I beg to move amendment No. 12, in page 11, line 42, at end insert
`only if the Government has presented a report to Parliament before the passing of this Act on certain of its implications specified in subsection (2) below.
(2) The Government shall report to Parliament on the implications of Schedule 4 for—
The amendment requires the Government to withdraw schedule 4, which is long and complex, covers 24 pages and is cross-referenced with the Vehicle Excise and Registration Act 1994. In their haste to open up another base for indirect taxation, we believe that the Government have not taken proper account of public safety or of the cost to businesses and the likely implications for employment. In particular, I want to emphasise the full ramifications of the schedule and I want to put the case for full assessment, with public consultation with the relevant bodies, to be undertaken before the Government require the House to take a decision on these matters.
Rather than deal with every category in the schedule, I shall use examples to make the principle points on public safety and the costs to businesses. The matter is further complicated by the fact that, in addition to schedule 4, the Government have tabled complex amendments in acknowledgement of their errors. They have tabled them in an attempt to ameliorate the worst excesses of their original proposals, but they have failed in that attempt.
I want first to consider the categories of vehicles that are now to have vehicle excise duty applied to them. Those vehicles are chiefly—[Interruption.] It is difficult to debate an important issue while half a dozen conversations are going on. Forgive me, Dame Janet—
Thank you, Dame Janet. I am much obliged.
The vehicles that are covered—snow ploughs, gritters, street cleansing vehicles, street lighting tower wagons and road construction vehicles—are mainly used by local authorities or by the private contractors which now fulfil certain obligations, as a result of the Government's compulsory competitive tendering policy. I shall deal only with road safety and likely costs. Because of the complexity of the Bill, it has been difficult for private contractors or local authorities, in such a short period, to unravel the complicated relationships that are set out in the schedule.
The Association of Metropolitan Authorities has made representations to me on the difficulties of ascertaining exactly the new rates of duty. Because of the separation of direct labour organisations and privatisation, it is difficult to see how costs can be measured. Clearly, for local authorities that are already rate-capped and have severe local authority grant settlements, any increase in cost will not just threaten the provision of services. I am sure that hon. Members can appreciate the significance of gritters or snow ploughs, particularly for authorities in the north of the country.
For example, the Association of Metropolitan Authorities has said that about 30 vehicles in the Wigan authority's fleet will be in this class of taxation for the first time. In trying to decide the effect of the new charges, it contacted the local taxation office, which was unable to supply anything other than a range of duties that may apply. That means that the additional costs to that authority could be anything from £1,500 to £60,000 a year.
Not only are there costs and possible implications for local authorities, private business and employment, but there are clear road safety implications. If local authorities which face severe grant restrictions are unable to find money, there could be severe consequences for the future maintenance of local authority highways and for road safety. That is at a time when there is extreme concern about the condition of roads in local authority remits, as a result of funding arrangements.
In addition, is there not an equity point that, if specialist vehicles spend most of their time stationary because men are up the tower or if they are used only for the few weeks of the year when salting is necessary, that goes right against the theology of vehicle excise duty, which is aimed at trying to deal with damage to our roads? Clearly, a vehicle which spends little time travelling or is used for only a few days a year should not, in equity, be asked to pay the same as a heavy goods vehicle which travels our roads for up to 24 hours a day, 365 days a year.
As a former Minister in the Department of Transport, the hon. Gentleman has considerable expertise. I agree with his point. Before any alterations are made to exemptions or to concessionary classes for vehicle excise duty, the Government need to undertake a rigorous assessment of the likely impact of such changes on public safety. For example, I refer to the environment, although we have not mentioned it in the amendment, costs to businesses—because of contracting out, there are now private contractors—and the likely long-term effects on the quality of our roads. We are not satisfied that the Government have undertaken any consultations or consideration before preparing schedule 4.
Last week, in my constituency in north-west Yorkshire, there were severe weather conditions. The gritters and snow ploughs were out. Under the standard spending assessment, there was no extra allocation for increases in vehicle excise duty in respect of the vehicles that my hon. Friend has mentioned. Because weather conditions have not been as severe over the past few years, the budget has been cut. Whether that is right or wrong, it has happened, and it will be the case in future. Therefore, road safety will be affected.
I agree with my hon. Friend. I was surprised, in the west country, to see television news reports of the dreadful weather that was occurring only a few 'hundred miles up the road and to see the different demands on the local authorities concerned. I do not want to make this into a larger point, but gritters are often dual-purpose vehicles. They might be dust carts as well.
Our general criticism still stands: the Government have not undertaken the necessary review. Whether a local authority undertakes work directly or whether it is done by a private contractor, the costs of providing that service will increase and therefore will fall on council tax payers. As a form of indirect taxation, that is regressive in that it hits people unequally. The Association of Metropolitan Authorities has struggled to understand the implications of the measures, because it is also concerned about prospects for road safety.
The Government proclaim themselves, first, to be concerned about the environment; secondly, to be concerned about safety, and road safety in particular; and, thirdly, to be considerate of small business and employment prospects. However, they have opened an entire taxation base without undertaking a proper assessment. The vehicle excise duties that can be imposed under schedule 4 can be increased every year, just as vehicle excise duty on private cars has been increased in the past.
That presents an enormous dilemma in properly assessing the likely impact. The Government have not undertaken an assessment. Local authorities cannot say what the impact will be. Private contractors whom I have contacted are in the same position—they need more information and discussion before they can make a conclusive statement.
I was about to refer to the AA, the RAC and private vehicle recovery firms which undertake essential safety work on our roads. They not only recover stranded motorists but deal with dangerous lorry loads, oil tankers and many noxious chemicals and products that are transported on our roads.
The proposals on road recovery vehicles offer the greatest threat to road safety. We recognise that the Government were trying to simplify the vehicle excise duty regime but schedule 4 makes for a more complex scheme. Road recovery vehicles had been taxed at a concessionary rate of £85 per year, regardless of size. Under schedule 4, that concessionary status would be removed, and there would be an increase in the taxation classes to between £135 and £5,000 a year. The Government are now proposing to amend that figure, and the Minister will no doubt put his case later in the debate.
The pegging of the excise duty is dependent on the weight of the vehicle and the new taxation rates are linked to those for heavy goods vehicles. HGVs are on the road much more and their work is more predictable than that of recovery vehicles, so the categories are not comparable. By the nature of their work, recovery vehicles are used occasionally. The work load cannot be planned, as it depends on the weather and what accidents the vehicles are called to. Consequently, they spend a great deal of time off the road on standby. Safety could be compromised if the proposals go ahead.
I have been in contact with two operators of heavy recovery vehicles in my constituency, and they have said that if the vehicle licence remains high, they will have to go out of business. As my hon. Friend said, it is only on the odd occasion when the vehicles are needed, and they are usually called out to help a tanker in trouble or in an emergency. I am worried that, if those operators go out of business, nobody will take up the emergency and recovery service.
I shall come to that point.
I have letters from private companies engaged in road recovery work which describe the difficulties that they will have in complying with the new rate if it is imposed, and also the implications for road safety. Large recovery vehicles may be called out only once a month to a road accident, but they are essential as they can clear any obstruction quickly. In a moment, I shall deal with the comments of the police with regard to the Government's proposals.
If a vehicle is taken out of circulation because it is too expensive to tax, another vehicle will have to be brought in from further away. The companies which are able to deal with accidents will be spread more thinly, and therefore there could be longer delays in responding to accidents and the time that the police will have to remain at an accident while waiting for an obstruction to be cleared could increase. That will not only waste the time of the police, who should be doing other things, but will cause a great deal of obstruction and possibly distress. It could cause disruption on the roads, and it is wasteful as well as unsafe. It is clear that the police cannot leave the scene of an accident before the road is clear.
The Association of Vehicle Recovery Operators has conducted a survey of all its regions. It says that if the proposal goes through, there will be no heavy goods vehicle recovery operators in Scotland north of Perth. In North Yorkshire, there is only one operator capable of removing heavy goods vehicles from Sutton bank, near Leeming Bar, which is a 1:3 gradient. That operator says that he will not be able to continue his service if the rate goes through, and if that happens, there will be no suitable vehicle to deal with an emergency within a 100-mile radius of that area.
My hon. Friend is raising the problems in my county. I have spoken to the company in question, and its 26-tonne heavy vehicle—a vehicle on which the excise duty would rise from £85 to some £5,000 under the Bill's provisions—was used on only eight occasions last year. The company was paid on only six of those occasions. Even under the Government's modified proposal of a £750 vehicle excise duty, does that not mean that the Government will be taxing the operator more than £100 for every trip he makes with a vehicle that is delivering a public service in opening roads for the police and for other road users?
The Minister will put his case carefully and adequately to the Committee this evening, but we reject what he has said. The Government amendments do not go far enough, and we wish to press our points.
Those points are reinforced in a letter from the North Yorkshire police on the specific matter of road safety, which was addressed by my hon. Friend the Member for York (Mr. Bayley). The force makes it clear that the proposals to remove the concessionary classes will cause considerable difficulties. The North Yorkshire force currently contracts the recovery of accident and broken-down vehicles to the RAC. The actual recovery work is subject to a business agreement between the RAC and the individual private specialist recovery operators, with the recovery fees being reclaimed from the individual companies or from insurance.
