4A. A vehicle is an excepted vehicle if—
We are denied an outing on amusement machine licence duty. The amendment relates to vehicle excise duty changes and it might be helpful briefly to remind hon. Members of the reasons for the changes to that duty, which are set out in schedule 4.
The existing system of VED suffers from a great many faults. It is archaic, in some cases dating back to before the second world war, and as a result it no longer concentrates special treatment and concessions on those who most merit them. It is also extremely complex. There are 132 separate classes for this type of indirect taxation. Consequently, it is bureaucratic and I am afraid that it is also prone to evasion. Therefore, we have used the Bill as an opportunity to push through major reform and restructuring of the vehicle excise duty system.
Any reform on this scale is not easy and we made a number of consequential changes after discussing the matter during earlier debate on the Bill and with the trades and associations that are affected. The system that is set out in schedule 4 addresses the faults that I have outlined and the 132 classes are reduced to fewer than a dozen. Special treatment is now concentrated on the most deserving, opportunities for evasion are closed and bureaucracy is reduced.
The amendment relates to farming, horticulture and forestry because it is obvious, especially to hon. Members with agricultural constituencies, that farm operators are frequently obliged to make short journeys between parcels of land in the same ownership. Such limited use of the public roads warrants the continued exemption from VED and entitlement to rebated fuel.
The old 6-miles-per-week exemption was bureaucratic and virtually impossible to enforce and our original intention was to abolish it. However, I said clearly in Committee that I would listen to representations from hon. Members, the National Farmers Union, the Country Landowners Association and others on whether we could design an exemption that was less bureaucratic and more enforceable, but which would give relief, where merited, to those farm vehicles making inevitable short trips along public roads.
I am listening carefully to the Paymaster General. Can he confirm that the proposals before us are not less restrictive than the previous 6-miles-per-week regulation, but are less bureaucratic? Is he saying that, basically, it is the same arrangement but in a less bureaucratic form?
The proposal is certainly less bureaucratic because previously the farmer had to fill out a complex annual form. If he needed to divert from the route laid down in the form because, for example, of a blockage in the road, theoretically he had to write for permission to make the detour.
The proposal is also more enforceable because, instead of a system based on time and distance—6 miles per week—we have agreed to a scheme that gives exemption to vehicles used for agriculture and similar purposes where no trip on a public road between land in the same occupation exceeds 1.5 km, which is about as near to a mile as the metric system allows. To enforce that, the police officer no longer has to guess how many miles the vehicle has travelled in a week; instead, he can easily judge whether the vehicle is within 1.5 km of the nearest land in that particular ownership or occupation.
It is a different system and a slightly different category of vehicles will benefit, but the overall intention is the same. In general, it is slightly more generous than the system it replaces. Under the old system, if the limit of 6 miles per week had been used up, in theory the farmer was not entitled to any more trips on a public road. Now, he can make an unlimited number of journeys on a public road, within the overall constraint that they can be no more than 1.5 km in distance. I commend the amendment to the House.
I want to mention the concerns that the agricultural, horticultural and forestry industries had about the original proposal, from which, to some extent, the Government have now retreated. That is welcome.
I have two questions for the Paymaster General. First, why was the original proposal ever included in the Bill? Clearly, consultation must have been absolutely minimal if the Government now have to make this major, albeit welcome, change. The only thing that I can think of that might have been the logic behind the original proposal is that Conservative Members who represent agricultural constituencies must have told the Government that such was the scale of current agricultural enterprises that they had so many private roads that the exemption was no longer necessary.
The other question is why the distance of precisely 1.5 km has been chosen. It is near a mile, but why were not the distances of 1, 1.5 or 2 miles chosen? That restriction does not seem to have any particular logic. No precedent for it exists in similar legislation from the past, or in present restrictions.
