Clause 8
Finance (No. 2) Bill
6:45 pm
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
Once we start considering the environmental consequences of such matters, red diesel is a lot less clean than main road diesel. The types of vehicles involved in various facets of road construction need to be treated in the way that we propose under the schedule. Some are quite heavy users of the road fuel network, which is why some, according to our proposals, will not be eligible in the way that they have been in the past.
The principal case, which I have attempted to explain to the Committee, is the answer to the question of the hon. Member for Braintree. No one can say that road hauliers are anything other than heavy road users. There is no case and they have never been excepted road vehicles under the terms of schedule 1. Therefore, there is no case for their being treated as such even though they may wish to make other parallel arguments about the levels of fuel duty and the costs that they impose as part of their operations.
Finally, turning to the rather extraneous question that the hon. Members for South-West Hertfordshire and for South-East Cornwall (Mr. Breed) asked me, canal boats come under a separate regime. They are not excepted vehicles. However, they have a right to use red diesel rather than main road diesel paid at that rate. The reason is that the UK has a derogation from the energy products directive in the European Union. It allows private boat owners to continue to use red diesel—a derogation that is due to expire at the end of December of this year.
Following a long process of detailed discussion with many boating associations, and following detailed analysis within HMRC, we announced in the Budget that we believe that there is a strong case for arguing with the European Commission that we should havean extension of that derogation. The UK has the opportunity to submit an application for that extension. We confirmed in the Budget that it is our intention to do just that. Alongside the Budget, we published our first regulatory impact assessment, which we built in consultation with the boating associations. That sets out our case quite strongly. We will apply in that way for the UK’s derogation, which would allow private boat owners in the UK to continue to use red diesel, and which would mean that we did not incur the cost and the consequences that an ending of the permission would entail.
The hon. Member for South-East Cornwall talked about fishermen in his constituency. Just to be clear, commercial boats are not subject to the derogation. Commercial boat owners and users can use rebated gas oil or red diesel anyway, without the provision of that derogation, so they will not be affected by the European Commission’s ultimate decision on whether we will be entitled to extend the derogation that applies to private boat owners. I hope that that is helpful to the hon. Gentleman, and generally to Members who raised points about the clause. Given the hour, I hope that members of the Committee will allow clause 8 to stand part of the Bill.