The major concern of the force is not about the commercial implications of the excise duty changes but with the knock-on effect that will occur on the availability of suitably equipped recovery vehicles to deal with accidents and safety requirements. The implications for the North Yorkshire force and for the motoring public who use the roads of the county may be quite profound. As the number of recovery trucks diminishes, the time of arrival at accident scenes will increase, the frequency of tailbacks will grow and there will be a further risk of accidents. That will create a need for the police to spend more time at accidents, which will have obvious implications for road safety.
We think that the Government have been hasty in their rush to extend their taxation base. They have not taken proper account of the cost implications, nor of the implications for the future existence of businesses. That is shown yet again in a later schedule which affects farm goods vehicles, and increases the costs on farming businesses. Those costs are estimated to be more than £6 million for the loss of the exempt classes, and £3.8 million for loss of the concessionary classes.
Finally, to demonstrate the folly of the schedule, a Government who claim to be interested in the environment and have used the increase in petrol duties as their fig leaf, claiming that they are sticking to the Rio targets on traffic pollution and pollution generally, are proposing to extend vehicle excise duty to electric milk floats—environmentally sound vehicles that should be encouraged, not taxed—which will cause problems for a milk industry that is already beleaguered because of the Government's policies.
The schedule is ill thought-out and no consultation has taken place. It has implications for road recovery vehicles and businesses and for public safety, which are all at risk. We request that the Government withdraw the schedule, undertake a full consultation, produce a review and report back to the House before they make any changes to vehicle excise duty for those vehicles.
It might assist the Committee if I set out the general background to the measures. Although we are debating clause 15, most of the detail is in schedule 4, to which the clause relates. A general explanation at this stage will help us when we debate the details of that schedule.
The present vehicle excise duty system is needlessly complex, with 132 different classes of concession and exemption. Lawyers cannot agree on some of the interpretations, which provides endless scope for expensive litigation. The system is also extremely archaic. Many of the provisions date back to before the second world war. They were added to during the time of digging for victory, when privileges and exemptions for agriculture were easier to justify.
Since then, technology has moved on. Some of the legislation that we are replacing refers to water being used for propulsion. It also explicitly provides for the wartime device of towing a trailer containing gas, which was used to propel the vehicle in question. That system is certainly no longer with us.
Some of the existing classes are empty. There is no relevant vehicle in them—perhaps there never was. New types have arisen, such as all-terrain vehicles, which have to fall into the general tax class because the concessionary tax classes have not caught up with their existence. I think that all hon. Members agree that the need for reform is plain and that it is overdue. The legislation is also anomalous.
When were the concessions for emergency relief vehicles on motorways discussed and agreed? I thought that it was about five years ago, so my hon. Friend's explanation hardly applies.
If my hon. Friend will forgive me, another section of my speech deals with those matters. My general argument is that the system which we have inherited is anomalous and inconsistent.
I regret the fact that many of the amendments tabled by the official Opposition appear to cling to those anomalies. The hon. Member for Bristol, South (Ms Primarolo) referred to street-cleaning vehicles, snow clearing and so forth, and I shall touch on those in detail later.
Under existing law, if a street-cleaning vehicle uses its hose to clear a gully, it is exempt from vehicle excise duty, but if it extends its hose a little more under the street to flush out a sewer, it is supposed to pay the full vehicle excise duty. A tower wagon—an hydraulic platform on wheels—is exempt when it is used for mending street lighting, but it must pay the full duty if it is mending a telegraph pole or a power line. The anomalies are indefensible and they invite tax evasion. We cannot expect policemen to check how far under the street the hose pipe from one of those cleansing vehicles goes, so the legislation is practically tailor-made for cheating and exemptions.
Many of the concessions are granted on the basis of nothing more than an operator's declaration that he or she qualifies and are thus almost impossible to police. When the Driver and Vehicle Licensing Agency carried out a detailed check on one class—restricted goods vehicles—it found that 90 per cent. of claimants for special treatment seemed to be claiming the concession wrongly.
The legislation is extremely bureaucratic. For example, let us consider the exemption for vehicles travelling six road miles a week. We shall debate it later, so I shall not go into great detail, but claimants must fill in a form every year and swear that they will not depart from the road routes that they use between their fields. If they want to make a detour during the year, because of a blocked road or some such thing, they are supposed to inform the DVLA in writing.
None of that makes for good taxation. In fact, the present system breaks every rule of good taxation; it is inconsistent, out of date, unclear, and difficult to enforce. We have aimed, first, to simplify the system so that it is easier for users to understand and cheap for the Government to operate. Secondly, we want to bring it up to date and to concentrate special treatment on those that most warrant it. Thirdly, we aim to grant consistent treatment for similar types of vehicles, thus removing anomalies. Fourthly, we insist that we can easily check that claimants for special treatment are genuine, so removing the opportunity to evade.
In place of the 132 classes, we have concentrated on four basic classes of vehicle, leaving unchanged the few add-ons for motor cycles, vintage cars and the like. First, vehicle excise duty exemption is granted to the most deserving cases, such as 999 emergency vehicles and those for the severely disabled. Secondly, very low rates of VED—only £35—are applied to those with a good case, such as snow ploughs, gritters, electric vehicles, tractors, other agricultural machines and mowing machines. Thirdly, a special low rate of £150 is applied to specialised vehicles that are based mostly on heavy lorries and have a specialised use; examples include mobile cranes, road rollers, digging machines, work trucks and showmen's lorries.
All other classes must pay the full vehicle excise duty. The presumption must be that, without good reason otherwise, a vehicle should be in that class. Most vehicles in the £35 and £150 classes will also continue to benefit from very low rates of duty on their diesel.
With any comprehensive reform, there are some winners and some losers—that is inevitable. The measures as a whole, however, increase the revenue from VED by less than 1 per cent. I believe that members of the Committee will join me in thinking that this is an overdue reform.
In her introductory remarks, the hon. Member for Bristol, South mentioned recovery vehicles.
Will the hon. Gentleman forgive me if I do not give way? I know that he intervened, and I hope that I can assist him and my hon. Friend the Member for Meriden (Mr. Mills).
I appreciate that the hon. Member for Bristol, South probably wrote her speech before the Government tabled amendments Nos. 44 to 47, but even after that was pointed out she ploughed on with unnecessary remarks about the additional taxation of recovery vehicles, with which we have already dealt.
It is reasonable to put light breakdown vehicles, which are commercial high-mileage vehicles, into the £135 per annum class. We have met the concerns raised by a number of hon. Members and the trade that to tax very large vehicles, which may be infrequently used, at the full heavy goods vehicle rate would be wrong. That is why we put the heavier vehicles into three bands, the highest of which will tax them at £750 per annum.
When the Minister intervened on my hon. Friend the Member for Bristol, South (Ms Primarolo), he might have been under the misapprehension that I was talking about the vehicle excise duty rates for 26-tonne recovery vehicles, as originally proposed. I was not. The original proposal was for £5,000 excise duty. I gave the new figure of £750, which the Minister proposes in his amendment.
The point is that, in the past 12 months, that operator in my county, the only operator who can clear Sutton Bank road, made just eight trips with his 26-tonne vehicle. As it happens, he was paid on only six of those occasions. Under the Minister's new proposal, the duty on that vehicle will rise from £85 to £750—a tax increase of more than £100 for each occasion on which the vehicle was used and paid for.
The Minister may say that his tax proposal amounts to only a 1 per cent. increase in the total vehicle excise bill, but for that operator—
I fully understood the hon. Gentleman's point. It was put to me by the Retail Motor Industry Federation, which represents the Association of Recovery Vehicle Operators, when its representatives came to see me. I listened carefully to, and met, the federation's concerns. I have before me a letter from the federation saying that it is happy with the compromise that we have reached. If it is happy—after all, it represents the industry and the operator mentioned by the hon. Gentleman—that should be good enough for the hon. Gentleman.
We shall return to the issue in a later group of amendments.
I am sorry, but I answered the hon. Gentleman's point. I said that the trade was happy with the new limit on very heavy recovery vehicles of not £5,000, but £750, a year.
The hon. Member for Bristol, South mentioned snow-clearing and street-cleaning vehicles. I want to say a little more about that matter, because it encapsulates the problems with which we are dealing and the necessity for the reforms that we are introducing. We have recognised the special nature of snow-clearing and ice-gritting vehicles by putting them in the category that charges only £35 a year VED and allowing them to retain their right to use rebated fuel—so called "red diesel". Were those vehicles in the heavy goods vehicle class, they would pay not £35 a year but between £150 and £5,000 a year, as well as full duty on the diesel that they use.
Street-cleaning and street-lighting vehicles will face normal VED rates. After all, those are commercial operations and, today, few such vehicles are owned by local authorities. Most are owned by private sector operators, often under contract to local authorities. Many local service vehicles such as refuse lorries already pay full VED. Why should street-cleaning vehicles be exempt when almost identical vehicles that clean sewers are taxed?