The Government's retreat is welcome. I know that all three industries will be delighted that, at long last, the Government have recognised the problem that they were creating. However, the attempt to reduce bureaucracy could still result in a number of problems. The provision on vehicles that are used only for agriculture, horticulture and forestry purposes might, for example, not catch in its net a pick-up truck that is used for leisure purposes at weekends—not that farmers ever get any leisure time. They may find that, if a tight net were drawn, a vehicle used for leisure purposes would not be captured within the amendment and, therefore, that they would not have the exemption either from fuel or vehicle excise duty.
I hope that the system will prove simpler than that of the past, and than that which would have resulted from the original proposal. I thank the Paymaster General for listening to hon. Members on both sides of the House at an early stage in Committee. I hope that he will be able to answer those two simple points when he replies to the short debate.
I want to thank my hon. Friend the Paymaster General for the changes. Farmers in Hastings and Rye quickly alerted me to the difficulties with the original proposal. I know that they are pleased about not just the changes in the distance that they can drive, but the reduction in bureaucracy. Every farmer would dearly like to have fewer forms to fill in. The reduction of one will be much welcomed.
I ask my hon. Friend the Minister to consider new section 4A(b), which states that the vehicle should pass between
different areas of land occupied by the same person".
On many occasions, the cost of agricultural machinery is so great that farmers buy machinery jointly, or have a working arrangement to farm each other's land and share the machinery. Although those farmers meet the purposes of new section 4A(a) and (c), the lands that they farm may not technically be occupied by the same person, even though they may be only 1 or 2 km away from each other.
That is important to farmers in my constituency such as Mr. Sandell and Mr. Crook of Amesbury, who have a river and a bridge between their land. They would not benefit from the clause simply because they do not occupy each other's land.
I shall be extremely brief, but I want to refer to my amendment No. 91. I accept that amendment No. 68, which stands in the name of the Chancellor of the Exchequer, is a massive improvement on the original proposal. The Paymaster General has referred to his desire to reduce bureaucracy and the complexity of forms that farmers must fill out, but I do not believe that the amendment will reduce that complexity. Aspects of it will lead to various arguments being propounded as to what an agricultural vehicle is exactly.
The amendment is not particularly clear when it states:
for purposes relating to agriculture, horticulture or forestry".
Will that, for example, include a truck that is not defined as a tractor or an agricultural implement? That is one of the concerns that many farmers have about the definition of an agricultural vehicle.
Has the Paymaster General received any representations recently from the National Farmers Union for Scotland or from Forestry Enterprise on the provision allowing an unlimited number of journeys of 1.5 km? Realistically, that provision is not particularly helpful in regions such as mine, where farms or forestry may cover vast areas of land. Farms may not be especially profitable, but they cover vast areas. I wonder whether there has been any recognition of the particular geography or topography of certain areas.
I echo the sentiments that have been expressed about co-operation between farmers which may involve moving implements from one farm to another, thereby leading to the 1.5 km provision being exceeded. It is important to clarify the issue so that we do not get into yet another muddle and in order to avoid bureaucracy. Our farmers and foresters are extremely concerned.
While there has been a general welcome for the amendment, I hope that the Paymaster General will take on board the fact that there are still reservations about it. I hope that we can be provided with a final definition.
The Paymaster General referred to "the most deserving case"—I think that that was the phrase—being kept in the revised regulations. I wonder whether he may come to regret that phrase because, although I have no objection to the proposal to reduce the burden on those who operate vehicles for forestry or for agricultural purposes, other groups of people in an almost identical situation do not receive the same sympathetic attention.
I am thinking of, for example, plant hire companies that provide, for use in construction, vehicles which are often used on the road for only part of the time. They are faced with a great increase in tax in the Budget and, while I accept that the merits of the case for agriculture may be strong, other groups do not benefit from the subsidies received by agriculture and forestry but, as they are involved in the construction industry, face considerable difficulty in passing on the increased tax burden.
