Clause 10 - Bioethanol
Finance Bill
2:30 pm
Mr Michael Jack (Fylde, Conservative)
It is a great pleasure to have you as our Chairman this afternoon, Sir John. You are a veteran of many Finance Bill Committees on which I have had the honour and pleasure of sitting and I know that you will guide our proceedings with distinction.
At the cessation of business at 11.25, I was just about to say that, in the context of justifying the 20p level of reduction in duty on biofuels, Ministers have often argued that because some of the agricultural land that is used to produce crops for biofuels, for example set-aside land, receives a £45 a hectare payment, that, together with the benefit conferred by the Treasury by means of the duty reduction, is in some way sufficient to ''kick-start'' the industry. There is a flaw in that argument. Even if it were to stack up statistically—it does not in my judgment—the problem is that the benefit is conferred on the grower of the crop and the argument automatically implies that the grower of the crop will be prepared to receive a reduced price from the processor, who would say, ''You've had your £45 a hectare. This is the number of litres of fuel I will get out of your crop contribution to my feedstock, and therefore this is the lower price.'' That is not quite how things work in the real world of agriculture. If we are talking about a market mechanism determining the price between the seller of the crop and the processor, I do not see how the argument holds water in the real world. The £45 a hectare is insufficient in itself to make up for the deficiency between the figure of 20p and the 30p that is argued for.
The benefit of having a break at luncheon is that if one chooses to devote it not to the consumption of food, but to following up what the Economic Secretary said in reply to an earlier debate, one comes to some interesting conclusions. When my hon. Friend the Member for Chichester (Mr. Tyrie) challenged the Economic Secretary about where other calculations of duty reduction came from, he uttered the magic words, ''pre-Budget report—go seek and find!'' We were told that we would find the arguments laid out in that report, which was published in November 2003, and so I went back to it and found box 7.1, entitled ''Alternative Fuels Framework''. I thought that this
was going to be the moment of revelation, but when I came to look in the wonderful box on page 155 for the detailed calculations that set out how the figure of 20p came about, I could not find that information. In fact, the page is completely figureless. There is no calculation.
In fairness to the Economic Secretary, who is a good and straightforward man, he was definitely guiding us, so I went back to the document referred to on page 155: ''Tax and the environment: using economic instruments''. I thought that that would give me the answer that I sought. It is 67 pages long so I did my best to skim-read it during the luncheon interval. I found some reference to biofuels, but no reference whatever to a breakdown of the costs or how the figure of 20p came about. I had gone back to 2002, at the direction of the Economic Secretary, but I could not find that information. I put my hand up and admit to my human frailty, but I look to the Economic Secretary for further guidance.