalator had environmental benefits, which I did not overstate, but I certainly thought that it was worth while to return to a higher rate of tax and a higher price for petrol and diesel to make people think twice about using their car and to make them look for efficiencies in their use of fuel, and that had environmental benefits.
  The Chancellor was very flattering—he took all that over and decided that the fuel tax escalator was now an essential part of his tax strategy. However, he increased the rate above inflation at which he was going to escalate fuel tax. He also increased the frequency of the increases by having two Budgets in one year, in both of which he applied the same escalator. He took over the escalator and accelerated it. He also forgot one of the rules of escalators which those who travel by public transport will recall, which is that one gets on at the bottom and one gets off at the top. This escalator was now to go on for ever, and according to this Chancellor, before last September, fuel taxes were going who knows where. At that stage, we were already the most expensive country in western Europe for the motorist and the haulier, and the Chancellor was firmly committed to carrying on with the fuel escalator for the foreseeable future, come what may.
  As a tax policy, that was catastrophic. It was one of the Chancellor's more elementary errors. People have often quoted Colbert saying that the art of raising taxation is to pluck the feathers of the goose but to get as many feathers as one can with the minimum of hissing. The Chancellor chose one target, fuel taxes, and drove them on remorselessly at such a rate until he had a consumer explosion—a revolt. He carried on with that policy to such an extent, showing no reservations about it, until we had the nearest that we have had to a citizens' revolt on the streets. For a week or two, it had mass support, as people realised that they had by far the most expensive
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  petrol and diesel in western Europe and that the Chancellor intended to carry on raising prices. Those of us on the road at the time found ourselves surrounded by a public who genuinely sympathised with hauliers going in for direct action, causing conflict and so on. Fortunately—although this is a funny way of conducting Government policy—the Government showed signs of panic, as they do in every crisis, retreated rapidly and backed down. Now we have no policy and there is a freeze on duties for an unspecified period, which will certainly go on until after the election.
  Mr. Salmond: I do not want to discourage the right hon. and learned Gentleman from speaking in Scottish National party debates in future but, if I have followed him correctly, he said that the Chancellor made two mistakes; first, public expenditure in the first two years was too low—which, of course, was inherited from the right hon. and learned Gentleman—and, secondly, the fuel price escalator, which was also inherited from him. Could he not have left a note in the Treasury telling the Chancellor to get off the escalator, or other helpful advice?
  Mr. Clarke: The Chancellor is fond of taking my slogans and claiming that he is taking my policies. In previous Budget and Finance Bill debates, I have tried to make it clear that he is getting them slightly wrong. I have been highly critical and have often regretted the fact that he has used my slogans and taken my name in vain to characterise the rather peculiar policies that he has followed. I will not go through everything, but I invented the slogan,
  "No return to boom and bust".
  I used that in my first Budget, and it was promptly stolen by the present Chancellor. When I used it, I did not mean that we going to abolish the economic cycle; the whole point of macro-economic policy was to stop the extremes that could arise from bad macro-economic policy when the economy went into a bubble, followed by a deep recession, which we experienced in the late 1980s and early 1990s and which the Americans may be experiencing now, as they seem to be going through a classic boom and bust scenario.
  I left behind figures on spending and, with all my colleagues, expected an annual public spending round, which would adjust those figures between Departments in the light of circumstances affecting both them and the national economy. The Chancellor said that he was following Tory figures, but when he made that announcement he made only one decision—to cancel two years of public spending rounds. I have said previously that I am sure that none of my colleagues in the Conservative Cabinet, especially the Secretaries of State for Education and for Health, would ever have put up with that.
  I find myself agreeing with Liberal Democrat Members that the Government's bizarre decision was motivated only by a desire to out public spending commitments in the first two or three years to enable them to be more generous at the end of the parliamentary period. The Government left it a bit late; the health service was in crisis and the Prime Minister was panicking when they finally changed gear and went into pre-election mode. Now there are spending commitments, not just on health and education—if wit were to take office now, I would

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  support colleagues who have committed us to that—but across Whitehall. The Government are now postulating increases in public spending in the next three years far beyond any likely rate of growth in our economy. Those increases are bound to take us into deficit in the middle of the next Parliament unless fiscal prudence is pursued by the Chancellor's successor.
  I have already dealt with fuel tax the Chancellor took over my escalator. If, when I was Chancellor, I was asked whether the idea of petrol and diesel escalator was that every year, whatever the circumstances, taxes on those commodities would be increased by a certain percentage beyond inflation for an indefinite and non-foreseeable period I would have said, "Of course not." I would have said that that would have caused a consumer revolt, because no sensible tax raiser puts such a large burden on a narrow piece of the tax base. When people look back on that feature of Government policy, they will think it quite bizarre; the Government just sat and waited until, eventually, the lorry drivers predictably took to the streets. Indeed, we got to the stage when major haulage firms filled large-capacity lorries with diesel before coming back to this country to make their journeys here.
  In present circumstances, I do not expect the Chancellor to accept the SNP's inducements to take off another 3p a litre. However, could we have an indication of the Government's present and future policy? Is it just to go to the election saying, "We cut the duty and held it down, and after the election, we'll have to see what turns up, but so long as you keep quiet and the newspapers don't mind, and if we have some problems with the public spending commitments, we will no doubt be back to putting up the tax on petrol and diesel again"?
  The Government got away with what they did before September last year because they were very lucky with the crude oil price, which fell extraordinarily for a long time, so the motorist and the haulier did not notice the impact of the taxation. Once the oil price began to go back to a more normal level, the full horror for the rural economy and much of the business economy was revealed, and the Government had to go back. Do they intend in future to take account of crude oil prices in deciding the appropriate level of petrol and diesel tax in any given year?
  Will the Government in future pay more attention to the impact of the tax, on the rural economy in particular? This is an especially appropriate time to discuss that aspect, as the rural economy faces a tremendous crisis this summer, which will have a marked effect on the growth of the economy as a whole, when the knock-on effect of the foot and mouth epidemic on many associated rural and countryside industries is felt.
  Will the Government have any concern for the environmental consequences of taxation? One minute they put the tax up because that is good environmental policy, then they put the tax down, which apparently, they say, has no environmental consequences at all. I know that the Government have no real commitment to using tax for environmental purposes. I personally introduced the landfill tax and gave a rebate on it—instead of the taxation being paid, when money was put by site operators into environmentally approved schemes. I cited environmental reasons for putting up road tax.
  This Government cited such reasons when it suited them, but they had different arguments for lowering the tax on domestic fuel. They had different arguments for
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  subsidising the coal industry and coal-burn in power stations. They have absolutely no consistent or genuine view on environmental issues, but will they be persuaded that there is an environmental case for keeping our fuel taxes among the highest in western industrial countries, but not vastly above the level that prevails in competitor economies across the rest of western Europe?
  When the Minister says that she cannot take off 3p per litre, I invite her to take the opportunity to explain the Government's approach. They look back over folly, panic and U-turn. Can they explain what balance they intend to strike, bearing in mind the crude oil price and the particular effects on the rural economy and on other parts of the economy that are dependent on diesel fuel, such as haulage? What is their policy on the environmental consequences of a fuel tax?
  Mr. James Clappison: It is a great pleasure to follow my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). I am sure that the House listened with interest to his analysis. If anything, he was unduly modest when he dealt with the history of the matter, and particularly the inheritance that the Government took over from his stewardship of the economy.
  My right hon. and learned Friend left the Government a benign economic inheritance and, as he made clear, the Government's principal activity since then has been to tax too much when they did not need to do so. The taxes that are the subject of the amendments are a good example of the Government's inclination towards tax by stealth and to tax as much and as long as possible while they can get away with it. Now, as my right hon. and learned Friend rightly said, after all the Government's boasts about boom and bust, they face a humiliating change of spin but not of policy, with the Chancellor today having to climb down over his claims about the economy and admit what is apparent to many other people—that we are facing a period of uncertainty in the world economy.
  I listened with interest also to the opening speech by the hon. Member for Banff and Buchan (Mr. Salmond). I hope that he will forgive me if I say that I feel able to resist the temptation that he presented to us to distribute Scottish nationalist literature throughout England. That is one activity that I can happily do without. However, I acknowledge reluctantly that some of the points that the hon. Gentleman made with respect to Scotland apply to motorists the length and breadth of the United Kingdom. I shall make some particular points about the effect of the Government's policies on Northern Ireland in due course.
  4.15 pm
  I want to make our position clear at the outset. As my right hon. Friend the shadow Chancellor said, we are committed to cutting duty on fuel by at least 3p a litre. We want to cut petrol tax and to offer some relief to the hard-working families who have to pay too much to the Government every time they fill their tanks. I assure Labour Members that those families will remember that in future.
  Mr. Bercow: Of course, my hon. Friend is absolutely right to speak about the impact of petrol tax on hard-working families. However, will he also bear in mind the interests of an appreciable number of people, not

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  least in rural areas, among whom I number Mrs. Elizabeth Zettl, an 83-year-old woman in Buckingham High street in my constituency? Mrs. Zettl travels around by car to undertake charitable work on behalf of deserving causes. She has been consistently punished by this Administration and she is very angry about it.
  Mr. Clappison: My hon. Friend rightly illustrates some of the personal circumstances that lie behind the problems associated with motoring in rural areas. His example concerned somebody who undertakes very commendable activities. The problems that are faced by poorer members of rural communities, who may rely on their cars to make their way from village to village, or from village to supermarket, often seem to be overlooked by the Government, under whom motorists in town and country alike—I shall deal with the special problems of the countryside in a moment—have taken a clobbering.
  My right hon. and learned Friend the Member for Rushcliffe was right in his analysis of the history of those problems. Perhaps his words deserve underlining with this fact: in May 1997, the motorist paid an average of 59p a litre to fill up at the pump, but today, he pays almost 76p a litre. For the benefit of Labour Members, we should make it clear where the responsibility lies, as no less than 13p out of that 17p increase arises from additional tax piled on by the Chancellor. As my right hon. and learned Friend said, it was piled on time and time again for as long as the Chancellor thought that he could get away with it. The amount of tax on a litre of petrol in May 1997 was 45.7p; it is now 59p. Let me give one particular motoring example. We have heard something about Mondeo man in the past. A Mondeo man who fills up his tank now pays £10 more than he did before this Government came to power.
  I have obtained from the Library figures that are based on the European Union weekly oil bulletin. According to those figures, even after making allowance for when the change in duty on ultra-low sulphur petrol and the temporary change in respect of ordinary unleaded petrol take effect, the United Kingdom still has the most expensive petrol in the European Union. That is the case because United Kingdom motorists pay so much tax and duty. The hon. Member for Banff and Buchan adverted to the fact that tax and duty amount to 75 per cent. of the total price of unleaded petrol at the pump. As was pointed out by one of our tabloid newspapers last week, the United Kingdom has one of the cheapest rates in the European Union for pre-tax petrol, but the most expensive rate for post-tax petrol.
  Not least among the implications is that which affects the part of the United Kingdom that shares a land border with another EU member. In the Republic of Ireland, petrol is about 15p to 17p a litre cheaper than in Northern Ireland. The gulf between petrol prices in Northern Ireland and the Republic has been reflected in the growing problem of cross-border fuel smuggling, to whose existence even the Government are beginning to admit, and in the disappearance of petrol retail stations in the vicinity of the border. A significant number of those stations have been lost in the past four years.
  The background to our debate is the unprecedented public dissatisfaction with fuel prices that was expressed last autumn. As my right hon. and learned Friend the
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  Member for Rushcliffe rightly said, the Chancellor was prepared to continue to increase petrol prices, apparently without any rationale or firm policy other than to raise as much revenue as possible from the motorist. He was happy to pursue that course, thus causing more and more pain to motorists, until the general public said that they could take no more.
  It was clear last autumn that those who expressed their dissatisfaction and said that they could take no more included pensioners and families on low incomes. High fuel taxation bears down heavily on pensioners and other groups who cannot afford it. However, it is part of the Government's unenviable record of increasing the tax burden on the least well-off in our society. The Institute for Fiscal Studies pointed that out today.
  The least well-off include people who want to own and use a motor car. In some rural areas, that is a necessity, as my hon. Friend the Member for Buckingham (Mr. Bercow) made clear. They want to use their cars, but the Government are punishing them with high levels of tax and duty, which contribute to their record of regressive taxation that hits the least well-off the hardest.
  My right hon. and learned Friend was right to paint a wider picture to encompass the world economy and the possibility of future increases in the price of petrol. Whatever happens to the price of crude oil, there should be no doubt about where responsibility rests for the relatively high price of petrol in the United Kingdom. Ministers cannot spin away the fact that the Government have significantly increased fuel duty and that 75 per cent. of that high price—the highest in Europe—arises from taxation. The Government must accept responsibility for the high price that motorists pay every time they visit the pumps. They must not be allowed to spin their way out of it.
  We shall endeavour to make it clear where the responsibility lies: it lies with the Government, who have lost their grip on policy. They try to increase taxation whenever they can get away with it—when they are not being pressed and buffeted by public opinion. They created those forces by setting such high taxes. Ministers are responsible for the agony that high prices at the pumps cause so many motorists. Responsibility rests with the Government, and they should not be allowed to escape it.
  Mr. Michael Moore: This has been an interesting discussion, not least for the cameo it has provided of the continuing debate about boom and bust and a possible return to the cycle over the coming months.
  Sadly, the debate has lacked any reference to sustainability, or to the role of the environment in the determination of fuel policy and associated matters. I note that no Labour Back Benchers are rushing to participate; I hope that Ministers will address such matters when they respond.
  We cannot ignore the difficulties that can arise in balancing the needs of the environment, economic competitiveness and social inclusion, which are the three components of sustainability. The hon. Member for Banff and Buchan (Mr. Salmond) made some important points about the economy and the way in which he sees it developing. I associate myself with his comments and those of other hon. Members concerning the sad news about Motorola jobs in central Scotland. Our rural

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  communities are suffering greatly from foot and mouth, and it is therefore right to place emphasis on the way in which we tackle the economic problems that affect the whole country.
  In the past two or three years—and especially in the past 12 months—the fuel price issue has been buffeted around. When things came to a head last autumn, we acknowledged that there had to be an accommodation and that we had to keep all parts of the sustainability argument in kilter. In the past, it was important to support the fuel duty escalator for environmental reasons, but changing circumstances meant that it had to alter.
  We have been advocating for a long time that there should be a freeze on fuel duty in real terms for the lifetime of this Parliament, and, indeed, the next one. After the events of last year, we would like to have seen a return to the travelling public of the windfall VAT receipts that the Treasury obtained and pocketed for other purposes. It is important to switch car tax aggressively towards encouraging smaller, more environmentally friendly cars and to shift the whole emphasis of our environmental taxation towards congestion charging, recognising, as we do, the need for upfront investment in public transport that will enable us to produce appropriate public transport alternatives.
  The pain that many of our communities are suffering has focused everyone's mind. We recognise the difficulties of escalating fuel prices, but we also recognise the opportunities that congestion charging and other technologies will afford us for using a more sophisticated approach to targeting environmental taxation.
  New circumstances involving huge increases in world oil prices, followed by massive fluctuations, have been experienced over the past six months. All the parties have had to adjust to that new reality—and some have done so more dishonourably than others. In adapting to the new situation, we cannot let the central idea of sustainability get lost. But alas, that is exactly what is happening, with a Dutch auction under way between the different parties to see which one can promise the most meaningless tax policy changes. We did not hear much about the environment from the hon. Member for Banff and Buchan—nor did we hear much from the right hon. and learned Member for Rushcliffe (Mr. Clarke) about his party's policy on fuel taxation. Sadly, even his Front-Bench spokesman did not provide an answer to that particular mystery.
  There is an argument for a cut in fuel duty if it can stimulate changes that lead the market to adopt more environmentally friendly fuels. We support the plans on ultra-low sulphur fuel for that reason, and, if the debate should move on, I hope that my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) will have the opportunity to raise the issue of taxation changes on biodiesel.
  Mr. Simon Thomas: I agree with the tenor of most of the hon. Gentleman's comments. However, a problem remains in rural areas, where a double jeopardy, or double whammy, is imposed on rural dwellers. The figures quoted for the price of petrol per litre by the Conservative Front-Bench spokesman would not be recognisable to the people in my constituency, who have to buy petrol at 2p, 3p or 4p a litre more than that. Does the hon. Gentleman have any suggestions as to how,
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  on the social justice side of sustainability, we can ensure that people in rural areas who need some form of private transport for access to jobs and services are not penalised by the differential between urban and rural petrol costs?
  Mr. Moore: I am grateful to the hon. Gentleman for that intervention and I acknowledge his credentials in these matters. He raises the issue of the environment with great regularity. This is a difficult issue for all of us. Our view is that the funds that will be made available through congestion charging must allow us to create alternative public transport systems. That will apply not only in urban areas but in rural areas, where people will be able to use those facilities to get into the towns and cities where many of them have to work. I suspect that the answer to the hon. Gentleman's question is in nobody's mind just yet. However, we must ensure that, when we put forward these arguments, we do not lose sight of the environmental aspects as we rightly and properly focus attention on the problems in rural areas.
  Mr. Matthew Taylor: My hon. Friend referred to urban congestion charging. Is it not the case that, in urban areas where public transport could be made available, if properly funded through urban congestion charging, there would not only be a renaissance of public transport, but higher costs for those who chose to use their cars needlessly? That would mean that those in rural areas would pay far less, because there would not be the same availability of public transport or the same need to get people out of their cars.
  4.30 pm
  Mr. Moore: I agree with my hon. Friend.
  We should ask what lies behind the amendment—what the intention is. The Scottish National party's petrol price policies have a sorry history: few survive, and this one is likely to fare no better. We have been told that what is proposed is an initial cut of 10p a gallon, which is tantalising stuff. Nowadays we tend to buy our fuel in litres rather than gallons, although we measure our cars' fuel economy in miles per gallon. My point is, however, that there may be just a hint of politics in this, rather than any real concern about the issues that are at the heart of the debate.
  What is behind the policy? Is it the environment? Clearly not: we have heard virtually no mention of that, except in the form of attacks on others' views. Is it a desire to help small petrol stations, in the teeth of competition from the major oil companies and the supermarkets? That is unlikely; there was certainly no evidence of it in the speech of the hon. Member for Banff and Buchan. Is it the fluctuating oil price? Well, we have heard a little more about that.
  Andrew Wilson, the SNP's finance spokesman, relaunched his policy a few days ago, trumpeting it as a response to a price increase announced by Shell. The problem is that the policy had been announced earlier, before the price increase. The "auction" approach that many other parties now seem to espouse does not take account of the fact that the oil price is fluctuating wildly. What we have not been given today is any sense that the objective is to tie us to a particular petrol price at a particular time. We have seen massive shifts in the oil price over the past year; to keep up with that would

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  require a weekly policy change, which, even by the SNP's standards, would be fairly breathtaking. The party's position has no credible basis.
  Mr. Salmond: What is breathtaking is the position taken by the Liberal Democrats over a number of years. It is based on the politics of the Kincardine and Deeside by-election: the Liberal candidate was busy attacking the price of petrol under the Conservative party, only for it to be revealed that Liberal policy would make it even higher. Indeed, Liberal policy over most of the last few years would make it even higher than it is under the present Government.
  If the hon. Gentleman consults the record, he will note that every fuel tax debate that has taken place while I have been a Member of Parliament has featured an extremely consistent position, to which some Members of his own party have been extremely sympathetic. What a pity that a Liberal Democrat Front-Bench spokesman will have to reveal to the people of Scotland that he is not prepared to vote for lower petrol prices in existing circumstances.
  Mr. Moore: As usual, what the hon. Gentleman says half-answers the point that we have been debating.
  Over the past two or three years, my Liberal Democrat colleagues and I have consistently opposed increases in fuel taxation that have not been accompanied by the requisite investment in public transport. Such investment has been completely lacking under the current Government, and it is still lacking. We hear lots about the £180 billion in the 10-year transport plan—I shall be very surprised if we escape another reference to that this afternoon—but that vague and notional amount is not, in fact, committed. The private sector amounts are not known; and, as we noted earlier during questions to the Secretary of State for the Environment, Transport and the Regions, we are still stuck in multimodal studies halfway around the country, which means that no serious investment is going on.
  The hon. Gentleman need not lecture the Liberal Democrats on fuel policy. We believe that there is a link between any fuel tax, the revenues that are raised, and the public transport that is created as a result. The hon. Gentleman has not demonstrated this afternoon that he cares much about that.
  As I have said, there is no credible basis for the SNP's position. This is a pre-election stunt, and we will have nothing to do with it.
  Mr. Alasdair Morgan: I want to talk briefly about the effect that the amendment would have on rural areas such as the one that I represent. As the hon. Member for Ceredigion (Mr. Thomas) said, in rural areas, we are talking about a cut in the retail price, which is already much higher than in many urban areas.
  Galloway and Upper Nithsdale is one of the six constituencies with the lowest average income in Scotland. Household incomes in Dumfries and Galloway, in which the constituency is situated, are the second lowest of all the local authorities in the UK, yet Galloway and Upper Nithsdale is in the top six constituencies in Scotland for car ownership.
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  That is not because my constituents are particularly perverse. It is not because, although they have much lower incomes than the average, they want many more cars than the average. It is because it is essential for them to have those cars to get to work. Another consequence of the lower incomes is that people's cars are often much older; more difficult and more expensive to maintain; and less fuel efficient.
  People in areas such as mine—as in many other areas in Scotland and the UK—have to travel considerable distances to work. That is largely due to the decline in agriculture, which is on-going even as we speak. In many cases, two members of the family have to travel to work separately: because wages are so low, both parents have to work but they cannot work at the same time because of child care and other commitments, so they need two cars—a fact which to some extent accounts for the increase in car ownership.
  In many such areas, public transport is not an option. Dumfries and Galloway offers a very generous subsidy to public transport in the area, yet services will never be frequent enough or at the right times to allow the majority of my constituents to get to work when they want to. I was recently at a meeting in Dalbeattie, where a factory was shutting down, with about 50 redundancies. One young chap said that he had been able to get a job in Dumfries, the nearest major town some 10 miles away, but that the job started at 7.30 am and the first bus in the morning could not get him to work in time. The only alternative for him was to buy a car. It is all very well to talk about alternative transport systems and investment in alternative transport systems, but the harsh fact is that, in many rural areas, no matter how much we invest in those systems, they will never be good enough to enable the vast number of people to get to the jobs that are on offer.
  There exists an alternative for those people: to get on their proverbial bike and move out of rural areas. Interestingly, the latest population statistics for Scotland, which were published this week, show that in all areas except Edinburgh, and particularly in rural areas, the population has declined over the past 10 years. At the same time, the number of older people in those areas has increased. The younger people—those who need work—are moving out of the countryside because they cannot afford to travel to work and cannot get jobs in rural areas. As that happens, a vicious circle develops. Local incomes drop even further because fewer people are in employment in rural areas, and the cost of services increases in those areas because more elderly people are putting a burden on social services. There is a cycle of decline in our rural economy.
  Many of the imperatives to use private transport are created by changes in our public services. For example, the centralisation of hospital services is going on throughout the country. From Stranraer, the biggest town in my constituency, it is a journey of 150 miles to the nearest general hospital. From the Mull of Galloway, it is a return trip of 210 miles to the nearest general hospital.
  People cannot do that sensibly in a day by public transport. They have to have a car to visit a relative in hospital or to go to an out-patient appointment. And that is only for those specialties that can still be dealt with in Dumfries infirmary. For many others, people have to go either to Edinburgh or to Glasgow. So the nature of public services in rural areas is driving people to use their cars.

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  Although modern technology can enable the economy in rural areas to expand, the Government's policy is to leave telecommunications development, particularly in relation to broadband, to the market. We know what the market is doing in rural areas—it is not investing in them, so in those areas of the modern economy that include some opportunity for rural areas to prosper, nothing is happening.
  I remember Government Back Benchers in previous Budget debates saying that the tax was being imposed for the sake of the environment, but we have not heard that story so much lately. That argument cut little ice with my constituents, who are relatively few in number and who did not see that they were individually causing much of a problem to the environment in Dumfries and Galloway, although they could see that the far more highly paid drivers who clog the M25 every day were contributing to the detriment of the environment. The tax did not stop those drivers, who simply absorbed the cost in the higher wages paid in their areas.
  It is a pattern that so-called environmental taxes hit rural areas harder. Yesterday, we debated the aggregates tax, which affects quarries, some 99.9 per cent. of which are situated in rural environments. That tax will be redistributed, allegedly, through cuts in employers' national insurance contributions, but—surprise, surprise—most of those with jobs work in urban areas, so the subsidy flows to those areas from a tax raised in rural areas.
  Another effect of the fuel duty is the significant impact on commercial hauliers, including those in my constituency. The hon. Member for Hertsmere (Mr. Clappison) mentioned competition from Northern Ireland, and that is significant for my constituency because it is the closest mainland constituency to that area. Many hauliers come across to Galloway from Northern Ireland, having filled up with cheap DERV in the south of Ireland, and can undercut local hauliers in my constituency—many of whom have gone out of business as a result.
  I suspect that the Government will not accept the amendment, even though they could earn some brownie points for the coming election if they did so. However, the Government must seriously consider mechanisms designed to help rural areas, and I have a suggestion for them. We know that the tourism industry is in deep crisis and we also know that rural bus services receive an essential rebate on DERV duty. Why not extend that duty rebate to operators of touring coaches? That would encourage them to come into country areas. Many hotels in my constituency, and other constituencies throughout rural Britain, have been affected by cancellations from tour operators because they have not had the bookings.Fuel duty is a significant cost for tour operators, and a reduction in it would enable them to reduce their prices and bring more tourists into the countryside. As we heard from the Minister for the Environment in his statement yesterday, we need to encourage more people to come to the countryside, and the Government could play their part today.
  The Economic Secretary to the Treasury (Miss Melanie Johnson): The amendment is an irresponsible attempt to reduce fuel duty below the levels proposed by the Government. Clause 1 already cuts the duty rates on the main road fuels used in the UK. The duty on ultra-low sulphur petrol will be cut by 2p a litre and that on ultra-low sulphur diesel by 3p, to equalise the
  186
  duty on the two products. Those reductions form part of a package of measures that will protect and enhance the environment, and are also equivalent to an overall cut of 4p a litre for motorists and 7p a litre for hauliers.
  The Government have a prudent and responsible strategy that balances the interests of motorists with legitimate concerns about the environment—about which we have heard remarkably little in this afternoon's debate—while ensuring that we continue to raise valuable revenue from fuel duties for spending on vital public services including health, education and transport, which is another issue that the Opposition seem keen to disregard.
  4.45 pm
  Mr. Salmond: I spoke at some length about the increase of £5 billion in Government revenues that has resulted from the fact that the price of oil is much higher than the Government expected two years ago. Will the Minister say what, in 1999, the Treasury expected the price of petrol to be now? If we are to believe the Treasury forecast, the expectation must have been that the price would be below current levels. If that level was considered sustainable for the environment in 1999, why is it not so in 2001?
  Miss Johnson: The hon. Gentleman made that point earlier, and I shall respond to it in detail later. However, there has been no reference in the debate so far to the Red Book. It was noted earlier that there have been considerable fluctuations in the spot price of Brent crude oil. The graph at box 6.3 in chapter 6 shows that that price rose from a low of $10 a barrel in January 1999 to a high of between $33 and $34. I am sure that I do not have to remind the hon. Gentleman that that threefold increase makes a considerable difference to the price of petrol at the pump.
  Mr. Salmond: The Minister makes my point for me. I have demonstrated already that in 1999 the Government expected oil to cost between $10 and $12 a barrel for the foreseeable future. What was the Government's expectation in 1999 of what the price of petrol at the pumps would be in 2001? It must have been lower than the current price, so why is that forecast level not sustainable in environmental terms now? It is a reasonably simple question, and I hope that the Minister will address it now.
  Miss Johnson: As I said, I shall come to that point in the course of my response. I want to be as logical as possible, to prevent the debate from jumping around from point to point.
  The hon. Gentleman did not mention the fact that the amendment would cost the Exchequer more than £800 million a year. That is a substantial amount of revenue, and he must explain how he would recoup the money and so be able to match the Government's spending plans. He must also explain how he would meet the environmental targets. The Scottish National party is keen to be seen as a tax-and-spend party. It needs to offer more of an explanation of how its economic policies hang together, and of how it would be able to deliver—fiscally and in terms of public finances—policies based on the tax-and-spend premise.
  Mr. Salmond: I give the Minister the credit of assuming that she has read my party's taxation document,

  187
  which explains that we propose to increase the rate of taxation for people earning more than £100,000 a year by 5p. Whether the Government think that that is right or wrong, the Minister's statement that we have not explained how we would raise the revenue to finance the proposal in the amendment is totally invalid. In passing, may I point out that our proposal would still leave the highest marginal rate of tax considerably below what the Chancellor considered to be the appropriate rate just a few years ago?
  Miss Johnson: I am well aware of what the Scottish National party's manifesto contains, but when he moved the amendment, the hon. Gentleman did not explain to the House how his party's proposals on spending and taxation would be squared. It is good to hear him confirm the party's commitment.
  However, the hon. Gentleman's policy contains an inconsistency. His party's taxation document talks about fulfilling Britain's international commitments, especially in reducing levels of carbon dioxide and sulphur dioxide, and related environmental obligations. It is unclear how the amendment would contribute to achieving such objectives.
  The package of measures in the Bill represents a balance between economic, environmental and social concerns. As I have argued, a single cut in fuel duty—which is one of the amendment's proposals—could have adverse effects on the environment. Instead, the Government have announced a package of measures that will protect and enhance the environment. The package is equivalent to a cut of 4p per litre for motorists, and 7p per litre for hauliers. Those who wish to cut fuel duty must explain how they would do that. The Government's first priority is a stable economy.
  Let me turn to the points made about the global economic climate by the right hon. and learned Member for Rushcliffe (Mr. Clarke) and to the remarks made by other right hon. and hon. Members. The Chancellor said today that all countries should take the necessary action to sustain growth. He made the point powerfully, supported by all that we have done, that our policy is much better placed than before in the face of global instability. As he said, we are on course to deliver stability and sustain growth. One reason for that is our tough and decisive action in introducing tough fiscal rules, reducing the national debt and making the Bank of England independent, which has succeeded in delivering the lowest rate of inflation for 30 years.
  The right hon. and learned Member for Rushcliffe spoke proudly of the previous Government's legacy. We come back from time to time to the idea of the Tories' golden inheritance. I can never manage to square that with the fact that under the previous Government there was £28 billion net borrowing, and that between 1979 and 1997 more was spent on debt and unemployment than on the national health service. What sort of golden legacy was that? In contrast, in 2001–2 alone we will be spending £30 billion more on the national health service than on unemployment and debt. We also inherited an unemployment figure that had reached 3 million, and a 15 per cent. interest rate.
  The right hon. and learned Gentleman says how lucky we have been—supposedly—but neglects to mention the Asian crisis and what we have done in international
  188
  environments to stabilise the global economy and to work for continuing stability through the institution of such organisations as the financial stability forum.
  Mr. Kenneth Clarke: The hon. Lady has become slightly confused in giving the usual Labour account of the Government's awful inheritance. She will recall that the Government came into power after three years of growth, low inflation and consistently falling unemployment. The public finances were on course for balance. At the last election we debated the black hole in Labour's finances, but when the Government came to power it did not appear. Does the hon. Lady agree that that is because they failed to mention that they would increase the tax burden so heavily, as they did over the next three years, and freeze public spending so severely for their first two or three years in office? They are only just beginning to emerge from the consequences of that, so under this Government the increased spending on health and education for example, is still below the levels achieved under the Major Government.
  Miss Johnson: The right hon. and learned Gentleman is again rewriting history. We inherited a 44 per cent. debt-to-GDP ratio, and have reduced it to 31 or 32 per cent.
  Mr. Howard Flight: That is too low.
  Miss Johnson: The hon. Gentleman says that that is too low. He wants to borrow more and enter the cycle of boom and bust that characterised all previous Conservative Governments.
  Mr. Flight rose—
  Miss Johnson: I shall give way to the hon. Gentleman.
  The Chairman: Order. This macro-economic debate is going wide of the amendment, and I do not want it to spread.
  Mr. Flight: Does the Minister believe that the long-term gilt yields underlying annuity costs, and the poor deal that pensioners buying annuities get, is a desirable part of Government policy, or would she like pensioners buying annuities to get better value?
  Miss Johnson: Our position on annuities has been made clear many times to the hon. Gentleman, and was set out in the Red Book and the Budget statement. I shall not be drawn further on that, Sir Alan, as I realise that I am testing your patience.
  The Chairman: In the time-honoured phrase, may I refer all hon. Members to the comments that I made a few moments ago?
  Miss Johnson: We shall abide by them most faithfully, Sir Alan.
  Mr. Clappison: Will the Minister give way?
  Miss Johnson: No I should like to move on.

  189
  Complaints have been made about UK tax levels. The overall context, however, is that our tax burden is much lower than the European Union average. Indeed, 10 EU countries have higher tax burdens. Business tax rates are low, and our corporation tax rate is among the lowest in the EU and well below average. In addition, for small companies the rate is only 10 per cent. We can be proud of our record on reducing taxation on business. Our taxation rates are competitive when compared with those of comparable EU and other countries.
  Let me talk about the Government's strategy on fuel duty. The appropriate duty rate will in future be decided Budget by Budget. Opposition Members have criticised that, and the right hon. and learned Member for Rushcliffe seemed to complain both that we had ended the escalator that he created, and that we had been on it at all. I am not clear what his argument amounted to. He may have been suggesting that we should have come off the escalator sooner—I see him nodding—but that policy would merely have added to the £16 billion cuts guarantee that his party must already explain to the people of the United Kingdom.
  Mr. Clarke: The Minister cannot continue the debate using the totally bogus £16 billion figure that the Government keep contributing to an election campaign that is totally brain-free on many subjects, particularly economic policy. Would it not have been logical, having started the escalator when we had the cheapest fuel in western Europe, at least to stop its automatic increase once our fuel had become the most expensive in Europe? Did the Government pursue any logical policy, rather than staying on an escalator towards the stratosphere until civil disobedience on our streets sent them into a U-turn?
  Miss Johnson: We had already announced the end of the escalator before then. The right hon. and learned Gentleman is obviously uncomfortable about the fact that he introduced the escalator and we ended it, but that is the fact of the matter.
  We have used duty differentials to encourage the manufacture and use of cleaner fuels. We have encouraged the use of ultra-low sulphur diesel, which now accounts for 100 per cent. of the road diesel market. The incentives that we recently announced for ultra-low sulphur petrol mean that we expect that to account for 100 per cent. of the petrol market by the middle of June. The Budget introduced a comprehensive strategy to encourage cleaner alternative fuels. Our clear policy on fuel duty has several different dimensions, and it is important that we should maintain that.
  Mr. Simon Thomas: Will the Minister address the recent report on fuel duty by the Select Committee on Environmental Audit? That report made it clear that the Government's thinking has been muddled and that not enough environmental modelling has been done on the effect of fuel duty and its relationships with traffic congestion and reductions in greenhouse gases. Does she accept that the Government need to make a far clearer environmental case if they intend to pursue the current rates of fuel tax in future? If they do not, the problems that arose in September will come back.
  5 pm
  Miss Johnson: I do not accept that our position is in any way muddled. However, the Committee is fully entitled to its view. We have looked at the triangle of difficult issues and achieved the right balance between them—between the environment and environmental needs, the costs of motoring, and the revenues from fuel duty. We need to balance those issues and we have made those difficult decisions, leading to the 4p equivalent cut for motorists and the 7p equivalent cut for hauliers.
  I point out to those Members whose memories seem remarkably short that the percentage of tax on a litre of petrol has not really changed. Indeed, in May 1997, tax was 77.5 per cent. of the cost of a litre of petrol, whereas it is now 74.7 per cent. on lead replacement petrol and 75.3 per cent. on ultra-low sulphur petrol. Several statistics were falsely bandied about by Members during the debate, and I need to put the record right.
  Mr. Clappison: When one is talking about a proportion, the figure of which it is a proportion is important. Will the hon. Lady remind us of the price of petrol in May 1997?
  Miss Johnson: I do not have that figure to hand. The point being made by the hon. Gentleman and by other Opposition Members is that the proportion is dramatically different. It is not dramatically different; it is almost the same—if anything, it is slightly lower—so the point is not relevant.
  I remind hon. Members that the wider choice of cheaper motoring that we want to see has also been initiated through policies on car use. There is a reduced rate of vehicle excise duty on cars with smaller engines registered before 1 March 2001. It is being extended on 1 July 2001 to all cars with an engine threshold of up to 1.5 litres, and will eventually be backdated to November 2000. As hon. Members know, that will reduce the cost of VED by £55 a year for an extra 5 million car owners. In addition, all car and motor bike VED rates were frozen this year. Those are relevant considerations when considering the cost of motoring.
  I accept, however, the comments made by several Members that for people living in, and travelling to work from, rural areas, motoring costs are more significant than they are for people in urban environments. However, we have introduced a 7p equivalent cut in the rate, and that is an especially big help to motorists in rural areas.
  Arguments were made about smuggling in Northern Ireland, and the differentials in duty rates between Northern Ireland and the Republic of Ireland. Those arguments always strike me as curious. UK rates are set for good reasons. The Government are well aware of the smuggling problem in Northern Ireland, but we shall not allow our policies—or the livelihoods of legitimate traders—to be undermined by the activities of criminals.
  I am puzzled by those arguments, because they sometimes seem like arguments for tax harmonisation, which the Government completely reject. Instead, Customs and Excise has developed a strategy to tackle oil fraud. In Northern Ireland, that strategy includes significantly increased resources, which have been in operation since 25 September last year and have resulted in greatly enhanced enforcement activity. The aim of Customs and Excise is not only to seize more smuggled petrol and diesel but to ensure that its activity has an impact on the illicit market.

