§ Mr. Barry FieldTo ask the Chancellor of the Exchequer what assessment he has made of(a) the environmental and (b) the fiscal effects of his policy on tax differentials between diesel and other fuels.
§ Sir John CopeDuty is charged on road fuels at rates which not only raise sufficient revenue but also take account of environmental considerations.
The environmental benefits of diesel rather than petrol consumption are not entirely clear cut. Diesel engines are 94W more efficient than petrol, so they emit less carbon dioxide per mile travelled. But this advantage has to be weighed against higher emissions of nitrogen oxide and particulates (soot/smoke) than from a petrol engine fitted with a three-way catalytic converter.
It is estimated that ending the diesel duty differential with unleaded petrol would yield around £65 million in 1993–94; ending the differential with leaded petrol would yield £555 million in 1993–94.
§ Mr. Barry FieldTo ask the Chancellor of the Exchequer what assessment he has made of the effect of the decision at the last Budget to widen the tax differential between diesel and other fuels on(a) the use of diesel fuel and (b) on the levels of revenue generated from diesel use.
§ Sir John CopeThe last Budget increased the duty on diesel and unleaded petrol by 4.5 per cent., in line with inflation. The 7.5 per cent. increase on leaded petrol widened the tax differential between diesel and leaded petrol (duty and consequential VAT) from 4.7 p per litre to 5.8p per litre. The impact of this on diesel consumption is very difficult to quantify. In the short run, however, few motorists will have had time to respond to the wider tax differential by switching to vehicles with diesel engines so the impact on diesel consumption is likely to have been insignificant. Accordingly, we do not expect the real increase on the leaded petrol duty to affect the yield from diesel duty from the present financial year.