I echo the views expressed by the hon. Members for Moray (Mrs. Ewing) and for Salisbury (Mr. Key) about co-operation among farmers. I think that the House will appreciate that the smaller the farms, the more likely there is to be such co-operation. Indeed, it is not so much common as nearly universal in Northern Ireland. I hope that the Minister will take on board the comments made a few moments ago.
I draw the House's attention to a matter which has not yet been mentioned, at least not in my hearing—the 1.5 km provision. In Northern Ireland and, no doubt, in slightly different forms throughout the United Kingdom, we have a system of renting land. In Northern Ireland it is called conacre. It involves renting land for a particular crop for one year. It is of considerable value to specialist potato growers and, to a lesser extent, to specialist grain growers and, of course, in respect of grass silage which often has to be grown at a considerable distance from where it is needed.
The periods of time during which tractors and other vehicles are used to move crops are comparatively short—in some cases, only a few days each year. As the House will know, at such times it is a question of every possible vehicle being put on the road to do the work in the shortest possible time. Crops are sometimes grown on land that is considerably further off than 1.5 km. Indeed, I should have thought that 10 km was a more reasonable distance to include in the legislation. Perhaps the Minister will take that point on board in addition to that made by the hon. Members for Moray and for Salisbury and attend to them next year, as I do not expect that any further changes to the Bill will be made now.
I was asked why the original proposal was to do away with the exemption. It was simply because it was bureaucratic and unworkable and the House should not pass or tolerate laws that are described as such. I made it clear, however, that if agricultural and similar vehicles could be exempted from vehicle excise duty in a way that overcame the problems, I would consider it. Since I said that and since we have had the meetings with the trade representatives, we have found exactly such a way and I commend it to the House.
I was asked why the amendment sets out a distance of 1.5 km. I own that I would rather have put "1 mile" in the statute, but I am advised that nowadays we are all going metric. I do not know why, but I can guess. It is certainly the case that, from 1999, our statutes have to reflect kilometres and other metric measurements, with a few exceptions that do not cover this case. I went for the nearest length equivalent to a mile and came up with 1.5 km, which is reasonably comprehensible to farmers, even though most of the farmers I know are still in the day of rods, poles and perches—if they are very modern they talk about furlongs. I am afraid that we must all go metric in due course, and so the figure in the statute will be 1.5 km.
On the argument of my hon. Friend the Member for Portsmouth, North (Mr. Griffiths) about construction vehicles, the rationale for the agricultural exemption is the low mileage on roads. Often, farmers simply have to cross a main road—they do nothing more than that—so they do not use the public highway in any real sense of the word, whereas construction vehicles and the like use public roads, which explains the difference in treatment.
I was also asked about farms that may not be in the same occupation, but use the same vehicles. Contract vehicles frequently travel quite short distances between different farms, but during a year they tend to make significant use of public roads. They would not have benefited under the old exemption of 6 miles per week and it is not right, therefore, that we should design a markedly more generous system to replace the one that we are doing away with.
Yes, but I think that the general point still applies. If a co-operative's vehicle moved frequently between different farms, it would not have benefited under the old system of 6 miles per week and, typically, would do more than the 1.5 km hops between land, even if we were to change the statute to allow such hops between farms to include movements between land in different ownership. Obviously, we have to draw a line at some point and I think that we have done so in the right place.
I want to draw the Paymaster General's attention to the words "same person" in paragraph (b) of the amendment. It is not clear to whom that applies—the same as what? In this case, it is extremely important because, as the hon. Member for Salisbury (Mr. Key) said, "same person" might mean something in the context of a co-operative. The "same person" is very difficult to define. I think that the hon. Member for Salisbury is agreeing.
The use of "same person" means that it applies to a farm in the same ownership. We are exempting a farm vehicle—a tractor or whatever—when it moves from a field owned by a man or a partnership to a different field in the same ownership. If it involves a journey of less than 1.5 km, the farm vehicle will be exempt from vehicle excise duty. That is reasonably clear and I commend the measure to the House.