  191
  A question was put about the hypothecation of fuel tax for investment in public transport. For the pleasure of the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore), I reiterate that we do indeed have a £180 billion, 10-year public investment strategy plan—we are extremely proud of it. The plan represents an increase of current expenditure by about three quarters. In the pre-Budget report in 1999, we agreed that any money derived from any future real-terms increase in fuel duty should be hypothecated for transport spending. That point has already been taken on board by the Government.
  I conclude by reminding hon. Members that, as I have said before, if they support the amendment, which is irresponsible, they should say where the money would come from and what would be cut. We have ensured that our monetary and fiscal policy adds up, that we are making the key investments in public services, and that we are tackling the disadvantage that some hon. Members have highlighted.
  In talking about some of that disadvantage, especially that in rural areas, Opposition Members forget the importance of the work being done for those on low and average incomes through the introduction of the working families tax credit, the national minimum wage, the children's tax credit and the cuts that we have made in direct taxation. In all those ways, Opposition Members have neglected to view the Government's policy in its wider context, so I recommend that the House oppose the amendment.
  Mr. Salmond: I assure the Economic Secretary that 75 per cent. of almost £4 a gallon amounts to more in monetary terms than 77 per cent. of less than £3 a gallon. She must take my word for that, but it is absolutely true. She may want to ask the mighty expertise at her disposal in the Treasury to work out that sum, but I can give her an absolute assurance that the sum that the Government are taking in petrol duty has vastly increased during the new Labour party's term in office.
  What does the Economic Secretary's speech amount to? She suggests that the Government's proposed 2p cut in the price of ultra-low sulphur is a wise act of policy, but that the 4p cut proposed by the Scottish National party is wildly irresponsible. However, the reality is that the cut proposed by the Government—and, indeed, the decision to step off the fuel price escalator—were brought about by force majeure, because of the impact of a massive fuel tax protest. That was not an act of policy; it was an act of panic, and everyone knows it.
  If the Economic Secretary cares to check the record, she will see that the SNP has consistently opposed that approach to petrol taxation, which was, I agree, started by the Conservative party—but it was continued by the new Labour party. The reason why we oppose the policy is simple: it is a blunt instrument. In pursuing the policy that the Government inherited from the previous Government, they tax most the people who do least environmental damage to the overall economy.
  Not only is the price of petrol higher in rural areas, but the taxation on every gallon of petrol is higher, because the element of taxation depends on the overall price. The policy is perverse. There are much better and more sophisticated ways to approach environmental taxation.
  192
  The Economic Secretary talks about the great infrastructure plan, but after four years in government, it is still definitely just a plan.
  Matthew Parris wrote an interesting article today, in which he speculated that if the new Labour party won the election, every Minister and Labour Back Bencher would have to get used to the fact that they would no longer have the luxury of blaming the previous Government for their mistakes, because, of course, they themselves would be the previous Government. I hope that when the Economic Secretary has had time to think about some of the arguments that she has used today, she will realise their fragility. Despite being totally unable to tell us what the Government's expectation was in 1999 of what the price of a gallon of petrol would be now, she argued that the policy was based on environmental grounds.
  That idea was always a phantom. The policy was always about cash for the Treasury, not about concern for the world environment. It was never green; it was always Brown. That is the reality of the policy, and it does huge damage to the rural economy, in particular, and to every consumer and everyone who depends on the price of transport when purchasing goods in the shops. The Government have not gone far enough to draw the sting from this as an election issue.
  If proof positive of that final statement were necessary, the fact that five Labour Members from Scotland have attended the debate without one of them indicating a wish to speak shows that they understand that when people—
  Mr. Malcolm Savidge rose—
  Mr. Salmond: The hon. Gentleman wandered into the Committee a few minutes ago, and I will not give him the opportunity to do what he should have done earlier—make his own speech. Neither he nor his colleagues wanted to speak in the debate because when people go to the polls, they will know that the new Labour party means high petrol prices in Scotland.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 129, Noes 287.

  Division No. 190]

  [5.10 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Curry, Rt Hon David

  Amess, David

  Davies, Quentin (Grantham)

  Ancram, Rt Hon Michael

  Davis, Rt Hon David (Haltemprice)

  Arbuthnot, Rt Hon James

  Day, Stephen

  Atkinson, Peter (Hexham)

  Dorrell, Rt Hon Stephen

  Baldry, Tony

  Duncan, Alan

  Bell, Martin (Tatton)

  Evans, Nigel

  Bercow, John

  Ewing, Mrs Margaret

  Blunt, Crispin

  Fabricant, Michael

  Boswell, Tim

  Fallon, Michael

  Bottomley, Peter (Worthing W)

  Flight, Howard

  Brady, Graham

  Forth, Rt Hon Eric

  Brazier, Julian

  Fox, Dr Liam

  Brooke, Rt Hon Peter

  Fraser, Christopher

  Browning, Mrs Angela

  Gale, Roger

  Bruce, Ian (S Dorset)

  Garnier, Edward

  Burns, Simon

  Gibb, Nick

  Clappison, James

  Gill, Christopher

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Gillan, Mrs Cheryl

  Gray, James

  Clifton-Brown, Geoffrey

  Green, Damian

  Cormack, Sir Patrick

  Greenway, John

  Cran, James

  Grieve, Dominic

  193

  Gummer, Rt Hon John

  Paisley, Rev Ian

  Hague, Rt Hon William

  Paterson, Owen

  Hamilton, Rt Hon Sir Archie

  Portillo, Rt Hon Michael

  Hammond, Philip

  Prior, David

  Hawkins, Nick

  Randall, John

  Hayes, John

  Redwood, Rt Hon John

  Heald, Oliver

  Robatha, Andrew

  Heathcoat-Amory, Rt Hon David

  Robertson, Laurence (Tewk'b'ry)

  Horam, John

  Robinson, Peter (Belfast E)

  Howard, Rt Hon Michael

  Roe, Mrs Marion (Broxbourne)

  Howarth, Gerald (Aldershot)

  Ross, William (E Lond'y)

  Jack, Rt Hon Michael

  Ruffley, David

  Jenkin, Bernard

  St Aubyn, Nick

  Johnson Smith, Rt Hon Sir Geoffrey

  Salmond, Alex

  Shephard, Rt Hon Mrs Gillian

  Key, Robert

  Shepherd, Richard

  Kirkbride, Miss Julie

  Simpson, Keith (Mid-Norfolk)

  Laing, Mrs Eleanor

  Soames, Nicholas

  Lait, Mrs Jacqui

  Spelman, Mrs Caroline

  Leigh, Edward

  Spicer, Sir Michael

  Letwin, Oliver

  Spring, Richard

  Lewis, Dr Julian (New Forest E)

  Stanley, Rt Hon Sir John

  Lidington, David

  Steen, Anthony

  Lidington, David

  Streeter, Gary

  Lilley, Rt Hon Peter

  Swayne, Desmond

  Lloyd, Rt Hon Sir Peter (Fareham)

  Syms Robert

  Llwyd, Elfyn

  Tapsell, Sir Peter

  Loughton, Tim

  Taylor, Ian (Esher & Walton)

  Luff, Peter

  Taylor, John M (Solihull)

  MacGregor, Rt Hon John

  Trend Michael

  McIntosh, Miss Anne

  Tyrie, Andrew

  MacKay, Rt Hon Andrew

  Viggers, Peter

  Maclean, Rt Hon David

  Walter, Robert

  McLoughlin, Patrick

  Waterson, Nigel

  Madel, Sir David

  Whittingdale, John

  Malins, Humfrey

  Widdecombe, Rt Hon Miss Ann

  Maples, John

  Willetts, David

  Mates, Michael

  Winterton, Mrs Ann (Congleton)

  Mawhinney, Rt Hon Sir Brian

  Winterton, Nicholas (Macclesfield)

  Morgan, Alasdair (Galloway)

  Yeo, Tim

  Nicholls, Patrick

  O'Brien, Stephen (Eddisbury)

  Tellers for the Ayes:

  Ottaway, Richard

  Mr. Dafydd Wigley and

  Paice, James

  Mr. Simon Thomas.

  NOES

  Adams, Mrs Irene (Paisley N)

  Bradshaw, Ben

  Ainger, Nick

  Brinton, Mrs Helen

  Ainsworth, Robert (Cov'try NE)

  Browne, Desmond

  Allen, Graham

  Buck, Ms Karen

  Anderson, Rt Hon Donald (Swansea E)

  Burden, Richard

  Burgon, Colin

  Armstrong, Rt Hon Ms Hilary

  Butler, Mrs Christine

  Ashton, Joe

  Campbell, Alan (Tynemouth)

  Atherton, Ms Candy

  Campbell, Mrs Anne (C'bridge)

  Atkins, Charlotte

  Campbell, Ronnie (Blyth V)

  Austin, John

  Campbell-Savours, Dale

  Bailey, Adrian

  Cann, Jamie

  Banks, Tony

  Caplin, Ivor

  Barnes, Harry

  Casale, Roger

  Battle, John

  Chapman, Ben (Wirral S)

  Bayley, Hugh

  Clapham, Michael

  Begg, Miss Anne

  Clark, Rt Hon Dr David (S Shields)

  Benn, Hilary (Leeds C)

  Clark, Dr Lynda (Edinburgh Pentlands)

  Benn, Rt Hon Tony (Chesterfield)

  Bennett, Andrew F

  Clarke, Charles (Norwich S)

  Benton, Joe

  Clarke, Eric (Midlothian)

  Best, Harold

  Clarke, Rt Hon Tom (Coatbridge)

  Betts, Clive

  Clelland, David

  Blears, Ms Hazel

  Clwyd, Ann

  Blizzard, Bob

  Coffey, Ms Ann

  Blunkett, Rt Hon David

  Cohen, Harry

  Boateng, Rt Hon Paul

  Coleman, Iain

  Borrow, David

  Colman Tony

  Bradley, Rt Hon Keith (Withington)

  Connarty, Michael

  194

  Cook, Frank (Stockton N)

  Iddon, Dr Brian

  Cooper, Yvette

  Illsley, Eric

  Corbett, Robin

  Jackson, Ms Glenda (Hampstead)

  Corston, Jean

  Jackson, Helen (Hillsborough)

  Cousins, Jim

  Johnson, Alan (Hull W & Hessle)

  Cranston, Ross

  Johnson, Miss Melanie (Welwyn Hatfield)

  Crausby, David

  Cryer, John (Hornchurch)

  Jones, Rt Hon Barry (Alyn)

  Cummings, John

  Jones, Helen (Warrington N)

  Dalyell, Tam

  Jones, Jon Owen (Cardiff C)

  Darvill, Keith

  Jones, Dr Lynne (Selly Oak)

  Davey, Valerie (Bristol W)

  Jones, Martyn (Clwyd S)

  Davidson, Ian

  Jowell, Rt Hon Ms Tessa

  Davies, Rt Hon Denzil (Llanelli)

  Joyce, Eric

  Davies, Geraint (Croydon C)

  Kaufman, Rt Hon Gerald

  Dean, Mrs Janet

  Keeble, Ms Sally

  Denham, Rt Hon John

  Kelly, Ms Ruth

  Dobbin, Jim

  Kemp, Fraser

  Donohoe, Brian H

  Kennedy, Jane (Wavertree)

  Doran, Frank

  Khabra, Piara S

  Dowd, Jim

  Kidney, David

  Drew, David

  Kilfoyle, Peter

  Drown, Ms Julia

  King, Andy (Rugby & Kenilworth)

  Dunwoody, Mrs Gwyneth

  King, Ms Oona (Bethnal Green)

  Eagle, Angela (Wallasey)

  Kingham, Ms Tess

  Eagle, Maria (L'pool Garston)

  Ladyman, Dr Stephen

  Efford, Clive

  Lammy, David

  Ellman, Mrs Louise

  Lawrence, Mrs Jackie

  Field, Rt Hon Frank

  Leslie, Christopher

  Fisher, Mark

  Levitt, Tom

  Fitzpatrick, Jim

  Lewis, Ivan (Bury S)

  Flint, Caroline

  Lewis, Terry (Worsley)

  Follett, Barbara

  Liddell, Rt Hon Mrs Helen

  Foster, Rt Hon Derek

  Linton, Martin

  Foster, Michael Jabez (Hastings)

  Lloyd, Tony (Manchester C)

  Foster, Michael J (Worcester)

  Lock, David

  Gapes, Mike

  McAvoy, Thomas

  Gardiner, Barry

  McCabe, Steve

  George, Rt Hon Bruce (Walsall S)

  McDonagh, Siobhain

  Gerrard, Neil

  McDonnell, John

  Gibson, Dr Ian

  McFall, John

  Gilroy, Mrs Linda

  McGuire, Mrs Anne

  Godsiff, Roger

  McIsaac, Shona

  Goggins, Paul

  McKenna, Mrs Rosemary

  Golding, Mrs Llin

  McNulty, Tony

  Gordon, Mrs Eileen

  MacShane, Denis

  Griffiths, Jane (Reading E)

  Mactaggart, Fiona

  Griffiths, Nigel (Edinburgh S)

  McWilliam, John

  Griffiths, Win (Bridgend)

  Mallaber, Judy

  Grocott, Bruce

  Mandelson, Rt Hon Peter

  Grogan, John

  Marshall, David (Shettleston)

  Hain, Peter

  Marshall, Jim (Leicester S)

  Hall, Mike (Weaver Vale)

  Martlew, Eric

  Hall, Patrick (Bedford)

  Maxton, John

  Hanson, David

  Meacher, Rt Hon Michael

  Henderson, Doug (Newcastle N)

  Merron, Gillian

  Hendrick, Mark

  Michael, Rt Hon Alun

  Hepburn, Stephen

  Michie, Bill (Shef'ld Heeley)

  Heppell, John

  Miller, Andrew

  Hesford, Stephen

  Moffatt, Laura

  Hewitt, Ms Patricia

  Moran, Ms Margaret

  Hill, Keith

  Morgan, Ms Julie (Cardiff N)

  Hinchliffe, David

  Morris, Rt Hon Sir John (Aberavon)

  Hodge, Ms Margaret

  Hoey, Kate

  Mountford, Kali

  Hood, Jimmy

  Mudie, George

  Hoon, Rt Hon Geoffrey

  Mullin, Chris

  Hope, Phil

  Murphy, Denis (Wansbeck)

  Hopkins, Kelvin

  Murphy, Jim (Eastwood)

  Howarth, George (Knowsley N)

  Naysmith, Dr Doug

  Howells, Dr Kim

  O'Brien, Bill (Normanton)

  Hoyle, Lindsay

  O'Brien, Mike (N Warks)

  Hughes, Kevin (Doncaster N)

  Olner, Bill

  Humble, Mrs Joan

  Organ, Mrs Diana

  Hurst, Alan

  Osborne, Ms Sandra

  Hutton, John

  Pearson, Ian

  195

  Pendry, Rt Hon Tom

  Southworth, Ms Helen

  Pickthall, Colin

  Squire, Ms Rachel

  Pike, Peter L

  Starkey, Dr Phyllis

  Plaskitt, James

  Steinberg, Gerry

  Pollard, Kerry

  Stevenson, George

  Pond, Chris

  Stewart, David (Inverness E)

  Pound, Stephen

  Stewart, Ian (Eccles)

  Prentice, Ms Bridget (Lewisham E)

  Strang, Rt Hon Dr Gavin

  Prentice, Gordon (Pendle)

  Stuart, Ms Gisela

  Primarolo, Dawn

  Sutcliffe, Gerry

  Prosser, Gwyn

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Quinn, Lawrie

  Radice, Rt Hon Giles

  Taylor, Ms Dari (Stockton S)

  Rammell, Bill

  Taylor, David (NW Leics)

  Raynsford, Rt Hon Nick

  Temple-Morris, Peter

  Reed, Andrew (Loughborough)

  Thomas, Gareth R (Harrow W)

  Robertson, John (Glasgow Anniesland)

  Timms, Stephen

  Tipping Paddy

  Roche, Mrs Barbara

  Todd, Mark

  Rogers, Allan

  Touhig, Don

  Rooney, Terry

  Tickett, Jon

  Ross, Ernie (Dundee W)

  Turner, Dennis (Wolverh'ton SE)

  Rowlands, Ted

  Turner, Dr Desmond (Kemptown)

  Roy, Frank

  Turner, Neil (Wigan)

  Ruane, Chris

  Twigg, Derek (Halton)

  Ruane, Chris

  Tynan, Bill

  Ruddock Joan

  Ward, Ms Claire

  Russell, Ms Christine (Chester)

  Wareing, Robert N

  Ryan, Ms Joan

  White, Brian

  Salter, Martin

  Whitehead, Dr Alan

  Savidge, Malcolm

  Wicks, Malcolm

  Sedgemore, Brian

  Williams, Rt Hon Alan (Swansea W)

  Shaw, Jonathan

  Sheerman, Barry

  Williams, Alan W (E Carmarthen)

  Sheldon, Rt Hon Robert

  Winnick, David

  Simpson, Alan (Nottingham S)

  Winterton, Ms Rosie (Doncaster C)

  Skinner, Dennis

  Woodward, Shaun

  Smith, Rt Hon Andrew (Oxford E)

  Woolas, Phil

  Smith, Angela (Basildon)

  Worthington, Tony

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Wright, Anthony D (Gt Yarmouth)

  Wright, Tony (Cannock)

  Smith, Jacqui (Redditch)

  Smith, John (Glamorgan)

  Tellers for the Noes:

  Smith, Llew (Blaenau Gwent)

  Mr. Greg Pope and

  Soley, Clive

  Mr. David Jamieson.

  Question accordingly negatived.
  Mr. Clappison: I beg to move amendment No. 6, in page 1, line 21, leave out "14th June 2001" and insert "5th April 2002".
  We have been debating the changes in duty on ultra-low sulphur petrol and the temporary reduction in duty on unleaded petrol. We now come to amendment No. 6, which deals with the period for which the reduction in duty on ordinary unleaded petrol is to apply. In his Budget statement, the Chancellor announced that the Government intended to match the reduction in duty on ultra-low sulphur petrol with a reduction in duty on unleaded petrol for a temporary period. The amendment would extend the period during which that reduction applies from 14 June this year—the date fixed by the Chancellor—to the end of the current financial year, 5 April 2002.
  Given the Government's plans, hon. Members may find 14 June an interesting choice of date. We are tempted to ask about the magic of 14 June. Where does that date come from and what is the rationale behind it? Why has 14 June been plucked from all other dates as the day on which the concession on ordinary unleaded petrol will end? Why is it necessary to end it then? It is clear that, on 14 June, any ordinary unleaded petrol on sale to the
  196
  public will bear an increase of 2p a litre in duty. In other words, on 14 June, the 2p that the Chancellor took off on 7 March will be put back on.
  I shall resist the temptation to talk about stealth, but we need more of an explanation of where 14 June comes from. Given that the price of petrol in this country is relatively high because of high fuel tax, which we have just debated, and given the ominous pressures in the world oil market, which were adverted to by Members on both sides of the Committee in the previous debate, the last thing any motorist using that type of petrol wants is a further increase in its price on 14 June. I suspect that any motorist who pays that extra duty on 14 June will get an unpleasant shock; on top of the already high price that he is paying, he will find himself paying an extra 2p a litre in duty.
  I do not want to anticipate the Minister's reply, but in answering the debate, she may well echo what we are told in the explanatory notes to the Bill:
  "To ensure no market distortion in the final transition to 100 per cent. ULSP"—
  that is, ultra-low sulphur petrol—
  "a temporary cut in duty for ordinary unleaded has also been introduced. This will ensure all distributors and retailers will be able to pass on a 2 pence per litre duty cut to their customers. When this temporary concession ends on June 14 it is expected that ULSP will form virtually 100 per cent. of the petrol supplied to the UK".
  5.30 pm
  We are told in the concluding words of that statement that Ministers expect that ultra-low sulphur petrol will form virtually 100 per cent. of the petrol supplied to the United Kingdom, but we know all too well that, in this field as in so many others, what Ministers expect to happen does not always come to pass. Indeed, in the previous debate we had some interesting questions about what Ministers expected in the past which did not receive an answer.
  In any case, whether or not ultra-low sulphur petrol is supplied to the motorist is not in the hands of Ministers, as Ministers admit. A Minister in the Department of Trade and Industry told my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) in a written answer on 16 November last year:
  "Future levels of supply for ULSP will be a matter for individual companies to determine, "—[Official Report, 16 November 2000;
  Vol. 356, c. 718W.]
  In a further written reply on 26 February, the Financial Secretary stated that he believed that
  "the oil companies are on track to meet their target to supply ULSP nationwide at their retail sites by the end of March"—[Official
  Report, 26 February 2001; Vol. 363, c. 511W].
  However, there is no guarantee of that. Can the Economic Secretary say whether ultra-low sulphur petrol is available at all the retail sites of the major oil companies? In addition, we should like to know how many of the retail sites of the independent petrol retailers are supplying ULSP. Can the Minister tell us what proportion of the petrol supplied in the UK is ULSP?
  If it is the Government's case that the concession on unleaded petrol should end when ultra-low sulphur petrol constitutes 100 per cent. of the petrol supplied in the UK, why should not the date for the ending of the concession be moved from 14 June to 5 April next year? Why should there be any question of whether or not the deadline of

  197
  14 June is approaching, if it is the Government's intention and expectation that ultra-low sulphur petrol should be universally available before the concession ends?
  If that is the Government's position, why do they not extend the deadline to April next year? If the deadline is not extended, is there not the risk that some motorists who fill their tanks on 14 June will get the unpleasant shock of an extra 2p per litre on top of the already high price that they are paying, and on top of whatever else they may face at that time by way of petrol price increases? We need an explanation from the Minister.
  As matters stand, there is the risk of an extremely unpleasant shock for many motorists on 14 June. Just when they have been told by the Chancellor that there was a reduction of 2p in the price of unleaded petrol on 7 March, hey presto—the 2p goes beck again on 14 June. What is going on?
  Mr. Matthew Taylor: When the proposal to which the amendment relates was made, Conservative Front Benchers argued that it was likely that the petrol companies would not succeed in getting ultra-low sulphur fuels on to the forecourt in all parts of the country in time to meet the deadline. It was argued that the deadline was therefore arbitrary and unfair to those who might not otherwise be supplied with the correct form of fuel.
  I listened intently to the comments of the hon. Member for Hertsmere (Mr. Clappison), as I assumed that he would give the House some evidence to show that that problem was now materialising, but I noticed that he was unable to cite one example or to quote any association or organisation in support of his argument. A little earlier, my colleagues spoke to the RAC Foundation to ask whether it believed there was a problem. It said that it believed that there would be no problem in obtaining ultra-low sulphur fuels. The problem on the basis of which the amendment was tabled therefore appears to be non-existent. Opposition Front Benchers cannot give any examples, and people who are in the know argue the contrary of what they are saying.
  The principle of the provision seems to make sense. It is about getting the big petrol companies to supply a fuel that not only causes less pollution in its own right, but will allow the supply of higher-efficiency engines that use less fuel. Such engines are already being used in Japan. As they use less fuel, they will emit less carbon dioxide, so the fuel will also help in meeting the Kyoto targets.
  Mr. Clappison: The hon. Gentleman is endeavouring to defend the Government—we are used to seeing Liberal Democrats do that—but in doing so, he has not answered the very point that I put to them. Why is 14 June specified, rather than 5 April next year, if it is intended that the ultra-low sulphur petrol reduction should be matched by a temporary reduction in respect of unleaded petrol until there is 100 per cent. coverage?
  Mr. Taylor: There is a simple answer to that question, but I must respond first to the hon. Gentleman's initial argument: I am defending not the Government but the environment. If there is a way in which we can help to protect the environment and to move towards the Kyoto targets, I believe that we should use it. On the particular element of policy in question, that is what the Government
  198
  are doing. I say again to the hon. Gentleman that if he can give examples that show that there is a problem, he should by all means make his case. The Liberal Democrats want to ensure that nobody is disadvantaged by the proposal. The hon. Gentleman has failed to make his case, however, and when we asked the RAC Foundation whether there was a problem, it said no. We can therefore see no basis for the amendment.
  Why should there be an early deadline, whether it happens to be in June or July? I am sure that it fitted in with the Government's election programme. They were rather lucky, in terms of foot and mouth, that it remained within that programme, but the principle of a tight deadline is correct anyway. We know from experience that the oil companies refused to introduce ultra-low sulphur fuel, on the grounds that it was too costly to do so. As a result of the price differential, we now see that they could have done so very quickly all along. Indeed, that is exactly what we are seeing now.
  A big question mark must be placed over the oil companies' willingness to make the investment that they needed to make without the price differential. Provided that the time scale is achievable, the earlier the deadline, the earlier the companies will supply all petrol stations with ultra-low sulphur fuel. As soon as that happens, manufacturers can introduce the engines that rely on such fuel. The environmental benefits that they bring can then be achieved, so a tight deadline makes sense. If the hon. Member for Hertsmere could provide evidence to show that an extra month or two months, or, indeed, the period until April next year, would make all the difference and allow something to happen that would not otherwise be possible, he would be advancing a perfectly coherent argument. The truth is, however, that he can sustain no basis whatever for arguing for postponement until next April.
  The only difference on the matter between the Conservative and Labour parties—dare I say it?—seems to be the date when they would like the election to occur. The Conservative party would like it to take place as late as possible, and no doubt the Government would like it to happen as early as possible. It seems peculiar, in terms of the general election, that the Government picked the specified date; and if we can assume Conservative Front Benchers are still in favour a an indefinite delay in the general election because of foot and mouth, their amendment precisely matches their election timetable.
  Mr. Nick St. Aubyn: I support the amendment. If there is an agreement to move to the new fuel and there is to be a transition period, it makes sense for it to be longer rather than shorter. Nothing that the hon. Member for Truro and St. Austell (Mr. Taylor) said contradicts that. An incentive exists for oil companies to invest in the new fuel if they know that at some point in the near future—next April is near enough—the regime will change. The way the Government are proceeding will lead people to feel that they have been conned. They will believe that they were given a fuel tax reduction that suddenly disappeared.
  Logistics dictate that there are bound to be places where the new fuel will not be introduced by the beginning of June. Consequently, people will feel put out. However, if the Government are confident that the new fuel will be introduced across the board by the beginning of June,

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  there is no harm in extending the deadline for the offer on the old fuel. A longer deadline is therefore a sensible and prudent step.
  Mr. Christopher Leslie: Clearly, the amendment would have an effect in terms of lost revenue. What would the proposal cost the Exchequer? Where would the money come from?
  Mr. St. Aubyn: If I follow the logic of the views expressed by the hon. Gentleman's colleagues on the Liberal Democrat Benches, there are two arguments: either all the petrol stations will have the new fuel by June, thus entailing no cost to the Exchequer, or some stations will not have the new fuel, which underlines the purpose of the amendment. We await the Minister's response, but we may surmise that the oil companies have taken to the new measure with a will and that the cost to the Exchequer will be small. However, it will be significant for those who have to bear it.
  My constituents already enjoy the benefits of the more environmentally friendly fuel. I am speaking not on their behalf but on behalf of the sort of community that the hon. Member for Truro and St. Austell represents. The additional cost of the fuel after June will bear far more heavily on the pockets of those in rural, more outlying parts of Britain, which are suffering so many burdens, than on the Chancellor's. We expect a Conservative Chancellor to be in office in June, and we will easily afford the item that we are considering out of the savings that we intend to make in running the Government.
  I want to comment on the presumption behind the Liberal Democrat argument, and others that Labour Members have expressed, that there would be no demand by consumers for, or movement by oil companies towards, the new fuel without the tuppence reduction. First, the British people's political sensibilities have been insulted this evening. They understand exactly what lies behind the short-term dip in the enormous price of fuel. Secondly, their environmental sensibilities have been insulted. Consumers are environmentally conscious, and companies are responding to that. The idea that the tuppence reduction triggered the introduction of the new fuel is naive on the part of Liberal Democrat Members and calculating on the part of the Government, who try to claim credit for something that would have occurred anyway through consumer demand and the companies' development of new technology.
  Mr. Matthew Taylor: The hon. Gentleman may know that I used to be the Liberal Democrat environment spokesman. In that role, I was approached by Japanese manufacturers who make high-efficiency engines. They argued for low-sulphur fuel in this country so that those engines could be used. I was also approached by petrol companies which argued against it because it would cost them too much to introduce. The reduction seems to have had the desired effect, and our argument cannot be characterised as naive, since the petrol companies made a case that was shown to be wrong.
  Mr. St. Aubyn: In his long and varied career, the hon. Gentleman was even spokesman for England. I am therefore not surprised to hear that he was once the
  200
  Liberal Democrat environment spokesman. I am not sure when he held that responsibility, but my point is that technology is moving forward.
  We all have an interest in improving the environmental impact of the fuels and engines that we use. As new technology takes hold, the relevant companies will invest in supplying the new fuel. Their customers want them to do that. Customer and consumer demand drives the changes in our society, not the Government's pettifogging tax changes.
  We welcome any reduction in fuel duty, and we will argue for its extension when we can, because fuel taxes in this country are far too high.
  5.45 pm
  Mr. Peter Atkinson: It is a pleasure to follow my hon. Friend the Member for Guildford (Mr. St. Aubyn), who said that although the benefits of ultra-low sulphur petrol would be available to his constituents, he was worried about those in rural areas who would be unable to get it. Many of my constituents cannot get ultra-low sulphur petrol. I entirely agree with my hon. Friend's logic. However, I disagree with that of the hon. Member for Shipley (Mr. Leslie), because, if he is right, the extra cost will be borne by constituents such as mine who will probably not have access to that petrol by the due date in June.
  I have checked today, and the Petrol Retailers Association tells me that two thirds of the country's garages are now able to supply ultra-low sulphur petrol. It is quite unlikely that the remaining third, including some of the smaller and more remote independent retailers, will be able to supply it by the due date in June. There will therefore be a problem of supply in those small country filling stations that are under so much threat, and customers in those areas will have to pay more.
  Mr. Oliver Letwin: Will my hon. Friend join me in expressing the hope that the assurance provided by the Liberal Democrat spokesman might be tested by the hon. Gentleman s offering personally to meet the additional costs if there are any motorists who fail to get ultra-low sulphur petrol by the due date? If the hon. Gentleman is as confident as he maintains, should he not be willing to give the House that assurance?
  Mr. Atkinson: I agree with my hon. Friend, and I shall certainly give way to the hon. Member for Truro and St. Austell to see whether he will give that assurance. I do not know what a Liberal Democrat cheque is worth, but a promise of something would be better than nothing. I am waiting, but I am sad to say that I do not think that the hon. Gentleman—
  Mr. Matthew Taylor rose—
  Mr. Atkinson: Ah! I give way to the hon. Gentleman.
  Mr. Taylor: If the hon. Gentleman was listening to my earlier remarks, he will have heard me say that if the Conservative party could offer evidence of retailers who were unable to find ultra-low sulphur petrol, we would support an extension of the deadline. However, his Front-Bench spokesman has been unable to offer any evidence of that whatever.
  Mr. Atkinson: As we can see, the money is not forthcoming. The hon. Gentleman would be a brave man

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  if he were to take on that bet, because the chances of ultra-low sulphur petrol reaching all corners of these islands by June are remote.
  We heard earlier about an explosion at a refinery in Houston, Texas. That has already prompted an increase in the price of petrol. One of the problems is that, with many states in the US now demanding cleaner fuel, the US is importing more and more fuel from Europe to meet that demand because it cannot produce ii itself. British petrol companies were relying on an import of some ultra-low sulphur fuel from Europe to reach the targets involved in meeting the June due date. That petrol may not now be available to them, because it will go to the United States instead. In that case, there will be a considerable likelihood of the deadline not being met.
  I would like to illustrate the problems and penalties of living in a remote rural area such as my constituency in Northumberland. Now that one of the small filling stations there has closed down, some of my constituents are faced with a round trip of 60 miles to fill up their car with fuel. That is a considerable burden. Furthermore, the prices charged by rural filling stations are already considerably higher than urban prices. The problem is that the smaller filling stations are not supplied by the major oil companies, which are currently engaged in a battle with the supermarkets. They have to buy their fuel from smaller, independent wholesalers who, in turn, buy it from the large oil companies. Those filling stations, therefore, face an extra stage in the wholesale market before they can start pricing their petrol.
  Today, ordinary unleaded petrol costs the wholesalers between 77p and 80p a litre. They then sell it on to the independent retailers, such as the small ones in my constituency, who are faced with charging 82p, 83p or even 84p a litre. That is considerably more than the 77p or so that people currently pay in urban areas. If rural people cannot obtain ultra-low sulphur petrol, 2p will be added to the substantial additional burden that they must bear, which will make ordinary unloaded petrol in rural areas 10p or 12p more expensive than it is in urban areas.
  According to the hon. Member for Shipley, if there is a loss to the Treasury it will be made up by my constituents. For safety's sake if for no other reason, I do not see why there should not be an extension. If the Minister does not like the suggested date of 5 April 2002, perhaps the date could be three months after 14 June 2001. That would be better for my constituents. [Interruption.]
  This may seem funny to Labour Members. It may be a joke to the Parliamentary Private Secretary. Labour Members like to laugh during debates such as this, but we are not talking about politics now; we are talking about people living in country areas who—in the case of my constituents—are suffering a foot and mouth crisis and a tourism crisis, and may subsequently have to pay 10p or 12p more for their petrol. I do not consider that to be a laughing matter.
  Miss Melanie Johnson: As well as being unnecessary, amendment No. 6 sends out entirely the wrong environmental signals. It seeks to delay our attempts to ensure that cleaner fuels are available from all United Kingdom petrol stations as soon as is practicable.
  Clause 1 cuts the duty rates on the main road fuels used in the UK. The Government have a record of using duty differentials to good effect, as I said earlier today. We
  202
  successfully introduced ultra-low sulphur diesel across the UK five years ahead of the European Union deadline, and we have now built on that success. By using duty incentives in the case of ultra-low sulphur petrol, we have ensured that this cleaner fuel will be available to every petrol station in the UK by June this year. Clause 1 is an important part of that strategy.
  I am not sure that the Opposition have thought out what they are proposing, or the reasons for their proposal. I agree with the hon. Member for Truro and St. Austell (Mr. Taylor) that they have come up with no evidence in favour of either the date that they suggest, or the extension.
  Ultra-low sulphur petrol offers environmental benefits over and above those of ordinary unleaded petrol when used in modern cars meeting Euro I/II emission standards—that is, cars fitted with catalytic converters. Research suggests that its widespread use in such cars could reduce emissions of nitrous oxides by up to 6 per cent., emissions of hydrocarbons by up to 14 per cent., and emissions of carbon monoxide by up to 11 per cent.
  As well as ensuring that emissions from the latest generation of cars remain low, ultra-low sulphur petrol allows the use of new fuel-efficient technologies, as the hon. Member for Truro and St. Austell pointed out. Gasoline direct injection engines, for example, can deliver substantial carbon dioxide savings. The early introduction of GDI and other fuel-saving technologies in new petrol cars is being strongly encouraged by the Government's carbon dioxide-based reforms of graduated vehicle excise duty and company car tax. The early introduction of ultra-low sulphur petrol ensures that fuel quality is not a barrier to the introduction of such technologies.
  Mr. St. Aubyn: The Minister said that the Opposition had provided no evidence in favour of the later date in April next year. She has not yet given us a jot of evidence in favour of the date in June. I hope that we shall hear some.
  Miss Johnson: I trust that the hon. Gentleman will be more generous with his patience than he appears to have been with his research before arriving in the Chamber.
  Clause 1 completes the introduction of the ultra-low sulphur petrol duty differential by cutting duty by a further 2p per litre, providing a total incentive of 3p per litre in relation to ordinary unleaded petrol.
  The Government recognised that the final stages of transition to ultra-low sulphur petrol had the potential to create competitive distortions in the market, and that short-term constraints on the capacity of UK oil refineries might have meant that it took longer for independent retailers to complete the transition. The Government want to ensure that everyone has access to the environmental benefits of ULSP and the associated duty cut. To ensure a smooth transition to 100 per cent. ULSP across the United Kingdom and to guard against any competitive distortions in the final stages, clause 1 also provides for a temporary cut of 2p per litre in the price of ordinary unleaded petrol.

