Road Fuel Prices: Effects on Rural Areas (Hansard, 1 November 1994)

§ The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley)
My Lords, we shall take great care in considering any recommendations, such as those of the Royal Commission on Environmental Pollution, for increases in the running costs of road vehicles. There are, though, a wide range of factors which would have to be taken into account by my right honourable friend the Chancellor of the Exchequer.

Lord Campbell of Croy
My Lords, I am grateful to my noble friend for his reply. Does he agree that a general increase would raise the cost of living disproportionately 768 in rural areas, where everyday life is dependent upon road vehicles, especially in Scotland and Wales, and where congestion and pollution occur infrequently? Will the Government therefore give urgent consideration to road pricing schemes, difficult though they may be, in urban areas and on congested roads where disincentives are very much needed?

§ Lord Henley
My Lords, I believe that increases of the sort which the Royal Commission is talking about would certainly have considerable implications for jobs, the economy and individuals. That would need to be the subject of detailed examination. I accept the point which my noble friend is making: that it would also possibly have greater implications for those living in rural areas. As regards road pricing and its possible effects, I can give an assurance to my noble friend that that is something which colleagues in the Department of Transport are looking into. A research programme into its possible effects, particularly on urban road pricing, has been carried out. No doubt in due course we shall be able to let my noble friend know more about that work.

Lord Bruce of Donington
My Lords, in view of the fact that most noble Lords would always wish to obey, both in the letter and in the spirit, the Salisbury rules in connection with items included in party manifestos, will the noble Lord inform the House as to whether, at the last general election, the party opposite promised to increase the price of fuel?

§ Lord Henley
My Lords, I can assure the noble Lord opposite that in last year's Budget my right honourable friend the Chancellor of the Exchequer—I refer the noble Lord to paragraph 450 of the Red Book—gave a commitment to increase road fuel duties, and not prices, by an average of something of the order of 5 per cent. per annum. That is considerably less than what the Royal Commission is suggesting, but it is in order to help ensure that the United Kingdom meets its Rio commitment to reduce CO₂ emissions to 1990 levels by the year 2000.

§ Lord Clark of Kempston
My Lords, does my noble friend agree that if there were any draconian increase in petrol or fuel tax, that would not only inflict hardship on those living in rural areas, but it would be an additional cost on business which would reduce our competitive position? Does my noble friend further agree that careful consideration should be given to this matter because we must retain our competitive edge?

§ Lord Henley
My Lords, my noble friend is right and that is why I answered my noble friend Lord Campbell of Croy in the manner which I did the first time I replied. There will be considerable implications as regards jobs, the economy and individuals if we increase fuel prices by as much as the Royal Commission has suggested. In response to the noble Lord, Lord Bruce of Donington, I repeated the commitment which my right honourable friend has given to increase duties by an average of 5 per cent. a year—that matter would have to be considered each year—in order to meet our Rio commitment.

§ Lord Brooks
My Lords, will the Minister not agree that there are few worse pollutants than pollution of the 769 freedom of movement, freedom of choice and freedom itself and that the motor car is a vital freedom to so many of our people? Let us be careful before we injure it.

§ Lord Henley
My Lords, I shall be the first to agree that the motor car is a vital freedom to the individual. I believe that most of us would also agree that on occasions the numbers of motor cars—which normally mean other people's motor cars and not one's own—can be an infringement of the liberties of other people. Quite obviously there has to be a balance drawn between those two particular freedoms.

§ Lord Monkswell
My Lords, are the Government aware that one of the biggest difficulties in terms of the cost of motoring is the perception of motorists that it costs them only the price of the petrol to travel from A to B when in fact, because of the fixed costs associated with motoring, the real costs which they incur are far higher? Have the Government any plans to transfer some of those fixed costs such as the road tax to increase the variable cost in fuel duty so that the actual cost of motoring would not change, but that the motorist's perception of the real costs would be improved?

§ Lord Henley
My Lords, I regret to say that I do not agree with the noble Lord. I believe that most consumers are sophisticated enough to recognise all the costs, both those of petrol and of the fixed costs. I believe that most of us find those costs quite a considerable burden on our individual budgets.

§ Lord Peston
My Lords, at the moment I find the noble Lord's answers puzzling. Does he agree that if the Government use the price mechanism for fuel the increase in price must fall on those who value the object the most? The Minister is trying to be as helpful to his friends as he can; but does he not recognise that if the price is raised in the end the user will bear the burden? Does he agree that there is no way around the problem other than not to raise the price in the first place?

§ Lord Henley
My Lords, if the noble Lord is trying to suggest that my answers have been contradictory, he is wrong. I made it quite clear that my right honourable friend the Chancellor of the Exchequer has given a commitment to increase duties by something of the order of 5 per cent. per year in order to meet our Rio commitments. I believe I said at first that the sort of increase suggested by the Royal Commission is considerably greater than that and that it would have very real and much greater implications than the increases purely in duty rather than in total price, as suggested by my right honourable friend the Chancellor of the Exchequer.

§ Lord Marlesford
My Lords, in expressing sympathy for the original point made by my noble friend Lord Campbell of Croy, does my noble friend recognise that it is really the number of cars on the road which is the main problem? Does my noble friend agree that one way of regulating that is to use the annual road tax on cars which, since it was introduced in its present form in 1968, has fallen in real terms to less than 60 per cent. of its level at that time? Does my noble friend further agree that if the 1968 level were restored, it would mean raising the 770 current rate from £130 to £220 which would have the benefit of not only reducing the number of cars, but of producing an extra £2 billion to the Exchequer?

§ Lord Henley
My Lords, as I believe is fairly obvious from the exchanges in this House, there are advocates of fuel duty and advocates of vehicle excise duty. My right honourable friend the Chancellor of the Exchequer will, I imagine, continue to consider both those duties and the full implications of their effects.

§ Lord Ezra
My Lords, will the noble Lord indicate whether, in the light of the Royal Commission's report to which he referred frequently, and of the views expressed in this House this afternoon, the Government are contemplating issuing a strategy on the whole transport issue to which the various problems can be addressed?

§ Lord Henley
My Lords, no doubt my right honourable friend the Secretary of State for Transport will consider that in due course. All I can say is that my right honourable friend the Chancellor of the Exchequer will consider the implications, as far as the duties go, in the forthcoming Budget.