Clause 8
Finance (No. 2) Bill
6:30 pm
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
The Hydrocarbon Oil Duties Act 1979 requires road vehicles to use fuel on which the full rate of duty is charged. However, schedule 1 to the Act describes excepted vehicles, which are entitled to run on rebated gas oil, popularly known as red diesel. This clause will introduce a power to enable Her Majesty’s Treasury to amend schedule 1 by statutory instrument.
The schedule for excepted vehicles was first introduced in 1935. It has failed since then to keep pace with changes in technology and commercial practice. As far as we can tell, the last serious review of that policy took place in the 1960s. Vehicle technology and design continue to evolve, creating new types of vehicles that were simply not envisaged when the framework for schedule 1 and the excepted vehicle status were first drawn up. For that reason, vehicle owners, enforcement agencies, tribunals and the High Court have interpreted the schedule on a case-by-case basis, which has resulted in some inconsistency of approach. Consequently, it has become increasingly unclear why some types of vehicle should benefit from excepted vehicle status and others should not.
In December 2004, the Government issued a consultation document on changes to the excepted vehicles schedule. A summary of responses to that consultation was published in December 2005 alongside proposals for changing the schedule against a set of principles for establishing greater clarity and consistency.
The reasons for the powers in clause 8 to amend the schedule by Treasury order are threefold. First, they will make it easier to keep the schedule up to date so that we do not stifle developments in new engine design and technology. Secondly, they will enable the Government to respond more quickly when loopholes are identified to ensure the degree of consistency and fairness that we seek in the system. Thirdly, they will give the industry the opportunity to contribute fully to ensuring that changes in definitions fit their industry and do not have unintended regulatory consequences and impacts.
Industry associations with particular interests inthe matter have welcomed our approach almost unanimously. The Agricultural Engineers Association commented that it considers it a practical solution.The International Powered Access Federation, the Construction Plant-hire Association and others have also backed our approach. We have published in draft the Treasury order to amend the schedule, together with a partial regulatory impact assessment. Those have been circulated to Committee members and to associations and groups representing interests in the field.
In the long run, this valuable relief can remain viable only if it has clear rules based on consistent principles. The changes we have announced are aimed at restoring clarity and consistency to the schedule, and the power to add, amend or delete categories by Treasury order set out in clause 8 will ensure that the schedule continues to provide that clarity and consistency and continues to keep pace with modern developments.