  203
  The reason that that will be withdrawn on 14 June 2001 is that it will no longer be needed by then, as the market shift to ULSP will be virtually complete—in fact, complete.
  Mr. Letwin: Complete?
  Miss Johnson: It will be complete.
  Mr. Letwin: Will the Minister give way?
  Miss Johnson: I will, but I am trying to answer the points that have been raised.
  Mr. Letwin: The Economic Secretary has just told us, in terms, that the market shift will be complete by 14 June. Will she now, in slightly more serious vein, offer the guarantee that I mentioned earlier in relation to the Liberal Democrat spokesman, on behalf of the Government? Will she give an undertaking that any motorist who fails to find ULSP as of that date will be reimbursed—paid the difference—by the Government?
  Miss Johnson: I will not respond to the hon. Gentleman's points. I want to respond to the substantive points made by members of the official Opposition, which I must say were rather limited.
  By 14 June, ULSP will be available to all UK forecourts. One reason why I will not answer the more trivial point made by the hon. Member for West Dorset (Mr. Letwin) is that, although it will be up to petrol retailers to decide whether to make ULSP available, it will be available to them. I understand that 14 June was picked because it matches the oil companies' accounting period, thus minimising compliance costs. It was chosen during discussion with the industry on a practical timetable following the point at which the policy was announced.
  Mr. Letwin: Will the Minister give way?
  Miss Johnson: I will give way once more.
  Mr. Letwin: I am doubly grateful to the Economic Secretary. Now that we understand her logic—which is perfectly rational—may I ask her to adopt a slightly different formulation? Will she guarantee to refund the differential to any retailers who cannot find ULSP to service their own forecourts?
  Miss Johnson: Let us go through the figures—a process that has been notably absent in the contribution of Opposition Members.
  DTI figures show that from early April ULSP was available from 81 per cent. of retail sites—up from 68 per cent. in late March—and made up 94 per cent. of unleaded sales, up from 77 per cent. in late March. By 1 June, 98 per cent. of the network should be covered. By the middle of June, ULSP will be available to every petrol station in the country. Of the oil majors, Esso and Shell already have ULSP at 100 per cent. of their retail sites.
  204
  BP has it at 99 per cent., TotalFinaElf at 98 per cent. and Texaco at 87 per cent. All the oil majors will achieve 100 per cent. by 1 May.
  Mr. Clappison: Did not the Government claim that those major oil suppliers would have the arrangements in place by the end of March?
  Miss Johnson: The reason for the 14 June date is that that is when it needs to be done by, and that is when we are saying it will be done by. The figures show that we are very close to being 100 per cent. there already. I realise that the hon. Gentleman may be a little embarrassed, having come to the debate with no evidence in support of an amendment asking for a postponement, and no real justification for the date that he has selected.
  Mr. Peter Atkinson: Will the Minister give way?
  Miss Johnson: I will give way one last time.
  Mr. Atkinson: I came to the debate with some evidence. I spoke to the Petrol Retailers Association today. The DTI figures given by the Minister do not take into account the consequences of the explosion in the Texas refinery the other day, which will have a substantial effect on United States demand for petrol from Europe. All we are asking the Minister is this. If she is wrong, the DTI figures are not reliable and the oil companies do not meet that target date, what will happen? Who will reimburse the motorists, particularly those in rural constituencies, who will lose out?
  6 pm
  Miss Johnson: I have already explained that ULSP will be available to all retailers. Obviously, it is up to retailers whether they retail it or not, but the fact is that it will be available to all retailers, and that is the point.
  The hon. Gentleman mentions the problems of refinery supply. There was a recent explosion at the Conoco refinery on Humberside, but we believe that that should have a negligible impact on supply as the refinery was preparing for shutdown for maintenance shortly. Indeed, the DTI figures anticipate the shutdown.
  The amendment is unnecessary. I have placed very good evidence before the Committee that we have made extremely good progress in implementing the commitment and that we are well on target to meet the 14 June deadline. We do not believe that it is necessary to extend a duty redaction for a fuel which will not be in use after June and which carries with it environmental disbenefits that I am sure hon. Members would want to see minimised.
  Mr. Clappison: I have listened carefully to the Minister's response and I think that the Government are in retreat. She is not prepared to back up her words and the assurances of the past with the guarantee that my hon. Friend the Member for West Dorset (Mr. Letwin) has sought. Nor have the Government been able even to make good the claim by the Financial Secretary that the major oil companies were
  "on track to meet their target to supply ULSP nationwide at their retail sites by the end of March"—[Official Report, 26 February 2001; Vol. 363, c. 511W.]

  205
  The Minister has made it clear that that target has not been met by the major oil companies, let alone the independent retailers that often serve the rural communities to which my hon. Friend the Member for Hexham (Mr. Atkinson) adverted.
  The hon. Member for Truro and St. Austell (Mr. Taylor), the Liberal Democrat spokesman, asked what evidence the Opposition had as to what the position would be by 14 June. Of course, neither the Opposition nor, it would appear, the Government are in a position to give cast-iron guarantees as to what the position will be on 14 June, but two things are clear. First, the danger of some motorists who rely on unleaded petrol facing a 2p increase because of the non-availability on a universal basis of ULSP will be greater on 14 June than it would be on 5 April—the Government are forcing the companies to meet the deadline. That cannot be gainsaid.
  Secondly, if that scenario transpires and we have people from parts of the country complaining that they cannot obtain ULSP and that the 2p that was taken off on 7 March is coming back on 7 June, the first people to denounce the Government will be the Liberal Democrats, who will say that they argued against this all along and warned the Government of the danger of a 2p increase. We know the Liberal Democrats well. That is one thing that is absolutely certain.
  We are not satisfied by the Minister's response. It would appear that there is a risk of motorists facing a 2p increase on 14 June after the Chancellor had made a reduction of 2p on 7 March—2p off on 7 March, 2p back on on 14 June, when fuel taxes are already at a very high level because of the Government's fuel taxation policies. We think that there is that risk, perhaps especially in rural areas, and we intend to press the amendment to a Division.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 126 Noes 324.

  Division No. 191]

  [6.4 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Duncan, Alan

  Amess, David

  Evans, Nigel

  Ancram, Rt Hon Michael

  Ewing, Mrs Margaret

  Arbuthnot, Rt Hon James

  Fabricant, Michael

  Atkinson, Peter (Hexham)

  Fallon, Michael

  Baldry, Tony

  Flight, Howard

  Bercow, John

  Forth, Rt Hon Eric

  Blunt, Crispin

  Fox, Dr Llam

  Boswell, Tim

  Fraser, Christopher

  Bottomley, Peter (Worthing W)

  Gale, Roger

  Bottomley, Rt Hon Mrs Virginia

  Garnier, Edward

  Brady, Graham

  Gibb, Nick

  Brazier, Julian

  Gill, Christopher

  Brooke, Rt Hon Peter

  Gillan, Mrs Cheryl

  Browning, Mrs Angela

  Green, Damian

  Bruce, Ian (S Dorset)

  Greenway, John

  Burns, Simon

  Grieve, Dominic

  Clappison, James

  Gummer Rt Hon John

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Hague, Rt Hon William

  Hamilton, Rt Hon Sir Archie

  Clifton-Brown, Geoffrey

  Hammond, Philip

  Collins, Tim

  Hawkins, Nick

  Cormack, Sir Patrick

  Heald, Oliver

  Cran, James

  Heathcoat—Amory, Rt Hon David

  Davies, Quentin (Grantham)

  Horam, John

  Davis, Rt Hon David (Haltemprice)

  Howard, Hon Michael

  Day, Stephen

  Howarth, Gerald (Aldershot)

  Dorrell, Rt Hon Stephen

  Hunter, Andrew

  206

  Jack, Rt Hon Michael

  Randall, John

  Jenkin, Bernard

  Redwood, Rt Hon John

  Johnson Smith, Rt Hon Sir Geoffrey

  Robathan, Andrew

  Robertson, Laurence (Tewk'b'ry)

  Key, Robert

  Robinson, Peter (Belfast E)

  Kirkbride, Miss Julie

  Roe, Mrs Marion (Broxbourne)

  Laing, Mrs Eleanor

  Ross, William (E Lond'y)

  Lait, Mrs Jacqui

  Ruffley, David

  Leigh, Edward

  St Aubyn, Nick

  Letwin, Oliver

  Salmond, Alex

  Lewis, Dr Julian (New Forest E)

  Shepherd, Richard

  Lidington, David

  Soames, Nicholas

  Lilley, Rt Hon Peter

  Spelman, Mrs Caroline

  Lloyd, Rt Hon Sir Peter (Fareham)

  Spicer, Sir Michael

  Loughton, Tim

  Spring, Richard

  Luff, Peter

  Stanley, Rt Hon Sir John

  Lyell, Rt Hon Sir Nicholas

  Steen, Anthony

  MacGregor, Rt Hon John

  Streeter, Gary

  McIntosh, Miss Anne

  Swayne, Desmond

  MacKay, Rt Hon Andrew

  Syms, Robert

  Maclean, Rt Hon David

  Tapsell, Sir Peter

  McLoughlin, Patrick

  Taylor, Ian (Esher & Walton)

  Madel, Sir David

  Taylor, John M (Solihull)

  Malins, Humfrey

  Tredinnick, David

  Maples, John

  Trend, Michael

  Mates, Michael

  Tyrie, Andrew

  Mawhinney, Rt Hon Sir Brian

  Viggers, Peter

  May, Mrs Theresa

  Walter, Robert

  Morgan, Alasdair (Galloway)

  Waterson, Nigel

  Nicholls, Patrick

  Whittingdale, John

  Norman, Archie

  Willetts, David

  O'Brien, Stephen (Eddisbury)

  Winterton, Mrs Ann (Congleton)

  Ottaway, Richard

  Winterton, Nicholas (Macclesfield)

  Paice, James

  Yeo, Tim

  Paisley, Rev Ian

  Paterson, Owen

  Tellers for the Ayes:

  Portillo, Rt Hon Michael

  Mr. James Gray and

  Prior, David

  Mr. Keith Simpson.

  NOES

  Adams, Mrs Irene (Paisley N)

  Browne, Desmond

  Ainger, Nick

  Buck, Ms Karen

  Ainsworth, Robert (Cov'try NE)

  Burden, Richard

  Allan, Richard

  Burgon, Colin

  Allen, Graham

  Burnett, John

  Anderson, Rt Hon Donald (Swansea E)

  Butler, Mrs Christine

  Campbell, Alan (Tynemouth)

  Armstrong, Rt Hon Ms Hilary

  Campbell, Mrs Anne (C'bridge)

  Ashton, Joe

  Campbell, Ronnie (Blyth V)

  Atherton, Ms Candy

  Campbell-Savours, Dale

  Atkins, Charlotte

  Cann, Jamie

  Austin, John

  Caplin, Ivor

  Bailey, Adrian

  Casale, Roger

  Baker, Norman

  Chapman, Ben (Wirral S)

  Banks, Tony

  Chidgey, David

  Barnes, Harry

  Clapham, Michael

  Battle, John

  Clark, Rt Hon Dr David (S Shields)

  Bayley, Hugh

  Clark, Dr Lynda (Edinburgh Pentlands)

  Begg, Miss Anne

  Beith, Rt Hon A J

  Clarke, Charles (Norwich S)

  Bell, Martin (Tatton)

  Clarke, Eric (Midlothian)

  Benn, Hilary (Leeds C)

  Clarke, Rt Hon Tom (Coatbridge)

  Benn, Rt Hon Tony (Chesterfield)

  Clelland, David

  Bennett, Andrew F

  Clwyd, Ann

  Bermingham, Gerald

  Coffey, Ms Ann

  Best, Harold

  Cohen, Harry

  Betts, Clive

  Coleman, Iain

  Blears, Ms Hazel

  Colman, Tony

  Blizzard, Bob

  Connarty, Michael

  Boateng, Rt Hon Paul

  Cook, Frank (Stockton N)

  Borrow, David

  Cooper, Yvette

  Bradley, Rt Hon Keith (Withington)

  Corbett, Robin

  Bradshaw, Ben

  Corbyn, Jeremy

  Brake, Tom

  Corston, Jean

  Breed, Colin

  Cotter, Brian

  Brinton, Mrs Helen

  Cousins, Jim

  207

  Cranston, Ross

  Humble, Mrs Joan

  Cryer, John (Hornchurch)

  Hurst, Alan

  Cummings, John

  Hutton, John

  Curtis-Thomas, Mrs Claire

  Iddon, Dr Brian

  Dalyell, Tam

  Illsley, Eric

  Darvill, Keith

  Jackson, Ms Glenda (Hampstead)

  Davey, Edward (Kingston)

  Jackson, Helen (Hillsborough)

  Davey, Valerie (Bristol W)

  Jamieson, David

  Davidson, Ian

  Jenkins, Brian

  Davies, Rt Hon Denzil (Llanelli)

  Johnson, Alan (Hull W & Hessle)

  Davies, Geraint (Croydon C)

  Johnson, Miss Melanie (Welwyn Hatfield)

  Dean, Mrs Janet

  Denham, Rt Hon John

  Jones, Rt Hon Barry (Alyn)

  Donohoe, Brian H

  Jones, Helen (Warrington N)

  Doran, Frank

  Jones, Jon Owen (Cardiff C)

  Dowd, Jim

  Jones, Dr Lynne (Selly Oak)

  Drew, David

  Jones, Martyn (Clwyd S)

  Drown, Ms Julia

  Jones, Nigel (Cheltenham)

  Dunwoody, Mrs Gwyneth

  Jowell, Rt Hon Ms Tessa

  Eagle, Angela (Wallasey)

  Joyce, Eric

  Eagle, Maria (L'pool Garston)

  Kaufman, Rt Hon Gerald

  Edwards, Huw

  Keeble, Ms Sally

  Efford, Clive

  Keetch, Paul

  Ellman, Mrs Louise

  Kelly, Ms Ruth

  Feam, Ronnie

  Kemp, Fraser

  Field, Rt Hon Frank

  Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

  Fisher, Mark

  Fitzpatrick, Jim

  Kennedy, Jane (Wavertree)

  Flint, Caroline

  Khabra, Piara S

  Follett, Barbara

  Kidney, David

  Foster, Rt Hon Derek

  Kilfoyle, Peter

  Foster, Don (Bath)

  King, Andy (Rugby & Kenilworth)

  Foster, Michael Jabez (Hastings)

  King, Ms Oona (Bethnal Green)

  Foster, Michael J (Worcester)

  Kingham, Ms Tess

  Gapes, Mike

  Kirkwood, Archy

  Gardiner, Barry

  Ladyman, Dr Stephen

  George, Andrew (St Ives)

  Lammy, David

  George, Rt Hon Bruce (Walsall S)

  Lawrence, Mrs Jackie

  Gerrard, Neil

  Leslie, Christopher

  Gibson, Dr Ian

  Levitt, Tom

  Gidley, Sandra

  Lewis, Ivan (Bury S)

  Gilroy, Mrs Linda

  Lewis, Terry (Worsley)

  Godsiff, Roger

  Liddell, Rt Hon Mrs Helen

  Goggins, Paul

  Linton, Martin

  Golding, Mrs Llin

  Livsey, Richard

  Gordon, Mrs Eileen

  Lloyd, Tony (Manchester C)

  Griffiths, Jane (Reading E)

  Llwyd, Elfyn

  Griffiths, Nigel (Edinburgh S)

  Lock, David

  Griffiths, Win (Bridgend)

  McAvoy, Thomas

  Grocott, Bruce

  McCabe, Steve

  Grogan, John

  McDonagh, Siobhain

  Hain, Peter

  McDonnell, John

  Hall, Mike (Weaver Vale)

  McFall, John

  Hall, Patrick (Bedford)

  McIsaac, Shona

  Hanson, David

  McKenna, Mrs Rosemary

  Harvey, Nick

  Maclennan, Rt Hon Robert

  Healey, John

  McNulty, Tony

  Heath, David (Somerton & Frome)

  MacShane, Denis

  Henderson, Doug (Newcastle N)

  Mactaggart, Fiona

  Hendrick, Mark

  McWilliam, John

  Hepburn, Stephen

  Mahon, Mrs Alice

  Heppell, John

  Mallaber, Judy

  Hesford, Stephen

  Mandelson, Rt Hon Peter

  Hewitt, Ms Patricia

  Marshall, David (Shettleston)

  Hill, Keith

  Marshall, Jim (Leicester S)

  Hinchliffe, David

  Martlew, Eric

  Hodge, Ms Margaret

  Meacher, Rt Hon Michael

  Hoey, Kate

  Merron, Gillian

  Hood, Jimmy

  Michael, Rt Hon Alun

  Hoon, Rt Hon Geoffrey

  Michie, Bill (Shef'ld Heeley)

  Hope, Phil

  Michie, Mrs Ray (Argyll & Bute)

  Hopkins, Kelvin

  Milburn, Rt Hon Alan

  Howells, Dr Kim

  Miller, Andrew

  Hoyle, Lindsay

  Moffatt, Laura

  Hughes, Ms Beverley (Stretford)

  Moore, Michael

  Hughes, Kevin (Doncaster N)

  Moran, Ms Margaret

  208

  Morgan, Ms Julie (Cardiff N)

  Smith, Jacqui (Redditch)

  Morris, Rt Hon Sir John (Aberavon)

  Smith, John (Glamorgan)

  Smith, Llew (Blaenau Gwent)

  Mountford, Kali

  Soley, Clive

  Mudie, George

  Southworth, Ms Helen

  Mullin, Chris

  Spellar, John

  Murphy, Denis (Wansbeck)

  Squire, Ms Rachel

  Murphy, Jim (Eastwood)

  Starkey, Dr Phyllis

  Naysmith, Dr Doug

  Steinberg, Gerry

  Oaten, Mark

  Stevenson, George

  O'Brien, Bill (Normanton)

  Stewart, David (Inverness E)

  O'Brien, Mike (N Warks)

  Stewart, Ian (Eccles)

  Olner, Bill

  Strang, Rt Hon Dr Gavin

  Öpik, Lembit

  Stuart, Ms Gisela

  Organ, Mrs Diana

  Stunell, Andrew

  Osborne, Ms Sandra

  Sutcliffe, Gerry

  Pendry, Rt Hon Tom

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Pickthall, Colin

  Pike, Peter L

  Taylor, Ms Dari (Stockton S)

  Plaskitt, James

  Taylor, David (NW Leics)

  Pollard, Kerry

  Taylor, Matthew (Truro)

  Pope Greg

  Temple-Morris, Peter

  Prentice, Ms Bridget (Lewisham E)

  Thomas, Simon (Ceredigion)

  Prentice, Gordon (Pendle)

  Timms, Stephen

  Primarolo, Dawn

  Tipping, Paddy

  Prosser, Gwyn

  Todd, Mark

  Quinn, Lawrie

  Tonge, Dr Jenny

  Radice, Rt Hon Giles

  Touhig, Don

  Rammell, Bill

  Tickett, Jon

  Raynsford, Rt Hon Nick

  Turner, Dennis (Wolverh'ton SE)

  Reed, Andrew (Loughborough)

  Turner, Dr Desmond (Kemptown)

  Rendel, David

  Twigg, Derek (Halton)

  Robertson, John (Glasgow Anniesland)

  Tyler, Paul

  Tynan, Bill

  Roche, Mrs Barbara

  Wareing, Robert N

  Rogers, Allan

  Watts, David

  Rooney, Terry

  Webb, Steve

  Ross, Ernie (Dundee W)

  White Brian

  Rowlands, Ted

  Whitehead, Dr Alan

  Roy, Frank

  Wicks, Malcolm

  Ruane, Chris

  Wigley, Rt Hon Dafydd

  Ruddock, Joan

  Williams, Rt Hon Alan (Swansea W)

  Russell, Bob (Colchester)

  Russell, Ms Christine (Chester)

  Williams, Alan W (E Carmarthen)

  Salter, Martin

  Willis, Phil

  Sanders, Adrian

  Winnick, David

  Savidge, Malcolm

  Winterton, Ms Rosie (Doncaster C)

  Sedgemore, Brian

  Woodward, Shaun

  Shaw, Jonathan

  Woolas, Phil

  Sheldon, Rt Hon Robert

  Worthington, Tony

  Simpson, Alan (Nottingham S)

  Wright, Anthony D (Gt Yarmouth)

  Skinner, Dennis

  Wright, Tony (Cannock)

  Smith, Rt Hon Andrew (Oxford E)

  Smith, Angela (Basildon)

  Tellers for the Noes:

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Mrs. Anne McGuire and

  Mr. Ian Pearson.

  Question accordingly negatived.
  Mr. A. J. Beith: I beg to move amendment No. 5, in clause 1, page 2, line 3, at end insert—
  '(3A) The rate of excise duty for biodiesel and bioethanol when used as road transport fuels, shall be 33p per litre below the rate fixed for ultra low sulphur diesel as defined by the Hydrocarbon Oil Duties Act 1979.'.
  I have great pleasure in moving this amendment, which would reduce the duty rate for biodiesel and bioethanol to that for road gas fuels, which is around the 7p mark. If offers the Government and the Committee an opportunity to do a deal of good for the environment and for our distressed farming industry at one and the same time. What could be better than that?

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  Biodiesel offers an unrivalled range of environmental benefits as compared with alternative transport fuels. It is sustainable and renewable, with very positive energy balances; it is safely biodegradable; it is far better in terms of greenhouse gas emissions than fossil fuels; it offers scope for recycling waste oils; it recycles carbon; and it produces far fewer local air pollutants than fossil diesel. Bioethanol is also renewable, sustainable and environmentally friendly and has excellent emission properties. On balance, biofules offer better environmental advantages than even the road fuel gases liquified petroleum gas, compressed natural gas and liquified natural gas—LPG, CNG and LNG.
  My amendment seeks to put the biofuels on all fours with the road fuel gases. Biodiesel compares favourably with those fuel gases and enormously favourably with fossil fuels. The Government have shown environmental logic in granting a substantial reduction to road fuel gases, and the same logic directs that a similar reduction should also be made for the biofuels. Granting a major reduction in duty rates to biodiesel and bioethanol would enable those fuels to make a significant and rapid contribution to reducing atmospheric pollution.
  Biodiesel can be used straight or blended in place of fossil diesel in all modern diesel engines, without modification. Bioethanol, blended with petrol, can be used in normal engines or purpose-built bi-fuel vehicles. Ten per cent. ethanol blends are already routinely used in the United States to curtail local air pollution. Life-cycle emissions of greenhouse gases from biodiesel and from bioethanol are at least 55 per cent. and 62 per cent. lower respectively than from fossil diesel Tailpipe emission figures are also much better for the biofuels. Particulates emissions from biodiesel are 20 per cent. to 39 per cent. better than low sulphur diesel and 10 per cent. to 29 per cent. better than ultra-low sulphur diesel. On almost all normal tests, biodiesel has an extremely favourable score.
  A duty rate of 7p per litre has been promised for gas fuels for road vehicles, but the Government have merely indicated that next year there will be a smaller reduction in duty—of 25p—for biodiesel. That s not on the face of the Bill: the Chancellor has simply indicated that that will happen. A much better signal should be sent to the industries involved that they should make the investment.
  Major companies are ready to produce such fuels. The necessary crops would provide much-needed new business for agriculture, and the whole country would benefit from cleaner air as biofuels were substituted for fossil fuels.
  Mr. Clappison: Can the right hon. Gentleman confirm that, even if the reduction in duty rate, is made next year, the price of biodiesel fuels will remain above that of road fuel gases because of the high level of duty on them?
  Mr. Beith: That is correct, and I cannot see the logic of the Government's position. It is sensible that the same chain of arguments should apply to biodiesel and bioethanol as applies to road fuel gas. In many cases, those arguments apply more powerfully to biodiesel and bioethanol. There is no logic to the Government's position with regard to duty levels—let alone to the year's delay in the implementation of any reduction.
  In fairness to the Government, it should be acknowledged that the situation has moved on because of the crisis in agriculture. The matter merits a fresh look.
  210
  A clear signal from the Government to farming that the current crisis means that there are other directions in which the industry should move would be timely and helpful. Farmers may decide to move out of livestock and into arable at precisely this stage. Those who have lost their livestock and are in receipt of compensation might be ready to make new investment in this area.
  The National Farmers Union supports the amendment. It considers that the further duty reduction proposed in the amendment
  is essential if biofuels are to become price competitive and deliver the benefits to the environment and the agricultural industry that they so clearly offer."
  The NFU also strongly supports
  "the extension of these reductions to bioethanol, which is extensively used in Brazil and the US where duty rates are more favourable to environmentally friendly fuels.
  The NFU adds:
  "You will be well aware that the agricultural industry is deep in crisis. The Government has often urged farmers to diversify into new enterprises, and we are firmly convinced that the emergent biofuels industry offers a realistic opportunity for diversification and for a new market for British farmers."
  Incidentally, it is significant that we are currently exporting oilseed rape to countries that produce and use biodiesel.
  Mr. Salmond: What the right hon. Gentleman is saying is important and welcome. Will he give the House an indication of the possible scale of biofuel use if the amendment were to be accepted?
  Mr. Beith: Such a forecast would be difficult, and it is not one that I have come prepared to make. The Government are no more prepared to give a clear indication of what they think will be the take-up of road fuel gases. Such calculations are difficult, and they are a job for industry. Making risky decisions about how extensive investment should be is something at which industry excels. Governments of all parties have a bad record in that regard.
  However, for industry to make such decisions, there must be a reasonable taxation basis. Giving industry an incentive to invest in road fuel gases and not in biofuels is likely to lead to the wrong investment decisions, or discourage investment that could be very beneficial in terms of both industry and agriculture.
  Mr. David Heath: I agree with the strong points that my right hon. Friend makes, especially on behalf of farmers across the country. However, is he aware that the Government could adopt a policy of substituting at least 15 per cent. of road fuel with ethanol as from tomorrow? The French have relaxed taxation on the ethanol component in fuel, and the Government could do the same. In that way, they could encourage what is an important and environmentally friendly industry.
  Mr. Beith: My hon. Friend makes a good point. He underlines my earlier point that conversion would be easy: indeed, people would only need to put a different fuel in their tanks at petrol stations. No engine adaptation is required, so the change would be easy to make.
  I mentioned the strong support for the amendment in the agriculture industry, and I draw the Government's attention to this week's edition of Farmers Weekly. In a

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  very strong editorial, it criticises the advice given by the Ministry of Agriculture, Fisheries and Food on this subject. Referring to "misguided MAFF advice", the editorial asks:
  "Why does MAFF make so many mistakes?"
  It states that the Ministry's advice
  "could have denied UK growers their biggest break for years."
  What was that MAFF advice? It was that an increase in oilseed rape production
  "could conflict with Government targets to reduce the decline in farmland birds".
  That argument was demolished by the Royal Society for the Protection of Birds. The RSPB supports renewable energy schemes, including biofuels. Farmers Weekly reported that the organisation considers that growing more oilseed rape
  "could help stem the decline in seed-eating birds such as linnets and bullfinches."
  Farmers Weekly reported that, although oilseed rape, as a
  "winter-sown crop … would not favour ground-nesting birds, it is better than winter cereals."
  The RSPB's secretary, Graham Madge, is reported as saying:
  "Long term if we don't do something to stem greenhouse gases there will be problems for all birds."
  Essentially, in terms of its effect on birds, growing oilseed rape for fuel is no different from growing any other crop—except for the benefits that it offers seed-eating birds. Alternative habitats would need to be arranged for ground-nesting birds, and headlands are an obvious choice in that regard. The Government's arguments simply do not stand up. Given that their policy has clearly been shown to be wrong, I hope that the Treasury will dismiss it from its calculations, and that unfortunate Ministers in the Lords will not be required to trot out an argument that makes no sense.
  Another argument that does not stand up is the one advanced by the Financial Secretary in a letter sent to the chairman of the British Association of Biofuels and Oils on 23 April. The Financial Secretary explained why road gas fuels attracted a lower rate of duty than biofuels, and said:
  "A 20 pence per litre duty cut ensures no disproportionate cost to society of securing reductions in carbon emissions, while providing recognition for the environmental benefits from biodiesel. Incentives for road fuel gases, on the other hand, are directed predominantly at improvements in local air quality where cleaner road transport has a key role to play. Because the proposed incentives for biofuels are focused on climate change improvements, a direct comparison in not appropriate."
  That is nonsense. The tailpipe emissions record of biofuels is every bit as good as that for road fuel gases, and in many cases better. The Financial Secretary was wrongly advised that the benefits arising from biodiesel and bioethanol were confined to the climate change benefits. The tailpipe emission benefits are also extremely important, and biofuels score on both counts. Now that that argument has been shown to be mistaken, I hope that it will not again figure in the Treasury's calculations.
  As I said earlier, biofuels perform very well when standard tests for local, tailpipe emissions of carbon monoxide, particulates, sulphur oxides and other pollutants
  212
  are carried out. Therefore, the comparison that the Financial Secretary sought to make was false: biofuels perform well in terms of both climate change improvements and tailpipe emissions.
  The amendment offers an attractive course for the Government to adopt. Conventional oilseed rape varieties such as are grown now could produce up to 6 per cent. of the UK's requirements for road vehicle diesel fuel. Substantial environmental benefits would be achieved. The technology already exists, and subsidies would not be needed to persuade growers to grow the crop. No new research would be heeded to develop growers' skills, as the crop is already being grown. No capital advances would be required for processing, as the UK already has crushing and esterification plants.
  In addition, the industry would be ready to increase investment, as long as is it knew that the relevant tax regime would work. Britain already exports oilseed rape to Germany and Austria, and those countries use what they import to produce biodiesel. We are denying ourselves environmental advantages that we could have. We are failing to give agriculture a benefit that could be extremely valuable at a difficult time such as this.
  The Government clearly realise that they should be doing something. That is the reason for the Chancellor's indication of a 20p cut next year. However, what they are contemplating comes too late and is insufficient. To wait until next year risks investments not being made. To preserve a significant difference between road fuel gas duty and duty on biofuels risks giving the industry the wrong signal.
  I invite the Government to accept my amendment in principle. I know that they will want to redraft it and present it in different terms—that is in the nature of parliamentary proceedings. However, it surely makes sense to secure an equivalent rate of duty.
  6.30 pm
  Mr. James Paice: I congratulate the right hon. Member for Berwick-upon-Tweed (Mr. Beith) on his speech, and on his wisdom in making this proposal.
  I confess that I am slightly less generous than the right hon. Gentleman in my view of the Government's motives. I suspect that at some stage in drafting the Budget, the Chancellor said, "I had better put something green in the Budget, especially if it will not actually cost anything. What can I do?" On the face of it, the Government's proposal looks extremely green, but it is not going to cost anything because it is not sufficient to create the desired result. My cynical belief is that the Chancellor will get away with it, at least for a time, like everything else he does, until people see what is underneath. The 20p reduction, as the right hon. Gentleman said, will not change the economies sufficiently to encourage a massive increase in production and use of biofuels.
  The right hon. Gentleman spoke about America and one or two other countries. Unusually for a Liberal Democrat, he did not mention Europe much, yet there are some good examples on our doorstep. Other European Union countries have already seen the benefit of such a measure. France provides a total exemption to its duties which equates roughly to 35p a litre, which is in the same ball park as the right hon. Gentleman's proposal. France has done that because it wants the use of biofuels to increase.