The Labour party needs to come up to date on that matter and realise what has been happening. Instead of single-use machines all owned by local authorities, we now have multi-use machines operated under contract by the private sector. It makes no sense to impose full annual VED on a vehicle when it is doing a job such as cleaning sewers, and exempt it when it is doing a slightly different job such as street cleaning, possibly on the very next day.
The Minister said that the changes in VED are to simplify the system. He then explained that the Government needed to make the system a little more complex because it did not take account of recovery vehicles, which now need to be put in a different regime. He then referred to red diesel, which was previously linked to vehicle excise duty exemptions and concessions, which must now have an entire schedule to itself to override the vehicle excise duty schedules because the system does not satisfy demand. Is that not a more complex rather than a simpler system?
I am glad that the hon. Lady has given me an opportunity to point out that we shall have a chance tomorrow, when the Bill goes upstairs to Committee, to debate the precise issue of the use of rebated fuel. Far from adding complexity to the system, we shall simplify that matter as well and put that provision into statute law.
I urge the Labour party to take on board the fact that the world has changed from one of municipally owned vehicles simply doing one job. Frequently, vehicles change operations from one day to another. Vehicles can change their configuration from one season to the next by using swap bodies; for example, a snow plough used in winter can be used for an entirely different operation in summer. The Labour amendment refuses to recognise that and puts back all the difficulties we seek to get away from.
The trade recognises the need for change, even if the Labour party does not. The police and the licensing agency know that the current system is becoming impossible to enforce. I only wish that we could persuade the Opposition, particularly the Labour party, to drop their ideological baggage just long enough to withdraw the amendment, which would take us back in time rather than forward.
The amendment would hinder and delay the very reforms that I have outlined. There are no adverse road or safety implications in the provision. We have given careful thought to the reforms, and the overwhelming need for them is recognised by outside bodies. We have delayed implementation of the VED system until 1 July 1995 both to give those affected an opportunity to adapt to the changes and to enable them to draw attention to any specific and special difficulties. I have already explained how we have responded to well-thought-out arguments presented to us in the context of recovery vehicles.
We are not convinced, however, by the arguments against the need for overall change, which is why I ask the Committee to accept the clause and to reject the Opposition amendment.
I wish to follow the Minister, as he has rightly put before the Committee the rationale of the whole of schedule 4. We are not just dealing with the Labour party amendment; it is right and proper that we look at the principles behind the proposed changes.
I am delighted to see the Under-Secretary of State for Transport, the hon. Member for Epping Forrest (Mr. Norris) in the Chamber to listen to the debate. His Department must have been actively consulted about the rationale for the changes, as I hope that the Department of Trade and Industry was consulted about their important energy implications.
There are a number of amendments standing in the names of my right hon. and hon. Friends. They relate to agricultural vehicles, vehicle usage as opposed to vehicle ownership—that is the key energy conservation issue with which we should be concerned—the impact that lorries have on the economy and, finally, the special circumstances relating to commercial traffic on islands. My hon. Friend the Member for Argyll and Bute (Mrs. Michie) will speak about that matter a little later.
I shall illustrate the extent to which the Government's apparent attempt to simplify vehicle excise duty not only will make the situation more complicated but is clearly not worth the candle. The Minister said that the total take in a full financial year will amount to only a 1 per cent. increase in VED, yet he is blundering into a series of mini-calamities—each one may not be important to everybody, but they add up to a snowstorm of calamities.
As the hon. Member for Eltham (Mr. Bottomley) said earlier, the only logical way to approach the tax is to relate it either to use of the highway or to the use of scarce resources. The Government's proposals do not relate directly to either use.
Perhaps the panic stations in rural constituencies have persuaded the Minister and his Treasury colleagues to re-examine the proposals for agricultural vehicles that use the roads for only a limited period. All U-turns are welcome, even if they are conducted on a motorway at such a slow speed that they cause a major hold-up. By trying to buy off his colleagues in rural constituencies, there is a danger that the Minister will end up with a situation that is as bad as the one he started with. It certainly will not be any less complex.
I will illustrate how the proposals will affect the individual farmer. A farmer from my constituency gave me at the weekend a careful assessment of the precise implications of the Bill—as it then stood; I acknowledge the Minister's comments in that regard. He estimated that he faced an additional cost of £1,080 a year under the Bill as it then stood. No doubt the amendments will improve the situation somewhat, but it will not improve dramatically.
My constituent is a hill livestock farmer with 265 acres of land which is bisected by a major road proposal—the A30 on Bodmin moor. As a result, he has great difficulty in reaching some parts of his land. He says that he has
no alternative other than to travel short distances on the public highway with agricultural vehicles and machinery to carry out essential day to day tasks such as inspecting livestock during the summer and transporting fodder in the winter.
I am sorry that the hon. Gentleman has now left his position on the Front Bench.
The farmer continued:
Bearing in mind the fact that this government has also axed Farm Waste Pollution Control and Farm Conservation Grants in this same budget, reduced the Hill Livestock Compensatory Allowances by 2.5 per cent. in the past year, I feel it is outrageous to expect me to find a further £1080 per year to run my business and also to threaten extra costs for fuel when the Customs & Excise review their policy on red diesel.
I know that the Minister intends to address that matter in Committee, but I think that he will acknowledge that the industry is correct to be concerned about that point.
The National Farmers Union has also briefed a number of hon. Members on the subject and has said:
Many agricultural holdings have parcels of land which are geographically close but not integrated within a "ring fence", and many more have contiguous parcels of land which are bisected by public roads necessitating the crossing of the road to take a vehicle from one field to another".
The NFU and individual farmers are saying that there is no specific rationale for the change which the Government currently propose. Their usage of the highway is very limited, but the legislation will impact greatly on the industry and on individual farmers. The NFU said:
The revenue benefit of forcing all these agricultural vehicles which are used for short local journeys into the VED system is out of all proportion to the additional administrative burden and cost which it would place on farmers".
The Minister makes great play of simplifying administration and removing burdens, but I suspect that he is taking administrative burdens away from the Treasury and loading them onto individual businesses.
I apologise for intervening for a second time. The Department of Transport organised an exemption for Dotto trains which allows small trains at seaside resorts to travel for a few hundred yards on the public highway. Does the hon. Gentleman agree that we are not looking for an exemption for a farmer who takes a tractor into a market town on a regular basis; we are talking about journeys of 20 or 200 yd on the public highway? Many people in agriculture do not understand why their vehicles, which will otherwise be used on their own land, should be taxed for such small, infrequent journeys.
Not for the first time, I am grateful to the hon. Gentleman for his intervention. I noticed with great pleasure the pained expression on the face of his hon. Friend the Minister. who has either not represented that view to the Treasury or failed to represent the views of the farming industry—and, for all I know, those of the Ministry of Agriculture, Fisheries and Food as well.
Many people believe that schedule 4 should be re-examined, because there has been inadequate consultation about the principles of the changes, let alone their practical implications and the economic effects on certain industries. We will return to that point later, so I will not labour it now.
There are a number of other "apparent anomalies"—to use the Minister's phrase—in the legislation. It has been suggested several times that the changes in the Budget, in the Finance Bill and in schedule 4 are intended to develop environmental objectives in some way. It is simply humbug. There is no environmental reason for increasing vehicle excise duty. We should make sure that future tax burdens are applied according to usage of the highway and of scarce resources. Usage, not ownership, is the issue.
It is therefore absurd to increase the vehicle excise duty this year. We should reduce the vehicle excise duty on those vehicles which are modest in their consumption of fossil fuels. It should be possible to reduce the excise duty on the smallest vehicles to £10—just an administrative charge—while at the same time allowing the full weight of the Budget increase to fall on those who use the most fuel.
I am trying to follow the hon. Gentleman's logic. Is he saying that heavy recovery vehicles should pay more excise duty because they use considerable amounts of diesel, and that smaller recovery vehicles which travel many more miles should pay less?
In a normal winter—who knows, we may be experiencing an abnormal one—many of the very large vehicles are on the road for only a short time, and therefore use an insignificant amount of fuel. I know that the hon. Gentleman represents a rural constituency, and I will show how a change of taxation emphasis from ownership to usage could assist his constituents.
The average private motorist in the hon. Gentleman's constituency, as in mine—even taking into account the difficulty of finding alternative public transport—travels only 8,000 or 8,500 miles per year. If that motorist does that sort of mileage in a comparatively modest car of between 1,200 and 1,500 cc and pays only £10 in VED but pays the full increase in petrol and diesel tax, that motorist will save a considerable amount of money. If the Government want to do something effective about the usage of fossil fuels and usage of the highways, they should encourage people to trade down and use modest vehicles more modestly. We will return to that issue at a later stage, but if there is to be any logic in schedule 4, the Government must do something more effective to persuade us.
The Royal Commission on the Environment reported a few months ago to the Department of Transport that the weight of responsibility for cost in terms of maintenance equations, the environment, and so on, is almost twice as much in the case of lorries as is paid in lorry vehicle excise duty. This morning, The Times reported, that despite the industry's claim that it is paying much more than it can afford, truck registrations in 1994 rose an astonishing 23 per cent. over 1993—the highest year-on-year increase on record, in stark contrast to the ailing car market.
