Clause 6 - Road fuel gas
Finance Bill
10:45 am
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
Our starting and principal point is an assessment of the environmental benefit that the fuel delivers, relative to alternative fuels. However, a number of other factors come into play in such decisions. A concern to see continuing investment and the industry flourishing is part of our Budget judgment. A concern to see a continuing expansion in the number of drivers using LPG vehicles and in the number of refuelling stations at which it is available is also an element. However, our principal point of judgment revolves around the environmental gains that may come from LPG, precisely as we set out in the alternative fuels framework in the pre-Budget report in December.
The changes in clause 6 mean that the rate of duty for LPG will be 13.03p per kilogram from 1 September this year, which is equivalent to a differential of 40.7p per litre between LPG and main-rate road fuels. The rate is still almost 2p per litre lower than it was in 1997.
I emphasise that the decision was taken after extensive and detailed consultation with the industry. I am therefore confident that it is the correct decision, which strikes the right balance, as the director general of the LP Gas Association said. We cannot support the fuels at any cost, but we must appreciate that some certainty and stability in the industry is necessary to allow it to plan its expansion and to invest for the future. Setting out the differentials three years ahead goes a long way to giving firms the certainty that they need.
Government and industry have invested heavily in the LPG industry in the past four years, and with the UK's manufacturing expertise, a good-size fleet and the infrastructure, the industry is well placed to meet new challenges in the period ahead and set for further expansion in the years to come. I commend the clause to the Committee.
Question put and agreed to.
Clause 6 ordered to stand part of the Bill.