Schedule 12 - Mileage allowances
Finance Bill
10:45 am
Mr Michael Jack (Fylde, Conservative)
I have a question for the Financial Secretary. I notice that in paragraph 3 of schedule 12 there is a definition of a car—
Mr Edward O'Hara (Knowsley South, Labour)
Order. I thought that the right hon. Gentleman was raising a point of order. The Committee has approved amendment No. 30, and the hon. Gentleman rose as I was proposing that we debate whether the schedule should be the twelfth schedule to the Bill.
Mr Michael Jack (Fylde, Conservative)
On a point of order, Mr. O'Hara. Could you therefore guide me? The Chairman's selection list shows schedule 12 as a separate item. I therefore assumed that there would be a debate on schedule 12.
Mr Edward O'Hara (Knowsley South, Labour)
I was in the process of proposing the Question on the schedule so that it could be debated.
Question proposed, That this schedule, as amended, be the Twelfth schedule to the Bill.
Mr Michael Jack (Fylde, Conservative)
Thank you for your helpful clarification, Mr. O'Hara. Paragraph 3 describes the car as a mechanically propelled vehicle. There are new technologies in the wings—electrically driven vehicles, for example—that may not necessarily be mechanical in the same sense as a petrol engine vehicle. [Interruption.] I am disappointed that there is so much carping comment from the Labour Benches. I should have thought that hon. Members would be interested in ensuring that the proposals covered the new forms of environmentally friendly technology. I merely wanted the Financial Secretary to make a statement on the record that electric, or petrol-electric, vehicles were covered by the measure.
With reference to the mileage allowances in paragraph 4, the Financial Secretary cited figures from the AA that indicated a running cost of 18p per mile. He did not say what was in the 18p, and therefore whether, in the context of the first 10,000 miles, the remaining 22p was adequate compensation for the depreciation and other costs not included in the 18p. Can he give a source for the Treasury's figure of 22p? People like to know how the numbers are calculated. Finally, can he say why 10,000 miles was selected, rather than any other distance?
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
I can give the right hon. Gentleman the reassurance that he seeks about what is covered by the term ``car''. That certainly would include electric and dual-fuel vehicles, and I agree that it is important that it should.
With regard to the costs, I quoted from the AA's most recently published assessment of motoring costs. The AA sets out the running costs under the headings of petrol, oil, tyres, servicing, repairs and replacements, which add up to 18.42p per mile for 1400 cc and 2000 cc cars. The total cost per mile, including ownership, for those vehicles, when run for 20,000 miles a year, comes to 40.78p per mile. Many of the AA's figures for motoring costs are for smaller cars, whose costs per mile are less. The costs are greater for larger cars. In setting the various figures used, the Government have paid close attention to the costs incurred by drivers. We also wanted to ensure that the impact on those who lost out because of the changes was kept modest. More people are gaining from the changes than are losing from them, and the overall impact on the Treasury will be negative: it will lose about £45 million a year in tax. I hope that no one will allege that the changes are harsh. In fact, we have been able to develop them in a way that minimises the adverse impact on any individual.
Mr Michael Jack (Fylde, Conservative)
I thank the Financial Secretary for that information. I note that under paragraphs 4(3) and 5(4) the Treasury may by regulations alter the rates in the schedule. As the Government have substantially increased taxation on hydrocarbon fuels in the past, and there are uncertainties about the cost of those fuels in the future, will the Financial Secretary enlighten us, for the record, about the process that would be employed for a review to determine whether those two provisions were to be exercised?
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
We will keep these matters under review, as we do all parts of the tax system.
Question put and agreed to.
Schedule 12 agreed to.