That increase scarcely suggests that lorries are over-taxed and will be taxed out of business, even in the recession that is still afflicting so much of our country. Lorries are making less of a contribution to overall road costs, the economy and consequent environmental costs than they should.
Schedule 4, at best, portrays muddled thinking about transport and energy policy. At worst, it looks like yet another indiscriminate, ill-thought-out and illogical attack on not just particular sectors such as agriculture but the private motorist.
Although the overall increase in vehicle excise duty may be modest in the context of the industry's total bill—a figure of 1 per cent. was suggested—the individual operator of a vehicle recovery service will find the rise staggering. Even under the modified proposal that the Minister considers acceptable, the firm that I mentioned earlier will have to confront a VED increase of more than 200 per cent.—from £1,020 to £3,300.
That will be less of a burden than the original proposal, which would have raised that firm's vehicle duty bill to nearly £20,000, but how does the Minister justify to that small business a 200 per cent. tax increase; and how does he respond to the case made by that firm and by North Yorkshire police, that such firms will reduce the number of their heavy recovery vehicles, which will extend the time that road users will be kept waiting when a heavy goods vehicle breaks down or is involved in an accident?
Earlier this month, the assistant chief constable of North Yorkshire police wrote to me about that matter.
Of course not, because they were announced only last Friday as a panic measure by the Government when they realised that they had got it wrong with their initial proposal.
If the hon. Gentleman will listen, he will learn that assistant chief constable's comment was relevant before the change and after it. He stated that the duty increase for smaller vehicles weighing under 7.5 tonnes could be recovered by operators because such vehicles are used frequently. However, he added:
The category over 7.5 tonnes will create a particular difficulty for recovery operators. Throughout the County there are approximately 16 recovery vehicles in this category and their work is extremely limited. They are primarily used for the recovery of broken down and accident damaged heavy goods vehicles, and I am aware that one operator has only used his vehicle on 12 occasions during the past 12 months. Despite this limited use it is imperative that North Yorkshire Police are able to call on this type of recovery vehicle.
Nevertheless, the Government are proposing for large vehicles an 800 per cent. rise, from £85 to £750. That represents a substantial increase in the tax burden on operators of large vehicles used only occasionally.
The Minister recognised that the initial proposal was a mistake. His compromise is a step in the right direction, but not a big enough step. The revenue implications of going the whole hog in my county, which is geographically the largest in England, should be considered. There are only 16 such vehicles in my county, but there will be fewer as a result of the proposal.
The vehicles to which the hon. Gentleman refers must be expensive. I do not know the depreciation involved, but can the hon. Gentleman say how much the vehicle owner charged in each of the 12 instances mentioned by the assistant chief constable?
The hon. Gentleman makes a reasonable point, in terms of the cost to the individual owner of a recovered vehicle of the extra £670. I cannot recall whether the hon. Gentleman was in his seat when I spoke earlier, but not all owners of recovered vehicles pay their bills. I said that one recovery vehicle was used only eight times during the course of a year, and its owner received payment on only six of those occasions. In that instance, the proposed increase would, if it had been passed on, have added £100 to the charge for each rescue.
Recovery vehicles provide a service to the public in removing an obstruction and opening the road to other users. Surely that is worth something in the Government's terms.
I heard the hon. Gentleman's earlier speech, but it strikes me that any business that uses such a vehicle so infrequently must build into its cost structure substantial fees per trip. Otherwise, the business is unlikely to be viable. Therefore, the proposed increase may represent a much smaller percentage of the firm's overheads than the hon. Gentleman suggests.
When the hon. Gentleman intervened earlier, I acknowledged that he made a valid point when he said that the lower rate increase would not represent a huge extra cost, given the overall charges made for vehicle recovery. Is that not all the more reason for the Government to examine its costings in the round?
In the case of the vehicle used eight times a year, for which its operator was paid on six occasions, the tax would add £100 per use. Why do the Government not set against that the increased cost of police time spent waiting at the scene of an accident, if the time taken to effect recovery is lengthened because perhaps only eight suitable vehicles will operate in North Yorkshire instead of the 16 that operate at present?
The Government's initial proposal prompted the company in question to cancel the purchase of a new vehicle, which would have cost £100,000. That obviously led to an immediate reduction in the quality of the service to the public and the county. The second consequence was that the company decided not to go ahead with appointing someone to a job that it had advertised and had planned to fill. The company has 26 employees, so, proportionately speaking, this had a significant impact. Thirdly, the company decided to call a halt to its efforts to get BS 5750 accreditation, because it realised that it had to make savings.
I hope that, as a result of the reduced increases in VED, the company will be able to reconsider some of these decisions. As the Government have admitted that they were wrong in the first place to propose these excise increases, and as the Government, when bringing in the new lower rate for these vehicles, have failed in their objective of simplicity—putting all the heavy goods vehicles on the same rate of taxation, why do they not accept that these vehicles are infrequently used but perform a valuable public service? If there are fewer of them, there will be greater costs to the Exchequer in terms of police time and road blockages.
The Government's argument is really not worth the candle. For vehicles over 7.5 tonnes, the Government have gone halfway; they should now go the whole way and abandon this increase. The revenue implications will be minuscule. The benefits for an industry on which the Government and the police rely will be considerable. There will also be the benefits of BS 5750 accreditation and of more employment, which the Government say they want. More investment will also go into the industry. All that could be lost if the Government go ahead with this tax increase.
This is one of those debates that go beyond the usual political point scoring with which we are so familiar. The Government should pay careful attention to what is said, with the intention of looking again at the proposals.
The Minister drew attention to the fact that most snow clearance, gritting, and street lighting and cleaning vehicles in Great Britain are owned by councils. Not so in Northern Ireland. He will be well aware that all those functions are still under the control of the Department of the Environment. One begins to wonder why the Government should impose a tax which they themselves will eventually have to pay. That does not seem the wisest way of proceeding to raise revenue.
The Minister talked about multi-use machines, but did not spell out what he meant by that. In my experience, many machines of the class that he described are single-use machines, used for gritting or for snow clearance—or sometimes for both but for nothing else—
I gave a specific example of how a street cleaning vehicle could be exempt from VED when cleaning gutters with its hosepipe but, with a small adaptation—not uncommon with such vehicles—it could put its hose further down under the street and do the same job for the sewer. In the latter case, it would pay full VED. So it could switch in and out of exemption from one day to the next. That is a recipe for evasion, and it would create a bureaucratic nightmare.
I can see the problem with that case, but I wonder whether the Government's is the right way of dealing with it. I think they should look for a different solution. In any case, in Northern Ireland, these are all DOE vehicles. Thank God, the Department still owns the sewers—no doubt many in this House and elsewhere wish the same were true throughout the United Kingdom. The fact remains that, in the nation from which I come, these are essentially Government vehicles; now they are being asked to pay tax.
Even when the service is privatised, as it has been over here, the cost will eventually be paid by local government taxpayers. Who pays for snow clearance? The road authorities do. Eventually, therefore, local government taxpayers will foot the bill. This is thus a rather sneaky way of placing an unjustified burden on those taxpayers. As we know, it can be snowing in the north of England while the sun is shining in London, at the same time as the south-west is being washed away.
Had the Minister been with me in the plane today, he would have seen a great deal of England under water—
Certainly a boat would have been more suitable had the journey been made on the ground.
This measure has not been properly thought through, and the Government should go away and reconsider.
As the House will know, I have long been associated with agriculture, about which the hon. Member for North Cornwall (Mr. Tyler) spoke earlier. The difficulty is that many farm vehicles, especially tractors, are used only rarely and for short journeys. A farmer in the summer does not take his tractor down the road to look over the gate at the sheep or cattle: he drives a car. The car is taxed. He takes it because it saves him time and is cheaper.
In winter, he will transport fodder to his livestock, which may be only 20 yd away or up to a mile away, two or three times a week—although it may be less often because the cattle may have been moved closer to the farm or even indoors. His farm vehicle thus makes the journey to and from the cattle extremely rarely.
Many farms have more than one tractor. One may be used on longer journeys, and thus be taxed in the usual way, while another is kept to do runabout jobs on the farm. That saves the farmer money, and is quite justified in the circumstances. It all depends on whether a farm is traversed by public roads or by a private road or lane. In the latter case, the need to pay tax is practically non-existent. The Government should bear that in mind, too.
The final problem is that, whereas privatised road cleaning services may be able to recover their extra costs by putting up their prices, farmers cannot just say, "I've got to pay higher tax, so I'll need another pound for this lamb, friend." They can only make what the market will pay them—a fact that the Government appear to ignore.
I was astonished to hear the Minister say, in the context of recovery vehicles, that there was no implication for road safety. There is always a road safety implication when a broken-down vehicle is on the road, especially at night.
Last Friday, I tried to cross the Glenshane pass, which reminded me of the road to Basra at the end of the Gulf war. There had been two hours of wet snow, and the road was in an horrendous condition. I spent an hour admiring the surrounding hills—I could well have done without that—before we got through. The snow cleared up after a couple of hours, but at least two vehicles were off the road by then, and they were not going to be lifted out by a light recovery vehicle. It was clear that a heavy one would be needed.