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  The energy technology support unit, the body that advises the Department of the Environment, Transport and the Regions on biofuels, told the Science and Technology Committee two years ago that the problem with biodiesel is its poor energy balance: it produces only twice as much energy as is used in its production. ETSU also said that every litre of biodiesel used reduces carbon dioxide emissions by approximately 1.5 kg. That is a major reduction. Even if we accept that first statement at face value, it is only half the story, because what also matters is the source of that energy in the energy balance.
  Biofuels cannot emit more carbon dioxide than was taken up in the growing process in the first place—that is basic chemistry. In the simplest comparison, they are energy neutral. They are not, of course, because one must include the energy that was used in growing the crop, producing the fertilisers and the subsequent use of energy in processing it into biodiesel or ethanol. Even allowing for that, we are faced with a major net gain of energy balance. Even if the energy sources used for production and processing are from fossil fuels, as the majority of our energy is, there is still a gain. However, they do not have to come from fossil fuels. There is no reason why other forms of biofuel, such as miscanthus for producing energy at power stations, could not be used to create the first energy and produce a double benefit.
  Amazingly, the policy on this issue in Europe has not had much coverage. European Union rules allow up to 15 per cent. by volume substitution of ETBE, an ethanol derivative, in our petrol. It is already there. In answer to the hon. Member for Banff and Buchan (Mr. Salmond), who is no longer in his place, the Farmers Weekly article to which the right hon. Member for Berwick-upon-Tweed referred gave some statistics. Europe currently produces 700,000 tonnes a year of biodiesel and has set production targets of 2.3 million tonnes by 2003 and 8.3 million tonnes by 2010. Germany is on course, as are Austria, Italy, Spain and France. Britain, at the moment, will produce almost zero towards that very sensible target.
  Some people claim that biofuels are not sufficiently positive in energy use terms to justify the effective subsidy that is required, which is the subject of the amendment. Much of that opinion is based on historical studies carried out in 1991. Conversion technologies have improved considerably and, as we have heard, the husbandry and every other aspect of the scientific production side is fully covered. In addition, the price of crude oil—the main comparator—has increased dramatically. Although less than it was a few months ago, it is still much higher than it once was. At the same time, prices for grain and oilseed rape, the two major sources of biofuels, have collapsed to little more than half of what they were when these studies were carried out in 1991.
  All those arguments about energy balance could be significantly damaged if it were not for the fact that both my party and the Government have already conceded the principle of using a taxation instrument to encourage environmentally friendly fuels. As the right hon. Gentleman said, road fuel gases will be taxed at 6p a litre to encourage their use. They are inevitably much cleaner than conventional petrol or diesel, but they are still fossil fuels. All the carbon dioxide that is emitted when road fuel gas is burned contributes to global warming and carbon dioxide levels. In reducing duty for environmental benefit, I think that we must go considerably further than the 20p proposed by the Government.
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  The right hon. Gentleman referred to the article and critical editorial in Farmers Weekly. I will not go through it again because he demonstrated clearly how daft the comments of the Ministry of Agriculture, Fisheries and Food are. The Ministry has not exactly covered itself with glory in recent months, and this adds to the pile of criticisms.
  No one envisages that the development of the biofuels market will manifestly change the face of agriculture. As the right hon. Gentleman said, British agriculture is in serious difficulties, even without the foot and mouth crisis. However, the reduction would provide an alternative market for oilseed rape and cereals. The price of rape or grain would not rise dramatically because the market would set its own levels. If the reduction on fuel duty were fixed at the 33p that we are discussing, that would feed back to a maximum price that people could afford to pay for the raw materials. The market would therefore limit the acreage of grain or oilseed rape being produced, commensurate with that price. If the price of rape went up too much, the economics would go out of the window yet again. So it would be a self-levelling device. It would, as the right hon. Gentleman said, help agriculture at a time of desperate need.
  If the reductions in the Budget for next year are a genuine and serious attempt to encourage the production of biofuels, I hope that the Government will listen to those who say that a cut of 20p will not produce the result that they want. I can understand that the Government would look cynically on anything said from the Conservative, and perhaps, occasionally, the Liberal Democrat, Benches, but they should listen to people such as Peter Clery, to whom the right hon. Gentleman referred, who have spent the past 20 years working to develop biofuels.
  In the late 1980s, for some unknown reason, the bus company in Reading tried running buses on biodiesel. The only environmental result was that the whole of Reading smelled like a fish and chip shop because the buses were burning vegetable oil, but the technology proved its worth.
  Mr. David Heath: In case the House has the impression that buses necessarily smell of fish and chips when they run on biodiesel, can the hon. Gentleman confirm that the entire Stockholm bus fleet runs on that fuel without any such problem?
  Mr. Paice: The hon. Gentleman is entirely right and my comment was a bit flippant, even if, since I was talking about the mid-1980s, it was true. I use that example to demonstrate that the technology was not developed in the 21st century but has been around for close on 20 years. It is time that this country gave it the promotion that it deserves. I hope that the Government will take heed of those who have studied it for many years and will realise that 20p is insufficient to bring the result that we all want. I hope that they will look favourably on the amendment.
  Mr. Simon Thomas: I support the amendment and what has been said about the inadequacy of the Government's proposals. The hon. Member for South-East Cambridgeshire (Mr. Paice) said that the technology, far from being new, had been around for at least 20 years. In fact, it is as old as the diesel engine itself, since the first of them were designed to run on

  215
  vegetable oil, not black gold from the ground once the oil companies muscled in. Even modern diesel engines have for years been able to run without adaptation on biodiesel or a mixture of biodiesel and conventional diesel. There is no technological problem about moving to a 50 per cent. mix of bioethanol or an even greater proportion of biodiesel. Nor do they smell of fish and chips, unless salt and vinegar are added to the mix.
  The Treasury team would have done well to study in more detail the Environmental Audit Committee pre-Budget report 2000, "Fuelling the Debate" before they produced the Finance Bill. Several of our debates tonight have revealed a lack of clear thought about real environmental benefits in Government proposals that purport to bring them. Paragraph 97 of the report states:
  "It is clear that whichever the preferred fuels, past experience indicates that long-term fiscal signals will need to be maintained to provide the necessary certainty so that industry and consumers can plan and invest against a particular tax regime. In the UK there have been incentives to encourage autogas for five years, but the market is only now beginning to take off."
  My constituency experience supports that. We have only one autogas refuelling station in Ceredigion, which is a rural area, and conversion to autogas is unlikely to take off. Yet the infrastructure exists in conventional fuel stations for biofuels of all types.
  I chair a biomass working group in my constituency, which is trying to promote biomass in terms of heat production. We have also considered opportunities for farmers in Ceredigion and west Wales to produce biofuels. For the future of farming, in addition to value added products that we have advocated for years and increasing organic production, we should consider energy production. It is disappointing that we have had so many mixed signals from the Government on that.
  The hon. Member for South-East Cambridgeshire and I participated in a debate in Westminster Hall a month ago at which the Ministry of Agriculture, Fisheries and Food seemed to give encouraging signals about support for energy crops. Yet the Finance Bill offers only a sop, not a measure sufficient to take matters forward. The 20p reduction in biofuels barely brings the cost of production down to that of conventional petrol and diesel. We need a greater impetus and stronger long-term signals if the industry is to take off. The amendment provides those signals, and I support it.
  The Temporary Chairman (Dr. Michael Clark): Order. We must conclude our proceedings on clauses 1 to 3 by 7 pm. If hon. Members will co-operate with me, I shall co-operate with them. I intend to call Mr. Brake and ask him to be fast, and I shall then call Mr. Clappison.
  6.45 pm
  Mr. Tom Brake: I shall be very quick in supporting the amendment and offering one example of why it should be agreed to. The "people, paper, oil and cans" project in Wandsworth works with the bio-regional development group based in my constituency. The core of the project is the conversion of cooking oil to biodiesel that can be used in vehicles which collect aluminium cans and white office paper for recycling. It seeks to create a virtuous circle, and the biodiesel will also be used in vehicles providing a service for users of the centre from which the project is being run.
  216
  The project sponsors say that the major stumbling block to success is the fuel duty. Even the promised 20p reduction would be inadequate, and the project would not be viable. A reduction of at least 40p—more than the amendment proposes—is required, in their view. The amendment would at least help that sort of innovation to proceed, and I hope that the Government will consider the points that have been made.
  Mr. Clappison: We welcome the debate. The right hon. Member for Berwick-upon-Tweed (Mr. Beith) made an interesting case in support of his amendment, and other interesting points have been made, particularly in the characteristically well-informed contribution of my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice), who has a long-standing interest in these matters.
  We have already said that we want a reduction in duty on biodiesel and bioethanol. There are environmental grounds for such a reduction. In addition, those fuels give hard-pressed British farmers the hope of another market. If farmers were under pressure before the outbreak of foot and mouth, they are even more so now. It is right to explore every avenue to see what help can be given to them, and there is potential in a market for biodiesel and bioethanol.
  The Minister has heard some expressions of farmers' opinions already. My hon. Friend and the right hon. Member for Berwick-upon-Tweed referred to the article in last week's Farmers Weekly, and I commend that article to her. I invite her to consider the analysis of Government policy under the headline, "Labour applies brakes to oilseed opportunity", and the opinion column, which expresses the view that the present state of Government policy
  "has left biodiesel and oilseed rape stuck on the forecourt".
  Let us see whether we can get the Government to move from there.
  Miss Melanie Johnson: I am pleased to hear support from the Liberal Democrat and official Opposition Benches for the Chancellor's Budget announcement of a new lower duty rate for biodiesel. That consensus is welcome, but the amendment seeks to cut the rate for biodiesel not by 20p per litre, as we propose, but by 33p. That is a bigger reduction than can be justified. The amendment also suggests extending the duty cut to bioethanol and bringing the reduction forward from next year. That would be premature.
  The Government are keen to stimulate development of viable alternative fuels that offer environmental advantages. Indeed, it was because of climate change benefits associated with biodiesel that the Government announced the 20p per litre reduction in duty. Although we recognise that the promotion of biodiesel can provide useful greenhouse gas emission savings, that should not be achieved regardless of cost. Many of the arguments advanced failed to take sufficient account of the costs of some of the current alternatives. Our climate change programme emphasises the principle that measures to tackle climate change must provide value for money—that is only sensible. A 20p per litre duty cut, while providing recognition for the environmental benefits of biodiesel, will ensure that there is no disproportionate cost to society in securing the reductions in carbon emissions.

  217
  Furthermore, it will take time to introduce a duty rate cut for an alternative fuel such as biodiesel. Not only do we need to settle on a UK specification for biodiesel to benefit from the duty reduction, and to seek the appropriate derogation from the EU mineral oils directive, we also need time to set up administrative arrangements to protect the revenue, and to protect legitimate biodiesel producers, motorists and hauliers by ensuring that poor quality biodiesel does not find its way into the UK distribution chain. Those are practical matters; they may involve time, but they are none the less relevant.
  Mr. Beith: Will the hon. Lady clarify why, in her judgment, the higher rate of reduction is justified for road fuel gas but not for biodiesel? She has explained that she regards a 20p reduction as sufficient for biodiesel, but she is prepared to make a much larger reduction for road fuel gas, although the same arguments apply to both types of fuel.
  Miss Johnson: The point relates to the environmental cost or the saving that will be made. I will run through a few figures. Before the Budget, the biodiesel lobby was pushing for a duty incentive of about 35p per litre relative to ultra-low sulphur diesel. That would have resulted in a cost of £2,333 per tonne of carbon saved, which would fall to £1,129 by 2010. It is true that the amendment suggests only 33p, but the cost would be nearly as large as that for a 35p per litre cut; in climate to change abatement terms, that would still be extremely high. For example, the duty incentive of 20p per litre for recovered vegetable oil relative to ultra-low sulphur diesel would actually cost £281 per tonne of carbon saved. There is a significant difference between the figures.
  Mr. Paice: Will the Minister tell us the total cost to the Exchequer of a duty of 6p per litre on road fuel gas? As the right hon. Member for Berwick-upon-Tweed (Mr. Beith) points out, she cannot trot out the figures for one side without giving the other side. This is a question not merely of a 1p reduction, but of the whole duty concession—from that on ultra-low sulphur right down to the 6p that she rightly proposes on road fuel gas. What is that cost to the Exchequer per tonne of carbon saved?
  Miss Johnson: Biodiesel does not offer the same air quality benefits as road fuel gases—[Interruption.] The Department of the Environment, Transport and the Regions has made an analysis; it is in the Library and hon. Members can study it. Road fuel gases provide significant benefits relative to diesel—especially with regard to particulates and nitrous oxides—but there are no such air quality benefits from biodiesel. That is one of the points that hon. Members are not taking on board.
  Mr. Paice: The hon. Lady must compare like with like. A diesel engine cannot run on gas, so we have to compare ethanol with gas and normal diesel with biodiesel. Will the hon. Lady tell the Committee how she can suggest that biodiesel is no better for the environment than conventional diesel? That is the comparison she should make—not a comparison with gas.
  Miss Johnson: What is relevant is the environmental cost of production as well as the environmental benefits—as the hon. Gentleman said during his speech, although
  218
  he did not produce any figures for actual environmental benefits and costs. His arguments were about the general idea. Indeed, we are in favour of the general idea; that is why we are incentivising it in this way. However, the particular options must work in practice. For that to happen, the sums must add up, and the options must offer value for money; all our care for the environment makes no sense if we do otherwise.
  The Budget has already given strong indications that have led at least three producers to commission the construction of large biodiesel plants. More than 100 million litres of biodiesel should be produced by the end of 2002. We have given a signal that is being read and is receiving responses.
  In his opening remarks, the right hon. Member for Berwick-upon-Tweed (Mr. Beith) asked why we said that a 33p cut would not be cost-effective. I have already covered that up to a point. The incentives for road fuel gases are directed predominantly at improvements in local air quality, in which cleaner road transport has a key role to play. The proposed incentives for biofuels are focused on climate change improvements, so a direct comparison is not appropriate. The evidence suggests that a 20p per litre incentive for biodiesel is a cost-effective means of delivering climate change benefits from the transport sector, so that is what we propose. We recognise that the promotion of biodiesel can provide useful greenhouse gas emission savings, but those should not be made regardless of cost.
  The amendment also suggests a duty cut for bioethanol. The Government believe that would be premature. Greenhouse gas savings from ethanol depend very much on the feedstock used. The production of ethanol from wheat, for example, which was mentioned by several contributors to the debate, is well established, but unfortunately, on a life-cycle basis—taking account of the carbon dioxide implications of crop growing and processing the fuels, as well as its use as a motor fuel—it offers few greenhouse gas savings. I accept that the hon. Member for South-East Cambridgeshire (Mr. Paice) took some account of that fact. There are few savings because wheat cultivation and ethanol production are both relatively energy-intensive processes, so the environmental case for the promotion of ethanol in the UK is weak, if wheat is to be the predominant feedstock. The feedstock does not necessarily have to be wheat, but as there was some discussion of wheat I wanted to make that point.
  Greenhouse gas savings of about 80 per cent. can be achieved by using ethanol produced from woody—lignocellulosic—biomass feedstocks; for the benefit of Members who do not know much about the subject, I should explain that those are wheat straw and forestry residues. However, that process is still very much at the research and development stage. The first generation of commercial production plants is not likely to be operational until about 2004.
  Given the potential climate change benefits, we are keen to ensure that UK industry can contribute to research and development. That is why the Chancellor announced in the Budget statement that viable pilot projects for bioethanol would be supported through duty exemptions or reductions. That will help UK industry to build on existing biomass research, which is also supported by our new and renewable energy programme.

  219
  The amendment urges the Government to introduce lower duty rates for biofuels. I assure the right hon. Member for Berwick-upon-Tweed that we intend to do so. However, we shall not produce rushed legislation. Indeed, if we did so, I should no doubt be hauled before the House or one of its Committees to give an explanation. Furthermore, we do not believe that we should pay over the odds for those greenhouse gas savings when the revenue forgone could be more effectively directed towards other climate change abatement projects.
  I hope that explains that although we have much sympathy with where the right hon. Gentleman is coming from, the practical difficulties have led us to adopt the present position.
  Mr. Beith: That is a very disappointing reply. It is not true that local air quality would not be improved very significantly by biofuels, nor is it true that the 20p reduction is a clear signal to industry, so I must ask the House to support me in this matter.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 162, Noes 286.

  Division No. 192]

  [7 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Flight, Howard

  Allan, Richard

  Forth, Rt Hon Eric

  Arbuthnot, Rt Hon James

  Foster, Don (Bath)

  Ashdown, Rt Hon Paddy

  Fox, Dr Liam

  Atkinson, Peter (Hexham)

  Fraser, Christopher

  Baker, Norman

  Gale, Roger

  Baldry, Tony

  Garnier, Edward

  Beith, Rt Hon A J

  George, Andrew (St Ives)

  Bell, Martin (Tatton)

  Gibb, Nick

  Bercow, John

  Gidley, Sandra

  Blunt, Crispin

  Gill, Christopher

  Boswell, Tim

  Gillan, Mrs Cheryl

  Bottomley, Peter (Worthing W)

  Gray, James

  Bottomley, Rt Hon Mrs Virginia

  Green, Damian

  Brady, Graham

  Greenway, John

  Brake, Tom

  Grieve, Dominic

  Brand, Dr Peter

  Hague, Rt Hon William

  Breed, Colin

  Hamilton, Rt Hon Sir Archie

  Brooke, Rt Hon Peter

  Hammond, Philip

  Browning, Mrs Angela

  Harris, Dr Evan

  Bruce, Ian (S Dorset)

  Harvey, Nick

  Burns, Simon

  Hawkins, Nick

  Campbell, Rt Hon Menzies (NE Fife)

  Hayes, John

  Heald, Oliver

  Chidgey, David

  Heath, David (Somerton & Frome)

  Clappison, James

  Heathcoat—Amory, Rt Hon David

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Horam, John

  Howard, Rt Hon Michael

  Clifton—Brown, Geoffrey

  Howarth, Gerald (Aldershot)

  Collins, Tim

  Hunter, Andrew

  Cormack, Sir Patrick

  Jack, Rt Hon Michael

  Cran, James

  Jenkin, Bernard

  Davey, Edward (Kingston)

  Johnson Smith, Rt Hon Sir Geoffrey

  Davies, Quentin (Grantham)

  Davis, Rt Hon David (Haltemprice)

  Jones, Nigel (Cheltenham)

  Day, Stephen

  Keetch, Paul

  Dorrell, Rt Hon Stephen

  Key, Robert

  Duncan, Alan

  Kirkbride, Miss Julie

  Evans, Nigel

  Kirkwood, Archy

  Ewing, Mrs Margaret

  Laing, Mrs Eleanor

  Fabricant, Michael

  Lait, Mrs Jacqui

  Fallon, Michael

  Leigh, Edward

  Fearn, Ronnie

  Letwin, Oliver

  220

  Lewis, Dr Julian (New Forest E)

  Salmond, Alex

  Lidington, David

  Sanders, Adrian

  Livsey, Richard

  Shepherd, Richard

  Lloyd, Rt Hon Sir Peter (Fareham)

  Simpson, Keith (Mid—Norfolk)

  Llwyd, Elfyn

  Smith, Sir Robert (W Ab'd'ns)

  Loughton, Tim

  Soames, Nicholas

  Luff, Peter

  Spelman, Mrs Caroline

  Lyell, Rt Hon Sir Nicholas

  Spicer, Sir Michael

  MacGregor, Rt Hon John

  Spring, Richard

  McIntosh, Miss Anne

  Stanley, Rt Hon Sir John

  MacKay, Rt Hon Andrew

  Steen, Anthony

  Maclean, Rt Hon David

  Streeter, Gary

  Maclennan, Rt Hon Robert

  Swayne, Desmond

  McLoughlin, Patrick

  Syms, Robert

  Madel, Sir David

  Tapsell, Sir Peter

  Malins Humfrey

  Taylor, Ian (Esher & Walton)

  Maples, John

  Taylor, Jonn M (Solihull>

  Mawhinney, Rt Hon Sir Brian

  Taylor, Matthew (Truro)

  May, Mrs Theresa

  Taylor, Sir Teddy

  Michie, Mrs Ray (Argyll & Bute)

  Thomas, Simon (Ceredigion)

  Moore, Michael

  Tonge, Dr Jenny

  Morgan, Alasdair (Galloway)

  Tredinnick, David

  Nicholls, Patrick

  Trend, Michael

  Norman, Archie

  Tyler, Paul

  Oaten, Mark

  Tyrie, Andrew

  O'Brien, Stephen (Eddisbury)

  Viggers, Peter

  Öpik, Lembit

  Walker, Cecil

  Paice, James

  Walter, Robert

  Paice, James

  Waterson, Nigel

  Paisley, Rev Ian

  Webb, Steve

  Paterson, Owen

  Whittingdale, John

  Prior, David

  Widdecombe, Rt Hon Miss Ann

  Randall, John

  Wigley, Rt Hon Dafydd

  Redwood, Rt Hon John

  Willetts, David

  Rendel, David

  Willis, Phil

  Robathan, Andrew

  Winterton, Mrs Ann (Congleton)

  Robertson, Laurence (Tewk'b'ry)

  winterton, Nicholas (Macclesfield)

  Robinson, Peter (Belfast E)

  Yeo, Tim

  Roe, Mrs Marion (Broxbourne)

  Ross, William (E Lond'y)

  Tellers for the Ayes:

  Ruffley, David

  Mr. Andrew Stunell and

  St Aubyn, Nick

  Mr. Bob Russell.

  NOES

  Abbott, Ms Diane

  Browne, Desmond

  Adams, Mrs Irene (Paisley N)

  Buck, Ms Karen

  Ainger, Nick

  Burden, Richard

  Ainsworth, Robert (Cov'try NE)

  Burgon, Colin

  Allen, Graham

  Butler, Mrs Christine

  Anderson, Rt Hon Donald (Swansea E)

  Campbell, Alan (Tynemouth)

  Campbell, Mrs Anne (C'bridge)

  Armstrong, Rt Hon Ms Hilary

  Campbell, Ronnie (Blyth V)

  Ashton, Joe

  Campbell—Savours, Dale

  Atherton, Ms Candy

  Caplin, Ivor

  Atkins, Charlotte

  Casale, Roger

  Austin, John

  Chapman, Ben (Wirral S)

  Bailey, Adrian

  Chisholm, Malcolm

  Banks, Tony

  Clapham, Michael

  Barnes, Harry

  Clark, Rt Hon Dr David (S Shields)

  Battle, John

  Clark, Dr Lynda (Edinburgh Pentlands)

  Bayley, Hugh

  Begg, Miss Anne

  Clarke, Charles (Norwich S)

  Benn, Hilary (Leeds C)

  Clarke, Eric (Midlothian)

  Benn, Rt Hon Tony (Chesterfield)

  Clarke, Rt Hon Tom (Coatbridge)

  Bennett, Andrew F

  Clelland, David

  Bermingham, Gerald

  Clwyd, Ann

  Best, Harold

  Coffey, Ms Ann

  Betts, Clive

  Cohen, Harry

  Blears, Ms Hazel

  Coleman, Iain

  Blizzard, Bob

  Colman, Tony

  Blunkett, Rt Hon David

  Connarty, Michael

  Boateng, Rt Hon Paul

  Cook, Frank (Stockton N)

  Borrow, David

  Cooper, Yvette

  Bradley, Rt Hon Keith (Withington)

  Corbett, Robin

  Bradshaw, Ben

  Corbyn, Jeremy

  Brinton, Mrs Helen

  Corston, Jean

  221

  Cousins, Jim

  Johnson, Miss Melanie (Welwyn Hatfield)

  Cranston, Ross

  Cryer, John (Hornchurch)

  Jones, Rt Hon Barry (Alyn)

  Cummings, John

  Jones, Helen (Warrington N)

  Curtis—Thomas, Mrs Claire

  Jones, Jon Owen (Cardiff C)

  Dalyell, Tam

  Jones, Dr Lynne (Selly Oak)

  Darvill, Keith

  Jones, Martyn (Clwyd S)

  Davey, Valerie (Bristol W)

  Jowell, Rt Hon Ms Tessa

  Davidson, Ian

  Joyce, Eric

  Davies, Rt Hon Denzil (Llanelli)

  Kaufman, Rt Hon Gerald

  Davies, Geraint (Croydon C)

  Keeble, Ms Sally

  Dean, Mrs Janet

  Kemp, Fraser

  Denham, Rt Hon John

  Kennedy, Jane (Wavertree)

  Donohoe, Brian H

  Khabra, Piara S

  Doran, Frank

  Kidney, David

  Dowd, Jim

  Kilfoyle, Peter

  Drew, David

  King, Andy (Rugby & Kenilworth)

  Drown, Ms Julia

  King, Ms Oona (Bethnal Green)

  Dunwoody, Mrs Gwyneth

  Kingham, Ms Tess

  Eagle, Angela (Wallasey)

  Ladyman, Dr Stephen

  Eagle, Maria (L'pool Garston)

  Lammy, David

  Edwards, Huw

  Lawrence, Mrs Jackie

  Ellman, Mrs Louise

  Leslie, Christopher

  Field, Rt Hon Frank

  Levitt, Tom

  Fisher, Mark

  Lewis, Ivan (Bury S)

  Fitzpatrick, Jim

  Lewis, Terry (Worsley)

  Flint, Caroline

  Liddell, Rt Hon Mrs Helen

  Follett, Barbara

  Linton, Martin

  Foster, Rt Hon Derek

  Lloyd, Tony (Manchester C)

  Foster, Michael Jabez (Hastings)

  Lock, David

  Foster, Michael J (Worcester)

  McAvoy, Thomas

  Gapes, Mike

  McCabe, Steve

  Gardiner, Barry

  McCartney, Rt Hon Ian (Makerfield)

  George, Rt Hon Bruce (Walsall S)

  Gerrard, Neil

  McDonagh, Siobhain

  Gibson, Dr Ian

  McDonnell, John

  Gilroy, Mrs Linda

  McFall, John

  Godsiff, Roger

  McIsaac, Shona

  Golding, Mrs Llin

  McKenna, Mrs Rosemary

  Gordon, Mrs Eileen

  McNulty, Tony

  Griffiths, Jane (Reading E)

  MacShane, Denis

  Griffiths, Nigel (Edinburgh S)

  Mactaggart, Fiona

  Griffiths, Win (Bridgend)

  McWilliam, John

  Grocott, Bruce

  Mahon, Mrs Alice

  Grogan, John

  Mallaber, Judy

  Hain, Peter

  Mandelson, Rt Hon Peter

  Hall, Mike (Weaver Vale)

  Marshall, David (Shettleston)

  Hall, Patrick (Bedford)

  Marshall, Jim (Leicester S)

  Hanson, David

  Martlew, Eric

  Healey, John

  Maxton, John

  Henderson, Doug (Newcastle N)

  Meacher, Rt Hon Michael

  Hendrick, Mark

  Merron, Gillian

  Hepburn, Stephen

  Michael, Rt Hon Alun

  Heppell, John

  Michie, Bill (Shef'ld Heeley)

  Hesford, Stephen

  Milburn, Rt Hon Alan

  Hewitt, Ms Patricia

  Miller, Andrew

  Hill, Keith

  Moffatt, Laura

  Hinchliffe, David

  Moran, Ms Margaret

  Hoey, Kate

  Morgan, Ms Julie (Cardiff N)

  Hood, Jimmy

  Mountford, Kali

  Hoon, Rt Hon Geoffrey

  Mudie, George

  Hope, Phil

  Mullin, Chris

  Hopkins, Kelvin

  Murphy, Denis (Wansbeck)

  Howells, Dr Kim

  Murphy, Jim (Eastwood)

  Hoyle, Lindsay

  Naysmith, Dr Doug

  Hughes, Ms Beverley (Stretford)

  O'Brien, Bill (Normanton)

  Hughes, Kevin (Doncaster N)

  O'Brien, Mike (N Warks)

  Humble, Mrs Joan

  Olner, Bill

  Hurst, Alan

  Organ, Mrs Diana

  Hutton, John

  Osborne, Ms Sandra

  Iddon, Dr Brian

  Pendry, Rt Hon Tom

  Illsley, Eric

  Pickthall, Colin

  Jackson, Helen (Hillsborough)

  Pike, Peter L

  Jamieson, David

  Plaskitt, James

  Jenkins, Brian

  Pond, Chris

  Johnson, Alan (Hull W & Hessle)

  Pope, Greg

  222

  Powell, Sir Raymond

  Stevenson, George

  Prentice, Ms Bridget (Lewisham E)

  Stewart, David (Inverness E)

  Prentice, Gordon (Pendle)

  Stewart, Ian (Eccles)

  Primarolo, Dawn

  Strang, Rt Hon Dr Gavin

  Prosser, Gwyn

  Straw, Rt Hon Jack

  Quinn, Lawrie

  Stuart, Ms Gisela

  Radice, Rt Hon Giles

  Sutcliffe, Gerry

  Rammell, Bill

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Raynsford, Rt Hon Nick

  Reed, Andrew (Loughborough)

  Taylor, Ms Dari (Stockton S)

  Robertson, John (Glasgow Anniesland)

  Taylor, David (NW Leics)

  Temple—Morris, Peter

  Roche, Mrs Barbara

  Timms, Stephen

  Rogers, Allan

  Tipping, Paddy

  Rooney, Terry

  Todd, Mark

  Ross, Ernie (Dundee W)

  Touhig, Don

  Rowlands, Ted

  Trickett, Jon

  Roy, Frank

  Turner, Dennis (Wolverh'ton SE)

  Ruane, Chris

  Turner, Dr Desmond (Kemptown)

  Ruddock, Joan

  Turner, Neil (Wigan)

  Russell, Ms Christine (Chester)

  Twigg, Derek (Halton)

  Salter, Martin

  Tynan, Bill

  Savidge, Malcolm

  Wareing, Robert N

  Sedgemore, Brian

  Watts, David

  Shaw, Jonathan

  White, Brian

  Sheerman, Barry

  Whitehead, Dr Alan

  Sheldon, Rt Hon Robert

  Wicks, Malcolm

  Simpson, Alan (Nottingham S)

  Williams, Rt Hon Alan (Swansea W)

  Skinner, Dennis

  Smith, Rt Hon Andrew (Oxford E)

  Williams, Alan W (E Carmarthen)

  Smith, Angela (Basildon)

  Winnick, David

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Winterton, Ms Rosie (Doncaster C)

  Woodward, Shaun

  Smith, Jacqui (Redditch)

  Woolas, Phil

  Smith, John (Glamorgan)

  Worthington, Tony

  Smith, Llew (Blaenau Gwent)

  Wright, Anthony D (Gt Yarmouth)

  Soley, Clive

  Wright, Tony (Cannock)

  Southworth, Ms Helen

  Squire, Ms Rachel

  Tellers for the Noes:

  Starkey, Dr Phyllis

  Mrs. Anne McGuire and

  Steinberg, Gerry

  Mr. Ian Pearson.

  Question accordingly negatived.
  It being after Seven o'clock, THE TEMPORARY CHAIRMAN put forthwith the Question necessary to dispose of proceedings on clauses 1 to 3, pursuant to Orders [7 November 2000 and 9 April].
  Clause 1 to 3 ordered to stand part of the Bill

Clause 50

  CHARGE AND RATES FOR 2001–02
  Mr. Matthew Taylor: I beg to move amendment No. 2, in page 41, line 15, leave out "10%" and insert "0%".
  The amendment relates to the 10p rate of tax that the Government currently levy on the first part of people's incomes. We believe that the rate should be reduced to zero, effectively extending substantially the tax free allowance that people enjoy. Some 2.7 million people now have a marginal rate of tax of 10 per cent. as a result of the Chancellor's expansion of the band by £300 above indexation. Along with the early introduction of the 10p rate, that has been a substantial cost to him. However, instead of introducing other tax cuts, we believe that he should simply have extended the tax free allowance, taking 2.7 million people out of paying tax altogether.
  The cost to the Chancellor of our suggestion would be £4.1 billion in 2001–02 on an accruals basis and that compares with the money that he has already spent in tax

  223
  cuts. According to the Red Book, he has spent just over £3.5 billion this year, will spend nearly £4.5 billion next year and the figure rises to nearly £5 billion in the year after that. Therefore, it is clear that he had the money available to undertake the type of change that we have suggested. It would be worth just under £200 to people on incomes as low as £6,500 a year.
  7.15 pm
  The key debate is whether the Chancellor is going down the right route in seeking to introduce and then expand the 10p starting rate of tax or whether he would have been better advised, as Liberal Democrats have consistently argued over many years, to expand tax-free allowances to take many people out of paying tax. Instead, he has introduced another complication into the tax system.
  The first question to ask relates to the distributional impact of the Chancellor's policy. Would we better help people on the lowest incomes by taking the Chancellor's course of the tax complication of a 10p rate or by taking the Liberal Democrats' choice of extending tax-free allowances? Research undertaken by the Institute for Fiscal Studies shows that spending an equivalent amount of money on either widening the 10p band or cutting it to zero has different distributional impacts that do not affect people in the same way.
  Broadly speaking, the poorest 10 per cent. would gain twice as much by the Government cutting the 10p rate to zero than they would by the Government spending the same money on increasing the 10p band. The poorest 50 per cent. would gain more by cutting the 10p rate to zero. That led the Institute for Fiscal Studies to comment in its "Green Budget 2000" that widening the 10p band in the way that the Chancellor has chosen to do is "less redistributive". By contrast, on our suggestion of cutting the 10p band to zero, it said:
  "This approach has a number of beneficial features, including being the most progressive means of redistribution via the income tax system, as it moves some people out of paying tax altogether. Increasing the number of non-taxpayers also acts to simplify the income tax system."
  That is the second argument for the Liberal Democrats' approach. Cutting tax for people on low incomes and on the first part of their incomes would help to remove complexity.
  The Paymaster General(Dawn Primarolo): Will the hon. Gentleman explain exactly how his proposal to introduce a zero rate tax relief band on top of the personal allowance would make the tax system less complex and easier to understand?
  Mr. Taylor: If the Paymaster General had been listening, she would have understood that I said that, in effect, we would increase the allowance. The nature of this debate and our ability to table amendments to the Finance Bill gives us an opportunity to discuss these issues.
  Dawn Primarolo: The hon. Gentleman must be clear. Introducing a zero rate tax relief is not the same as increasing the personal allowance. It would add to
  224
  complexity in the tax system if people had to understand that they have not only a personal allowance, but a zero rate tax relief before they pay the basic rate. He has not dealt with that point.
  Mr. Taylor: If that is the best that the minds in the Treasury can come up with, I have worries about their ability to brief Ministers. I have said twice—I shall say it again—that our proposal is to increase the tax-free allowance. I shall make absolutely clear the mechanism through which we would do that. We would spend money to turn the 10p rate into a tax-free allowance at equivalent income levels.
  In case the Minister is wondering, our approach would be so beneficial in redistributive terms because it would give the maximum benefit at low income, including to part-time earners. That is exactly what the Institute for Fiscal Studies says. The Chancellor has to explain why he has chosen to take such a complex approach in preference to the simplification that we want. The Minister is right: operating two systems—a tax-free allowance and a 10p rate—is complex. If we were proposing, as she suggests, to have two different systems, we would be maintaining the complexity. However, we are not arguing that, because we want simplification. The Institute for Fiscal Studies argues, as does the broad range of those involved in the sector, that there should be a simple system that gives maximum benefit to people on the lowest incomes. Our proposal would take 2.5 million people out of the tax system.
  The Chancellor has also introduced other complexities into the tax system since he took office. The number of direct tax rates was 24; it is now 47. There were no tax credits; now there are eight, with five more proposed. The tax system is hugely complex. It benefits accountants enormously, because it allows them to earn much more, but it does not benefit those in greatest need. The money would be put to more effective use if it were given to people on the lowest incomes.
  Mr. Jim Cousins: Does the hon. Gentleman not see advantages in terms of tax simplification in aligning the system of personal allowances with the trigger rates for the payment of national insurance? The Government have moved towards that. If we bring the tax and national insurance systems together, we will achieve a massive measure of tax simplification.
  Mr. Taylor: The hon. Gentleman and I would probably agree to a large extent on long-term reform, for which the Liberal Democrats have been arguing much longer than others. There are difficulties in that policy, however, because we need to ensure that people are not unfairly penalised, which is why change has to be introduced gradually. I do not disagree with the principle of the hon. Gentleman's argument. Indeed, personal national insurance—employees national insurance—is an anomaly within the tax system. It does not build up an individual insurance fund. We have argued that the basic state pension should be available in full to all and not tied to a contribution record that unfairly penalises people, most of whom have stayed at home to look after children and have a reduced pension as a result. The operation of national insurance gives rise to many issues, but I will be called to order if I discuss them now.

  225
  The question mark that hangs over the Chancellor's strategy is how he envisages the tax system developing. It is not obvious from the internal logic of introducing the 10p rate and the decision to broaden the band at what point the Chancellor believes the process should be halted. Do the Government believe that the basic rate should gradually become the 10p rate? On what basis have they decided on the £300 increase? In addition, we are increasingly seeing difficult interactions between tax and savings. The tax system has been made more complex.
  People who are trying to tackle poverty have argued for our option. They want to take people out of tax altogether in preference to the 10p band. People who deal with tax, such as accountants and those employed by other professional bodies, have also argued that the Government are unnecessarily complicating the system and that it would be better to take some people cut of the tax system. There is only one reason for the Government's decision: the Chancellor is delivering a political message designed to trump the Conservatives. They argued for a 20p rate, so he came up with the 10p rate. That is the only logic behind their decision. The Government have a huge majority, which they expect to keep in the general election. I had hoped that they would have the courage to go for a sensible tax policy to take people out of paying tax instead of introducing a tax complication that is purely designed to wrong-foot the Conservative party.
  Mr. Cousins: Will the hon. Gentleman give way?
  Mr. Taylor: I do not want to hold up the proceedings, but I will give way in a moment if the hon. Gentleman still wants to intervene.
  The Government might argue that there is a difference of opinion about strategy, but at least Labour agrees—unlike the Conservatives—that the aim is to have a progressive tax system so that people on the lowest incomes contribute least until their incomes increase, when they are expected to contribute a little more.
  The introduction of the 10p rate cuts at the basic rate of income tax but huge increases in indirect taxation have made the tax system more regressive. Under the Conservatives, the rich paid less of their income in tax than the poor, but that has got worse under Labour. People in the poorest fifth of households typically pay 41.4 per cent. of their income in tax in one form or another compared with just 36.5 per cent. for the richest fifth. We know that because it is part of the information provided by the Government in table B on Page 39 of the Red Book. The proportion of income paid in tax has risen for the bottom 80 per cent. of households since 1997–98 and fallen for the richest 20 per cent. Most people are paying more; the rich are paying less; and the very poor are paying substantially more as a percentage of their income than the very rich. The process that we advocate of taking people out of tax would help to turn that around.
  It is not just a question of tax; we are also concerned about inequality in our society. The measure of inequality of income after tax—the Gini coefficient—has recorded another increase in the past year and now stands at 40 per cent. That is the highest level for any year for which the Office for National Statistics has data. Almost every measure shows inequality at its highest, or close to its highest, level. Such information is available in April's Economic Trends.
  226
  We have a Labour Government who are apparently committed to increasing equality in society, but who are actually increasing inequality. They are theoretically supporting progressive taxation, but have increased the regressive nature of tax in the United Kingdom. They have increased tax for the poorest and cut it for the richest. In the process, they have been unable to deliver the improvements in health, education and pensions that people thought they were going to receive back in 1997 when Labour came to office.
  Our proposal shows that the Chancellor had a choice about what to do with the money available to him, which he decided to spend on tax cuts. We have used figures in the Red Book to demonstrate that he could have taken 2.5 million people out of paying tax, increased equality and created a more progressive, simpler tax system which would please even the accountants. We believe that the Labour Government should have delivered on that; it is something on which the Liberal Democrats aim to deliver.
  7.30 pm
  Mr. Flight: We have some sympathy with the underlying principles of the amendment, although we do not support it, in part for the reasons stated by the Minister and because it would create the equivalent of a personal allowance of £6,415 at a cost of over £4 billion, and we do not feel that that is fiscally viable right now.
  It is a great pity that a massive effort has been devoted to simplifying the wording of tax legislation but not to the principle of simplifying the tax system for the typical citizen. If anything, the Government have an almost obsessive desire further to complicate the tax system as it applies to individuals and companies, including even foreign companies operating in this country. It must be wrong that ordinary citizens are unable to understand the tax rules that apply to them and that millions of people have to use accountants to look after their tax affairs. Surely it is not an insurmountable problem to arrive at a much simpler system.
  In principle, the debate is whether to have two rates or to stay with the three rates that have been introduced by this Administration. Crucial to that, as the hon. Member for Truro and St. Austell (Mr. Taylor) pointed out, is the Government's intention. Is the 10 per cent. band just a political gimmick or do they intend to widen it significantly so that it is more in line with a model such as that in Hong Kong? It must be inefficient to have millions of people paying very small amounts of tax at 10 per cent., as at present, when an averaged-out higher personal allowance would potentially take a significant number of people out of tax.
  The crucial point is the principle that lies behind the amendment. As the hon. Gentleman pointed out, the message is loud and clear, whether it comes from the Institute for Fiscal Studies or chartered accountants, that there is an urgent need to focus on simplifying our tax system. More and more people will end up doing self-assessment tax returns, so more and more people will fail to understand the tax rules that apply to them and there will be increasing trouble with people making mistakes and feeling that they have been ill treated.

