Clause 6 - Road fuel gas
Finance Bill
10:15 am
Mr Andrew Tyrie (Chichester, Conservative)
I am sure that we will find out more about your deep knowledge of this subject, Mr. McWilliam, as we examine these eight clauses.
As the Minister will no doubt explain, the clause deals with liquefied petroleum gas. Its main effect is to increase the LPG duty by almost 45 per cent., from 5.4p per litre to 7.82p per litre. My biggest worry is the effect that that will have on the LPG market. The case against the Government's action has been emphatically summed up by the chief executive of the Retail Motor Industry Federation, Matthew Carrington, who said:
''The duty increase on LPG could be the beginning of the end for the fuel in the UK. This anti-green measure is a backward step environmentally. It could be a death-blow for the fledgling LPG market, and could destroy public confidence in the viability of all alternative fuels.''
He went on to say:
''At a time when we are all being encouraged to think beyond conventional fuels, it seems paradoxical that the government would take away any incentive to try alternatives, especially since it was the government that encouraged us in the first place.''
That leads to a number of questions, which I should be grateful if the Minister could answer. What is the Government's long-term intention for LPG? Do they have a long-term policy? Where can we find it in a form that looks credible if the Minister does not present it to us today? Why have the Government reversed the freeze that they introduced in 2001? There has been a complete reversal of policy in four years. I will give the Minister time to think about those.
No doubt a brief has already been prepared for him on the question about 2001; I have been trying to think of some explanations for the change myself. First, the Government might intend to encourage people out of LPG and into biofuels because another effect is to narrow the differential between the two. Another possibility is that the Government believe that the industry has now invested enough to make it self-sustaining to switch to LPG, so they can afford to raise rates. If that is the explanation, it is not the majority view of those who were recently consulted. Finally, I ask the Minister to comment on the fact that the majority of respondents in that consultation wanted to see no change in these key differentials.