The hon. Member for Bristol, South (Ms Primarolo) described the difficulties very well. These vehicles are very much needed—sometimes only rarely—and are essential to our road system.
The economics of the operation was raised. I believe that whether an operator of heavy recovery vehicles will spend £100,000 or go out and buy a second-hand or third-hand vehicle for a fraction of that cost depends on the amount of use that he expects to make of it. Those people are business men. They can count.
We all know that, in one part of the country, such a vehicle may be needed every day—certainly every week—but in others it may be needed half a dozen times a year and no more than that. In those circumstances, it will be an extremely heavy burden on the individual concerned. If the tax goes up to several times its present rate, there will be a knock-on effect on insurance costs. It may be small for an individual vehicle, but there will inevitably be a rise in insurance costs to cover increased costs, and, of course, there will also be the VAT, which I assume will be added, for the service of taking out the recovery vehicle and using it.
The Minister said that it would raise only 1 per cent. The implication is that 1 per cent. is an absolutely tiny sum, scarcely worth thinking or bothering about. If so, why does he bother about it? Why does not he go away and forget about the tax for a year? He should listen to what is said this evening and no doubt to what will be said in Standing Committee. After that, he could come back with a regime that is more easily defendable than what is before us this evening.
The reality is that a number of completely obsolete vehicles are mentioned in the proposed legislation. The Minister does not have to worry about them. Nobody is breaking the law. The vehicles do not exist, so by definition the law cannot be broken. He could wipe them out at any time, and nobody would be too concerned. The mere fact that the present legislation has lasted so long says an awful lot for those who framed it. It would seem that they got it very nearly right.
I suspect that, if the Minister goes ahead with the proposed legislation, not only will he be unpopular but he will be back here again in a year or two trying to dress up the mistakes that the Government are currently making.
I support the amendment proposed by my hon. Friend the Member for Bristol, South (Ms Primarolo), for two simple reasons: first, clause 15 and schedule 4 raise a question mark about the extent to which the Government have seriously taken on board some of the road safety and road traffic issues that Opposition Members have raised; and, secondly, there is a genuine case for reviewing the parts of the Bill that relate to changing vehicle excise duty on heavy recovery vehicles, because of the burden that the duty changes will place on many small businesses.
I was intrigued by some of the Minister's earlier remarks. He said two things that particularly caught my attention: first, that this part of the Bill is necessary. The hon. Member for Londonderry, East (Mr. Ross) made it clear that the amounts being raised by the Government are very small, and some people might conclude, as he did, that therefore it is an argument that is not worth having at all. Secondly, he tried to make the case that the changes were necessary because the existing legislation was in a mess—it was confusing and complex and few people understood it.
Anyone involved in law making and applying the law wants to see Parliament make law that is comprehensible and sensible. That is not what the Government propose. That is particularly true of some of the changes being made for vehicle excise duty on road recovery vehicles. At the moment, there is a simple provision in legislation in the Vehicle Excise and Registration Act 1994, which specifies the rate of duty that those vehicles are to be charged. That will be replaced by a considerably more complex range of provisions, which is unlikely to see an end to the complex litigation and expensive law actions that have pursued that area of the law in the past.
I shall comment not only on road recovery vehicles but on the proposed exemption for emergency vehicles, or 999 vehicles, as the Minister described them.
Paragraph 3A of schedule 4 is to be inserted into schedule 2 of the 1994 Act, to create a new category of exempt vehicles. Many hon. Members, on both sides of the Committee, will be quite surprised to learn that police vehicles are not already exempt from vehicle excise duty. I support the extension of the category of exempt vehicles in section 5 of the 1994 Act to include that category. That is long overdue and sensible. The Government's intentions are clear from paragraph 3A—it is clearly designed to exempt police vehicles from paying vehicle excise duty. But there must be a question mark over whether the amendments proposed to schedule 2 of the 1994 Act will achieve the Government's objectives.
Schedule 2 is to be amended by the insertion of a new paragraph 3A, which says:
A vehicle is an exempt vehicle when it is being used for police purposes.
The Minister said that that was designed to include 999 emergency vehicles to the concept on an exempt vehicle not liable to vehicle excise duty. I do not think that is what the Government have achieved.
I bring to the Minister's attention two problems with paragraph 3A. He may not be able to respond to these points tonight, but I hope that he is listening. First, there is no definition of "police purposes" for the purposes of the new paragraph. Secondly, there is no definition of what is a police vehicle. I should have thought that both problems were fundamental. If the Government simply propose an exemption for 999 emergency vehicles, is that what they have achieved? What about a range of police vehicles that are not used in 999 emergency situations, for example, vehicles that are used to transport prisoners to and from a magistrates court to prison? Will they be covered by the new paragraph 3A?
I used that example, because from the existing legislation that relates to the definition of police purposes—we could use section 25 of the Road Traffic Act 1960 and section 79 of the Road Traffic Regulation Act 1967—it is clear that both of them relate to emergency situations: when a police vehicle is attending the scene of a crime or an accident and must exceed the speed limit for that area. Clearly, not all police vehicles are designed or used for those emergency scenarios, so where does that leave us? If we look at existing case law that relates to both statutory provisions, we are unlikely to have much assistance. Therefore, no definition in existing case law appears to be of any great assistance to us.
Perhaps a more fundamental problem for the Government is that there is no definition of what is a police vehicle. That is strange. Other emergency vehicles, for example, fire engines and ambulances, which are already exempt under schedule 2 of the 1994 Act, are pretty comprehensively defined in schedule 2 of the 1994 Act. The Minister may not be aware of those definitions, but if he cares to look at schedule 2 of the Act, he will see in paragraphs 4, 5, 6 and 7 a pretty comprehensive and impressive definition of what those emergency vehicles are.
Why is there not a similar definition of a police vehicle for the purposes of the new exempted category of vehicles? Surely a paragraph such as paragraph 5 is capable of being used without any great intellectual effort to apply to the concept of a police vehicle. I wonder whether the Minister might consider at some point having another look at the new schedule and including in it some reference to the fact that the vehicle exempted from excise duty should not be a vehicle that is kept or operated by a police authority. Surely that is what the Minister intends this part of the Bill to achieve. Sadly, it is not what the Bill does.
I shall give the Minister three examples of where there might be a problem with police vehicles. First, what will happen if a police authority wishes to hire or rent a vehicle to enable business to be done by the police authority? It is not uncommon to see police stickers on the sides of vehicles that are, in fact, used to transport stores. Under the Bill as it stands, will such vehicles be exempt from vehicle excise duty? Are they being used for police purposes? They are not actually owned by the police authority.
Presumably, the company that owns such a vehicle—Hertz, for instance, or Eurodollar—will be able to ask for a rebate from the Inland Revenue or Customs and Excise, saying that the vehicle has been on contract hire to a police authority and that paragraph 3A of the new schedule to the 1994 Act should apply.
Secondly, what about the use of private vehicles commandeered by constables—or police officers of other rank—to respond to emergencies? Although we hope that such vehicles would be used for only a short time, in theory an owner could claim that his vehicle was being used for police purposes during that time. Do the Government want owners of private vehicles to be able to claim exemptions from vehicle excise duty? Probably not; in which case, why does not the Bill make it clear that only vehicles kept or operated by police authorities will be so exempted?
Schedule 4 is a complex provision, but it does not refer to earlier legislation dealing with police authorities, police vehicles and police purposes. That is not good enough. The Minister rightly described the law as complicated, and said that the Government wanted to simplify it; that is fine, but I fear that this part of the Bill will represent three cherries on the fruit machine for lawyers. I do not think that Members of Parliament are in the business of handing the prospect of expensive litigation to well-paid lawyers, when we can get our legislation right and make it simple.
The third problem involves prison escort vehicles. The Government have emphasised the need to privatise some of the escort services transferring people between prisons and courts. I do not wish to become involved in the merits or otherwise of their policy now; but could it not be argued that vehicles carrying remand or convicted prisoners between prison and court are acting for a police purpose, in the context of new paragraph 3A? Could not a private operator such as Group 4, which has won contracts in Humberside and the east midlands, argue that because police authorities are currently using its services, those services are being used for a police purpose?
Opposition Members do not wish to cause difficulties for the Government on this issue, at least; but let us be certain about the vehicles that we are exempting. The Government could tighten the drafting of the Bill with very little effort. The definition of police purposes could be refined if we inserted a provision to the effect that the vehicles involved need to be operated or kept by police authorities: that would limit exemptions to the category that the Government probably had in mind.
Amendment No. 12 also raises road safety and traffic issues. The Government have clearly had a change of heart, seeing the force of the arguments against them, which have been deployed again tonight: it seems probable that the duty will now be substantially less, and we welcome that. The proposed changes will, however, have an impact on heavy road recovery vehicles in my constituency in south Cumbria.
It has often been said that my constituency lies at the end of the longest cul de sac in Europe. I think that that is something of an exaggeration, but it gives a flavour of the sense of geographical isolation felt by many of my constituents. The bulk of the incoming traffic comes down the A590, which is an awful road; however, there are not many garages or other small companies running heavy vehicle recovery services in the area. I believe that there is a risk that the Government's proposed changes to vehicle excise duty legislation will jeopardise the provision of any such services. I put it no higher than that, but the Government must take the risk into account.