  227
  The amendment is a point well raised, but the specific mechanism is not operative. The cost of raising personal allowances to over £6,000 is too great a fiscal burden at this stage.
  The Paymaster General: I understand the Liberal Democrats' main argument that personal allowances should be increased to remove low earners from the tax system. The hon. Member for Truro and St. Austell (Mr. Taylor) knows full well that the Government's response is that an increase in personal allowances benefits higher earners to a greater extent. To achieve our objective of dealing with the poverty trap and the inequality to which the hon. Gentleman referred, we therefore introduced the 10p starting rate of tax. In this Budget we raised the allowance applicable at the 10p rate—that provision is set out in the next clause.
  I understand why the Liberal Democrats consistently advance their argument, but the Government reject it because we feel that it does not deal with our objectives of helping those on low incomes and reducing inequality. The hon. Gentleman's arguments were very confused, but I understand that the amendment is a means whereby Liberal Democrat Members can discuss their principled position on personal allowances. The amendment would introduce zero rate relief on £1,880, if the next clause is agreed to. All the arguments that the hon. Gentleman has advanced against the Government apply equally to his proposal because the amendment would result in a personal allowance, a zero rate relief band and subsequent relief bands. He knows that the cost of such a measure would be about £4.8 billion, which is not an insubstantial amount.
  The hon. Gentleman asked why there should be a 10p rate. The Government have made it clear that we want to provide an incentive to those on low wages to work harder, earn more and keep more of their earnings, so that we can tackle the poverty trap. The 10p rate is not the only policy that we are using; there is also the minimum wage and the national insurance changes to which my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) referred earlier. We have also introduced the working families tax credit and the children's tax credit, which deal specifically with poverty. The hon. Gentleman will not be surprised to hear that, as a Minister, I favour our approach, with its balanced package, to what the Government agree with him are extremely important issues. The tax system and the supporting in-work benefits must not act as a disincentive to unemployed people to move into employment.
  I turn now to the inequality argument advanced by the hon. Gentleman. I am sure that he will acknowledge that the vast number of people on low incomes are receiving benefits and are therefore not paying tax. Government policy assists them by enabling them to keep more money. By introducing programmes such as the new deal, we move people out of unemployment and into paid work. That affects the figures to which the hon. Gentleman referred. He sought to portray a simplistic relationship of cause and effect, but there are other ways to interpret the facts.
  The data to which the hon. Gentleman referred relate to the 1999–2000 tax year, and if I am not mistaken they are from the Office for National Statistics. He will know
  228
  that those figures do not include—indeed, they specifically exclude—the full-year benefits of the working families tax credit, the full effects of the introduction of the 10p rate and the reforms of national insurance, which have benefited those on lower earnings. Taken together over the whole Parliament, all the Government's measures show that we are bearing down on the inequality that the hon. Gentleman seeks to tackle in his amendment. Our judgment is that the balance of using resources is correctly set by widening the 10p band.
  Mr. Matthew Taylor: The hon. Lady will be aware that statistics released in the past few days confirm that the gap between the richest and the poorest in this country has continued to widen. She has a good record of campaigning on poverty issues during the period in which I have been in the House. Does it not concern her that the Government's choice of cutting direct taxes while increasing indirect taxes inevitably increases the tax burden on those on the lowest incomes while cutting the burden on those on the highest incomes?
  Dawn Primarolo: The hon. Gentleman has probably, like me, read the IFS study that shows that the disposable income of those on the lowest incomes is increasing. We must both be careful about how we use the figures. I take that as a correction to myself not to stretch certain issues too far.
  As a result of the introduction of the 10p rate which, as I explained, is part of a wider set of policy objectives, including the minimum wage, national insurance reform and working families tax credit—which will move into integrated child credit in 2003–3 million people have had their tax bills halved, including 2.2 million low-paid workers. My right hon. Friend the Chancellor's proposals to increase the 10p band, which are the subject of clause 51, will halve marginal rates of tax for a further 450,000 people.
  I accept that Liberal Democrat Members always want more, and that they want us to go further this evening. However, the Government believe that targeted tax cuts are part of a broader package to help those on low pay and, specifically, to help the unemployed into employment; that is the way forward. That package is affordable for the country; the extra £4.8 billion that the hon. Member for Truro and St. Austell proposes to spend in his amendment is not. While I have every sympathy with the hon. Gentleman's principled position, I do not agree with the methods that he seeks to use to achieve his objectives, so I urge my hon. Friends to vote against the amendment, should he push it to a vote.
  Mr. Taylor: Having listened to the hon. Lady, I am worried that the Government are still advancing a case that nobody outside the House sees as anything other than a continuation of the Chancellor's political effort, begun in opposition, to rock the Conservatives. That has complicated tax. Everyone who deals with poverty argues that our route is better.
  I am glad we have had an opportunity to debate the issue and I hope that the Paymaster General and her colleagues will reflect on it. Perhaps it is better to have movement on that after the election, rather than before. People are aware of the penny that we would put on tax for education and the higher rate that we would introduce

  229
  for people with an income of over £100,000 a year to pay for our education, health and pensions policies, but this is an opportunity to make the point that we are also arguing for a tax cut for those on the lowest incomes. My hon. Friends and I believe that the Government have made the wrong choice; the Paymaster General has not addressed that in arguing that the amendment should be rejected on a technical point. We therefore wish to press it to a vote.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 41, Noes 281.

  Division No. 193]

  [7.43 pm

  AYES

  Allan, Richard

  Livsey, Richard

  Baker, Norman

  Llwyd, Elfyn

  Beith, Rt Hon A J

  Michie, Mrs Ray (Argyll & Bute)

  Bell, Martin (Tatton)

  Moore, Michael

  Brake, Tom

  Oaten, Mark

  Brand, Dr Peter

  Öpik, Lembit

  Breed, Colin

  Paisley, Rev Ian

  Burnett, John

  Rendel, David

  Campbell, Rt Hon Menzies (NF Fife)

  Robinson, Peter (Belfast E)

  Ross, William (E Lond'y)

  Chidgey, David

  Russell, Bob (Colchester)

  Cotter, Brian

  Sanders, Adrian

  Davey, Edward (Kingston)

  Smith, Sir Robert (W Ab'd'ns)

  Stunell, Andrew

  Fearn, Ronnie

  Taylor, Matthew (Truro)

  Foster, Don (Bath)

  Thomas, Simon (Ceredigion)

  George, Andrew (St Ives)

  Tonge, Dr Jenny

  Gidley, Sandra

  Tyler, Paul

  Harris, Dr Evan

  Wigley, Rt Hon Dafydd

  Harvey, Nick

  Willis, Phil

  Keetch, Paul

  Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

  Tellers for the Ayes:

  Mr. Steve Webb and

  Kirkwood, Archy

  Mr. David Heath.

  NOES

  Abbott, Ms Diane

  Butler, Mrs Christine

  Adams, Mrs Irene (Paisley N)

  Campbell, Alan (Tynemouth)

  Ainger, Nick

  Campbell, Mrs Anne (C'bridge)

  Ainsworth, Robert (Cov'try NE)

  Campbell, Ronnie (Blyth V)

  Allen, Graham

  Campbell—Savours, Dale

  Anderson, Rt Hon Donald (Swansea E)

  Cann, Jamie

  Caplin, Ivor

  Armstrong, Rt Hon Ms Hilary

  Casale, Roger

  Ashton, Joe

  Chapman, Ben (Wirral S)

  Atherton, Ms Candy

  Chaytor, David

  Atkins, Charlotte

  Clapham, Michael

  Austin, John

  Clark, Rt Hon Dr David (S Shields)

  Bailey, Adrian

  Clark, Dr Lynda (Edinburgh Pentlands)

  Banks, Tony

  Barnes, Harry

  Clark, Paul (Gillingham)

  Battle, John

  Clarke, Charles (Norwich S)

  Bayley, Hugh

  Clarke, Eric (Midlothian)

  Begg, Miss Anne

  Clelland, David

  Benn, Hilary (Leeds C)

  Clwyd, Ann

  Bennett, Andrew F

  Coffey, Ms Ann

  Bermingham, Gerald

  Cohen, Harry

  Best, Harold

  Coleman, Iain

  Betts, Clive

  Colman, Tony

  Blears, Ms Hazel

  Connarty Michael

  Blizzard, Bob

  Cook, Frank (Stockton N)

  Blunkett, Rt Hon David

  Cooper, Yvette

  Borrow, David

  Corbett, Robin

  Bradley, Rt Hon Keith (Withington)

  Corston, Jean

  Bradshaw, Ben

  Cousins, Jim

  Brinton, Mrs Helen

  Cranston, Ross

  Browne, Desmond

  Cryer, John (Hornchurch)

  Buck, Ms Karen

  Cummings, John

  Burden, Richard

  Cunningham, Jim (Cov'try S)

  Burgon, Colin

  Curtis—Thomas, Mrs Claire

  230

  Dalyell, Tam

  Jones, Dr Lynne (Selly Oak)

  Darvill, Keith

  Jones, Martyn (Clwyd S)

  Davey, Valerie (Bristol W)

  Jowell, Rt Hon Ms Tessa

  Davidson, Ian

  Joyce, Eric

  Davies, Rt Hon Denzil (Llanelli)

  Kaufman, Rt Hon Gerald

  Dean, Mrs Janet

  Keeble, Ms Sally

  Denham, Rt Hon John

  Kennedy, Jane (Wavertree)

  Donohoe, Brian H

  Khabra, Piara S

  Doran, Frank

  Kidney, David

  Dowd, Jim

  Kilfoyle, Peter

  Drew, David

  King, Andy (Rugby & Kenilworth)

  Drown, Ms Julia

  King, Ms Oona (Bethnal Green)

  Dunwoody, Mrs Gwyneth

  Ladyman, Dr Stephen

  Eagle, Angela (Wallasey)

  Lawrence, Mrs Jackie

  Eagle, Maria (L'pool Garston)

  Leslie, Christopher

  Edwards, Huw

  Levitt, Tom

  Efford, Clive

  Lewis, Ivan (Bury S)

  Ellman, Mrs Louise

  Lewis, Terry (Worsley)

  Field, Rt Hon Frank

  Liddell, Rt Hon Mrs Helen

  Fisher, Mark

  Linton, Martin

  Fitzpatrick, Jim

  Lloyd, Tony (Manchester C)

  Flint, Caroline

  Lock, David

  Follett, Barbara

  McAvoy, Thomas

  Foster, Rt Hon Derek

  McCabe, Steve

  Foster, Michael Jabez (Hastings)

  McCartney, Rt Hon Ian (Makerfield)

  Foster, Michael J (Worcester)

  George, Rt Hon Bruce (Walsall S)

  McDonagh, Siobhain

  Gerrard, Neil

  McDonnell, John

  Gibson, Dr Ian

  McFall, John

  Gilroy, Mrs Linda

  McIsaac, Shona

  Godsiff, Roger

  McKenna, Mrs Rosemary

  Goggins, Paul

  McNulty, Tony

  Golding, Mrs Llin

  MacShane, Denis

  Gordon, Mrs Eileen

  Mactaggart, Fiona

  Griffiths, Jane (Reading E)

  McWilliam, John

  Griffiths, Nigel (Edinburgh S)

  Mahon, Mrs Alice

  Griffiths, Win (Bridgend)

  Mallaber, Judy

  Grocott, Bruce

  Mandelson, Rt Hon Peter

  Grogan, John

  Marshall, David (Shettleston)

  Hain, Peter

  Marshall, Jim (Leicester S)

  Hall, Mike (Weaver Vale)

  Martlew, Eric

  Hall, Patrick (Bedford)

  Maxton, John

  Hanson, David

  Meacher, Rt Hon Michael

  Healey, John

  Merron, Gillian

  Henderson, Doug (Newcastle N)

  Michael, Rt Hon Alun

  Hendrick, Mark

  Michie, Bill (Shef'ld Heeley)

  Hepburn, Stephen

  Miller, Andrew

  Heppell, John

  Moffatt, Laura

  Hesford, Stephen

  Moran, Ms Margaret

  Hewitt, Ms Patricia

  Morgan, Ms Julie (Cardiff N)

  Hill, Keith

  Mountford, Kali

  Hinchliffe, David

  Mudie, George

  Hoey, Kate

  Mullin, Chris

  Hood, Jimmy

  Murphy, Denis (Wansbeck)

  Hoon, Rt Hon Geoffrey

  Murphy, Jim (Eastwood)

  Hope, Phil

  Naysmith, Dr Doug

  Hopkins, Kelvin

  O'Brien, Bill (Normanton)

  Howarth, Rt Hon Alan (Newport E)

  O'Brien, Mike (N Warks)

  Howells, Dr Kim

  Olner, Bill

  Hoyle, Lindsay

  O'Neill, Martin

  Hughes, Ms Beverley (Stretford)

  Organ, Mrs Diana

  Hughes, Kevin (Doncaster N)

  Osborne, Ms Sandra

  Humble, Mrs Joan

  Pendry, Rt Hon Tom

  Hurst, Alan

  Perham, Ms Linda

  Hutton, John

  Pickthall, Colin

  Iddon, Dr Brian

  Pike, Peter L

  Illsley, Eric

  Plaskitt, James

  Jackson, Helen (Hillsborough)

  Pollard, Kerry

  Jamieson, David

  Pond, Chris

  Jenkins, Brian

  Pope, Greg

  Johnson, Alan (Hull W & Hessle)

  Powell, Sir Raymond

  Johnson, Miss Melanie (Welwyn Hatfield)

  Prentice, Ms Bridget (Lewisham E)

  Prentice, Gordon (Pendle)

  Jones, Rt Hon Barry (Alyn)

  Primarolo, Dawn

  Jones, Helen (Warrington N)

  Prosser, Gwyn

  Jones, Jon Owen (Cardiff C)

  Quinn, Lawrie

  231

  Rammell, Bill

  Straw, Rt Hon Jack

  Raynsford, Rt Hon Nick

  Stuart, Ms Gisela

  Reed, Andrew (Loughborough)

  Sutcliffe, Gerry

  Robertson, John (Glasgow Anniesland)

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Roche, Mrs Barbara

  Taylor, Ms Dari (Stockton S)

  Ross, Ernie (Dundee W)

  Taylor, David (NW Leics)

  Rowlands, Ted

  Temple—Morris, Peter

  Roy, Frank

  Timms, Stephen

  Ruane, Chris

  Tipping, Paddy

  Ruddock, Joan

  Todd, Mark

  Russell, Ms Christine (Chester)

  Touhig, Don

  Salter, Martin

  Trickett, Jon

  Savidge, Malcolm

  Turner, Dennis (Wolverh'ton SE)

  Sedgemore, Brian

  Turner, Dr Desmond (Kemptown)

  Shaw, Jonathan

  Turner, Neil (Wigan)

  Sheerman, Barry

  Twigg, Derek (Halton)

  Sheldon, Rt Hon Robert

  Tynan, Bill

  Simpson, Alan (Nottingham S)

  Wareing, Robert N

  Skinner, Dennis

  Watts, David

  Smith, Rt Hon Andrew (Oxford E)

  White, Brian

  Smith, Angela (Basildon)

  Whitehead, Dr Alan

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Wicks, Malcolm

  Williams, Rt Hon Alan (Swansea W)

  Smith, Jacqui (Redditch)

  Smith, John (Glamorgan)

  Williams, Alan W (E Carmarthen)

  Smith, Llew (Blaenau Gwent)

  Winnick, David

  Soley, Clive

  Winterton, Ms Rosie (Doncaster C)

  Southworth, Ms Helen

  Woodward, Shaun

  Squire, Ms Rachel

  Woolas, Phil

  Starkey, Dr Phyllis

  Worthington, Tony

  Steinberg, Gerry

  Wright, Anthony D (Gt Yarmouth)

  Stevenson, George

  Stewart, David (Inverness E)

  Tellers for the Noes:

  Stewart, Ian (Eccles)

  Mrs. Anne McGuire and

  Strang, Rt Hon Dr Gavin

  Mr. Ian Pearson.

  Question accordingly negatived.
  Question proposed, That the clause stand part of the Bill.
  Mr. Flight: The issues that we wish to raise in relation to clause 50 are represented by amendments that were not selected. Our argument is that the clause does nothing in the area of tax policy to relieve or compensate those who have suffered most from Labour's 48 stealth taxes, equivalent as they are to a 10p increase in income tax. The categories that we believe should be compensated are savers, married people in cases where one spouse has chosen to stay at home to look after the children, and those who are retired.
  The Conservative view is that it would be correct to remove the starting and basic income tax rate on savings; to abolish the 10p ordinary rate of income tax on dividends; and in particular to restore to individuals who are non-taxpayers but who are in receipt of dividends their right to claim a 10 per cent. tax credit in cash. The failure to address that is, in our view, Labour's single most unjust policy in respect of personal taxation. The issue has been raised many times and it affects 660,000 people.
  People's savings have been accumulated out of income that has been taxed. It is therefore a question of principle as to whether the fruits of that taxed income should again be taxed. A further issue is the volatility in the savings rate that has occurred under the present Administration, and the economic good sense of seeking to achieve a much more stable savings rate.
  It may surprise the Government to learn that of the 12 million shareholders in this country, almost 60 per cent. belong to socio-economic groups C1, C2 and D/E.
  232
  We want to encourage saving by the many. Proposals to relieve savings from basic and lower rate tax would also go some way to offset Labour's £5 billion a year stealth tax on pension funds. It will cost the average family an extra £400 a year to keep its pension fund capable of producing the same pension as it would have done before the removal of the advance corporation tax credit. The Government are no doubt aware that Tesco, for example, has advised its staff that contributions need to be increased by some 15 per cent. a year just to stand still.
  On the wider issue of savings and the volatility of savings, there is a major point to be made about the Government's overall fiscal policy. They love to boast of the extent to which they have reduced Government debt, but they do not comment on the fact that personal debt has increased by almost the same amount as Government debt has gone down. They do not reveal the fact that disposable incomes have grown by considerably less than the economy as a whole—on average, by 1.7 per cent. The reason why the savings rate has more than halved is that individuals have been borrowing more in order to keep up their consumption.
  The danger of this posture, especially now that we are entering much more difficult economic climate, as the Chancellor now admits, is that individuals will look to de-gear and to rebuild their net savings, quite sharply reducing their consumption in the process. That is precisely what leads to the ups and downs—the booms and busts—of the business cycle. The Chancellor is making optimistic noises about the British economy. I trust that they will prove well founded, but the Minister knows that growth it the first quarter was only some 0.3 per cent., annualised at 1.2 per cent. The evidence is that the savings rate is bouncing back up rather more sharply than is desirable. Our view is that the tax policy in relation to savings should be designed to stabilise the savings rate as far as possible.
  8 pm
  Mr. Bercow: I am grateful to my hon. Friend for giving way, as he is an acknowledged expert on these matters. In the context of the halving of the savings ratio, which is common ground among all hon. Members, what assessment has he made of the likely impact on that state of affairs of the substitution of the inferior ISAs for the superior TESSAs?
  Mr. Flight: I thank my hon. Friend for that question. As everyone knows, the main issue with ISAs is that they are too complicated. People still do not understand clearly the difference between mini-ISAs and maxi-ISAs. In terms of the savings that ISAs have attracted, the figures appear reasonably satisfactory—excepting those for recent months. The relevant figures are difficult to distil, as large sums have been transferred into ISAs from building society accounts that did not qualify in the past.
  Dawn Primarolo: The hon. Gentleman is being uncharacteristically disingenuous. Perhaps he will tell the hon. Member for Buckingham (Mr. Bercow) that, as he well knows, a third more people are investing in ISAs than invested in TESSAs and PEPs together in their last and most successful year. In total, 8.5 million people

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  invested some £28.4 billion in ISAs in their first year. ISAs are doing extremely well, especially for people who want to save smaller amounts.
  Mr. Flight: I thank the Paymaster General for those figures, but I point out that they do not tell the entire story. The preponderance of ISAs involves people who were already building society savers and who merely switched a modest cash element of their savings from outside an ISA to within one.
  Dawn Primarolo: Good for them.
  Mr. Flight: Yes, but the argument that ISAs have created huge numbers of new savers does not stand up.
  Let us consider also how total volumes of savings in the various good years of TESSAs and PEPs compare with those in the best years of ISAs. When the Government introduced ISAs, they admitted that their primary objective was to reduce the tax cost that was previously associated with PEPs and TESSAs. Indeed, that objective was set out in their Green Paper. Although they have been forced by the pressure of public opinion to keep the ISA level at £7,000 rather than to reduce it to £5,000, the benefits to the community in terms of tax incentives have been marginally less than those of PEPs and TESSAs.
  In respect of the tax positions of people who are retired and of those who will be retiring, one of the particularly objectionable aspects of the Government's fiscal policy was the removal of married couples allowance for all people who were going to retire in future. The spin was that retired people would continue to receive the allowance, but that applied only to people who were already 65 and receiving the money. Many people made their retirement plans on the basis that they would qualify for the allowance, but reached 65 this year and cannot receive it.
  The Opposition propose to increase the age allowance by £2,000 a year for everyone over 65; that would more than compensate for the circumstances that I am describing. It would take 1 million retired people out of tax and benefit almost 3 million more people by approximately £400 a year. It would also be a powerful antidote to the major swing towards a means-tested society that has occurred under the current Administration. The proportion of retired people on means testing has increased from 37 per cent. to 56 per cent. It is especially demeaning for people in the latter part of their lives to have to come cap in hand for means-tested benefits. Many pensioners are paying tax and also qualify for means-tested benefits. The measures that we propose for 2003–04 would be a major swing back towards enabling people to stand on their own feet and allowing most pensioners to come out of the tax net altogether.
  I want to comment now on tax and marriage and on couples in which one spouse wants to stay at home and bring up young children. We propose to restore a tax incentive for marriage and to acknowledge the importance of stability for people who are bringing up young children. We would recognise the contribution made by parents who are looking after young children or caring for elderly relatives by allowing the non-working spouse who is staying at home to transfer his or her personal tax allowance, which is now £4,535 a year, to the working spouse.
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  That arrangement would be worth up to £1,000 a year, depending on tax rates and full usage of the personal allowance. In particular, it would enable many people who would prefer to work part time rather than full time to do so, in order to give them more time to look after young children. Such a tax change would offer a tremendous benefit to almost 4 million married couples with children aged under 11. In more than one respect, the Government have penalised through taxation—I trust that they have not done so intentionally—married couples where one spouse wishes to stay at home to look after children.
  Let us also consider widows. We are supposed to have a caring Labour Government, but the position of widows has deteriorated under this Administration. Unlike the Labour party, we propose to cancel any tax burden for widowed parents by making the continuing widowed mothers allowance and the new widowed parents allowance, both of which are worth £87.50 a week, free of tax in future.
  Our concern is what the clause does not do. It merely repeats the tax bands as they were last year and does nothing to compensate the main sufferers under Labour's tax policies. We want to put on record the key areas in which the future Conservative Government would propose to use by 2003–04 the £8 billion—not £16 billion—of tax savings that we have identified, in order to do justice to the people who have suffered and to return a stable savings regime throughout the country.
  Dawn Primarolo: I want to contribute very briefly to this short debate. I begin by reminding the hon. Member for Arundel and South Downs (Mr. Flight) of something that he knows well: household wealth is at a record high and the ratio of household debt to wealth has fallen. As he follows such matters very closely, he knows also that the Bank of England said in its quarterly bulletin for spring 2001 that the UK household saving ratio did not seem unusually low when adjusted for changes in inflation rates in the past 30 years. When I challenged him, he had the good grace to concede the success of ISAs in assisting people who wish to save. He also acknowledged that they were more successful than their predecessors, PEPs and TESSAs.
  I am a little surprised at the hon. Gentleman, who knows a great deal about the subject, because once again his point about the tax on savings is a red herring. He tried to claim that the same money is taxed twice. He knows that that is not the case: the tax applies to earned, additional income that has not already been taxed. He slipped quickly over that point because he does not try to mislead the House. He seemed to claim that the same money was taxed twice, but I am sure that he did not mean that, because he knows that it is not so.
  The hon. Gentleman made several points, and presented the Conservative party's manifesto on tax on pensions, the age-related allowance, savings and the married couples allowance. He failed to point out that 90 per cent. of the age-related personal allowances, which Conservative Members say they will provide for the over-65s, would go to the richest 30 per cent. of pensioners. Sixty per cent. of the gain would go to the richest 20 per cent. He also failed to point out that only four out of 10 pensioners pay tax. Some of our pensioners experience poverty not because they pay tax but because their income is low. The Government have therefore introduced the minimum

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  income guarantee, increases in the state pension, and the £200 winter fuel allowance, and made a commitment to the pension tax credit. I shall go no further because I am straying beyond the clause.
  Mr. Edward Davey rose—
  Mr. Flight rose—
  Dawn Primarolo: I shall give way first to the hon. Member for Kingston and Surbiton (Mr. Davey), who is itching to intervene.
  Mr. Davey: Will the Paymaster General confirm that using the money that the Conservatives propose to spend on a so-called tax cut for pensioners to increase the basic state pension, as proposed by the Liberal Democrats, would be much more effective in reducing pensioner poverty?
  Dawn Primarolo: I shall not act as a referee between the Liberal Democrats and the Conservatives about which party has the marginally better policy. I believe that the Government have the best policy.
  Mr. Flight: The Paymaster General may have misunderstood our proposals. Pensioners who pay tax at the rate of 40 per cent. would not benefit from our proposals. The 3 million pensioners in the middle, who pay the standard rate of tax, would be the main beneficiaries.
  Dawn Primarolo: I am grateful to the hon. Gentleman for confirming that not all pensioners would benefit from Conservative party proposals on the age-related allowance. The publicity and—dare I say it?—the spin implied that all pensioners would gain from the change. Clearly, that is not the case.
  Mr. Bercow: The Paymaster General invariably makes the best fist of a poor case. It is, none the less, a poor case. We are considering a position whereby the interest earned on income that has already been taxed is at stake. It is mere casuistry for the hon. Lady to dance on the head of a pin. My hon. Friend the Member for Arundel and South Downs, whose expertise the Paymaster General has graciously and rightly acknowledged, made the point that people are being taxed twice for the same money. That is so blindingly obvious that only an extraordinarily clever person could fail to see the point.
  8.15 pm
  Dawn Primarolo: The hon. Gentleman is extraordinarily clever. If he cares to study the way in which investments are taxed, he will realise that they are taxed on the interest that they earn. That money has not been taxed before.
  Mr. Bercow: That is very cheeky.
  Dawn Primarolo: That is how tax law works. If Conservatives want to explain the benefit of their suggested policy change in that way, that is fine. However, they should not suggest that the money is taxed twice.
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  I dealt with savings in my intervention on the hon. Member for Arundel and South Downs and in my initial comments. He also considered the married couples allowance. First, the Conservatives said that they would reintroduce the married couples allowance, then they said that they would not. They then claimed that they would limit the number of those who would gain from it. Again, the proposals lack clarity. Eight out of 10 married couples and eight of 10 families with children would gain nothing. Single parents and married couples with both partners working would gain nothing. That also applies to married couples with children of secondary school age. However, the Government's policies—the 10p starting rate, the working families tax credit, the minimum wage, the children's tax credit, increases in child benefit and reform of the national insurance system—are all targeted at helping families on low income.
  Clause 50 establishes income tax for 2001–02. It shows that the Government have kept their promises on tax rates. We promised not to increase the top rate of tax, which remains at 40 per cent. We promised not to raise the basic rate of tax. The Chancellor's stewardship of the economy, ably assisted by my right hon. Friend the Chief Secretary, has meant that we were able to make a cut of 1p in the basic rate last year, to 22p. We promised to introduce the new starting rate of 10p and we have done that. The next clause expands that provision.
  We are halving the marginal rate of tax for nearly 3 million people. Our policies mean that the direct tax burden on a single earner family on average earnings and with two children will fall from 21.5 per cent. in 1996–97 to 18.1 per cent. by 2001—the lowest since 1972. The Government keep their promises on tax, and I commend the clause to the Committee.
  Question put and agreed to.
  Clause 50 ordered to stand part of the Bill.

Clause 51

  STARTING RATE LIMIT FOR 2001–02
  Question proposed, That the clause stand part of the Bill.
  Mr. Flight: Although the increase in the band by £360 per annum will be welcome to all citizens who benefit, and the Government boast that they have increased it by more than the statutory indexed increase, it is worth pointing out that it is equivalent to 69p a week. At the same time, the increase in the upper limit for national insurance from £535 to £575 a week has resulted in an additional national insurance bill of £2.09 a week for 2.9 million people.
  The Chancellor did not announce that in the Budget; in retrospect, we knew that another stealth tax was on the way. Therefore, nearly 3 million people are £2.09 a week worse off and 69p per week better off. There may be justifiable reasons for such redistribution—it depends on one's view of what is best for the economy. However, the Chancellor's failure to make it clear that, for 3 million people in the middle, more was being taken away with one hand than given with the other shows a lack of transparency and is simply electioneering.
  Mr. Edward Davey: I want briefly to put on record my concern at the continuing complexity in the tax system

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  that the 10p band represents. The arguments against the 10p band are as powerful as those that were used against the 20p band when it was introduced as an election gimmick by the former Chancellor, now Lord Lamont, just before the 1992 election. The problem with these bands of lower tax over a small amount of income is that they do not target the most tax relief on the poorest people. They also add unnecessary complexity to the tax system.
  If one is trying to target precious resources on those who need them most, one should always increase the allowance. That takes people out of tax altogether. The Institute for Fiscal Studies has been arguing this for years, and it has been right for years. One used to hear from many Labour politicians—including some very reform-minded politicians—when they were in opposition, that they understood that argument. Simple arithmetical calculations can be made to show that, for every extra £1 million that the Government have to spend, it is always better for the poorest people if that money is spent on increasing the allowance because that takes the poorest people out of tax altogether.
  Mr. Bercow: It is very difficult to contain oneself in these circumstances because, frankly, the amiability of the hon. Gentleman is equalled only by his effrontery. He has the brass neck to grumble about the complexity of the system—which has undoubtedly been exacerbated under the auspices of this Chancellor—but, unless he is going to argue, as my hon. Friends and I consistently do, for simplicity and for lower overall taxation, he has a cheek, as he is arguing for higher overall taxation. He can rest assured that his cheek in this debate will be relayed by me to the next Conservative Member of Parliament for his constituency, Mr. David Shaw.
  Mr. Davey: I am sure that the former hon. Member for Dover, to whom the hon. Gentleman refers, will be pleased that his election expenses have now been started by the hon. Gentleman.
  It is rich for the hon. Gentleman to accuse another Member of the House of having a brass neck. He raised the issues of the level of taxation and of the simplicity of the system. I make no bones about the fact that the Liberal Democrats have argued, continue to argue, and will argue at the forthcoming election that the basic rate of income tax and a new top level of tax for incomes above £100,000 a year should be raised to provide revenue to fund our public services and to ensure that pensioners have a better deal. However, I shall not continue down that line, Mr. Lord, because you will rule me out of order.
  I was making a point, separate from the hon. Gentleman's argument, about complexity. Whatever one's view on the overall burden of taxation, surely there can be consensus on the need for simplifying the system and getting rid of bureaucracy and unnecessary costs, whether in relation to individuals or the corporate sector. New tax measures such as this add extra complexities.
  Dawn Primarolo: Will the hon. Gentleman explain whether a balance needs to be struck between simplicity and fairness? If he believes that to be the case, where and how should such a balance be struck?
  Mr. Davey: The point that I was making was that if one increases the personal allowance—the 0 per cent. band of
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  taxation—one gets the benefits of both worlds: the benefits of greater fairness and of greater simplicity. That is the whole point of the argument made not only be party politicians but by academics, accountants, members of the tax profession and members of the business sector.
  Dawn Primarolo: I understand the point that the hon. Gentleman is making now. However, when he started his complexity argument, he was advocating raising the marginal rates of tax and the average rates of taxation by a combination of policies that he said his party would advocate at the next election, whenever that is. Will he explain why it would be fair to put up the marginal rates of tax and the average rates of taxation at the same time?
  Mr. Davey: The hon. Lady is making a similar mistake to the one made by the hon. Member for Buckingham (Mr. Bercow), which, to her credit, is very unlike her. The Liberal Democrats have always made it clear that marginal rates of tax should go up to fund essential expenditure. That is completely different from the argument that I am making, which is that if the Government have a certain amount of money to spend on making the tax system fairer, as sure as night follows day it would be a better use of that money to increase the income tax allowance, the 0 per cent. tax band. That would have the added advantage of not adding these unnecessary complexities to the system.
  That is a simple point that has been made many times by hon. Members in all parts of the House. I want to use the opportunity of this clause stand part debate to make the point again. We have a tax system that is far too complicated, and we should argue at every opportunity for simplifying it. One of the Government's major economic mistakes has been to make the tax system far too complex, and I hope that, as they think again about tax policy, which they may or may not have the chance to implement in a future Parliament, they will understand that reducing complexity is an important issue. It is important in the personal sector, in the move to greater self-assessment, and in the reduction in complexity for the corporate sector. This is a microeconomic issue that has macroeconomic outturns, and the Government should take it very seriously.
  Dawn Primarolo: The clause fulfils the Government's commitment to introduce a 10p starting rate of income tax—the lowest rate of income tax since 1962–63. We are also introducing a range of other measures, on income tax, national insurance contributions and tax credits, to encourage people into work and ensure that they keep more of what they earn. The allowance with which the clause deals is part of that package.
  Both the hon. Gentlemen who have spoken in the debate seem fundamentally to misunderstand the purpose of the Government's policy, particularly when it is coupled with the new deal. One of the Government's many tasks is to assist those who are unemployed into paid employment. That requires us to ensure that there are low marginal rates of tax, so that those people can move from unemployment into employment and then up the ladder, earning more and more.
  The hon. Member for Kingston and Surbiton (Mr. Davey) makes a simple point, and he makes it regularly. He wants things simple, simple, simple. However, a balance has to be struck in policy objectives

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  between fairness and simplicity. We have had the discussion a number of times in the House, in Committee and in Select Committees about how the Government should balance their objectives and keep the tax system as simple and as clear as possible.
  If the hon. Member for Kingston and Surbiton looks closely at his proposals he will realise that, if implemented, they would cut directly across the objective of moving people from unemployment to employment—an objective that I believe his party shares with the Government, but which he is in danger of undermining. That is what the hon. Gentleman has seemed unable to grasp during our discussions about the 10p rate and the 10p band rate.
  Mr. Edward Davey: I thank the Paymaster General for giving way so generously, but can she explain how a policy objective of moving people from unemployment to work is better served by a 10p rate band than by a 0p rate band?
  Dawn Primarolo: I do not think that the hon. Gentleman was present when I explained to his hon. Friend the Member for Truro and St. Austell (Mr. Taylor), who had spoken to a Liberal Democrat amendment, about the importance of giving unemployed people incentives to move from benefits to work and ensuring that they keep more of what they earn. The desirability of reducing, wherever possible, the marginal rate of tax in order to maintain that process is the rationale of the 10p rate and the 10p rate band. I know that the hon. Gentleman thinks that the Government have other motives, and that our proposal is not part of the welfare-to-work programme and is not related to our objective of securing full employment. If he examines the full range of our policies, however, he will see that they are all targeted in the same direction.
  This has been a short but interesting debate on a very narrow clause. I commend the clause to the Committee.
  Question put and agreed to.
  Clause 51 ordered to stand part of the Bill.

