Environmentally Friendly Road Transport

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 15th April 1999.

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Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield 12:00 am, 15th April 1999

If he will make a statement on the impact of the measures in his recent Budget statement to encourage more environmentally friendly road transport. [79452]

Photo of Patricia Hewitt Patricia Hewitt Economic Secretary, HM Treasury

This year's Budget contained the most far-reaching package of environmental tax reforms ever seen in our country. In particular, my right hon. Friend the Chancellor announced a number of measures designed to encourage the use of cleaner fuels and vehicles and to discourage unnecessary journeys. Those included a £55 reduction in vehicle excise duty for small cars, a fundamental reform of company car taxation, changes in fuel duties to encourage cleaner fuels and seven new tax relief measures to encourage employers to promote environmentally sensitive commuting. Those measures will help to reduce congestion and emissions of both greenhouse gases and local air pollutants.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

I thank my hon. Friend for that reply, and I welcome the cut in duty for liquid petroleum gas. Will she go further and encourage the use of more environmentally friendly fuels—for instance, ultra-low sulphur diesel? On vehicle excise duty, I welcome the step along the way in relating that to engine size, but does she agree that engine size is not the best measure of environmental performance? We need to look at much more exact measures, such as carbon dioxide emissions.

Photo of Patricia Hewitt Patricia Hewitt Economic Secretary, HM Treasury

The Budget cut duty on road fuel gases, including liquid petroleum gas, by 29 per cent., and we have widened the differential for ultra-low sulphur diesel. That differential is having such a beneficial effect that we expect that, by the end of the year, virtually all the diesel sold in this country will be the cleaner ultra-low sulphur type.

As my right hon. Friend the Chancellor announced in the Budget, from next autumn we will introduce a new system of vehicle excise duty for new cars, graduated according to their emissions of carbon dioxide. That will give a very clear signal to people who are buying new cars to choose cleaner cars that do less environmental damage.

Photo of Owen Paterson Owen Paterson Conservative, North Shropshire

The Minister trumpets the environmental gains in the Budget, but the measures will drive British hauliers into bankruptcy. British freight will be carried by foreign hauliers. Hauliers with trucks on the continent have told me that the foreign lorries are not maintained as well as lorries in this country. The freight will still be carried, the pollution will stay here, and it will be pumped out by less well-maintained, dirty foreign trucks.

Photo of Patricia Hewitt Patricia Hewitt Economic Secretary, HM Treasury

The hon. Gentleman is wrong as well as xenophobic. It was of course the Conservative Government who introduced the road fuel escalator, which he now apparently opposes. It was the Conservative Government who drove 5,000 British hauliers into bankruptcy. In the Budget, we froze the rate of vehicle excise duty for 98 per cent. of lorries for the second year in a row; doubled the VED reduction for cleaner lorries to £1,000; increased the differential on ultra-low sulphur diesel; cut the duty on road fuel gases; made it easier for hauliers to down-plate, as the industry has long requested; and introduced cuts in the rate of corporation tax, from which all businesses, including hauliers, will benefit.

Photo of Ben Bradshaw Ben Bradshaw Labour, Exeter

I warmly welcome the imaginative measures in the Budget to promote cycling, including the tax breaks for employers and employees to encourage cycling to work, which will go a substantial way towards helping us to achieve our target of quadrupling cycling by 2010. What is my hon. Friend doing to publicise those measures and to increase the take-up?

Photo of Patricia Hewitt Patricia Hewitt Economic Secretary, HM Treasury

I know that my hon. Friend sets an excellent example by riding his bicycle to work. We have responded to the pleas of various companies and the environmental lobby by introducing seven measures in the Budget to promote environmentally friendly commuting. Those have been warmly welcomed by both business and the environmental lobby, with which we are working closely to ensure that employers and employees know of the measures and take full advantage of them.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

Will the Economic Secretary confirm that the further 12 per cent. increase in diesel duty in the Budget has made diesel nearly twice as expensive in Britain as on the continent? Is she aware that it enrages the British haulage industry that the Government dress up that huge revenue-raising measure as an environmental measure? How does it help the environment to drive British haulage firms out of business; raise the cost of all manufactured goods that have to be transported; encourage foreign lorries to come into this country using cheap foreign diesel and taking away British jobs; and to encourage British lorries to travel to the content to fill up with cheaper fuel?

Photo of Patricia Hewitt Patricia Hewitt Economic Secretary, HM Treasury

The right hon. Gentleman was a Treasury Minister when the previous Government introduced the road fuel escalator. It was he and his colleagues who described the road fuel escalator as an environmental measure. Less than 1 per cent. of road miles in this country travelled by lorries are travelled by foreign lorries. International competitiveness is simply not the issue.

In the context of the total tax and cost burdens on business, this country is the favoured environment for road hauliers, as for other businesses. A typical road haulier setting up in the Netherlands would face costs £600,000 higher than those in this country, and, for Belgium, that figure would be £800,000.

We are helping the road hauliers by freezing VED[Interruption.] Tory Members clearly prefer to support the disruption caused by extremist lorry drivers instead of supporting us in our policy of discussion with the road hauliers through the new industry forum that we have set up. We took several steps in the Budget to help hauliers—by freezing VED, by widening the differential for cleaner fuels and by doubling the VED cut for cleaner lorries.

Will the right hon. Gentleman tell us whether the Conservative party supports the policy of disruption by lorry drivers, or our policy of discussion—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. It is not for the Minister to ask the Opposition what their policies are.