HC Deb 27 February 2003 vol 400 cc390-1
6. Dr. Alan Whitehead (Southampton, Test)

What effect on fuel tax revenues will result from changes that he has made in the taxation of green fuels. [99467]

The Economic Secretary to the Treasury (John Healey)

The Government are committed to using duty incentives to promote increased use of alternative and green fuels to improve the environmental performance of road transport. In the next financial year, the wide range of existing duty incentives to use green fuels will be worth approximately £1.4 billion.

Dr. Whitehead

I thank my hon. Friend for that answer, which demonstrates the Government's commitment to encouraging the development of alternative fuels. Does he accept that tax signals need to be stable and long term to assist that development? Does he intend to relate reductions to the need and opportunity for development, such as the tremendous opportunities for the development of biofuels as blends to existing fuels at the pumps?

John Healey

My hon. Friend, who is knowledgeable about these matters, makes an important point. At each stage since we introduced measures on duty discounts for fuels, we have both weighed the evidence available to us and signalled in good time the changes that we plan to bring in—the very point that my hon. Friend makes. We have done that both with the new cut on biodiesel that we introduced in July last year and in the pre-Budget report, when we announced ahead of time our intention to introduce a 20p per litre cut on bioethanol.

Miss Anne McIntosh (Vale of York)

Is the Minister aware of the experimental station near Selby, which was looking into making biofuels from willow produced by many farms in the Vale of York and which, regrettably, closed, despite the measures that the Government introduced? Looking ahead to the coming year, what representations has the Minister received about the extension of the lower rate of duty to biofuels? That would obviously be beneficial to the farming community, but how would he square it with the long term interests of the oil companies in this country?

John Healey

We have received a wide range of representations and I have held meetings with a wide range of interest groups on our policies for biofuels, as the hon. Lady would no doubt have anticipated. On her point about farmers, we have set our discount duty rate at 20p per litre for biodiesel and announced our plans for bioethanol. Although the Government recognise the wider importance of the biofuel industry and the diversification potential for farming, the principal policy purpose of the biofuel duty cuts is to improve the climate change performance and to reduce climate change gases in this country. We believe that the cuts that we are proposing are sufficient to recognise the environmental benefits that we shall gain while providing good value for public money.