Clause 52

  CHILDREN'S TAX CREDIT: AMOUNT FOR 2001–02 AND FOR SUBSEQUENT YEARS
  Question proposed, That the clause stand part of the Bill.
  8.30 pm
  Mr. Flight: The Government may have forgotten that three or four years ago—unfortunately, the Chancellor's office arranged a little leak—the Select Committee on Social Security advised strongly against arrangements of the type that the children's tax credit represents, suggesting that such arrangements were ill-conceived and not the best way of helping children. Of course, an increase in the maximum receipt to £520 a year will be welcomed by those who qualify, but the principle of CTC remains flawed. It tends to benefit the lowest earners with children least; it is complicated and regressive in its interaction with working families tax credit; and it is unfair in that its impact on families with a single earner is different from its impact on families with double earners.
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  The proposed increase will, in many instances, reduce entitlement to working families tax credit, as well as creating yet more complexities and administrative problems for the employers who have been forced to administer CTC. The Chancellor himself has admitted that the arrangement is unsatisfactory by announcing that Labour would abolish it in future, and make it part of an integrated child care element—or rather that the child care element of working families tax credit would be replaced by an integrated child benefit.
  As has been widely recognised, it is morally wrong for a child benefit to discriminate against single-earner couples. If the combined income of a working couple is £65,000—it may be £60,000; I have forgotten the precise figure—that couple are likely to qualify. If only one earner is involved, the couple will not qualify, although the same children are there to benefit. After tax, the single earner may have less than two earners receiving the same gross pay.
  There is an administrative nightmare when divorced and separated parents and couples involving new partners come together to look after children. The Association of Chartered Certified Accountants, expressing the feelings of many, has complained that the application form is so complex that, for a number of people the task of completing it is too difficult, and they will lose out as a result. I believe that some 500,000 have failed to apply in time this year, and they are likely to be those most in need of support. Even the BBC news, that great organ of the Labour party, has admitted that citizens need a guidebook to work out what family tax credits they will be entitled to.
  The Conservatives are pledged to review the position, to introduce a fairer and simpler child tax credit and to increase the cash benefits by a further £200 per annum in respect of children under five. We will set out in due course how we will do it. The principle of providing greater support to children must be right—I should declare an interest: I have four children. The cost of child rearing is a major burden. I go back to the cross-party Social Security Committee, which advised against trying to apply a means-tested approach. The mechanism is not working. The Government themselves admit that, in their proposals to make changes in due course.
  Mr. Edward Davey: Let me start by saying something that the hon. Member for Arundel and South Downs (Mr. Flight) did not say: it is welcome that more money is going to families with children.
  Mr. Flight: I did say that.
  Mr. Davey: I beg the hon. Gentleman's pardon. He corrects me from a sedentary position. I withdraw the remark. It is important to target extra money on families with children. This Government have done so, which has been a welcome change: the previous Government did not do so. It is worth acknowledging that, and putting it on the record.
  Having said that—
  Mr. Graham Allen(Vice-Chamberlain of Her Majesty's Household): Ah—there's a "but".
  Mr. Davey: There is; the hon. Gentleman from the Whips Office is right. The children's tax credit is a very

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  complicated way of targeting money on families with children. Simplicity is of the essence in many of these issues. Let me explain how complex a system of child care support we have. We have child benefit, a children's tax credit, the child care tax credit and the working families tax credit. It is incredibly complicated. There is a plethora of forms and of civil servants and a range of guides, and the different tax credits operate in different ways.
  Mr. Flight: In contradictory ways.
  Mr. Davey: The hon. Gentleman is right. It is not surprising that not everyone who is entitled to the children's tax credit is taking it up. It is so confusing. That is what happens when we have complexity.
  As the hon. Gentleman rightly said, the Government have realised their mistake. They have realised that they have made the system complex, so they are going to get rid of the children's tax credit. We are debating an increase in the credit that has come into force only this month, when the Government have already announced that they will get rid of CTC by 2003. They have admitted that this was the wrong way to go about things. Although it is welcome that more money is going to children and families, this is not exactly the most effective way of governing. It suggests that there is a lack of strategic thought in the Treasury. The extra money is welcome, but the piling of change on change and the extra complexity leave one questioning the way in which the Government have gone about things.
  Although it has been said before, and I am sure that the Minister is almost fed up of hearing it, it must be said again that some of the support mechanisms for families, particularly the working families tax credit, have imposed severe burdens on business. Small business in particular has been hit by the burden of administering the credit, which was previously administered in the form of family credit by the Department of Social Security. Businesses have effectively been asked to get involved with social security mechanisms. As a principle, that is not sensible.
  As we consider the clause in the knowledge that the Government have those plans—and particularly as the clause increases the value of the children's tax credit—it is worth asking how they propose to get around some of the problems that they have created for themselves in not having a coherent strategy from the start. When they move to the integrated children's tax credit, if they do, it will, we are told, be assessed on household income—the incomes of both parents. The hon. Member for Arundel and South Downs made the valid point that a single-earner couple is discriminated against in the administration of the children's tax credit as compared with a dual-earner couple who have earnings below the higher-rate tax level. That lacuna in the current legislation will cause a problem when the Government introduce the integrated tax credit. A couple who both earn an amount just below that which qualifies for higher-rate tax, and who therefore receive the full children's tax credit, will have their incomes added together when they are assessed for the integrated tax credit and, unless the scale is increased significantly, they will lose a substantial amount of children's tax credit—and possibly all of it.
  The Paymaster General is giving me one of her quizzical looks, which suggests that she may have thought of that point. If she has, I hope that she will enlighten
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  the Committee further, because we have had no public announcement of how the Government intend to overcome that very real problem. Some families in that situation can benefit to the tune of £520 a year from the children's tax credit, and they will stand to lose a significant amount when it is integrated. If the Government try to take £520 a year away from such families, they will soon hear all about it.
  I welcome the extra money for families with children, but—as the hon. Member for Arundel and South Downs said—more than 500,000 people who are entitled to the credit have not yet claimed it and will not benefit from the increase in its first year. The Paymaster General may have more up-to-date figures and I hope that take-up has increased. My party wants the take-up to be 100 per cent. and we hope that the Government are successful in achieving that, because no one wishes to see families with children denied money to which Parliament has decided they are entitled. However, the question is how we can ensure that those families with real financial problems are getting the credit, and that is an important policy objective for everyone. I hope that the Paymaster General will be able to tell us how the Government will be able to ensure that their extra generosity goes to the people who need it most.
  Dawn Primarolo: Clause 52 will increase the amount paid for the children's tax credit so that it is worth up to £520 a year, or £10 a week. My right hon. Friend the Chancellor said in his pre-Budget report last year that he was minded to do that, and he confirmed it in the Budget. The increase of £1.50 a week is the equivalent of a 3p cut in the basic rate of tax, and will be very important for those single-earner families on average earnings who will particularly benefit.
  The hon. Members for Arundel and South Downs (Mr. Flight) and for Kingston and Surbiton (Mr. Davey) both welcomed the proposals, but they raised several points of detail, including the treatment of single-earner families compared to dual-earner families; the position in cases of separation or divorce; the complexity of administration; the numbers who have applied; and the transition to the integration of the full panoply of support that is offered to families. I shall deal with each point, briefly.
  8.45 pm
  First, the hon. Member for Kingston and Surbiton ended his speech by referring to the complexity of the current child care support structure. That structure includes child benefit, income support—which the hon. Gentleman omitted to mention—working families tax credit and the children's tax credit. The Government intend to move in 2003 to an integrated child credit, based on a household income paid to the carer. That move will enable the Government to tackle some of the matters that have been raised this evening.
  I can tell the hon. Member for Kingston and Surbiton that that move will be a substantial change affecting a huge number of families. The Government took the view that the move should be taken step by step. At each stage, we will ensure that we can get resources quickly to those families who need it most. That is why the working families tax credit will separate in 2003: there will be an employment tax credit for adults, while the child support

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  element will be made part of the integrated child credit. Those changes are part of a coherent strategy that will enable us to deal with the problem, identified by the hon. Member for Kingston and Surbiton, in connection with single-earner and dual-earner families.
  The hon. Member for Arundel and South Downs should know—I hope that he does—that the treatment in the tax system of the difference between a single-earner family and a dual-earner family is the direct result of the introduction of independent taxation by the previous Government. I hasten to add that independent taxation is a good thing for millions of women. It means that each taxpayer has allowances and access to tax rates. As a result, a family with two earners clearly has access to both earners' allowances, and the tax rates.
  The hon. Member for Arundel and South Downs said that that produces direct discrimination. In fact, it is merely a function of a tax system that respects and recognises individuals equally. We are working to resolve the matter, although the solution is not simple. Moving to the integrated child credit means that there will be a move to a household assessment which the present tax system does not allow us to make. The different treatment of dual-earner and single-earner families will thereby be dealt with, as the amount of tax payable will be assessed according to each household's income.
  I reject the suggestion that we should have waited and not used resources currently available for the children's tax credit to help the families involved immediately over two years.
  Mr. Flight: I accept that the reason for the distortion is a function of our tax system, but I refer the Minister to the deliberations of the Select Committee on Social Security. Two or three years ago, the Committee focused on just that problem, and made some suggestions for dealing with it. The Government therefore did not have to go down the route that resulted in the functional problem that the Minister describes.
  Dawn Primarolo: If the hon. Gentleman looks at the latest report from the Social Security Committee on child support and the development of the integrated child credit, and if he reads its comments on the children's tax credit, he will find that the Committee now recognises that matters have moved on. It accepts that an attempt to bring together for the first time support for children into one place, to be paid directly to the main carer, is the correct way to advance. The Committee now acknowledges that the children's tax credit is an important element in providing immediate support to those families.
  The hon. Member for Arundel and South Downs referred to the complexity of the system with regard to separation and divorce. The arrangements for the children's tax credit were agreed in the Finance Act 2000. I do not recollect the hon. Gentleman or any of his colleagues referring to the very unhappy circumstances in which a couple separate and there has to be a fair and decent apportionment of entitlement to a tax relief if there is joint care of the children. The children's tax credit approach to that is sensitive and fair. It has not been criticised before. Compared with the huge complexities of the married couples allowance and the additional personal
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  allowance in terms of entitlement, the arrangements in the children's tax credit are as fair and straightforward as possible, given that they apply to complicated personal circumstances where a family is under considerable pressure and stress.
  The hon. Gentleman said that the form was complicated. I am sure that he cannot have seen what is a straightforward form for claiming tax relief. He might be confusing it with some other form, but I do not want to speculate which one it might be. The application form for claiming the children's tax credit was researched and tested on a sample of about 1,000 people to see whether they understood it clearly or whether it would put them off making a claim. The most recent figures show that 3.5 million PAYE taxpayers—some 85 per cent.—have returned their forms. The other 1 million people are self-employed and pay their tax in arrears anyway. Under the self-assessment scheme, their relief will be available to them when they account for their income in the current tax year.
  I agree that we need to find those people who are entitled to claim the children's tax credit but have not yet done so. The Chancellor wrote to every hon. Member asking them to encourage parents at every opportunity to apply for the relief. It will be paid from the beginning of this tax year, whenever they apply for it. I hope that all right hon. and hon. Members will continue to encourage parents to claim the children's tax credit, because up to £10 a week is no small amount for those families.
  Mr. Edward Davey: I know that the Paymaster General has not been speaking for long, but she has not answered my point about a two-earner couple—[interruption.] The Minister says that she will answer it, but I will just make the point for the record. In my example, both people earn just below the base rate limit. When the integrated child credit is introduced, will they be protected against losing the £520 provided for in the clause?
  Dawn Primarolo: I had not forgotten the hon. Gentleman's point; I was trying to work through each subject area.
  When the Government introduce the integrated child credit in 2003, the Chancellor will have to look closely at the distributional impact of the introduction of the children's tax credit with regard to whether it benefits families as well as its predecessors did. I am sure that the hon. Member for Kingston and Surbiton would not expect me to commit the Chancellor to future decisions, although he might wish that I would. However, the hon. Gentleman's point must be crystal clear to all those who understand the position—that is, why would we create a system to help families that did not do so?
  Finally, specific points were made about entitlement to children's tax credit and its interaction with the working families tax credit and the 10p rate. The combination of those three things will ensure that the families in greatest need receive maximum benefit from the provision that the Government have made available. On that basis, I commend the clause to the Committee.
  Question put and agreed to.
  Clause 52 ordered to stand part of the Bill.

Clause 53

  CHILDREN'S TAX CREDIT: BABY RATE
  Question proposed, That the clause stand part of the Bill.
  Mr. Flight: I shall speak about clause 53 and touch on schedule 11, which relates to it. The objective of the clause is to provide, from 2002–03, a full year's child tax credit in respect of a child born in the current tax year. I am not clear whether the credit will be given pro rata, but my understanding is that it will not. Would a couple who have a child in September 2002 and who qualify for full child tax credit receive the full £520 or six months' worth? The wording is slightly obscure about whether they would receive a full year's worth or a pro rata amount.
  Schedule 11 adds complex changes to the rules when a qualifying baby is resident with more than one adult during the year of assessment. Will the Minister explain, in understandable language, what that means? The fact that the schedule refers to a "qualifying baby"—a qualifying child born in the relevant year—implies that there must be babies who do not qualify.
  Disqualification under section 257AA of the Taxes Act echoes the definition of a qualifying child, and where a husband and wife or the relevant two people split up, they may lose some relief, which cannot then be claimed back. The schedule is so complex and obscure that I have read it several times without understanding precisely how it is intended to operate. My main request, therefore, is for a practical explanation of what people will receive and what the angle is on qualification and disqualification.
  Mr. Edward Davey: I shall focus on the policy point, and why the Government are going down the route taken in the clause. They want to provide extra money for families with children aged under one—babies—and that aim is laudable. The question is whether the clause is the best way to do it.
  In the past, new parents could claim a maternity grant on registration of the birth of their first child, and that provided a lump sum up-front that they could use for the expenditure well known to arise when one has a baby—on prams, cots and all the other things that one needs. Incidentally, perhaps I should declare an interest—although I am not sure whether it is required by the Register—as an unmarried male who hopes to be married and have a child.
  9 pm
  As regards political policy, the question is whether a maternity grant or a tax credit is the most effective measure. With a tax credit, the money is not up-front. Presumably, one has to wait for the monthly pay cheque, so the benefit will be received over a period. Perhaps some families buy everything on hire purchase, but many want to pay up-front, so the benefit of the Government's laudable aim of putting money in the pockets of families with new-born babies could be more effectively delivered if they chose a different route. The old maternity grant achieved what I am advocating—money up-front for the purchases needed at the beginning of a child's life.
  There is a strong argument that a tax credit may not be the best way of delivering the Government's policy objective. Of course, there are arguments on both sides.
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  The Government might say that a universal maternity grant would be claimable by higher-rate taxpayers, while the tax credit is, in effect, means-tested. However, there are not many people in that category; the means-testing necessary to achieve the Government's aims would not involve a huge amount of money.
  Moreover, it is possible that the Government's chosen method might reduce take-up. That is important. What about families who do not pay income tax for a short period? What about families who have not applied for the credit and are not aware of it? They will miss out. We have heard about the problems of take-up of the children's tax credit, which is a recurring credit. How much greater will the problems be for a credit that lasts for only one year? I am not convinced that the Government are taking the right route to ensure that families who need extra help at that time receive it. I hope that the Minister can persuade me, but I am not sure whether she can.
  There may have been take-up problems with the former maternity grant, but my recollection of the days before the Tories abolished it is that there was a high take-up rate. It was one of the benefits for which take-up was almost universal. It was advertised in maternity clinics, GP practices and so on, and it was fairly easy for people to apply. Young mothers might be reluctant to get involved with tax credits; it all sounds terribly financial and difficult. They might be more reluctant to go for that form of help than for a straightforward maternity grant.
  I hope that the Government will be able to explain their policy objective. I am not convinced that it is the right way to go.
  Mr. Steve Webb: I should like to explore further the points that my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) was making about take-up. The Paymaster General said that children's tax credit forms had been returned by about 4 million families on PAYE—so 15 per cent. have not yet claimed it. As my hon. Friend says, we do not know whether that 15 per cent. will claim the new baby tax credit. Obviously, it is not too late for them to do so, but they have not yet been found. Given that the Government invented the children's tax credit two years ago, and have thus had two years to find people but have failed to find that 15 per cent., there is a question about whether the new tax credit will eventually reach them.
  Dawn Primarolo: The hon. Gentleman is very knowledgeable on such subjects, so he will recall that the take-up of family credit, for example, which ran for a considerably longer period, did not reach the heights that the children's tax credit has already achieved in the year in which it has become operational. Yes, we must find the 15 per cent. or so—the 500,000 people who have yet to send in their forms—so I am not complacent, but by any measure, the Government should be congratulated on the very high take-up that we have already achieved for the children's tax credit, notwithstanding all the other issues that the hon. Gentleman raises.
  Mr. Webb: Well, that is interesting, is it not? The Paymaster General said, "by any measure", and there is an alternative yardstick to the family credit or the working families tax credit take-up rates—the child benefit take-up rate, which, as she will know, is approximately 100 per cent. She may know someone who is not claiming it, but the rate is about 100 per cent.

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  The Government have decided that they want to support families who have a new baby, and they know where every single one lives, because when the child is registered for child benefit, the Department of Social Security sends back a response and issues a benefit book or notifies the family that the money can be paid into their bank account. They are precisely the people at whom the child tax credit is aimed, so instead of having a baby tax credit—the subject of the clause—why do not the Government simply put a £500 cheque in the post when those people claim child benefit on day one? As my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) says, that would give them a lump sum up-front, with which they could buy cots, prams and so on. I speak as a father of young children, which is why I thought I would take part in the debate.
  Another point, which has not been mentioned so far, is that when the money becomes part of the monthly income for the first year of the child's life, there is a danger that the family will adjust to that pattern of income. Parents will have £40 a month extra for a year, but when their children reach the age of one, they will come to our surgeries telling us that the Government have just taken £40 a month from them.
  There was never any pretence that the payment would continue—it is just for the first year—but the families will have become used to a pattern of regular income that includes the £40 boost. They will not have been able to smooth out the payments to buy the lump-sum items, because they will have had to buy those items at the beginning. The danger is that families may get used to that standard of living, and then have the money taken away from them. However, there may be a hidden agenda in that idea—to get the mum back to work.
  The clause is not really about supporting families in poverty when babies are born, because that policy is now known as the sure start maternity grant, or whatever. I believe that that is largely the same initiative, but it has to be renamed. There is a maternity grant system, so the baby tax credit is not really about poverty among families with new babies; it is about the Government's agenda of getting more people into the labour market. They seem to suggest that a year is enough. The financial support for families with young children drops after a year, so how will they make up for the loss of that £40 a month? Perhaps they will start pin-money jobs or work a day a week at Tesco, or whatever.
  I should be interested to hear the Paymaster General expand a little more on the Government's thinking, because they have not taken the action that they were expected to take on paid leave and so on. I wonder whether that is why the tax credit will last only a year—but what does that say about the Government's views on whether people should return to work a year or so after their children are born?
  The Government clearly have a mechanism to get the money to every one of those families if they wanted to, but the problem is that they would have to use the benefits system. The second fundamental criticism is that the Government's dogma says that this is a tax credit. It is not in the tax code, and it is assessed on the family, not on the individual, but it is called a tax credit, so it will probably not feature in the DSS accounts and expenditure.
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  A system that would have given money to everyone who was entitled, with 100 per cent. take-up, has been ditched—or rather, not adopted—in favour of a system that misses 15 per cent., and does not help families so effectively because of the Treasury dogma that it is better to provide things called tax credits rather than social security benefits. Sometimes the benefits system is the best way to help families. Sometimes take-up is better in the benefits system than with a tax credit, so I am disappointed that the Government have not gone down that avenue.
  Dawn Primarolo: Contributions to this debate have fallen into two categories. The hon. Member for Arundel and South Downs (Mr. Flight) talked about the clause and how it relates to schedule 11, and the hon. Members for Kingston and Surbiton (Mr. Davey) and for Northavon (Mr. Webb) referred to the support policies that go alongside the children's tax credit, which is designed to support young families.
  I shall deal first with the points made about schedule 11 and the clause, and describe what they will do. They will introduce the additional children's tax credit that will be payable from 2002 for the first year after a child's birth. It will not be paid pro rata but for the whole year. The clause also provides for an additional £5,200 of children's tax credit in 2002–03, and that will be paid at the rate of 10 per cent.
  The clause establishes the principle of the baby credit within the children's tax credit. Subsection (1) will insert a new subsection (2A) into section 257AA of the Taxes Act 1988, and will provide for an additional £5,200 of children's tax credit in the year after a child's birth. Similar provisions were made last year to introduce the children's tax credit, and although the figure of £520 already appears in the Taxes Act, this clause inserts the principle of the credit of £5,200.
  The clause also describes the basis on which the baby credit can be claimed and defines the qualifying child. A child must be born within the tax year to qualify for the relief. The clause also relates to schedule 11 and provides for the introduction of the baby credit in 2002–03.
  Schedule 11 will place those principles in the Taxes Act 1988 to sit alongside the existing provisions for the children's tax credit which will be worth up to £520. Paragraph 2 introduces the higher rate and provides that it can be shared in the same way as the lower rate. Paragraph 4 provides for a re-election in year, which means that when a baby is born within the tax year, a family will be able to apply for the credit immediately and will not have to wait.
  The schedule also makes it clear that however the credit is paid—it may be shared between two members of the family who live together or between two people who have separated but have equal responsibility for the child—the combination of their entitlement can never exceed 100 per cent. of the credit. However, if the family structure changes, their entitlement to the credit remains.
  9.15 pm
  If a family separates having claimed the baby credit and decides to share the remainder, the schedule provides for the two periods to be added together as a tax year. Otherwise, the baby would not be a qualifying baby.

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  Paragraph 5 sets out how the arrangements will work. Only one credit is paid for a child. Irrespective of whether the parents live together or are separated, they are still entitled to only one credit, which they can divide between them. I hope that that is crystal clear to the hon. Member for Arundel and South Downs, but I shall give way—with some reluctance—if it is not.
  Mr. Flight: I have a simple and obvious question. As I understand it, depending on the extent to which the new-born baby qualifies, the parents will get both the children's credit and the baby credit in the first year of that child's life. However, the provision could also be taken to mean that it is not possible to get children's credit if the baby is born within the tax year. In those circumstances, the parents would have to wait until the child was six months, nine months or whatever and the next tax year started. The wording could mean either that a double credit is provided in the first year, or that it is not.
  Dawn Primarolo: It is based on the year in which the child is born. However, I shall consider my explanation of schedule 11 and if for any reason I was not precisely correct, I shall write to the hon. Gentleman. I believe that what I have said is right. The provisions for the baby credit operate in the same way as those that were used when we introduced the children's tax credit in last year's Finance Bill. Clause 53 and schedule 11 add the baby credit, which will operate on the same basis in terms of proportionment.
  The hon. Members for Northavon and for Kingston and Surbiton inquired about the best way in which to assist families, especially when their children are very young and the burdens are greatest on the family budget. I know that one of them is very knowledgeable about such matters and the other is hoping to be so soon. They asked whether the children's tax credit and the baby credit were the best way to proceed.
  The pressures on families in the first year of a child's life are acute when one parent is unable to work. Certainly the woman would not work during her confinement and maternity leave. The baby credit should be seen as part of the package of changes that the Government are progressively making to maternity pay and maternity leave, which we are extending. The sure start maternity grant has been increased to £500 from April 2000 and is paid up-front. The children's tax credit and the working families tax credit will follow the income support premium for children, so that they are included in the integrated child credit. That will be paid directly to the carer and will be a regular income.
  I was puzzled by what the hon. Member for Northavon said about the Government's hidden agenda to force women out to work. I can speak from personal experience.
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  When I was a single parent, I met many people in the same circumstances. Indeed, I continue to meet single parents and know that many women want to be economically active. The debate centres on managing the balance between work and life, and the need to enable women to do that.
  There is nothing sinister about the Government's advancing that agenda and taking the opportunity to introduce the children's tax credit, which gives immediate help to families. We are publicising the children's tax credit in bounty packs. I am sure that the hon. Member for Northavon, who must be knowledgable about those packs, will explain later to the hon. Member for Kingston and Surbiton what they are and what their significance is, to mothers in particular.
  The argument about dependency could apply to any payment. I agree with the hon. Member for Northavon that we must use the method of giving the support that works best, whether that comes through the social security system or through tax credits, which the Government believe are the best way to deal with questions of welfare to work and the work-life balance. Lowering marginal rates of tax provides incentives for family members to be in paid employment. The hon. Gentleman's point about families having to adjust to the loss of the baby credit could apply equally to child benefit. When a child becomes economically independent, the family lose child benefit, which is not an insubstantial amount, thanks to this Government, and if an unemployed person finds employment, the child premium will be lost.
  I reassure the hon. Gentleman that there is not a sinister message behind the measure. I understand that he and his party do not see eye to eye with the Government about the use of tax credits, but I will continue to advocate them, and I am sure that he will continue to explain why he does not like them. There is no hidden agenda, and the Government have not concealed the fact that the children's tax credit will become part of the integrated child credit in 2003. Important decisions about the structure of that credit will be made. Those are not the subject of this debate, but hon. Members will want to be aware of them.
  I have explained how clause 53 will operate and how schedule 11 supports it. I have made it clear how the Government's broad approach of using tax credits, maternity pay and grants to support families with young children is the best way forward. I commend the clause to the Committee.
  Question put and agreed to.
  Clause 53 ordered to stand part of the Bill.
  Schedule 11 agreed to.
  Bill (Clauses 1 to 3 and 16 to 53 and Schedules 4 to 11) reported, without amendment; to lie upon the Table.

Road Traffic
9.23 pm
Mr. Robert Syms: I beg to move,
That the Road Vehicles (Display of Registration Marks) Regulations 2001 (S.I., 2001, No. 561), dated 26th February 2001, a copy of which was laid before the House on 28th February, be revoked.
The motion is in the name of my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) and other colleagues. It concerns a highly controversial statutory instrument and two important issues, which is why, unusually, we have requested that it be dealt with on the Floor of the House. When debating statutory instruments in Committee, on a number of occasions I have spoken about the importance of the matter under consideration, only to be asked why, in that case, I did not deal with it on the Floor of the House. Tonight, therefore, we are in the Chamber to deal with several issues relating to the road vehicles regulations.
Basically, two issues are involved. First, there are the proposals for a number plate with emblems on it—the letters GB and the European Union flag. Secondly, there is the matter of American cars, which involves deeper issues. If the regulation is passed, it will be difficult for many in the American car business to continue and people may be forced out of it.
I shall begin with the first and most important issue. In this country, we have a long tradition of not having any logos or flags on our number plates except a registration number. In 1998, the Government agreed in Europe that we would move to ensure greater commonality on number plates and would introduce the statutory instrument, which makes provision for plates to show the GB symbol and the EU logo. There is a choice, as people can continue with existing number plates, with nothing else on them. However, as we have already seen, even before the regulations become law, car manufacturers have been producing vehicles with the new logos.
May I ask the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Streatham (Mr. Hill), whether it is legal for manufacturers to produce number plates to the new standard, which the House has not approved? For many people, having a symbol with the EU logo on a number plate is upsetting. Symbols and flags are important and carry meaning. Tonight, we stand in a palace above which flies the Union Jack flag from Victoria Tower. This is about who we are and to whom we owe allegiance.
If the nation is going to depart from having a plain number plate and have one with logos, I take exception to the fact that the regulations will mean that it will bear the GB symbol and a Euro flag, and that if people wish to put a Union Jack on their number plate, they could be criminalised and fined up to £1,000.
Sir Teddy Taylor: This is important for Back Benchers like me. In view of the significant issue raised by my hon. Friend, can we have an assurance that, as we are likely to have a Conservative Government soon, they will introduce legislation to change the position and ensure that people will be able to have a Union Jack on their car number plate if they wish? Can my hon. Friend give a clear commitment on behalf of the Conservative party, particularly as it is likely that
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there will be an election soon? Many people would love to have a clear answer, which we always get from those on the Conservative Front Bench.
Mr. Syms: Yes. The issue is important.
Mr. Alex Salmond: As the hon. Member for Rochford and Southend, East (Sir T. Taylor) said, for many people, this is quite an important issue. We have just been joined by a Labour Whip, but it should be recorded that only he and the Minister are on the Government Benches, and no one else. It is 9.30 pm, and I cannot believe that Government Members are canvassing in their constituencies. Where is new Labour on this important issue, as defined by the hon. Member for Poole (Mr. Syms)? Hansard should record just how lightly the Government view the importance of having a saltire on number plates in Scotland.
Mr. Syms: The hon. Gentleman makes a good point. If people wish to have a Euro logo and a GB symbol on number plates, we are not against that. However, we are in favour of choice. If people wish to have the Union Jack on their number plate, they should be allowed to do so. Equally, if they wish to have the Scottish saltire or the Welsh dragon, we would be perfectly happy with that.
The statutory instrument has been laid by a Government who have no sense of what our nation is about—a Government who gave us the contents of the dome, and who do not understand the deep importance that the symbols of our nation hold for the vast majority of our constituents. That is why the Conservative party has already announced that it will revisit the regulation. As I said, in government we will allow people to have the Union Jack, the Scottish saltire or the Welsh dragon displayed on their car, if that is their wish.
Symbols are important, as can be seen around the world. The current debate in the United States about the old confederate flag in the south shows that that symbol still stirs great passions. The Union Jack stirs passions in this country. The Government aim to introduce regulations under which the European Union flag would be allowed, but displaying the Union Jack would be criminalised and people could be fined for doing it. That would be extremely unfortunate. Our position is clear. I should like to hear from the Minister a full explanation as to why his Government cannot support the display of the Union Jack as an important symbol on a car.
It is interesting that the position of the Labour party in opposition was different. The then shadow Secretary of State for Transport, now the Minister for the Environment, wrote on 16 August 1995 to T. R. McLennan of Jepson & Company of Sheffield:
"Thank you for your letter regarding the harmonisation of number plates throughout Europe.
At the present time, the Labour party has no plans to replace the British number plate with an E.U. flag and typestyle plate. We are also of the belief that the British number plate is probably the most legible and easily memorised plate in the world and that reducing the size of the characters would be a mistake."
There we have it: the Labour party in opposition saying something different from the Labour party in government. If this important matter is the subject of a deferred Division tomorrow, the Conservative party will make its feelings known and will vote against.

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A further important issue is the problem faced by American car owners. The number plate on American cars is smaller than that on British cars. The American cars, which are imported into the UK mainly by businesses, have a 12 in by 6 in number plate with motor cycle-style font lettering. The regulation would make it difficult for any such car number plate to be legal. At present, it is not the easiest thing in the world to become an American car owner. A number of businesses import the vehicles, which must undergo single vehicle approval.
The regulation would mean that modifications would have to be made to the rear of the vehicles in order for them to be legal. That would be entirely against the principle of SVA, the purpose of which is to certify that the vehicle is safe. It would not be a simple job to put a larger number plate on many of those vehicles, because safety regulations on extended projections from vehicles, particularly sharp edges, mean that alterations would be necessary to the boot and the lights, which would to some extent ruin the line of the vehicle and diminish its appeal.
In the UK there are between 50,000 and 75,000 American cars, and 500 to 600 are imported each year. That represents an important minority in the UK. The individuals who participate in that business do not feel loved, either by the Department of the Environment, Transport and the Regions or by the Government, because of what is proposed.
There has been endless correspondence between American car owners and importers, and various other individuals. So far, those who are anxious about the regulations do not seem to have had much joy from DETR or the Driver and Vehicle Licensing Agency. They have been making suggestions about how their vehicles could be made legal. For example, there is a specialised vehicle category in which their cars could be included. They think that they should be able to carry on purchasing and driving the vehicles if they continue to use smaller number plates with the motor cycle-style font.
There are currently 175,000 motor cycles in the UK whose number plates have a smaller font than those of other vehicles. Nobody says that reading those number plates is a problem. One should also take into account the fact that the number plates of most motor cycles are illuminated by one light, whereas an American car with a similar number plate will have two lights, so the characters will be easier to recognise.
The key point is this: if the Government do not recognise that people with American cars have a special case, they will be criminalising all such people and causing great difficulty for the businesses that are involved. So far, those businesses have spent more than £300,000 in trying to fight the regulations. They have been given some comfort by the European Commission, which has said that, on open-market grounds, there is no need for the Government to encompass many of the vehicles within the regulations.
In a letter to Mr. Harry Tune, the DVLA vehicle policy group set out some of the reasons why it does not wish to allow people with American vehicles to use number plates with a smaller font. The letter states
"Extending the use of the smaller font to vehicles imported from America was carefully considered during the consultation period. The police and road safety organisations had serious concerns over the ability of witnesses to read the smaller characters with the naked eye. The Government is keen to bear down on criminal activity involving the use of the motor vehicles. In many cases the successful
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apprehension and conviction of criminals relies on a witness sighting a number plate and being able to recall a part of its number. The success rate will be substantially enhanced with a standardised font as provided for in the new regulations."
That is clearly nonsense. As I mentioned, a car's number plate will be illuminated by two lights, so it will be easier to read than those of motor cycles, but apart from that, a Buick, Pontiac or Chevrolet will be one of the most easily recognisable vehicles in the UK. I put it to the Under-Secretary that a person who was going to do a blag in Streatham would not turn up outside a bank in an American car.
Mr. Edward Davey: I agree with the hon. Gentleman. Surely, a person who is doing a blag in Streatham or wherever else will be more likely to use a motor cycle, which would not be covered by the regulations. The Government have got it wrong on both counts.
Mr. Syms: The hon. Gentleman makes a very good point.
Many people enjoy owning American cars. They take great pride in their vehicles and like them to be admired. If the driver of such a vehicle breaks the law, it will not be the most difficult thing in the world to track down the perpetrator, given the limited number of these vehicles on our roads. I think, therefore, that the argument that the regulations should be strictly applied is wrong in this instance. The Government could easily agree to the motor cycle-style font and accept that the cars are easy to recognise on our roads.
The various individuals who are involved have been in touch with the European Commission to ask whether the Government can exempt them from particular aspects of the regulations. I should be interested to know whether there has been any correspondence between the European Commission and DETR. My noble Friend Earl Attlee asked a question in another place about whether relevant letters had been sent by the European Commission in relation to the free movement of markets. The answer was no, but I understand that there has been further correspondence. I should be interested to know whether the Minister could confirm that.
The regulations do not do justice to our national symbols and flag. They do not allow people to exercise choice. If they were not amended, all manufacturers would produce vehicles that displayed the GB symbol and EU flag. They would resemble Henry Ford's Model T Ford, which one could buy provided that it was black. Number plates displaying the GB symbol and EU flag would become standard. If we move away from the normal British number plate, which displays no symbols, we should be able to opt for the display of the Union Jack.
Mr. John Bercow: In eager anticipation of the Under-Secretary's comments, would my hon. Friend care to reflect on the fact that in the Standing Committee that considered the Vehicles (Crime) Bill in January, the Under-Secretary unwisely said that there was and would be no obligation to display a flag or other symbol that some people might find distasteful? If the production practices that my hon. Friend predicted occur, people will find themselves in that predicament.
Mr. Syms: My hon. Friend makes a good point. The regulations risk putting American car importers and

