Clause 9 - Rates of duty for goods vehicles
Finance Bill
6:00 pm
Mr James Clappison (Hertsmere, Conservative)
We now come to the changes in excise duty relating to goods vehicles, which will be of interest to the road haulage industry. I cannot let the matter pass without making a few remarks about the industry and its state.
The changes in clause 9 were announced by the Chancellor as part of the package in his pre-Budget report, in response to the pressures that I described in the previous debate. At the time of the pre-Budget Report, the Chancellor said that the changes were equivalent in value to a cut of 3p in the price of diesel to the haulage industry. However, that 3p is only a small fraction of the total increase in the cost of diesel that has come about since the Government came to office, an increase that has meant that British hauliers are at a significant disadvantage compared with their European counterparts. British diesel prices are still the highest in Europe by some distance; they are substantially higher than they were in 1997 and three quarters of that price is made up of tax and duty.
That disparity is particularly significant in Northern Ireland. According to road fuel prices supplied by the House of Commons Library for 9 April, diesel is 47p a litre in the Republic of Ireland and 77p a litre in the North. The Minister will have seen the interesting article in yesterday's Financial Times outlining the effect on the petrol and diesel retailing industry of disparity in the North. Industry has gone into decline and smuggling is taking its place, controlled by groups in the Province.
Given that the changes are said to be part of a package to help the haulage industry in the face of European competition, has the Minister any statistics for the increase in the number of foreign trucks operating in the United Kingdom in the past four years? Will he also address the question of cabotage, by which foreign firms operate in the domestic business carrying freight from one destination to another in the United Kingdom? What is the extent to which foreign hauliers are taking a share of the internal United Kingdom market?
We were told in the pre-Budget statement that the Chancellor wanted to introduce a vignette system under which non-British companies and lorries would pay their share to Britain for using British roads. The Chancellor apparently adopted it in his pre-Budget statement, although he did not mention it. An accompanying press notice stated that the Government had consulted on the matter and that they would continue to develop their plans to set up a vignette in the coming months. Given that we have been calling for such a system, we should be grateful if the Financial Secretary would tell us what is happening about it.
On the detail of the proposed changes, I ask the Financial Secretary to consider one category of vehicle in particular. I appreciate that several categories relate to goods vehicles and vehicle excise duty. However, I invite the Financial Secretary to give an account of the history of one such vehicle and the reasons for the Government's thinking on the matter. The 40-tonne vehicle on five axles has only recently been allowed on to United Kingdom roads following a European Union directive. The UK Government took the view that that particular lorry causes much more wear and tear on UK roads than the previously permitted and common 38-tonne lorry. I cannot give the technical reasons for that, but the Government have previously placed that fact on the record.
The wear and tear is so great that the 1999 Budget set a relatively high rate of vehicle excise duty for 40-tonne five-axle lorries. That rate was £5,750, compared with £3,210 for 38-tonne five-axle lorries—a significant differential. A press notice said that it was set at that rate
``to discourage strongly the use of these vehicles in view of the additional road damage that they cause''.
The 2000 Budget reduced the rate for the 40-tonne lorry to £3,950, and this year's Budget will reduce it further to £1,850 from December 2001. In view of that dramatic change of the 40-tonne lorry's position in vehicle excise duty, will the Financial Secretary say whether the environmental factors that were enunciated in 1999 and the effect on British roads still apply? Why have both the absolute VED for the 40-tonnes vehicle and the differential with the more common 38-tonne lorry fallen? We would appreciate an outline of the Government's thinking, given that they previously said that the 40-tonne lorry causes wear and tear to, and expense for, our roads.