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Amendment of the Law

Part of Budget Resolutions and Economic Situation – in the House of Commons at 7:34 pm on 21st March 2000.

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Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham 7:34 pm, 21st March 2000

We could continue this discussion in another debate. I know that figures from the M & G survey, and other surveys, show that the number of people who have taken out ISAs has not yet equalled the number of people who have taken out PEPs.

I want to say something about the environment. Last year we were promised 22 environmental tax areas; we were also promised hypothecation of environmental taxes for the first time. We were promised that by a Government who claimed that they would put the environment at the heart of decision making. I welcome parts of that, and I have looked carefully through all the press releases; but, as so often happens with a Chancellor who wants us to believe that black is white, green becomes brown on closer inspection.

The Chancellor has tinkered with vehicle excise duty on cars—the qualification is to go up from 1,100 cc to 1,200 cc. That will have very little impact on emissions. The Chancellor has recycled his announcement about four bands for company cars in the future. We have been told about a possible relief for stamp duty on new brownfield developments. It is nothing to do with reducing VAT on brownfield developments, which we were promised. Indeed, the Deputy Prime Minister claimed just a few weeks ago in the financial press that this was a bit of a done deal with the Chancellor.

The Chancellor recycled the announcement of an increase of £1 per tonne in landfill tax, but that tax is not being recycled to help good causes such as local charitable or environmental concerns, as it was when the tax was invented under the last Government. There was nothing in the Budget to promote recycling of any kind, at a time when recycling is being threatened by a crash in the prices of raw materials.

When we look at the small print, we see that there is an aggregate tax. I think that that is a shame as the voluntary agreements offered by the industry offered considerable improvements. According to the fine detail, aggregates dug out of the ground for export will not be subject to the tax, but those for use in this country will. We are allowed to dig holes in the countryside if we are exporting aggregates overseas, and will not be taxed, but that will not be the case if we are using them to build roads and hospitals in this country. That strikes me as an anomaly. Opencast coal mining will also be exempt from the tax. This is supposed to be an environmental measure, but opencast coal mining is possibly one of the biggest blights on the countryside. In many respects, the Bill is more brown than green.

I welcome the end of the fuel duty escalator, but diesel fuel duty is still going up. Business is still going abroad, and foreign trucks are still taking over from British trucks on British roads. Cars using unleaded petrol will still have to pay more for their petrol—1.89p per litre. A study carried out just this week has shown that families in Sussex now spend more on running their cars than any other household bills. That is more than is spent in any other part of the United Kingdom. The average Sussex family spends £78 a week—17 per cent. of household income—on cars. That is more than food and more than housing costs.

There was nothing in the Budget to encourage travel by bus, tram, metro or bicycle, apart from the recycling of some of the grants relating to rural buses. Despite the early announcement on rural buses, the number of bus passenger miles travelled has continued to fall. We still have the worst record in Europe for passenger miles travelled on public transport—a third of the amount in Denmark and half of the amount in the Netherlands.

The Budget does nothing to deal with the fact that we have the longest commuting times per day in Europe. It does nothing to deal with the problem that more road links are congested for at least one hour a day here than in any other country in Europe, apart from Poland. I am glad that road fuel gas duty has been frozen, but I wish that the Chancellor had shouted more loudly about that. Last year the Government reduced it by 29 per cent., which was very welcome, but the Chancellor did not mention that today. The trouble is that, despite all the Government's claims, this and previous Budgets have done nothing to encourage the conversion of public transport vehicles such as lorries to the use of road fuel gases.

According to a written answer last week, since 1996 the number of heavy goods vehicles that have converted to the use of liquid petroleum gas has increased from 24 to the grand total of 68, while the number of buses now able to use it has increased by 15 to 36. In the whole country, despite all the tax measures promised and shouted about by the Government, 36 buses have taken advantage of the tax breaks to convert to LPG.

For all Labour Members' talk of capital allowances for business, there was no mention in any of the notes or in any part of the Chancellor's speech of the use of capital allowances to encourage innovative environmental technology, a measure that was supported by 94 per cent. of business leaders. That underlines the need for a green tax commission to check the Government's green credentials and to build consensus between the Government, business, industry and environment advisory boards.

I could mention energy tax, too. I hope that we will debate that another day. Suffice it to say that there were no great improvements to energy tax in the Budget—a tax that will make many parts of British industry, particularly the steel industry and horticulture, very uncompetitive.

In my constituency, the BOC Group is a large employer. Electricity represents some 78 per cent. of production costs: the cost will be some £8.5 million in the first year. The company is being taken over by a French and United States consortium, which will mean that production in this country can easily move to either of those countries.

Understandably, the company has said: We would have no choice, faced with such a massive cost, but to reflect it in our prices to customers, therefore passing a burden to other competitive British companies as well. It is no surprise that, just yesterday, the Select Committee on the Environment, Transport and Regional Affairs said: We do not believe that the Climate Change Levy meets the tests of good taxation. The system of exemptions, negotiated agreements and reduced rates has produced an extremely complex and cumbersome market instrument which will result in a relatively modest emissions reduction. There is an old Budget adage: the louder Government Members cheer on Budget day, the more they will regret it later, when the Budget has been properly analysed in the cold light of day. Today's Budget is no exception. The devil is in the detail. It is a classic socialist Labour Budget—tax up 9p with one hand but down just 1 p with the other. Labour Members seem to have had difficulty in working that out.

After the Budget, the United Kingdom will still have the fastest rising tax burden in the industrialised world. No amount of fudging the figures, glossy brochures or spin doctoring will conceal that fact. With productivity growth slowing, with all help for industry targeted on new technology sectors—there is little help for traditional industries, which are increasingly tied up in red tape—and with the savings ratio plummeting, the Budget just stores up trouble for the future.

People are not stupid. They have woken up to the fact that services are getting worse and that they are paying more tax by stealth. They will treat with contempt a Chancellor who is more intent on building a war chest for election bribes than delivering effective services. The Government have been sussed. They are taxing more and delivering less.