The Minister said that the Retail Motor Industry Federation was happy with the changes, but I should be interested to know how many small companies and garage operators have been consulted, even about these particular changes. Certainly, many small employers in my constituency are still extremely concerned about the impact of the measure on their businesses.
In a very articulate letter, one of those small employers urges me to vote against the Government tonight. It will surprise no one when I disclose that that is exactly what I intend to do. My constituent, Mr. Bob Grieve, makes his case against the Government's proposals very clearly, writing:
the new rates would force some operators out of business with others opting out of HGV recovery altogether;
many parts of the country would end up with only limited capacity for removing broken down or accident damaged heavy lorries horn our roads, leading to longer delays in road clearance and raising the question of public safety.
That, I feel, is very pertinent to the interests and needs of my constituents.
My constituency is remote, and is served by only one major road. It is 40 miles from the M6, and even further from larger centres where there are other garage service providers. We are heavily dependent on local providers of HGV recovery services. I see no reasonable justification even for the modest changes that the Government propose. The law as it stands is very simple, and .given what my hon. Friend the Member for York (Mr. Bayley) said about the few occasions on which heavy vehicles are used, I feel that there is obvious justice in keeping that law in place until we have had an opportunity to examine some of the wider issues raised by the proposed change.
I hope that the Government will re-examine the provision in schedule 4 that exempts police vehicles from vehicle excise duty, and ask whether there is scope for improvement in the drafting to specify the exempted vehicles more accurately.
I congratulate my hon. Friend the Member for Barrow and Furness (Mr. Hutton) on a fascinating speech, anti particularly on what he said about police vehicles.
I should first declare that I am a parliamentary adviser to the Police Federation, although I have no particular brief from the federation tonight. While listening to my hon. Friend, I thought of two more issues that might arise, in regard to police vehicles unless the Government. provide the clarification that he rightly demanded: given all-party interest in the matter, the Government should, accept the need for such clarification.
I refer to conditions affecting unmarked surveillance vehicles. Such vehicles raise all sorts of questions in relation to when they are used. Some of them are quite old and, for obvious reasons, their dilapidated state is intended to make them less conspicuous. Some police officers, especially those in rural areas, drive home at night in police vehicles and return to work in them the following day. Obviously, when an officer is driving home he is not using the vehicle for a police purpose for which it is normally used. There is an obvious need for clarification.
My main objective in the debate is to raise the concerns of constituents who came to see me in my surgery. Harvey and Madeleine Wasson own Harvey's Recovery and Repairs of Exhall in Bedworth. Mrs. Wasson recently came to see me because she was concerned about the Government's proposals on vehicle excise duty. The company owns seven vehicles and has three employees. The husband and wife also work in the business. They were appalled by the proposals because they had just bought a four-axled vehicle of the type which is to be taxed at the highest rate. It was obtained at considerable sacrifice and they anticipated that the vehicle excise duty would be £85. They have suddenly found that it will be about £5,000.
I accept that, to some extent, the Minister has listened to representations from the industry and from hon. Members, including me, in all parts of the House because there is an alternative proposal considerably to reduce the tax on these vehicles.
Mr. and Mrs. Wasson have a good business but it is by no means making them millionaires, and the Minister should consider what he is doing to that couple. He is proposing to raise VED on their vehicle by about 800 per cent. That is a massive and unacceptable rise and the Minister should think seriously before going ahead with it.
Large recovery vehicles perform a public service. Without them, or with a reduction in their number, there would be increased congestion on our motorways and an increase in the cost of police and other time in dealing with accidents. If the only benefit to the Exchequer is a 1 per cent. increase in the take from VED it will be far outweighed by the extra expense of traffic congestion and more police inconvenience. The Minister should consult further.
I agree that the Minister has made considerable concessions, but why at the last minute has he had to amend his proposals? The reason is that he had not consulted properly. His civil servants do not seem to have given him the detailed advice on which Ministers have to rely about the market in which heavy recovery vehicles operate. He did not seem to understand that the market would be damaged and he had to amend his original proposals.
My hon. Friend the Member for Barrow and Furness (Mr. Hutton) outlined other inadequacies in the Bill. The Minister should accept, as he has already accepted to some extent because of his climbdown on VED, that he has not properly consulted or has inadequately considered some of the effects of the proposed changes. He should consult properly with industry and councils that will be affected, look in detail at the impact of his proposals, and consider the reality of the market. If he does that, he will find that his proposals will reduce the availability of heavy recovery vehicles and he will change his mind on some of the detail. We ask only for consultation. The Minister got into a mess by not consulting and his proposals are the result.
I should like to hear more from my hon. Friend about the use of the word "concessions". There is a danger of us falling into a trap. The Government set outrageous objectives and in a state of sheer panic they reduced them and claimed that they had made concessions. The Minister said that the trade welcomes these concessions. Of course it does, but that is because of the outrageous figure that was first proposed.
I entirely agree with my hon. Friend. I was about to come to that issue. The Minister said that the trade associations have accepted the "concessions". That is not surprising, because, matters could have been far worse. However, my constituents will not welcome the damage that will be caused to the small business which they struggled to establish by an 800 per cent. increase in VED. That is unacceptable. Such vehicles are rarely used and any extra burden placed on small businesses is damaging. The Minister should think carefully before imposing it.
The Wassons have told me that they will not go out of business if the changes are imposed, but they think that they will have to lay off staff and will probably get rid of the biggest vehicle. The Government should try to prevent them from doing that by changing the proposals. Our amendment asks merely for consultation. It is accepted that the various exemptions have many deficiencies, but people do not accept that the Government have found the correct way to deal with difficulties that have been around for a long time.
The proposals will be costly and are potentially damaging not only to the police and businesses but to everyone who uses our roads. The Minister should accept that the Opposition have made sensible suggestions on various issues and he should agree to consultation. That would be reasonable and it would mean that we would not have to press the matter to a vote.
In opening the debate the Minister explained why there was a need to restructure vehicle excise duty. He said that there were anomalies, that the system was complex, and that we needed to make arrangements to simplify and ease understanding of the duty. As we have heard, the Government proposals do anything but that. They replace one nightmare of anomalies with a series of other anomalies. That point was ably made by my hon. Friends.
The Government claim that their proposals are good taxation and that they need to press ahead with them. They are doing that for the sake of, initially, a 1 per cent. increase in revenue. He fails to understand, however, that he started with a bad proposal, that he has amended it slightly so that it is not as bad as it was, but that it is still based on premises that are incorrect. It is hardly surprising that the Road Rescue Recovery Association is prepared to accept a reduction as a concession, when it was threatened with such a massive increase.
Companies are still faced with a massive increase in taxation and draw on resources, even as a result of the concessionary rates that the Minister has announced this evening. For instance, Link Assistance in North Yorkshire, which is paying an excise bill of £1,020 a year, and which is looking at a possible bill of £19,740 on the originally proposed rates, will find, even with the concession, that its taxation will be increased by £9,000.
In the debate, Labour Members have repeatedly said that the Government scheme is ill thought out. The increased costs will be transferred from the Government to either the private motorist or car user. They will be absorbed by companies or passed on to the consumer. It is simply not acceptable that the Government should behave in that way. My hon. Friends have made that case.
In echoing the points about road safety, the hon. Member for Londonderry, East (Mr. Ross) made clear the particular variations in Northern Ireland. He asked why we cannot if the scheme is so badly thought out, pause, undertake the review and bring back the proposals next year. It would be worth forgoing the 1 per cent. increase in revenue if the scheme were in place and operating correctly.
In a detailed and knowledgeable speech, my hon. Friend the Member for Barrow and Furness (Mr. Hutton), who has obviously, in his bedtime reading, compared the Vehicle Excise and Registration Act 1994 with schedule 4 of the Bill, made clear the definitions of a police vehicle, its purposes and the varying purposes that would count under the definition. Again, he raised the point about the prison escort service. If those points have not created further anomalies in this so-called clear and simplified system, I do not know what will, or how the Government will understand the mess that they are getting themselves into.
My hon. Friend the Member for Warwickshire, North (Mr. O'Brien) echoed the points about road recovery difficulties. The Minister has not said whether the arrangements that he has announced tonight will be permanent, or whether they will stand simply for the next 12 months. He has not said that, in next year's Finance Bill, we will not face another debate on an incremental increase on the vehicle excise duties of all the vehicles that we have discussed this evening. Why not stop? Why not undertake the review? Why not undertake proper consultation instead of last-minute, knee-jerk reaction, and come up with a decent scheme for vehicle excise duty which deals with anomalies and which gives us a firm foundation to tax? That is a good taxation policy.
In this evening's debate, no hon. Member on either side of the House has disputed that the existing system is riddled with anomalies, that it is out of date, and that it has great difficulty in coping with new vehicles that arrive on the scene and with technological changes. I have described some examples that give rise to those difficulties. My proposals are major, simplifying measures. They will make it a great deal easier for the trade, for users of the vehicles and for the Vehicle Certification Agency. They will reduce the classes of vehicles by more than 90 per cent.
