HL Deb 11 October 1999 vol 605 cc4-6

2.55 p.m.

Lord Campbell of Croy

asked Her Majesty's Government:

Whether they are taking any steps to compensate for the widening differential between taxation applied to British road haulage vehicles, including fuel, and the taxation of similar vehicles registered in continental Europe.

Lord McIntosh of Haringey

My Lords, the Government believe that the best way of helping the UK haulage industry is to create a climate of sustainable economic growth and long-term investment in business. When considering issues of competitiveness, we must look at both the total tax burden and other social and business costs. Taking all those factors into account, the Government believe that the position of UK hauliers compares favourably with the position of hauliers in many other EU member states.

Lord Campbell of Croy

My Lords, I am grateful to the noble Lord for his reply which brings in the question of social taxation and insurance. However, is he aware that besides the road haulage industry other businesses are also affected, such as those which have to own their own lorries because of their trading requirements? Would the Minister be surprised if British operators were to apply for registration abroad?

Lord McIntosh of Haringey

My Lords, I would be surprised because that would be an extreme measure to take as regards differences which are marginal or apply in both directions. As I made clear in my first Answer, the climate of sustainable economic growth which has been achieved under this Government is significant, as is the issue of other costs which apply to all businesses, whether or not they are road haulage operators. I refer to corporation tax and income tax.

Lord Islwyn

My Lords, would not the Government be wiser to take note of the old adage that when the cost of transport is put up, that puts up the cost of just about everything, and that that applies particularly in Britain which is essentially a road-based economy?

Lord McIntosh of Haringey

My Lords, of course it is true that the costs of transport affect many sectors of the economy However, our reasons for increasing fuel duty and vehicle excise duty arise to a considerable extent from our statutory obligations under the Kyoto agreements. I hope that my noble friend will agree that pollution affects all sectors of the economy as well as transport costs.

Lord Saatchi

My Lords, will the Minister give his reaction to the action of Eddie Stobart, which is, I believe, Britain's No. 1 road haulage company, which is now registering 250 of its trucks on the Continent? Does the Minister condemn that practice on the ground that it constitutes tax avoidance, or does he praise it on the ground that it maintains competitiveness and employment in a key British industry?

Lord McIntosh of Haringey

My Lords, I have met Eddie Stobart and I have a great respect for him as an entrepreneur. If he chooses to register a certain number of vehicles overseas—a very small proportion of his fleet, I may say—he will of course at some stage run up against cabotage rulings. He may find himself in the position where, if he operates a domestic haulage service in a country other than that in which his vehicles are registered, he will be breaking the law in one country or another.

Baroness Thomas of Walliswood

My Lords, is the Minister aware that as a result of the price differential many lorries are taking large amounts of petrol through the tunnel and on Channel ferries—some in supplementary or additional tanks? Are the Government concerned about the safety implications of this practice? If so, what will they do about it?

Lord McIntosh of Haringey

My Lords, as far as concerns taking normal full tanks through the tunnel and on cross-Channel ferries, there is nothing the Government can do about that. The vehicle manufacturers have the responsibility of making sure that those tanks are full. Issues of safety could arise with regard to what I believe are called "belly tanks" for carrying additional petrol. We would be very concerned if the practice were to spread.

Lord Mackay of Ardbrecknish

My Lords, if the Government have to put up the price of petrol in this country in order to meet their Kyoto targets, can the Minister explain to the House and to those of your Lordships who have been on holiday on the Continent during the summer why other continental countries do not seem to feel any obligation to do likewise?

Lord McIntosh of Haringey

My Lords, it is not for me to answer for other European countries; it is for me to say that they are other European countries—a point which seems to have escaped noble Lords opposite. The noble Lord's experience is probably the same as mine—although he has had a good deal more time than I to travel around Europe recently—that other countries have also been putting up their fuel taxes.

Baroness Young of Old Scone

My Lords, can the Minister assure us that the Government will continue with the excellent line they have taken on this issue in order truly to reflect the social and environmental costs of road transport? Will the Government continue to try to find ways to mitigate any burdens on industry—not from this particular measure but from other similar measures in environmental taxation—and not waiver from what is a good, strategic and long-term approach to a deep issue in this country? Can the Minister further assure us that the Government will not waiver in the face of the short-termism that we hear from the Benches opposite?

Lord McIntosh of Haringey

My Lords, the Chancellor said in his July 1997 Budget that the increase in real terms which took place then would be continued "in future Budgets". Indeed, in recent Budgets we have allowed for a continuing increase of the same size in real terms for our public expenditure estimates for the next three years. If my noble friend is asking me about the dim and distant future, such as a period when we might expect to see a return of a Conservative government, I must advise him that I am not willing to go that far into the future.

Lord Campbell of Croy

My Lords, arising from the last question, is the Minister aware that, unfortunately, Scotland and northern Scotland are suffering most from the very high fuel tax?

Lord McIntosh of Haringey

My Lords, it is logically the case that where there are longer distances, more fuel is consumed. The overriding arguments, which I have made clear in my previous answers, apply to Scotland as well as to the rest of the United Kingdom.