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enthusiasts out of business. We are considering a small number of people who nevertheless invest a lot of money in their businesses. They fight a constant uphill battle with the SVA regulations in order to get vehicles into the country. They are not the big battalions; they are not major international firms. They are individuals and I do not understand why Parliament should not protect their right to conduct their business and provide products that people wish to buy and cherish. I hope that the Under-Secretary will consider the matter carefully and amend the regulations so that businesses, jobs and livelihoods are not lost.
9.42 pm
Mr. Edward Davey: I agree with everything that the hon. Member for Poole (Mr. Syms) said. I want to focus on his second point because I have a constituency interest in the matter, and it is also important to many vehicle and business owners throughout the country. Livelihoods are at stake. Although I accept that Conservative Members and others wish to raise issues of principle about flags, I believe that our priority should be businesses.
The American Carriage Company on London road in Kingston is a successful, long-established family firm, which is owned by the Ouvaroffs. It could be put out of business if the Government do not have a speedy, major rethink about the regulations' application to a tiny section of the car market, namely the imported American car market, which the hon. Member for Poole mentioned.
Some owners of American cars live in my constituency. Mr. Don Rolt, who owns an 88 Pontiac Fiero, is worried about the implications of the regulations for him and other owners and aficionados of American cars.
We are considering between 50,000 and 75,000 car owners; that is a lot of people. I should not be surprised if every Member of Parliament had a constituent who owned an American car and could be affected by the regulations. Between 100 and 200 businesses will also be affected. I want to explain the services that they provide to our constituents. About 40 businesses and organisations are directly involved in the importation and sale of American cars. They are involved in sourcing bespoke vehicles. We are talking about a very low-volume market: not many end-users desire these cars. That is why the sales and importing business is so specialised.
As well as those involved in the sales and importing businesses, many people are involved in after-sales service. They service the cars, provide the equipment to do so, and ensure that all the Government safety requirements are dealt with. Many people are employed, including qualified mechanics and servicing personnel. In addition to the 30 or so servicing businesses, about 20 companies are involved in supplying parts to the garages and owners who service the cars. People specialise in providing certain parts, such as the special glass and tyres that American cars need.
It does not end there. Other businesses are involved, including specialist insurance companies. In the larger insurance companies, there are special sections dedicated to insuring these cars, which are often of very high value and require specialist insurance capabilities. Finance houses and warranty suppliers are involved, and there are
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also clubs where people who own the vehicles get together and organise. We are, therefore, talking about quite an extensive number of people and businesses.
The Minister should be in no doubt about the effect of the measure. Some people say that this is a small niche market. Compared with the overall market, of course it is. However, a lot of people and businesses are involved, and that is why we should pay special attention to the American car business. I hope that the Minister will show some movement on this matter, and show that he is sympathetic to these demands.
Mr. Simon Thomas: I have listened to what the hon. Gentleman has said about the American car market with some interest. He said that all constituencies probably contained owners of American cars. That may well be the case, although no one from my constituency has contacted me on the matter. However, between 5 and 10 per cent. of my constituents drive around with a Welsh flag incorporated in their number plates. The proposal, as well as affecting American cars, will make criminals of those ordinary, law-abiding citizens. I hope that the hon. Gentleman will address that point as well.
Mr. Davey: As I said earlier, I support everything that the hon. Member for Poole said, and I intend to address that point. However, I want to concentrate on the people that I have been describing, because they have businesses and they have investments in these cars, some of which are worth an awful lot of money. They put their hard-earned savings into them. Their hobby, their pleasure, their pride and joy is going to be affected by the regulations, and I make no apology for taking up some of the House's time discussing the issue. The regulation is not justified. It is bad government, bad economics and bad politics.
I want to explain a little bit about the technicalities. The hon. Member for Poole performed some of that task for me, but it is important for the House to realise what is involved. This is, as the hon. Gentleman said, about the size and space allowed for the fixing of a rear registration plate. If the regulation goes through unamended, or is not amended in due course, more than 90 per cent. of left-hand drive American cars imported to the UK will have to be modified. The hon. Gentleman went into some detail about the modifications required. If anything, I think he underplayed the problem of making the modifications.
One of the reasons people own American cars is for their look, their aesthetic value. [Interruption.] People drive round in them and want people to look at them; they want people to see that they have an American car. They are proud of their car, and quite rightly so. However, if they have to modify the boot and the rear of the car, it will change it to some degree. It will no longer be a genuine American car, and a lot of people will no longer want to buy it. The modification will reduce these cars' value.
Mr. Bercow: I am really quite shocked by what I have just heard, and I am not easily shocked. Did the hon. Gentleman, while making his point about the attractiveness and physical beauty of American cars, hear the hon. Member for Ellesmere Port and Neston (Mr. Miller) chunter from a sedentary position "No style"? I do not want

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to be unduly provocative—I rarely am—but does the hon. Gentleman agree that it ill behoves an enthusiast for the displaying of the EU symbol to lecture others about style?
Mr. Davey: The hon. Gentleman makes his point in his usual extravagant manner—flamboyant, perhaps, or even stylish—but I do not want to be tempted down that route. I have serious points to make which are not about style or substance.
I was talking about modifications. It is not as if those who are importing American cars, or buying them, were not prepared to make modifications—[Interruption.] If the hon. Member for Ellesmere Port and Neston listens, he will realise how serious this is. People in his constituency will be affected. The hon. Gentleman laughs again: I find that shocking.
Those who buy such cars have to make modifications in order to conform to regulations already imposed on them by the British Government—modifications involving their lights, for example. It is not as if car owners and businesses were not used to making modifications; the question is whether this is a modification too far, which will completely change the way in which people view cars. I believe that it will. I believe that it will eventually destroy the market—not the overall market for cars, which will continue because, I am delighted to say, we have a European single market, but the market in the United Kingdom that is owned by British business people and used by British customers.
People will go abroad, to continental Europe, to buy their American cars. That means that we shall be exporting jobs. It will be child's play for someone who wants to buy an American car to get to Holland, where the car will be approved by the Dutch authorities and can then be imported. The Government and other authorities here will have to accept that, because the car will have been approved by another member state. The Government have been defeated in their regulatory enthusiasm by the fact that we have a single market.
This is an example of the European Commission's riding to the help of British industry. The British Government, in this instance, are doing very little to support British industry. I have a letter from D-G XV, which was sent to someone who wanted to complain about the Government's draft regulation, signed by an official called S. Lecrenier. She—I think it is a she—says at the end of the letter that the Commission is to call on the British authorities to include left-hand vehicles in the specialised vehicles category. The hon. Member for Poole mentioned that.
The Government would have the support of the European Commission if they decided to exempt imported left-hand drive American cars. They would not be isolated; they would be joining the Commission in ensuring that there was no barrier to trade. In this case, the European arguments are on our side and also on the Conservatives'—which is good, as it happens very rarely.
The hon. Member for Poole made a couple of points about the way in which the Department of the Environment, Transport and the Regions and the Department of Trade and Industry had gone about things. Their initial consultation suggested that they were quite happy for registration plates the size of those on motor cycles to be fixed on all vehicles, but after that, and their second consultation, they changed their minds. Worse
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still, during the consultation those whom I am representing tonight—people who import American cars—were not themselves consulted, and received no consultation documents. They therefore could not register their disapproval at that stage, which meant that the regulatory impact assessment made by the Government following the first consultation did not take account of the industry—of all the people who would be affected. The whole consultation exercise has been discredited, which is another reason why the Government should think again.
When we begin to analyse the pros and cons of the fact that the Government have yet to provide an exemption for imported American vehicles, we are prompted to ask what is behind it. Why are they deliberately pushing the regulations, which will hit that small and entrepreneurial sector so hard? One thinks that there might be some conspiracy. Perhaps it is the Society of Motor Manufacturers and Traders in this case that is trying to ensure that there is no extra competition in the sale of cars.
I would not want to impugn that organisation unfairly, but the Government are rightly putting pressure on it, to reduce car prices and perhaps this is one of the pay-offs. I hope that the Minister will be able to say that that is not the case. If it is not, I wonder whether he could comment on something that I have heard: officials at the DTI who are responsible for trying to promote competition in the motor vehicle market are concerned about the attitude of DETR. That is not joined-up government. One part of Whitehall is saying, "Let us promote competition" and another part wants to pass protectionist regulations.
Mr. Andrew Miller: If there were any logic in the hon. Gentleman's argument, General Motors and Ford, two rather large American companies, would surely, through the SMMT, have raised objections. Is he aware of such objections?
Mr. Davey: The hon. Gentleman shows that he knows nothing about the subject, because the cars that he is talking about have regulatory approval as a class. The cars that we are talking about must go through single vehicle approval. General Motors and Ford make, to my knowledge, very few cars in that sector. We are not talking about the mass car market. We are talking about a niche market. [Interruption.] If the hon. Gentleman wants to say that I am wrong, I hope that he will intervene on me formally to try to make his point and to prove his case, rather than shout from a sedentary position, which certainly does not become him.
I do not believe that the Government have made any attempt to defend the proposal. The letters that I have seen passing between the industry and the Department are unconvincing. The argument does not stand up. I am sure that the Minister will use the debate to reflect very carefully on the matter and to bring his civil servants to book. I do not believe that he intends to damage the sector. He needs to ensure that his civil servants are not misleading him about that sector.
There have been other cases—for example, those involving type approval—where bureaucratic pressure and problems have been put in the way of that reputable car market sector. It has had to battle at great legal expense, employing expensive QCs, going to Brussels, regulating, and getting Brussels to tell the British civil

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service that it should not be gold-plating regulations from Brussels. It is having to fight the whole time. This is not the right way to promote business. The Minister is in a position to bring those civil servants to book, to listen to the Commission and to British industry, and to get it right.
I want to talk about the issue that many other hon. Members wish to talk about. I agree—I signed the early-day motion—that if the Government are, through the regulations, introducing a new option to have a flag on the registration plate, that option could be multiple. One understands the argument following on from the discussions in Europe for the right to have a European flag. That enables people to meet the requirements of the Vienna convention without necessarily having the nationality indicated on the registration plate when they go through the countries of the European Union, although hon. Members may wish to correct me on that point. One can understand why the option came about in the first place. The Government have the chance, because they want to implement the regulations and to give people that option, to give people other options.
That has never been done by a previous Government, so let us not have too much hypocrisy. The previous Government did not want to make that option available. When Conservative Members speak later, I hope that they will realise that their Government did not make that option available to people.
It being Ten o'clock, the debate stood adjourned.
Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That at this day's sitting, the Motion relating to the Road Vehicles (Display of Registration Marks) Regulations may be proceeded with, though opposed, until half-past Eleven o'clock.—[Mr. Pearson.]
Question agreed to.
Question again proposed.
Mr. Davey: I am tempted to use a French phrase—revenons à nos moutons—to come back to the point that I was making, but I am sure that some Conservative Members would not appreciate it.
If we are making new regulations to allow the European flag on registration plates, it makes sense to allow some flexibility. There is no European plot and no harmonisation of registration regulation is proposed. It will be an option, and we should remember that no right is being removed, only given. The real issue is how many other rights should be given, and I agree with the hon. Member for Poole that we should have the right to have the UK, Welsh and Scottish flags, as well as the flag of St. George. I speak as a pro-European, because it is an issue of choice.
The Minister may argue that he cannot act because of problems with space on the registration plate or with visibility, but those problems are not insurmountable. If a European flag can be fitted on a registration plate, so can another flag. I hope that the Minister will show flexibility in the American case and in this.
Mr. Gerald Howarth: The hon. Gentleman is right that it is possible to have the union flag in place of the Euro stars. He may care to examine
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my car, which is standing at the Members' Entrance and which displays an illegal number plate with a blue strip down the left-hand side, proudly bearing a union flag.
Mr. Davey: That does not surprise me.
I hope that the Minister will not be intimidated by the anti-Europeans who will contribute to the debate. This is not a debate between anti-Europeans and pro-Europeans, although some of the hon. Members present are certainly more Eurosceptic than Europhile. The issue is one of choice, and I hope that the Minister will give the English, Scottish and Welsh peoples that choice.
10.4 pm
Mr. Nigel Evans: I speak as someone who is Welsh and proud to be so, and British and proud to be so. That is something that some Labour Members fail to understand. I do not see why I as a Welshman ought not to have the opportunity to display the Welsh flag on my car registration plate if I so wish. Indeed, when I was in Wales a month ago I saw a Welsh flag displayed on somebody's registration plate. I have also seen Union Jacks and Scottish solents—[Hon. Members: "Saltires!"] That is what I mean.
The Government should say whether the Home Office has given guidance and advice to police forces throughout the country as to whether people who display symbols other than the union flag will be prosecuted. I pointed out a union flag on a car to someone the other day. I said that that was illegal and that the owner could be prosecuted. I was asked who would be stupid enough to prosecute people for displaying the union flag on their cars, and in reply I asked who would be stupid enough to prosecute someone for selling bananas by the pound instead of the kilogram. That happened the other day in Sunderland, where there is clearly no other crime.
The Government say that they are tough on crime and tough on the causes of crime, yet they have created a new crime. There are fewer police on the streets than four years ago, but the police will have to check out cars to see if they are displaying anything other than the union symbol.
The hon. Member for Ceredigion (Mr. Thomas) said that between 5 per cent. and 10 per cent. of his constituents drive cars that proudly display the Welsh flag. They are breaking the law, and are therefore criminals. They can be stopped by the Welsh police or their counterparts in the United Kingdom, and prosecuted for displaying the fact that they are Welsh.
That comes very rich from this Government, given that the census forms that we have to return by 29 April allow people to say that they are Scottish or from Northern Ireland, but not that they are Welsh or English. What is wrong with the Government? Why do they not believe that people should be able to say whether they are Welsh, Scottish, Northern Irish, or English?
Mr. Dafydd Wigley: Although I recognise the right of people to put a Union Jack on their cars if that is what they want, does the hon. Gentleman not agree that our advice to the thousands of drivers in Wales whose cars bear the Welsh flag should be that they carry on showing the flags and ignore these stupid regulations? If the Government insist on introducing them, they will be bringing the law into infamy.
Mr. Evans: This is a bad law. A law that is widely flouted needs to be looked at again. I do not believe that

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the consultation procedure that the Government followed was right. They did not consult widely with the motoring organisations, which would have told them that the introduction of space for symbols on registration plates would mean that people in Wales, Scotland, Northern Ireland and England would want to display their nationality. People would also want to display the Union Jack as well. I cannot believe that that was not pointed out to the Government in the consultation that was held.
The Minister must tell the House what the guidance is. Will people driving around with their national flags displayed proudly on their cares be told that they are breaking the law? Will they run the risk of being stopped by the police and prosecuted, and of having to pay a fine of £1,000? If the Government want to create martyrs, they are going about it the right way—they will create thousands, as people ensure that they change their registration plates to show the flags of the nations of which they are proud.
I am not one of the nutters who wants to throw up whenever they see the euro symbol—[Interruption.] However, I do not jump for joy when I see it. In contrast, when I see the Union Jack, there is a flutter in my heart. When I see the Welsh flag, there is a bit of hwyl about me. I am also proud to represent an English constituency. Thank goodness the Government had the good grace not to insult us all by having this debate yesterday. I am also proud whenever I see England playing football or the flag of St. George being displayed throughout England and people wearing red roses, as they did yesterday. It is quite right that they should be proud as well.
I find it incredible that we do not have the Minister for patriotism here. During one of their frights, the Government decided that they were being charged with not being sufficiently patriotic. They therefore dredged up a Minister who not many people had heard of and gave him the title of Minister for patriotism.
Madam Deputy Speaker (Mrs. Sylvia Heal): Order. I have allowed the hon. Gentleman some latitude, but he must now return to discussing the regulations.
Mr. Evans: I was going to say that although the Minister for patriotism is not here. I suspect that the Minister for Europe would have been here had he not been indisposed.
The Government must give the House an explanation. They have an opportunity to do so tonight. It has already been noted that there are no Scottish or Welsh Members of Parliament on the Labour Benches for this debate. Because we are using this dreadful procedure, people debating the issue are not allowed to vote on it tonight. The vote will have to be deferred until tomorrow. I will be looking very carefully at how Labour Members representing Scottish and Welsh constituencies vote. The people of Scotland, Wales and Northern Ireland ought to know exactly how their Members of Parliament vote on this issue.
I am staggered at the necessity for this debate. We are given a choice that we can either display the European Union symbol or nothing. It is Europe or nothing with this Government, and that sickens me. I am proud to be British, I am proud to be Welsh, and I demand the right to be able to display those symbols on my car if I so wish and not have the European Union pushed down my throat.
10.12 pm
Mr. Elfyn Llwyd: The hon. Member for Poole (Mr. Syms) said that if the Conservative party were returned to power, it would be content with the flexibility that we seek. I am pleased at that indication, although it may be academic for the next few years. However, I agree with the hon. Gentleman wholeheartedly.
Mr. Nicholas Winterton: That is a start.
Mr. Llwyd: While I am at it, perhaps I should admonish the hon. Member for Ribble Valley (Mr. Evans) for being so personal about the hon. Member for Macclesfield (Mr. Winterton) and saying that he throws up whenever he sees the European Union symbol. That was really out of order.
In an exchange on this subject between my hon. Friend the Member for Ceredigion (Mr. Thomas) and the Home Secretary, the right hon. Gentleman said:
"The Welsh Assembly and the Scottish Executive were consulted on that and … raised no objection.
I am happy for the issue to be raised in Committee."—[Official Report, 18 December 2000; Vol. 360, c. 31.]
To my certain knowledge, neither body was consulted. That brings me back to what the hon. Member for Ribble Valley said. What kind of consultation process was this?
Mr. Wigley: I give my hon. Friend a categoric assurance that the National Assembly, as a whole, was not consulted on this. The Executive may have been, the Labour Government, or Lib-Lab Government in Wales may have been, but the Assembly was not. That is certainly the truth.
Mr. Llwyd: What makes it even worse is that quite recently, when the matter was discussed by the National Assembly, virtually all Labour, Liberal Democrat and Plaid Cymru Members decided that this flexibility should be introduced and that people should have the right to display the Welsh flag if they wanted to do so. That opinion is now being totally ignored by the Government. They want to steamroller this measure through with an apparent complete disregard for the feelings of thousands of people in Wales, criminalising them on the way. Interestingly, they are taking the same approach as they did when denying Welsh people the right to say that they were Welsh in the census, given what has been said about the Welsh "tick box".
The Government are not listening to the people of Wales. It is the wrong way to proceed, and I am sure that they will pay a heavy price for it in the next few weeks.
Mr. Simon Thomas: One of my constituents, a professor of physics at the university of Aberystwyth, is currently in Davos in Switzerland undertaking international research. He drives a great deal on the continent, between Wales and his international work. He has a doctorate in physics, and he happens to be my parliamentary agent. He will be criminalised by this measure because he, a committed European, chooses to display the Welsh flag on his car. Is that the sort of person whom the Government should seek to criminalise?
Mr. Llwyd: Absolutely not. That gentleman is one of many law-abiding people in Wales who will similarly fall

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foul of this wrong, stupid and senseless regulation. My hon. Friend has spoken about this matter before and made his feelings clear. There is a resonance across the House on this matter: whether one wants the flag of St. George, the Union Jack, the Welsh flag or the saltire should be entirely up to the individual.
Mr. Alasdair Morgan: Does the hon. Gentleman agree that this matter goes further than flags? Many people in Wales and Scotland choose to display "CYM" or "SCO" on their numberplates. Previously, there was no rule about whether one should have a "GB" sticker or any other sticker. That, too, is entirely new.
Mr. Llwyd: I agree. What I say, I am also saying on behalf of the Scottish National party—at least until I am pulled up for saying something wrong.
The consultation process is interesting. The follow-up consultation letter was sent on 20 January 2000, and a summary of responses was published on 10 May. The Minister looks perplexed, but my information comes from the House of Commons Library. The Department of the Environment, Transport and the Regions asked for views, but I do not know how far the consultation went. Will the Minister tell us how wide it went and who and which bodies were consulted? Why, even at this late date, are the views of the National Assembly for Wales and the Scottish Parliament being ignored? That cannot be right.
Whether or not one favours devolution, it is wrong to bring in bad law by the back door. That law will have no credence in the country and will not be adhered to by law-abiding citizens. It will create a class of people who will be in court for the first time in their lives because of this action by the Government—though inaction might be a better description.
The Department has been cackhanded in its dealings with the European Commission. It submitted draft proposals, which came back duly amended and rewritten. The Commission has made it clear that there is no intent to harmonise registration plates across the community. That makes it clear that what the Opposition seek is perfectly legal under EU law. There is no impediment to what we want. Even at this late stage, will the Minister take a message to his Department asking that the matter be reconsidered. There could be a huge outburst of feeling in England, Scotland, Wales and Northern Ireland. The regulations are offensive to many of us.
We were initially told that the big problem lay in the fact that the Commission would dictate the regulation to the Government. That is not the case. It is the Government's intransigence that is causing a growing crisis. I appeal to them to reconsider, and swiftly. It is all very well for the Minister to put his hands in his pockets and look at the ceiling, but the regulations are grossly offensive to us all. [Interruption.] I repeat that this matter is grossly offensive to many of us. It is noteworthy that no Scottish or Welsh Labour Members are present—either they have no mind of their own or they could not care less about their native countries.
When we were told that the Commission was at fault, Ian Titherington—soon to be the Member of Parliament for Swansea. West—held discussions with the DVLA and
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was told that the matter had nothing to do with the Commission; the proposed regulations could be implemented with no problem whatever. At some point, the Government will have to come clean. Just as the census form is insulting and offensive and may lead to law-breaking, so too will the regulations.
I listened carefully to the comments of the hon. Member for Kingston and Surbiton (Mr. Davey) about American vehicles. I am a German-vehicle person myself, but that is beside the point. I do not know anyone in Meirionnydd Nant Conwy who can afford to run American cars, given the current price of fuel.
I shall briefly and swiftly conclude my remarks as other hon. Members want to speak. The Government claimed that the Assembly raised no objections—I doubt whether that is true. The Assembly and its Ministers have said that they want recognition of national flags—as did the Scottish Parliament.
The DVLA was led to believe that the order was mandatory under European law—that is also nonsense. Will the Minister please allow the people of the constituent nations of the British state to have their say and show respect to their nations?
10.22 pm
Sir Teddy Taylor: It had been my intention to make a lengthy speech about European number plates and national number plates, but there is now no need for me to do so. Tonight, we have seen something dramatic: it has emerged that, in a few weeks' time, the new Conservative Government—with the support of the Liberal Democrats, the Welsh nationalists, the Scottish nationalists, our friends from Northern Ireland, the Scottish Parliament and the Welsh Assembly—will bring back the right for people to use the number plates and the flag that they think most appropriate.
Obviously, I hope that my hon. Friends will not end up in a European prison as a consequence of their bravery. However, a popular front has been established; we know what can happen if the right decision is made in the general election. For that reason, I want to say a few words about the American car issue.
My sincere appeal to the Government is that they reconsider the matter. What on earth can be gained by the regulations? What will be lost? I am sure that there are such car dealers in the constituency of every Member. In my constituency, there is a small firm—Route 66—at 41 Purdeys Way, Rochford; another little firm, the American Car Company, is located in the area of Southend represented by one of my colleagues.
As the Minister knows, no big firms are involved in that business. There are only small firms—tiny businesses—which do not make much money. The hon. Gentleman will be aware that only about 500 American cars are registered every year—it is a small sector. What the blazes will happen under these regulations? Unless a way of fitting a new number plate can be found—usually that cannot be done—about £1,000 will have to be spent on altering those cars. Great expense will be involved for many businesses. Why are we doing that?
Will the Government include an exemption? They have done that already for left-hand drive cars. On the advice of the European Union, the Government brought in

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legislation in schedule 2 of the Motor Vehicles (Approval) Regulations 2001, to give an exemption for left-hand drive vehicles. The Government could easily introduce an exemption if they want to.
I know that people have been writing to Ministers and civil servants to ask why the Government are introducing the regulations. In fact, one of the American car importers—a nice man called Mr. Cohen—wrote a letter to the Department asking why the proposal was being introduced. He received an answer from the Driver and Vehicle Licensing Agency, whose only argument was that some people in the police thought big letters were easier to see than small letters and that that could help in the battle against crime.
I ask the Minister to tell us how many big American vehicles were involved in crime last year or the year before. I think he will find that they are not the kind of vehicles purchased or used for that purpose. If the Government are concerned about crime, why the blazes do we allow motor cycles to have small number plates? If it is difficult to see an American car plate because it is too small, what about criminals who ride around on motor cycles?
Mr. Edward Davey: Will the hon. Gentleman give way?
Sir Teddy Taylor: Certainly—but the hon. Gentleman spoke for a very long time.
Mr. Davey: I want to reinforce the point that the hon. Gentleman is making. The DVLA argued that smaller number plates might not be visible to speed detection cameras—until the owners of American cars sent the DVLA their speeding fines.
Sir Teddy Taylor: The hon. Gentleman refers to another point that has been mentioned.
If the Minister considers the issue, he will discover that there is no argument. He must ask himself what is to be done. He will know that we are not dealing with the big battalions of the motor industry and with big firms that can spend a lot of money on alterations. He will know that those businesses have difficulties because American cars cost a lot of money. If the regulations involve more discomfort, more trouble and more expense, what is the point?
The Minister could very easily include an exemption for American cars. That would be as easy as pie. It could be done specifically for left-hand drive American vehicles. However, people might ask why an exemption should be made for American cars. We want such an exemption because American number plates are different and the structure of American cars is different. The modifications will involve a lot of extra work. The manufacturers calculate that, apart from a tiny number of cars to which bigger number plates can be attached, the alterations will cost more than £1,000.
I am afraid that Governments of all parties have sometimes introduced legislation that involves a lot of expenditure, bureaucracy and distress, and I ask myself,
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"Why on earth do they do it?" Can the Minister give us any good reason for introducing the regulations? I can see no advantage of any sort to anyone; I can see a great deal of trouble and distress. That matters to a small number of people who might be daft enough to want to own an American car. Some people love owning American cars; some of them look terrific. This is a country where people should have that freedom, and it must not be taken away. So why should more unnecessary bureaucracy be introduced?
The Government should be aware that there is no need to aim for consistency. There is almost an obsession with ensuring that everything is the same—but there is no need. We have repeatedly asked the Government to tell us what is the argument for introducing the regulations. The argument about crime does not stand up, given what has been said about motor cycle number plates. The argument adduced about speed cameras is not very relevant. Given the recent test case in Scotland, the Minister will be well aware that we may have to do away with speed cameras because of the European rules.
Mr. Miller: The hon. Gentleman should be aware that the ruling in the case to which he refers was overturned by the House of Lords.
Sir Teddy Taylor: I am well aware of what happened. I have had the pleasure of being a Member of Parliament for a very long time. When something stems from European law, it can be stopped in various ways in the House of Lords. I do not want to be ruled out of order, but I ask the hon. Gentleman to consider what happened in relation to the Merchant Shipping Act 1988, when many hon. Members cheered their heads off because Parliament's decision was overturned. The hon. Gentleman is always trying to cause trouble, but there is no need. If he really thinks that democracy is safe from European rules, he honestly has a lot of rethinking to do, and I ask him to think about that very carefully indeed.
I simply tell the Minister that we should forget about the big issues because they will be resolved at the next election. If people want to go the Government's way, they can vote them back into power. If they want to retain their national freedoms, they can vote for the Conservative party, along with the Welsh nationalists and all our other new friends—the popular front. The crucial question is this: why should we introduce a measure that will cause a lot of trouble, involve great expense and make many people unhappy when no one can see any benefit from it?
I hope that the Government will show common sense and agree to a tiny amendment to the regulations. That would be better for everyone and save a lot of trouble and unhappiness when there is no benefit to be obtained. I hope that the Minister will at least say that the Government will reconsider the matter and perhaps bring in a minor change to help decent people who deserve some attention.
10.30 pm
Mr. Gerald Howarth: This is an historic night because there has been such a broad consensus among the Opposition parties. We are all united in our belief in the concept of choice—choice which the Government wish to extinguish. Had it not been for the perception of my hon. Friends on the Front Bench and the determination of my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) to pray against the regulations and to seek to have them revoked, there would have been no debate on the matter. I salute them for bringing this matter to the attention of the House.
The regulations are extensive and they are made up of 19 paragraphs that do not relate to just a couple of issues. In them, the Government are guilty not only of crushing individuality and choice, but of being something of a spoilsport.
The first issue that I wish to raise relates to paragraph 11 on the nature of registration plates and the way in which the characters are laid out. Sub-paragraph (2) states:
"A registration plate must not be treated in any other way which renders the characters of the registration mark less easily distinguishable to the eye or which would prevent or impair the making of a true photographic image of the plate through the medium of camera and film or any other device."
Sub-paragraph (3) adds that a registration plate must not be fixed to a vehicle in such a way
"which has the effect of changing the appearance or legibility of any of the characters of the registration mark, which renders the characters of the registration mark less easily distinguishable to the eye or which prevents or impairs the making of a true photographic image of the plate through the medium of camera and film or any other device."
The effect of such provisions will be that those of us who have an enormous interest in looking at number plates and at the ingenious way in which our fellow countrymen manage to order the letters of the alphabet and numbers in such a way as to make their number plates interesting reading will have that possibility denied to us. For example, I see a Jeep Cherokee near where I live in London—I have no idea who owns it—which has the registration "L10N TV". For all I know there may be a production company called Lion TV, but I find it interesting to see the way in which that number plate is laid out. Other obvious examples spell out names such as "SUS1E" and "ANG1E", although I do not know the ladies in question. Hon. Members may have seen some rude examples, but I will not repeat them to the House because even though it is after the watershed and sensitive journalists have gone to bed, they may be videoing our proceedings. My son's girlfriend Tammy has a car and the number plate on it spells out her name—"T4MY"— and that makes her car recognisable. Such registrations are so much more noticeable, visible and memorable than the boring old number plates that there will be if the regulations come into effect.
Those of us who have had the displeasure of engaging libel lawyers know that there is a splendid firm of libel lawyers called Peter Carter-Ruck and Partners, of whom I have been the beneficiary.
Mr. Nicholas Winterton: They are expensive.
Mr. Howarth: They are extremely expensive, but they were very good value in my case. Peter Carter-Ruck
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wanted a particular number plate. When the DVLA auctioned licence plates, he asked me whether I would be prepared to help because he did not want to be seen to be bidding in case it pushed up the price. Instead, his partners bid for "L1BEL" and he now drives around in a Rolls-Royce with a plate that reads "libel". That makes two statements: "Don't mess with me" and "My profession warrants a Rolls-Royce". However, in my case, the BBC paid, not me.
The Government are determined to crush individuality. They are in favour of big brother. They want our number plates to be uniform so that we can be photographed and our movements recorded everywhere we go. We do not know why. It might be fine to do that to catch criminals, but for what other purposes are we to have our vehicles photographed?
Mr. David Taylor: The hon. Gentleman's example of "ANG1E" is fascinating. Perhaps the vehicle in question belongs to the hon. Member for Tiverton and Honiton (Mrs. Browning). On the matter before us, the regulations on the sequencing and placement of letters on number plates have been in existence for many years. Did the hon. Gentleman raise concerns in previous debates?
Mr. Howarth: It was not necessary. The citizens of our country enjoyed the freedom conferred on them which was not allowed in other European countries. In addition, the DVLA cashed in on specialist number plates and coined money for the Government by flogging them. It will be interesting to see how the agency will be affected by the regulations and whether they will reduce substantially its receipts from the sale of specialist number plates.
Mr. Bercow: Although it is true, as the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) said, that the European Commission is not currently planning to impose complete uniformity on this country, the Government are preparing to soften us up for that scenario. Is my hon. Friend aware that, when challenged to commit the Government to oppose rigorously any such intended uniformity, the Minister came over all shy and reticent in the Standing Committee on the Vehicles (Crime) Bill? He said:
"somebody in my position, as a mere Under-Secretary of State, is not in a position to make commitments on behalf of the Government."—[Official Report, Standing Committee A, 11 January 2001; c. 134.]
Very touching, but not very convincing.
Mr. Howarth: Indeed not. However, the Minister is modest. No doubt he will be even more modest by the end of the debate and will not want to have anything to do with the measure. He will ascribe to his Secretary of State the responsibility to take the decision.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): The buck stops here.
Mr. Howarth: Unfortunately it does not; we know that only too well. However, the Minister would enhance enormously his standing in the Chamber, and, no doubt, in his constituency of Streatham, if he persuaded the

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Secretary of State to abandon the measure. No Opposition Member—I suspect this is true of many absent Labour Members—wants the measure enacted.
The second issue that concerns me was splendidly covered by my hon. Friend the Member for Poole (Mr. Syms) and the hon. Members for Kingston and Surbiton (Mr. Davey), for Ceredigion (Mr. Thomas) and for Meirionnydd Nant Conwy (Mr. Llwyd). The fact is that it is not legal for cars to travel around the country with blue strips on the left hand side of their number plates bearing the letters GB and the European symbol. They will be made legal only if this measure is enacted.
That is fine, but the Government have tried to smuggle the business through the House and they have been less than open about the way in which that has been done. [Interruption.] The Whip, the hon. Member for Weaver Vale (Mr. Hall), suggests that I am being unfair. I invite hon. Members to read paragraph 16(2) of the regulations, under the heading "Miscellaneous", which says:
"Where a mark is displayed on a dual purpose plate—
(a) no material other than the international distinguishing sign of the United Kingdom displayed in accordance with the Council Registration may be placed in the space provided on the plate for that purpose".
To all intents and purposes, the casual reader seeking to understand what the Government are on about would think it perfectly in order to display a United Kingdom international distinguishing sign, which for many of us is the union flag.
What does the reference to "Council Registration" mean? Does it refer to local authorities? Are we talking about Buckinghamshire county council, Hampshire county council or perhaps town councils in Streatham or Hawley? Fortunately, there is an explanatory note, and sub-paragraph (g) on page 25 of the regulations refers to:
"The making of provision for the display of the international distinguishing sign of the United Kingdom adjacent to the registration mark in accordance with Council Regulation (EC) No. 2411/98 (a copy of which can be obtained from the Stationery Office)."
Therein lies the secret of what this is all about.
One has to go to another document—the European Council regulation of 3 November 1998, to read, if not the full story, at least part of it. The preamble to that document reads as follows:
"Whereas several Member States have introduced a model registration plate which, on the extreme left, displays a blue zone containing the 12 yellow stars representing the European flag plus the distinguishing sign of the Member State of registration; whereas for the purpose of intra-Community transport this distinguishing sign meets the objective of identifying the State of registration as provided for in Article 37 of"—
the Vienna convention of 1968, I can tell the hon. Member for Kingston and Surbiton. That is the only indication that the only international symbol that will be lawful is the EU flag. One has to turn to the annexe to the regulations to see what is proposed. All that will be permitted is the European symbol with the national symbol beneath it. It will be a criminal offence to display any other symbol. It is a circuitous way of introducing a measure that will greatly offend our fellow citizens once they discover the enormity of what the Government are up to.
To some, this may seem a trivial matter, but it is not trivial to all the hon. Members in the Chamber tonight. The hon. Member for Kingston and Surbiton said that as
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far as he is concerned it is a matter of choice. The hon. Gentleman is a committed pro-European, and he has chided us for the anti-European motives that he believes lie behind our opposition to the measure. I have explained why I am opposed to one part of it. I oppose the requirement to authorise only the European symbol. I say to the hon. Gentleman that I see this as another attempt to foist a European identity on this country. We have a European Parliament, a European Court, a European currency, a European anthem and a European flag, and we are about to have a European army, so we have all those symbols of nation statehood. That is what worries us: our driving licences have to have the Euro symbol—we cannot have the union flag—and now our registration plates have to have it as well. It is an affront to the British people to authorise motorists to bear the Euro symbol on their cars and make it a criminal offence for Englishmen proudly to proclaim the cross of St. George on their motor cars, for hon. Members from Wales proudly to bear the Welsh dragon on their number plates, and for the saltire of Scotland to be borne on Scottish number plates. Indeed, my French car—a blue Picasso—is outside the Members' entrance and carries the Union Jack, but I would be made a criminal if I put such a new number plate on it after 1 September this year. People in this country will find that deeply offensive.
However, there is a solution. Between now and 1 September it will be possible for us to have things other than Euro symbols on our cars. I can tell the House that I have a number plate with a blue strip bearing the Union Jack and the letters "GB" on the left-hand side because there is a splendid company called I-N-M(UK) Ltd., which, for the sum of £27, provided me with a set of number plates. It is based at 22 Kingswood Gardens, Leeds LS8 2BT, and Mr. Peter Rogers, a company director, has said that he is prepared to make to order a set of number plates for Members of Parliament, whatever their shade of opinion. I am sure that he will provide a Welsh dragon or indeed, a fish symbol for those who wish to proclaim their Christian faith on their vehicles. Members can have whatever they like on their registration plates and Mr. Rogers will provide it not for £27, which I was charged, but for £25. There will be no commission for me; I am doing this in the interests of our country and to ensure that we retain some individuality and maintain pride in our national symbols, which should not be taken over by the dreaded Euro flag.
Mr. Nicholas Winterton: I endorse everything that my hon. Friend has said. Does he believe that on the blue strip on the left of the registration plate one should be able to put not only the Union flag—the Union Jack—but the cross of St. George? Why should we not boast not only of the Union of the United Kingdom but of England, which comprises the greater part of that union?
Mr. Howarth: As my hon. Friend said, that is a possibility. I do not know what is in Mr. Rogers's extensive range, so I cannot say what he can provide, but I am sure that a call to him—
Mr. David Taylor: Is this a commercial break?
Mr. Howarth: The hon. Gentleman is perceptive; this is an unashamed commercial in support of a man who, I believe, is doing good for our country and providing us

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all with the means to proclaim pride in our country—and, if I may say to the Minister, for whom I have high regard, metaphorically to put two fingers up to those who would have us behave in a uniform fashion. As Mr. Churchill might have said, that is something up with which we will not put.
Of course, the House cannot vote on the regulations tonight because we are muzzled under our new arrangements and are denied the opportunity to vote. However, when the measure does come to a vote, I hope that the House will ensure that it is thrown out, because a comprehensive case has been made across the board. In conclusion, may I ask the Minister for an assurance that cars bearing those number plates perfectly legitimately after 1 September 2001 will not fail their MOT on the grounds that they do not have the appropriate symbol on their number plates? I seek an assurance from the Minister that there will be no attempt to stop people having such number plates after 1 September by making it a requirement that their cars fail the MOT if the number plates do not bear the Euro symbol, should they choose to put any symbol at all on their number plates. With that, I rest my case.
10.50 pm
Mr. Patrick Nicholls: I shall be brief, not from any uncharacteristic compassion for the sentiments of the House, but simply because I want to enjoy the spectacle of the Minister, who is a popular and intelligent person, having to justify the wholly unjustifiable.
I have not always led a blameless life. I have been in the House for 18 years, but before that, I was a humble country lawyer—or at least, I was a country lawyer. One of the attributes of humble country lawyers is that they have a certain interest in good law being passed. Good law is not necessarily popular or welcome, but it is obeyed. I remember that many years ago, before I came to the House, there was a great feeling of outrage when we made safety belts compulsory. It was thought to be an infringement of civil liberties and there was a great brouhaha about it, but the day that law came into force, it was observed. No matter how much people may grumble about it, everybody now puts on a safety belt, because they acknowledge that the law is right.
As a lawyer and a parliamentarian, I am worried when I see that the House is prepared to enact law that will not be obeyed. We Conservatives have learned the lesson. We saw what happened with the council tax: excellent measure though it was in many ways, it lacked the essential ingredient, and ultimately, people would not accept it. That was an isolated case under the Conservative Government, but the present Government have shown time and again that they are prepared to enact legislation which ordinary, decent, law-abiding people will not obey.
We have seen that, and we will see it again in due course if the Government win the next election. We will see them outlawing foxhunting. They will take a swathe of ordinary, straightforward, decent, law-abiding human beings and provoke them into breaking the law. I appreciate that there are passions on both sides of the argument, and it might be argued that the issue is so
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important that Parliament is entitled to take a view. However, there is no earthly reason why the regulations before us should be pushed through the House.
If Labour win the next general election, we face the prospect of pointing out to any policeman whom we may see that some horse boxes on their way to a foxhunt, which have stopped off to buy some non-metric bananas, have dodgy illegal number plates. Is that the choice that we are to present to our police forces? Are they to chase non-metric bananas, foxhunters, or those with dodgy number plates? That is the nonsense that the Government are prepared to inflict.
I warn the Government that there are many people who, on an issue such as foxhunting, may feel deeply upset but will not break the law. However, with the regulations before us, the Government could face a string of vehicles parked all the way up Whitehall, with people rattling the gates outside No. 10, saying, "Come on, big boy. Come and prosecute me on the grounds of public policy." That is what the Government are in the business of doing. The one thing that they do not have in the slightest degree is any sense of humility or propriety about what they are and are not entitled to do.
I shall now sit down to watch the Minister, who is extremely popular, and who has great charm and intelligence, standing at the Dispatch Box to justify the unjustifiable. It will not be a pretty sight.
10.53 pm
Dr. Julian Lewis: After that introduction, I hesitate to rise and speak. I am almost tempted to quote the number plate "VOMIT", which is the reaction of most of us to the measure proposed. This will probably be my shortest ever parliamentary speech, but I hope that it will make up in quality what it lacks in quantity.
There are three points to make. First, why are the Government introducing a measure to allow the European symbol to be put on number plates, when, as everyone knows, the law that prevents people from doing that now is not being enforced? The answer is fairly obvious. The Government are introducing the measure to allow that to be done in preparation for the time, which they know will come, when it will be made compulsory. Otherwise, there is no reason for them to introduce the provision. They are trying to make it legal for the EU symbol to be displayed on number plates throughout the United Kingdom and the European Union only because they know that it will be impossible to order that to happen if the practice is technically illegal.
Thus the first point—or question—is why the Government are doing this, and the second point is the answer to that question, which is that they know that what is now to be permitted will later be made compulsory.
The third point is this: what are the various pressure groups that oppose the creeping federalism of the European Union going to do about the regulations? As somebody who was once arrested for playing the national anthem in public, I have a certain amount of experience of what pressure groups do in such circumstances. I predict that they will commission quality printing firms to prepare union flag stickers with permanent, self-adhesive backs that can easily be stuck over the European symbol on future number plates.