Of course, no reform is painless and any group of users of vehicles affected by any increases are bound to argue against them, but I answered those points in my introductory remarks. The additional points raised in the debate cover a specific group of amendments which will arise later in the debate, so they will be covered.
I am disappointed that the Labour party is persisting, apparently, with a number of amendments that continue and take forward local authority privileges. I have already shown that, under its proposals, some of the vehicles that it wants to be exempt will face full duty if used in a mode on a Monday, but complete exemption if used with a slight adaptation on a Tuesday. That cannot be right. It invites evasion and, administratively, it is unworkable.
I will, however, answer the points raised by the hon. Member for Barrow and Furness (Mr. Hutton) because the police vehicle issue may not arise again. I assure him that the definition used for police purposes is common in transport legislation—it is used, for instance, in the Severn Bridge Tolls Act 1965. It will not give rise to litigation or ambiguity of the sort that he fears.
I confirm to the hon. Gentleman that leased vehicles will be covered if they are leased for more than a month, but commandeered vehicles will not be covered and the owner will not be able to claim exemption, unless the vehicles are commandeered for whole months at a time. In answer to the point about unmarked police surveillance vehicles, they will benefit from the exemption, but, for obvious reasons, they will display a tax disc, as if vehicle excise duty had been paid. As we are taking forward a definition that is used in other legislation, I hope that the hon. Gentleman will agree that the clause, as drafted, is sound.
|Division No. 54]||[8.07 pm|
|Abbott, Ms Diane||Blunkett, David|
|Adams, Mrs Irene||Boateng, Paul|
|Ainger, Nick||Boyes, Roland|
|Ainsworth, Robert (Cov'try NE)||Bradley, Keith|
|Allen, Graham||Brown, Gordon (Dunfermline E)|
|Anderson, Donald (Swansea E)||Brown, N (N'c'tle upon Tyne E)|
|Armstrong, Hilary||Burden, Richard|
|Ashton, Joe||Byers, Stephen|
|Austin-Walker, John||Caborn, Richard|
|Banks, Tony||Callaghan, Jim|
|Barnes, Harry||Campbell, Mrs Anne (C'bridge)|
|Battle, John||Campbell, Ronnie (Blyth V)|
|Bayley, Hugh||Campbell-Savours, D N|
|Beckett, Rt Hon Margaret||Canavan, Dennis|
|Benn, Rt Hon Tony||Cann, Jamie|
|Benton, Joe||Chisholm, Malcolm|
|Bermingham, Gerald||Church, Judith|
|Berry, Roger||Clapham, Michael|
|Clark, Dr David (South Shields)||Llwyd, Elfyn|
|Clarke, Tom (Monklands W)||Loyden, Eddie|
|Clelland, David||McAllion, John|
|Clwyd, Mrs Ann||McAvoy, Thomas|
|Coffey, Ann||McCartney, Ian|
|Cohen, Harry||McCrea, The Reverend William|
|Connarty, Michael||Macdonald, Calum|
|Cook, Robin (Livingston)||McKelvey, William|
|Corbett, Robin||Mackinlay, Andrew|
|Cousins, Jim||MacShane, Denis|
|Cunningham, Jim (Covy SE)||Madden, Max|
|Cunningham, Rt Hon Dr John||Mahon, Alice|
|Dalyell, Tam||Marek, Dr John|
|Darling, Alistair||Marshall, David (Shettleston)|
|Davidson, Ian||Martin, Michael J (Springburn)|
|Davies, Bryan (Oldham C'tral)||Martlew, Eric|
|Davies, Rt Hon Denzil (Llanelli)||Maxton, John|
|Denham, John||Meacher, Michael|
|Dixon, Don||Meale, Alan|
|Donohoe, Brian H||Michie, Bill (Sheffield Heeley)|
|Dunwoody, Mrs Gwyneth||Milburn, Alan|
|Eagle, Ms Angela||Miller, Andrew|
|Eastham, Ken||Mitchell, Austin (Gt Grimsby)|
|Enright, Derek||Molyneaux, Rt Hon James|
|Etherington, Bill||Moonie, Dr Lewis|
|Evans, John (St Helens N)||Morgan, Rhodri|
|Ewing, Mrs Margaret||Morley, Elliot|
|Field, Frank (Birkenhead)||Morris, Rt Hon Alfred (Wy'nshawe)|
|Fisher, Mark||Morris, Estelle (B'ham Yardley)|
|Foster, Rt Hon Derek||Morris, Rt Hon John (Aberavon)|
|Foulkes, George||Mudie, George|
|Fyfe, Maria||Mullin, Chris|
|Galbraith, Sam||Oakes, Rt Hon Gordon|
|Galloway, George||O'Brien, Mike (N W'kshire)|
|Gapes, Mike||O'Brien, William (Normanton)|
|George, Bruce||O'Hara, Edward|
|Gerrard, Neil||Olner, Bill|
|Gilbert, Rt Hon Dr John||O'Neill, Martin|
|Godman, Dr Norman A||Orme, Rt Hon Stanley|
|Golding, Mrs Llin||Paisley, The Reverend Ian|
|Graham, Thomas||Parry, Robert|
|Griffiths, Nigel (Edinburgh S)||Patchett, Terry|
|Grocott, Bruce||Pearson, Ian|
|Gunnell, John||Pendry, Tom|
|Hall, Mike||Pickthall, Colin|
|Hanson, David||Pike, Peter L|
|Harman, Ms Harriet||Powell, Ray (Ogmore)|
|Heppell, John||Prentice, Gordon (Pendle)|
|Hill, Keith (Streatham)||Prescott, Rt Hon John|
|Hinchliffe, David||Primarolo, Dawn|
|Hoey, Kate||Purchase, Ken|
|Home Robertson, John||Quin, Ms Joyce|
|Hoon, Geoffrey||Radice, Giles|
|Hoyle, Doug||Randall, Stuart|
|Hughes, Kevin (Doncaster N)||Reid, Dr John|
|Hughes, Robert (Aberdeen N)||Robertson, George (Hamilton)|
|Hutton, John||Robinson, Geoffrey (Co'try NW)|
|Illsley, Eric||Rogers, Allan|
|Ingram, Adam||Rooker, Jeff|
|Jackson, Helen (Shef'ld, H)||Rooney, Terry|
|Jamieson, David||Ross, Ernie (Dundee W)|
|Janner, Greville||Ross, William (E Londonderry)|
|Jones, Barry (Alyn and D'side)||Ruddock, Joan|
|Jones, Jon Owen (Cardiff C)||Sedgemore, Brian|
|Jones, Lynne (B'ham S O)||Sheldon, Rt Hon Robert|
|Jones, Martyn (Clwyd, SW)||Shore, Rt Hon Peter|
|Kaufman, Rt Hon Gerald||Short, Clare|
|Keen, Alan||Skinner, Dennis|
|Kennedy, Jane (Lpool Brdgn)||Smith, Andrew (Oxford E)|
|Khabra, Piara S||Smith, Chris (Isl'ton S & F'sbury)|
|Kilfoyle, Peter||Smith, Llew (Blaenau Gwent)|
|Lestor, Joan (Eccles)||Snape, Peter|
|Lewis, Terry||Soley, Clive|
|Liddell, Mrs Helen||Spearing, Nigel|
|Livingstone, Ken||Spellar, John|
|Lloyd, Tony (Stretford)||Squire, Rachel (Dunfermline W)|
|Steinberg, Gerry||Wicks, Malcolm|
|Stevenson, George||Wigley, Dafydd|
|Stott, Roger||Williams, Rt Hon Alan (Sw'n W)|
|Strang, Dr. Gavin||Williams, Alan W (Carmarthen)|
|Sutcliffe, Gerry||Wilson, Brian|
|Tipping, Paddy||Wise, Audrey|
|Turner, Dennis||Worthington, Tony|
|Vaz, Keith||Wright, Dr Tony|
|Walker, Rt Hon Sir Harold|
|Wardell,Gareth (Gower)||Tellers for the Ayes:|
|Wareing, Robert N||Mr. Eric Clarke and|
|Watson, Mike||Mr. Peter Mandelson|
|Ainsworth, Peter (East Surry)||Cran, James|
|Aitken, Rt Hon Jonathan||Currie, Mrs Edwina (S D'by'ire)|
|Alison,Rt Hon Michael (Selby)||Curry, David (Skipton & Ripon)|
|Amess, David||Davies, Quentiin (Stamford)|