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That will have a double effect. It will mean that people who want the union flag to cover the relevant part of their number plates can stick it on. Such people can claim when they are stopped by the police that some opponent must have stuck the symbol on, and that they did not do it themselves. Alternatively, it will be possible to place stickers on the number plates of car owners who support the European Union, which will mean that they are done for a criminal offence and fined £1,000.
Will the Under-Secretary address that problem and explain how it will be dealt with? How should the police respond when they discover that somebody is driving around with a regulation number plate on which the British flag is displayed in the form of a sticker of the sort that I have described? Will such a person be fined, or will it be enough of an excuse for him to say that he did not do it himself? Will he be obliged to check his number plates every time he takes his car out? Will he be required not to take the car out because he cannot remove a sticker and make his number plate legal again?
The whole process is fatuous, unenforceable and deeply sinister. The provisions are not permissive, as the Government are trying to suggest. They are being introduced to pave the way for a compulsory measure, and I predict that that measure will not be long in coming down the line.
10.58 pm
Mr. William Ross: I did not originally intend to speak in this debate, but a few minutes ago I picked up the statutory instrument and opened it up to find out about its extent. Hon. Members will know that when one reads legislation, one usually finds a little sentence saying that it extends to somewhere, wherever it may be. It might extend to England and Wales, to Great Britain or to the United Kingdom. I cannot see such a provision anywhere in the regulations, but at the top of page 11, I see a paragraph stating that particular regulations introduced for Northern Ireland in 1973 "shall cease to apply".
I am curious to know whether the regulations are a United Kingdom measure. What is their extent? If they are United Kingdom regulations, as they seem to purport to be, what is the position with regard to the powers of the Department of the Environment in Northern Ireland? After all, it is responsible for the registration of vehicles in Northern Ireland. As was pointed out earlier, many number plates are sold, and the Department of the Environment has a number of public auctions every year. Once upon a time, I tried to get a message to a member of the Government to tell him that a number in which I thought he might be interested was coming up for sale. Unfortunately, the message was not passed on, and the hon. Member in question missed the number "VAZ 1". I thought that he would have been more than interested in such a number plate. The sale made only £3,000 or £4,000, but it gives some idea of the value that some people place on such number plates.
As the Under-Secretary knows, the Northern Ireland Department of the Environment holds back the first 1,000 numbers in every run and sells them off. One sees Northern Ireland number plates all over London because people buy them. There is a huge trade in them; tens of thousands are advertised for sale in the press. They bring in a lot of money to the Northern Ireland Exchequer. Will we be deprived of that in future? If so, who will receive it?
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Are we considering United Kingdom regulations? Has any discussion taken place with the devolved institutions in Scotland, Wales and Northern Ireland? If not, why not? Their finances could all be adversely affected.
Mr. Evans: England is the one nation that the hon. Gentleman has not mentioned. What consultation occurred with the English about the changes?
Mr. Ross: Is there not a rising tide of anger throughout England? Do the English feel bereft of a Chamber? Or would they, like me, be much happier if we had only this one? I could live with that. I believe that especially given that I have to live with a Chamber that, if it ever had hopes of being democratic, has proven since its inception that democracy does not rule there.
I simply raise the question of responsibility and the extent of the regulations, which has financial implications. I hope that I shall receive a clear reply from the Under-Secretary.
11.1 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): Our debate has been fascinating, and all too brief. It has been an evening of passion, even atavism—and it was not entirely predictable that the subject of vehicle number plates could provoke that. I shall deal with several key issues. First, however, I shall try to put the subject in perspective.
I doubt whether any hon. Member, with the possible exception of that well-known libertarian the hon. Member for Aldershot (Mr. Howarth), would disagree that it is important for law enforcement and road safety that number plates should be clearly legible to the naked eye and to enforcement cameras.
Over the years, apprehending criminals in many high-profile cases, often involving serious crimes, has depended on the successful identification of a motor vehicle. The number plate—in many cases, only a part of it—has often provided the only clue that the police have had to work on.
The Government are determined that there should be no dilution that might adversely affect the legibility of number plates. Indeed, the Road Vehicles (Display of Registration Marks) Regulations 2001, which we are debating this evening, will strengthen the existing 1971 regulations and introduce for the first time a standard character font to improve clarity. In passing, let me deal with the point that the hon. Member for East Londonderry (Mr. Ross) made. We are considering a United Kingdom measure; the matter is not devolved to Northern Ireland.
The regulations also introduce a new British standard to make number plates more durable. Furthermore, they introduce a new format to replace the existing one, which, as has frequently been pointed out, runs out at the end of August. The format last changed as long ago as 1963. No doubt some of those present, but perhaps not all, recall that. We are therefore experiencing a once in a lifetime event. Because of its rarity, the Government took the opportunity to consult widely before drafting the regulations. I shall revert to the subject of consultation later.
I assure the House that we have carefully considered representations from all interested parties.

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We have listened in particular to those from the independent American car importers business who are quite rightly keen to foster, preserve and encourage wide use of what, for many, are highly desirable vehicles.
I shall respond to a couple of the observations made on this point during the debate. The hon. Member for Poole (Mr. Syms), who introduced the debate, asked whether the European Commission had written to the United Kingdom Government asking for left-hand drive vehicles to be included in the list of specialist vehicles allowed to use the smaller font size. The answer is yes, the European Commission wrote to the Government in January 2001. The hon. Member for Kingston and Surbiton (Mr. Davey) asked about the import of American cars. The regulations do not change the position on American vehicles—it has never been legal for them to display small number plates.
The point at issue is that vehicles manufactured for the north American market have, in many cases, a restricted space for the vehicle number plate, making it difficult for owners to fit a standard UK number plate. However, that problem is not exclusive to vehicles arriving here from across the Atlantic. Vehicles made for markets in Japan and the far east—in other words, vehicles not manufactured to European standards—have a similar difficulty in displaying a legal UK plate. It is estimated that up to 50,000 vehicles are independently imported here annually from those markets. So, we are dealing with a sizeable number.
Many of those vehicles currently display plates made for motor cycles. These are smaller in size and not intended for display on cars. They are illegal under the current regulations, and owners who display them are liable to prosecution. Enforcement of the regulations is a matter for the police who, for operational reasons, have—to my mind, quite rightly—concentrated their efforts on more serious offences. [Interruption.] My old sparring partner, the hon. Member for North Essex (Mr. Jenkin) says that the law is an ass. I would say that this is a splendid example of British pragmatism. We have heard much about great British qualities this evening and, in my humble submission, that is one of them.
The easements in the new regulations, and those carried forward from the 1971 regulations, as amended, continue to permit two-wheeled and three-wheeled vehicles, quadricycles, agricultural machines and road rollers to use small characters on their number plates. In the case of motor cycles, smaller plates are necessary for safety reasons, and they could not reasonably accommodate larger plates. The other vehicles that may use the smaller plates are tightly defined. They are not generally high-powered or used on the public road. When they are, they are usually driven slowly or for very short distances.
We have carefully considered the representations made on behalf of the importers of American vehicles who wish to be granted a similar concession. I want to assure the hon. Members for Poole, for Kingston and Surbiton and for Rochford and Southend, East (Sir T. Taylor) that we will, of course, continue to take account of those representations. Perhaps I should add that a complaint has been lodged with the European Commission, which has urged the UK to provide an exemption. If such an exemption is not given, the Commission has reserved the right to challenge the provisions if they create an
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unjustified barrier to trade. If it is eventually decided that an exemption has to be provided, all that would be required would be to make a small amendment to the Road Vehicles (Display of Registration Marks) Regulations 2001. However, for the purposes of the present regulations it has been decided that, for the reasons that I have given, there should be no change to the existing position that American vehicles should fit standard plates.
Mr. Edward Davey: Will the Minister go slightly further than he has done? He seemed to suggest that we needed to wait for the Commission to take on the Government. Could not the Government listen to the argument that has been put very strongly from all parts of the House and—rather than wait for the Commission to take the Government on using European law—move to anticipate the outcome, given that they might well be contravening European law by introducing this measure?
Mr. Hill: I have just spent a long time explaining why there are powerful safety reasons for the regulations. It is possible that they will be found to be defective according to the European Union's commercial legislation, but I cleave to the view that we have the right to assert our commitment to road safety in this regard.
Mr. Syms: Will the Minister give way?
Mr. Hill: I will, very briefly.
Mr. Syms: Small businesses that have already spent considerable sums on sending letters to the European Commission, the DVLA and DETR feel very frustrated because no one has listened. We are at the end of the process. The Minister acknowledges that there is a problem. Why can we not sort it out now?
Mr. Hill: I have spent some time telling the hon. Gentleman and the House that we are talking not just about American imported vehicles, but about up to 50,000 vehicles from the far east and Japan that fall into the same category.
Mr. Evans rose—
Mr. Davey rose—
Sir Teddy Taylor rose—
Mr. Hill: I do not want to engage in a protracted discussion, but I will give way to the hon. Member for Rochford and Southend, East, because he spoke about this issue specifically.
Sir Teddy Taylor: The Minister has implied that we have not been applying the law correctly—that what we have been doing has been illegal, but that we have not been bothering about it because the police have been concentrating on other issues. Would it not be appropriate to apply the same policy until some decision is made by Europe? I appreciate that that is not an easy thing for a

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Minister to say, but is it possible that the new law might not be applied in the foreseeable future, given that the police have much to do and many issues to face up to?
Mr. Hill: The hon. Gentleman would hardly expect me to incite people to break the law from the Dispatch Box. Let me add that this is essentially a matter for the discretion of the police force.
Mr. Davey: Will the Minister give way?
Mr. Hill: No. I have given way sufficiently, and I dare say I shall give way again later.
Let me deal with an issue that was raised with rather more passion: voluntary provision for the display of the GB national identifier and the European circle of stars on number plates. I must confess that I cannot deal with the extraordinarily complicated question asked by the hon. Member for New Forest, East (Dr. Lewis) about permanent adhesive, but I shall Peruse Hansard carefully and in due course, if I am able, respond to the hon. Gentleman in writing. The hon. Member for Poole asked whether it was illegal to produce plates featuring a European Union symbol. It is not illegal: there is no provision relating to the symbol in current legislation. Use of it, however, might be illegal if it affected the size or legibility of a registration mark.
The hon. Member for Meirior ydd Nant Conwy (Mr. Llwyd) asked about consultation. Letters were sent to both the Welsh Assembly and the Scottish Executive. How those devolved authorities have dealt with the issue is, of course, entirely a matter for them, but they had two bites at the cherry, because they were involved in the two rounds of consultation. The hon. Gentleman also asked—as did others—who else was consulted. The Automobile Association, the Royal Automobile Club, the Royal Society for the Prevention of Accidents, the Road Haulage Association, the Confederation of British Industry, the number plate industry and the Association of Chief Police Officers were all consulted and welcomed the regulations.
Mr. Llwyd: Will the Minister give way?
Mr. Hill: Let me answer the questions first—this set of questions, at least.
The hon. Member for Aldershot asked for an assurance that after 1 September the display of a number plate not conforming to the regulations would not be a cause for failure of an MOT test. I consider that an important and interesting point. I confess that I do not have the answer; however, I give the hon. Gentleman an absolute assurance that I will make it my business to find it, and write to him. I am grateful to him for raising the issue.
Mr. Llwyd: The Minister said that the Welsh Assembly had had two bites at the cherry. At the time of the first consultation, the Assembly did not even exist.
Mr. Hill: I am tempted to say, Touché!" I take that point, but I assure the hon. Gentleman that, if it had been in existence, the Welsh Assembly would certainly have been consulted.
I would like the House to be clear about the issue of the European symbol on number plates. There is no provision within the regulations for either the GB logo or European
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flag to be mandatory on vehicle number plates. All the regulations do is to allow motorists to take advantage, if they so wish, of a European Commission regulation that allows vehicles displaying the Euro symbol on their number plates to dispense with the need for a separate national identity sticker for journeys within the Community.
Where the Euro symbol appears on the number plate, it must be accompanied by the GB national identifier. It will also be possible for neither logo to appear. It will also be possible for neither logo to appear on the number plate and for the conventional GB decal, as it is known, to be attached to the rear of the vehicle. All those options will be available and acceptable, entirely according to the voluntary desires of the vehicle keeper.
Mr. Evans: Will the Minister now give a direct answer? If motorists in the Ribble Valley display the flag of St. George alone or the Union Jack alone, will they face prosecution because of the regulations?
Mr. Hill: Not if they are displayed as a decal on the rear of the vehicle. There would he no question of a prosecution in those circumstances.
Mr. Evans: I am happy to clarify the situation for the Minister. If a motorist does not have the European Union symbol on the registration plate and just has the union flag on the plate, which I have already seen in the Ribble Valley, could the motorist be stopped and prosecuted because of that?
Mr. Hill: I think that the answer is yes. [Interruption.] There are roars of surprise from Opposition Members but I think that they already knew the answer to that question.
Dr. Julian Lewis: Given that the police are not enforcing the law in respect of those number plates anyway, why are the Government changing the law to allow this practice to be made legal, unless it is because they know that, further down the line, it will be made compulsory?
Mr. Hill: Let me come back to the deep-dyed suspicion of a conspiracy. The fact is that the essence of the scheme is to permit ease of circulation in certain European countries. That is the whole basis of the use of these symbols, which after all are 98 mm by between 40 to 50 mm—4 by 2 inches in the old measurement, for the benefit of the hon. Gentleman. This is not a major deal.
Mr. Bercow: Whenever the Minister has not a leg on which to stand, the decibel level of his oration rises proportionately. Given the concern that my hon. Friend the Member for New Forest, East (Dr. Lewis) has expressed—that this measure is the prelude to a compulsory imposition of an EU symbol, a concern that I expressed to the Minister in the Vehicles (Crime) Bill Standing Committee in January—why will he not now abandon his procrastination, give up the coy nonsense about being merely a junior Minister and pledge in front of you, Mr. Speaker, and the House that he will always oppose any such compulsory EU imposition? It is blindingly simple. Is he up to it?
Mr. Hill: The British Government have no intention of making such a symbol compulsory on number plates. I cannot go further than that.

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I stress the voluntary nature of the arrangement. I know that many of our compatriots are keen to exhibit their national identity, whether it be through the display of the Union Jack or other flags from within the United Kingdom. The Government have absolutely no desire to impede perfectly proper displays of national pride. Of course, as I have said, vehicle keepers may continue to use stickers and transfers on their vehicles. We simply do not believe that the number plate is the right place for such flags or logos. The watchword here is clarity and the need for a standard mark on the number plate.
Mr. Edward Leigh rose—
Mr. Hill: I shall give way to the hon. Gentleman, although he is a somewhat belated, if not entirely unpredictable, sojourner in our proceedings.
Mr. Leigh: If it is unhelpful to road traffic safety to have certain symbols on the number plate, why have any symbol on it? It would surely be easier to exclude all symbols and have neither national nor EU symbols. What is it about the EU symbol that, alone among any other patriotic or religious symbol in the world, makes it the only one that should be allowed on our number plates? Where is the logic in that?
Mr. Hill: I remind the hon. Gentleman that it is entirely up to the individual vehicle keeper whether he or she has the symbol on the number plate. The reason for the use of the EU symbol is to permit ease of circulation in the European Community. It is also a standard symbol, not a confusing or distracting symbol. The hon. Gentleman may not have been here for the beginning of my speech, so I shall repeat that the object of the exercise is clarity. The recognition of a number plate is vital for law enforcement and it is for that purpose that the Government have decided to legislate to ensure that number plates are easy to read and free from other potentially distracting marks. The EU symbol does serve a particular purpose and is to be permitted on a voluntary basis. There is no good reason to allow other variations.
I appreciate that strong feelings over national identity have been expressed here tonight. However, I hope that the House now fully understands the intentions of the new regulations and that the Government, by making the display of the Euro flag optional, have preserved that freedom of choice which is the birthright of every self-respecting Briton.
Question put:—
Mr. Speaker: I think the Ayes have it.
Hon. Members: No.
Division deferred till Wednesday 25 April, pursuant to order [7 November 2000].

Battersea Primary Care Group
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Touhig.]
11.22 pm
Mr. Martin Linton: I am grateful for the opportunity to raise the issue of the funding of Battersea primary care group. I make no apology if this sounds like a cry for help, because the health service is seriously underfunded in Battersea by comparison with neighbouring areas. I do not wish to drown my right hon. Friend the Minister in statistics, but he will know from his Department that Battersea is underfunded by £4 million and he will be familiar with the figures produced by the Merton, Sutton and Wandsworth health authority. Battersea primary care group has an allocation of £70 million, its target spending is £74 million, and that leaves a shortfall of just over £4 million, or roughly £43 a head.
Battersea is not even in the flush of good health. Among the six primary care groups in the health authority, Battersea is in the unenviable position of having the highest rates of heart disease and respiratory disease. Indeed, it may have the highest asthma rate in the country, but this comparison is solely with the other primary care groups in the health authority. Battersea also has the highest neonatal mortality rate; the highest mortality ratio for all ages; the highest admission rate for respiratory diseases; the highest admission rate for men and women over 65; and the highest admission rate for diabetes. I am sorry if the list is long, but it is important to establish the facts. It also has the highest admission rate for epilepsy, the highest conception rate for under-age mothers—three times the London average—and the highest conception rate for teenage mothers. It has the highest proportion of single, widowed or divorced households. Battersea also has the highest proportions of one parent families and of pensioners living alone. All those factors are indicators of medical need.
Battersea also has the highest rates of claims for income support, jobseeker's allowance, attendance allowance and many other benefits. The NHS needs index is the Department of Health's measuring tool for medical need. It shows that Battersea comes top on the indices for acute needs, for community mental health, for district nurses, for health visitors, for community maternity, and for chiropody. Battersea comes top in every single category.
The needs are high in national as well as local terms; Battersea is 26 per cent. above the national average on the community mental health index, and 19 per cent. above the national average on the mental health index. It is 10 per cent. above the national average level for the chiropody index, and 10 per cent. above that for the health visitor index.
Battersea also has the highest limiting long-term illness ratio, according to the normal standardised basis that takes account of age. It has the highest proportion of adults in-household who are recorded as unable to work because of permanent sickness. Battersea has the highest mortality rate for people over 75, and for people under 65. That is extremely worrying, because the population is very young. Of all the 659 constituencies in the country, Battersea has the highest ratio of people aged between 25 to 34.

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The last census showed that Battersea had the second most mobile health authority population in the country. I am sure that the new census will show that we have reached the number one spot—certainly in the Merton, Sutton and Wandsworth health authority and probably in the entire country. The electoral register shows that Battersea has gained 37,000 new voters since the 1997 election: that is, 53 per cent. of electors in Battersea were not living at their present addresses in 1997.
When Battersea is not first in terms of medical need, it is often second after the neighbouring primary care group of Balham, Tooting and Wandsworth, part of which is in my constituency. Balham, Tooting and Wandsworth is not much better off financially, having an allocation that is nearly £4 million under target. It has the highest mortality rate from lung cancer and diabetes, with Battersea in second place in both cases.
The Battersea and Balham, Tooting and Wandsworth primary care groups are at the top of every relevant league table bar one. Both are at the bottom of the spending league table, at roughly £4 million below target. This is not a simple demand for more cash. I want to ask my right hon. Friend the Minister about the criteria according to which funds are allocated to primary care groups. Should the guiding principle be equity, need or demand?
If the Government believe that the guiding principle should be demand, I concede that in some respects the Battersea primary care group has low demand. We have the lowest admission rate for cancer, for instance, and for bypass operations, even though we have the highest incidence of heart disease.
That sums up the problem: Battersea has low demand in some areas, but that is not because needs are low. We have the highest emergency admission-to-hospital rate, but a low admission rate from GPs. That is a classic symptom of people on low incomes in the inner city who need the NHS more but use it less. It is not because they do not believe in it—quite the reverse: it is usually because such people lead hard, stressful and chaotic lives. It is much easier for such people to miss an appointment with a GP or a hospital. To go through the system from diagnosis of a heart problem to a bypass operation often requires a lot of tenacity.
The Government believe that the national health service should be founded on the principle of treatment on the basis not of demand of need. The health service should not simply meet the needs of the articulate or the well organised. We need a proactive health service that can find the people who need the treatment most.
The Government's system is based on measuring need, producing target figures based on need and providing more growth money to be distributed to health authorities with higher need. Primary care groups that are under target should be levelled up. Pace of change money is provided, but what happens? Health authorities have so many "must do" targets, such as reducing waiting lists, fulfilling the quota of cancer operations—all good aims in themselves—that it is easy to lose sight of the most important target of all, which is to meet medical need.
Merton, Sutton and Wandsworth health authority ended up with pace of change money of only £500,000. That may sound like a lot, but the portion that went to help Battersea PCG reach its target was only £281,000—just 0.4 per cent. of its annual budget. Wandsworth council has calculated that at that rate it would take 21 years for Battersea to catch up with its fair share of the budget.
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I understand the reluctance of the Department of Health to reduce budgets. I understand why there is a principle of non-disinvestment, as it is called, and that PCGs should not have money taken away from them. It is not my aim to take money away from any of the neighbouring primary care groups, but I want the growth money to go to the primary care groups that need it most and to close the gap not in 21 years but in two or three years—the foreseeable future. That must be a "must do" target.
I remind the Minister that Battersea primary care group has been a pace setter. It was a pilot for locality commissioning schemes back in 1997–98. When my right hon. Friend the Secretary of State for Health was Minister of State, he visited Battersea primary care group when it was set up as a pilot because it was seen as a model of good practice. I pay tribute to the work done by the chairman of the primary care group, Dr. Sian Job, by Dr. David Finch, and by all the other members of the board who have set up a model PCG. It is involved in its community, it has good relationships with its general practitioners and it consults and listens to local people.
If the Government set up primary care groups, they must listen to them. If they have targets, they must make progress in meeting them. If they give more money to health authorities in deprived areas, they must ensure that the redistribution occurs not just between health authorities but within health authority areas. Wandsworth is in inner London, but in a health authority that is mainly in outer London, taking in the whole of Merton and Sutton. The danger is that this system of funding will turn into a huge disadvantage if money is allowed to drift towards demand rather than need. That argument has all-party support. The Minister will hear it from Wandsworth council as well as from me, as the Member of Parliament for Battersea.
Just as the deprivation of Wandsworth, as an inner London borough, is diluted and, to some extent, disguised by being joined with Sutton and Merton, so the deprivation of Battersea as the most inner London, deprived part of Wandsworth can be disguised by the creation of a new Wandsworth primary care trust, which would average out some of these inequities.
I do not seek to make a purely local point. The aim of this debate is to draw attention to a wider problem through the example of Battersea. Primary care groups need to become intelligent primary care organisations—the very point of setting them up in the first place. When general practitioners were purely reactive, one could not expect them to go out to discover the health needs of their areas. Battersea PCG provides a role model of a group determined to be proactive and intelligent in tackling its job, seeking out health needs and pushing preventive care programmes. It can make sure that the people who most need the health service receive the help.
I appeal to my right hon. Friend to take another look at the formulas used to determine how soon PCGs will meet their targets. While the situation that I have described has come about for the most understandable of reasons and out of the purest of motives, it would be unacceptable, having set targets, to allow it to be possible to take more than 20 years to achieve them. The Minister and his hon. Friends have set up PCGs and a system that can deliver intelligent primary care, but he must either provide the money for health authorities to make that a reality or

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loosen the system so that more resources can be put towards the most important health objective of all—medical treatment in relation to need.
11.36 pm
The Minister of State, Department of Health (Mr. John Denham): I congratulate my hon. Friend on securing an important debate on the funding of the Battersea primary care group. PCGs and primary care trusts are at the forefront of modernising the national health service, and we see them playing a key role in leading the way towards better patient services. I am aware from the debate and from recent correspondence of my hon. Friend's concerns about funding for Battersea PCG.
Before I address my hon. Friend's specific concerns, I want to clarify how PCGs and trusts receive funding, and to set out the background to my hon. Friend's points. Health authorities in partnership with primary care trusts, primary care groups and other local stakeholders should determine how best to use their funds to meet national and local priorities for improving health, tackling health inequalities and modernising services.
Prior to the establishment of primary care groups in April 1999, health authorities established contracts with NHS trusts and other bodies to provide health care services to meet the needs of their populations. Since then, health authorities have been responsible for allocating resources direct to their primary care trusts or primary care groups within national guidelines.
The formula used to set targets for PCTs and PCGs is essentially that used for health authorities. Health authority PCT and PCG allocations are based on a weighted capitation formula that combines the population number for the area with the levels and types of problems historically found in that area. The aim is to distribute NHS funds fairly on the basis of health care needs in the local population. Although the weighted capitation formula is largely based on utilisation, it includes a wide range of socioeconomic variables associated with the need for health care. It takes full account of the age profile of local populations.
A review of the existing funding formula used to distribute resources is under way. The NHS plan has made the direction of travel clear. We want reducing inequalities to be a key criterion for allocating NHS resources, as the NHS plan specifically says. The review is being carried out under the auspices of the Advisory Committee on Resource Allocation, which has NHS management, GP and academic members. We are adopting an incremental approach to the review of resource allocation. ACRA will make regular reports to Ministers as the review proceeds, and will move towards fairer resource allocation as improvements become possible.
When my hon. Friend described the situation in Battersea, he made no acknowledgement of the substantial increase in resources invested in the NHS in his area—as has occurred throughout the country. Although I understand his concerns, to talk solely about distance from target may be inadvertently to give the impression that substantial investment is not going into the NHS in his area. An increase of about 24.9 per cent. in resources in
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the area covered by the Battersea primary care group in three years is, by any measure, a more substantial investment in the health service of that part of London than was experienced in most previous years. Of course, we are only at the beginning of the unprecedented expansion of resources announced in the second spending review, which underpins the NHS plan. That is important in setting the context for the remainder of my remarks.
Overall, health authorities are receiving an increase of about £3 billion for 2001–02. That represents an average cash increase of 8.9 per cent.—a real-terms rise of 6.2 per cent. Merton, Sutton and Wandsworth health authority received an increase of £42.4 million—a 9.3 per cent. increase. That health authority received the ninth largest increase of any health authority in England.
Within national guidelines, health authorities determine the pace of change at which individual PCTs and PCGs in their area move towards their fair share. For 2001–02, the national guidelines state that all PCTs or PCGs should be given a 2.5 per cent. uplift on their unified baselines. All health authorities should distribute the funding for implementing the NHS plan to PCTs or PCGs on the same basis as allocations have been made to health authorities.
Within those parameters, health authorities are encouraged to make progress towards fair shares, especially for those PCTs or PCGs that are most under target. That should take into consideration the service investment that all PCTs or PCGs will need to make this year. In addition, health authorities will continue to follow the principles of pace of change guidelines that we set out in 1998, including moving towards equity, maintaining continuity and stability.
It is true—and, I think, right—that we do not want to take funds away from PCGs even when they are over target, although that is allowed in exceptional circumstances with their agreement. We want PCGs instead to move towards target through levelling up—by allocating bigger shares of the extra money that we are giving the NHS to those PCGs that are furthest under target.
Battersea PCG is one of the five PCGs and one PCT within Merton, Sutton and Wandsworth health authority, covering the three local authority areas. Battersea PCG consists of 51 GPs working in 17 practices, six of which are single handed. The PCG covers a very mobile and multicultural population of 99,000, which has a wide variety of health needs.
In terms of funding, Battersea PCG and Balham, Tooting and Wandsworth PCGs are under target. The Nelson and East Merton PCT and PCG are close to target, while Putney and Roehampton and Sutton PCGs are above target. We do recognise, however, that Battersea PCG is still about £3 million, or 4 per cent., below the figure suggested under the allocation formula.
Nothing in national policy prevents under-target PCGs from moving towards their ultimate target. Although national policy has stipulated a minimum increase in allocations for all PCGs and PCTs during the past three years, there is still scope for all health authorities to allocate extra funds to under-target PCGs and PCTs, provided that does not destabilise services.
Merton, Sutton and Wandsworth and all its stakeholders—including the primary care groups and trusts—agreed how the additional 9.3 per cent. funding should be allocated. They agreed to focus on maintaining stability within the local health economy by levelling up

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under-target PCGs and PCTs. A sum of £500,000 was made available for pace of change for Battersea and Balham, Tooting and Wandsworth PCGs within the borough of Wandsworth. That has moved the two under-target PCGs in Wandsworth 0.6 per cent. closer to target. This is the third year the health authority has set aside funding for the pace of change initiative. Battersea PCG has received the largest increase of any of Merton, Sutton and Wandsworth health authority's PCGs this year.
It is worth noting that all PCGs in the health authority, including Battersea, have confirmed in their 2001–02 service and financial framework that they will deliver the main NHS plan targets this year. One of the aims of the guidance issued nationally was to ensure that the targets set out in the NHS plan would be met in every area of the country.
My hon. Friend has mentioned that although Battersea has poor health indicators, that has not been reflected in the use of services. The health authority's public health department and the two under-target PCGs are working together better to understand the relationship between health needs and utilisation and the range of actions that may be most appropriate better to address health needs.
My hon. Friend mentioned many of the borough's specific problems, which relate to high teenage pregnancy rates, lung cancer and respiratory disease, coronary heart disease and diabetes. I understand the points that my hon. Friend made about funding, but it is also worth acknowledging the many initiatives that are currently in place in Battersea PCG to tackle those problems. The PCG is piloting a "young person friendly" GP practice in Battersea. There is the smart heart campaign, with the London ambulance service and the British Heart Foundation. Work is being done with Battersea research group, through the conduit project, to create active coronary heart disease registers in all practices. A multidisciplinary diabetes taskforce is being established, and there is a relatively new walk-in centre at Tooting.
Those initiatives reinforce what my hon. Friend says about the PCG's ambition and vision. Although I have absolutely no doubt that the PCG would like to make faster progress towards the target than has so far been possible, I am sure that it will recognise that the rate of increase in resources is far greater than practices in the area might have expected under the previous Government.
Of course, health needs are not always met just by increased funding; existing resources need to be matched to health needs. Currently, a health impact assessment is being undertaken in Clapham, which is expected to be completed in the autumn. Such reviews should enable the health community to develop appropriate pathways of care between primary and secondary care, ensuring that the right person delivers the right treatment at the right time in the right environment.
The concerns that my hon. Friend has raised about funding and health inequalities are those that drive the Government's policy to modernise primary care services. They are the very reasons why the NHS plan sets out the
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vision and the ambition that all PCGs will be in PCTs by 2004. The PCTs will have control of much larger budgets. They will have greater flexibility and influence over local health care decisions, as PCTs, rather than health authorities, will be responsible for commissioning services in the future.
I am aware that the PCGs in Wandsworth are considering applying for PCT status as one PCT for the whole borough next year. As I might well have to take a decision on that proposal in the future, my hon. Friend will understand that I should not comment further, but it is legitimate for me to say that, as part of any consultation on any PCT proposal in any part of the country, the question of how the trust intends to deal with health equality issues, patterns of under-provision and unequal access to services are perfectly legitimate issues to be raised by the public, local authorities, patients or others as part of the consultation process. Indeed, such issues are included among those that should be addressed in any application for a PCT. So there will be opportunities for such issues to be addressed as part of any PCT proposal in any part of London.
As part of the allocation to health authorities, more than £54 million was made available last year to improve access to primary care in the United Kingdom, of which London received £8 million. In Battersea, that has enabled an enhancement of the intermediate care team and packages of care; the extension of the falls prevention project; a reduction in waiting times for community-based physiotherapy; and the employment of a PCG-wide phlebotomist. It is good to see that, in that part of London, the additional funds allocated to primary care are being put to good use.
PCGs and, increasingly, PCTs play a central role in the development of primary care itself and in the future shape and direction of the health service. Merton, Sutton and Wandsworth health authority has followed national policy in its funding allocation for 2001–02 and it is inevitable that, as with the national allocation in which there are over-and under-target health authorities, there may at any one time be over-and under-target PCGs and PCTs. The speed at which we can move health authorities towards their targets and the speed at which health authorities can move PCTs and PCGs towards their targets has to balance two issues: the desire to move health authorities progressively towards equity as represented by weighted capitation targets, and the need for across-the-board increases to maintain continuity and stability in the service and to make progress nationally in priority areas.
I hope that I have indicated to my hon. Friend that we are making progress nationally and in the health authority. Substantial additional funds are available to the national health service and, in the longer term, a review of the national funding formula that is under way will seek more explicitly to tackle the issues of health inequality that he raised in his speech.
Question put and agreed to.
Adjourned accordingly at nine minutes to Twelve midnight.