|Ancram, Michael||Day, Stephen|
|Arbuthnot, James||Deva, Nirj Joseph|
|Arnold, Jacques (Gravesham)||Delvin,Tim|
|Arnold, Sir Thomas (Hazel Grv)||Dicks, Terry|
|Ashby, David||Dorrell, Rt Hon Stephen|
|Ashdown, Rt Hon Paddy||Douglas-Harnilton, Lord James|
|Atkins, Robert||Dover, Den|
|Atkinson, Peter (Hexham)||Duncan, Alan|
|Baker, Nicholas (North Dorset)||Duncan Smith, Iain|
|Baldry, Tony||Dunn, Bob|
|Banks, Matthew (Southport)||Dykes, Hugh|
|Banks, Robert (Harrogate)||Elletson, Harold|
|Bates, Michael||Emery, Rt Hon Sir Peter|
|Batiste, Spencer||Evans, David (Welwyn Hatfield)|
|Beith,Rt Hon A J||Evans, Jonathan (Brecon)|
|Bellingham, Henry||Evans, Nigel (Ribble Valley)|
|Bendall, Vivian||Evans, Roger (Monmouth)|
|Beresford, Sir Paul||Evennett, David|
|Biffen, Rt Hon John||Faber, David|
|Booth, Hartley||Fabricant, Michael|
|Boswell, Tim||Field, Barry (Isle of Wight)|
|Bottomley, Peter (Eltham)||Fishburn, Dudley|
|Bottomley.Rt Hon Virginia||Forman, Nigel|
|Bowden, Sir Andrew||Forsyth, Rt Hon Michael (Stirling)|
|Bowis, John||Forth, Eric|
|Boyson, Rt Hon Sir Rhodes||Foster, Don (Bath)|
|Brandreth, Gyles||Fowler, Rt Hon Sir Norman|
|Brazier, Julian||Fox, Sir Marcus (Shipley)|
|Bright, Sir Graham||Freeman, Rt Hon Roger|
|Brooke, Rt Hon Peter||French, Douglas|
|Brown, M (Brigg & Cl'thorpes)||Gale, Roger|
|Browning, Mrs Angela||Gallie, Phil|
|Bruce, Ian (Dorset)||Gardiner, Sir George|
|Bruce, Malcolm (Gordon)||Garnier, Edward|
|Budgen, Nicholas||Gill, Christopher|
|Burns, Simon||Gillan, Cheryl|
|Butcher, John||Goodlad, Rt Hon Alastair|
|Butter, Peter||Goodson-Wickes, Dr Charles|
|Butterfill, John||Gorst, Sir John|
|Campbell, Menzies (Fife NE)||Grant, Sir A (SW Cambs)|
|Carlisle, John (Luton North)||Greenway, Harry (Ealing N)|
|Carlisle, Sir Kenneth (Lincoln)||Greenway, John (Ryedale)|
|Carrington, Matthew||Griffiths, Peter (Portsmouth, N)|
|Cash, William||Grylls, Sir Michael|
|Channon, Rt Hon Paul||Hague, William|
|Chapman, Sydney||Hamilton, Neil (Tatton)|
|Chidgey, David||Hampson, Dr Keith|
|Clappison, James||Hanley, Rt Hon Jeremy|
|Clark, Dr Michael (Rochford)||Hannam, Sir John|
|Clarke, Rt Hon Kenneth (Ru'clif)||Hargreaves, Andrew|
|Clifton-Brown, Geoffrey||Harris, David|
|Congdon, David||Harvey, Nick|
|Conway, Derek||Haselhurst, Alan|
|Coombs, Anthony (Wyre For'st)||Hawkins, Nick|
|Coombs, Simon (Swindon)||Hawksley, Warren|
|Cope, Rt Hon Sir John||Hayes, Jerry|
|Cormack, Sir Patrick||Heald, Oliver|
|Couchman, James||Heath, Rt Hon Sir Edward|
|Heathcoat-Amory, David||Neubert, Sir Michael|
|Hendry, Charles||Newton, Rt Hon Tony|
|Hicks, Robert||Nicholls, Patrick|
|Higgins, Rt Hon Sir Terence||Nicholson, David (Taunton)|
|Hill, James (Southampton Test)||Nicholson, Emma (Devon West)|
|Hogg, Rt Hon Douglas (G'tham)||Norris, Steve|
|Horam, John||Onslow, Rt Hon Sir Cranley|
|Hordern, Rt Hon Sir Peter||Oppenheim, Phillip|
|Howard, Rt Hon Michael||Page, Richard|
|Howarth, Alan (Strat'rd-on-A)||Paice, James|
|Howell, Rt Hon David (G'dford)||Patten, Rt Hon John|
|Hughes, Robert G (Harrow-West)||Pattie, Rt Hon Sir Geoffrey|
|Hunt, Rt Hon David (Wirral W)||Pawsey, James|
|Hunter, Andrew||Peacock, Mrs Elizabeth|
|Hurd, Rt Hon Douglas||Pickles, Eric|
|Jack, Michael||Porter, Barry (Wirral S)|
|Jackson, Robert (Wantage)||Porter, David (Waveney)|
|Jenkin, Bernard||Portillo, Rt Hon Michael|
|Jessel, Toby||Powell, William (Corby)|
|Jones, Gwilym (Cardiff N)||Redwood, Rt Hon John|
|Jones, Nigel (Cheltenham)||Rendel, David|
|Jones, Robert B (W Hertfdshr)||Richards, Rod|
|Kellett-Bowman, Dame Elaine||Riddick, Graham|
|Key, Robert||Robathan, Andrew|
|King, Rt Hon Tom||Roberts, Rt Hon Sir Wyn|
|Kirkhope, Timothy||Robertson, Raymond (Ab'd'n S)|
|Kirkwood, Archy||Robinson, Mark (Somerton)|
|Knapman, Roger||Roe, Mrs Marion (Broxbourne)|
|Knight, Mrs Angela (Erewash)||Rowe, Andrew (Mid Kent)|
|Knight, Greg (Derby N)||Rumbold, Rt Hon Dame Angela|
|Knox, Sir David||Ryder, Rt Hon Richard|
|Kynoch, George (Kincardine)||Sackville, Tom|
|Lait, Mrs Jacqui||Sainsbury, Rt Hon Sir Timothy|
|Lang, Rt Hon Ian||Scott, Rt Hon Sir Nicholas|
|Lawrence, Sir Ivan||Shaw, David (Dover)|
|Legg, Barry||Shaw, Sir Giles (Pudsey)|
|Leigh, Edward||Shephard, Rt Hon Gillian|
|Lennox-Boyd, Sir Mark||Shepherd, Colin (Hereford)|
|Lester, Jim (Broxtowe)||Shepherd, Richard (Aldridge)|
|Lidington, David||Shersby, Michael|
|Lightbown, David||Sims, Roger|
|Lilley, Rt Hon Peter||Skeet, Sir Trevor|
|Lloyd, Rt Hon Sir Peter (Fareham)||Smith, Tim (Beaconsfield)|
|Lord, Michael||Soames, Nicholas|
|Luff, Peter||Spencer, Sir Derek|
|Lyell, Rt Hon Sir Nicholas||Spicer, Sir James (W Dorset)|
|Lynne, Ms Liz||Spicer, Michael (S Worcs)|
|MacGregor, Rt Hon John||Spink, Dr Robert|
|MacKay, Andrew||Spring, Richard|
|Maclean, David||Sproat, Iain|
|Maclennan, Robert||Squire, Robin (Hornchurch)|
|McLoughlin, Patrick||Stanley, Rt Hon Sir John|
|McNair-Wilson, Sir Patrick||Steel, Rt Hon Sir David|
|Maddock, Diana||Stephen, Michael|
|Madel, Sir David||Stern, Michael|
|Maitland, Lady Olga||Stewart, Allan|
|Malone, Gerald||Streeter, Gary|
|Mans, Keith||Sumberg, David|
|Marlow,.Tony||Tapsell, Sir Peter|
|Marshall, John (Hendon S)||Taylor, Ian (Esher)|
|Marshall, Sir Michael (Arundel)||Taylor, John M (Solihull)|
|Martin, David (Portsmouth S)||Taylor, Matthew (Truro)|
|Mates, Michael||Taylor, Sir Teddy (Southend, E)|
|Mellor, Rt Hon David||Temple-Morris, Peter|
|Merchant, Piers||Thomason, Roy|
|Michie, Mrs Ray (Argyll & Bute)||Thompson, Patrick (Norwich N)|
|Mills, Iain||Thornton, Sir Malcolm|
|Mitchell, Andrew (Gedling)||Thurnham, Peter|
|Mitchell, Sir David (NW Hants)||Townsend, Cyril D (Bexl'yh'th)|
|Moate, Sir Roger||Tracey, Richard|
|Monro, Sir Hector||Tredinnick, David|
|Montgomery, Sir Fergus||Trend, Michael|
|Moss, Malcolm||Twinn, Dr Ian|
|Needham, Rt Hon Richard||Vaughan, Sir Gerard|
|Nelson, Anthony||Viggers, Peter|
|Waldegrave, Rt Hon William||Widdecombe, Ann|
|Walden, George||Wiggin, Sir Jerry|
|Walker,Bill (N Tayside)||Willetts, David|
|Wallace, James||Wilshire, David|
|Waller, Gary||Winterton, Mrs Ann (Congleton)|
|Ward, John||Wolfson, Mark|
|Wardle, Charles (Bexhill)||Yeo,Tim|
|Waterson, Nigel||Young, Rt Hon Sir George|
|Wells, Bowen||Tellers for the Noes:|
|Whitney, Ray||Dr. Liam Fox and|
|Whittingdale, John||Mr. Timothy Wood|