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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 6:54 pm on 20th April 2004.

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Photo of Richard Bacon Richard Bacon Conservative, South Norfolk 6:54 pm, 20th April 2004

It is a pleasure to have the chance to take part in this debate and to follow Adam Price, to whom I listened with interest.

The Chief Secretary, who is now back in his place, began the debate by saying that he looked around the Chamber and saw lots of graduates of previous Finance Bills. I have to say that I felt distinctly like an undergraduate at that point because this is my first Finance Bill, so I thought that it would be sensible to restrict my comments to two narrow issues that concern me, and to one rather broader issue. The first of the two narrow points is one on which I am concerned that the Government are not doing enough: their policy on the duty on biofuels. The second—the Government's proposals on duty stamps for whisky—is of huge concern to Angus Robertson and other Scottish Members, and to any single malt whisky drinker. I regret to say that we in South Norfolk have no distilleries, but we have a gratifyingly large number of microbreweries.

It is increasingly widely, albeit not universally, known that one can make fuel for cars or lorries from wheat, barley, sugar beet and oilseed rape—and from single malt whisky, I suppose, if one were sufficiently desperate. Such fuel has huge benefits in terms of the environment and fuel security, and it benefits the rural economy and farming constituencies such as mine. There is a good case on a wide variety of grounds for encouraging the development of a biofuels industry in this country. Fuel security has not been a great concern in the past, but in the increasingly uncertain world in which we live, its importance is growing.

I pay tribute to my right hon. Friend Mrs. Shephard, who has campaigned assiduously on this issue, which has extensive cross-party support within the House, and widespread support from outside bodies including the National Farmers Union, the Road Haulage Association, the British Chambers of Commerce, the Confederation of British Industry and Friends of the Earth—not bodies often seen on the same side of an issue. There is a general view that although the 20p per litre duty reduction on biofuels announced by the Government is a welcome step in the right direction, it is not enough to stimulate the development of a serious biofuels industry in this country.

The Government frequently repeat their commitment to reducing emissions of greenhouse gases, but research undertaken by Sheffield Hallam university suggests that conventionally produced bioethanol could produce a reduction of 60 per cent in carbon dioxide emissions, and British Sugar research indicates that efficient production methods could increase that figure to 70 per cent. However, to achieve those benefits, we need a biofuels industry. The Government have stated their intention to meet the renewable fuels targets by 2020 and the requirements of the EU biofuels directive by 2005, but those targets will not be met with the UK biofuels industry in its present state.

The main effect of the Government's duty proposals on biofuels will simply be to suck in imports. Now, oilseed rape is grown in this country, put on a lorry and exported to Germany—the transport generating carbon emissions. There, it is turned into biofuel and re-imported to this country to take advantage of the tax break that the Government have introduced. That is ludicrous. It has happened because the German Government introduced a larger tax break to get a serious manufacturing industry up and running. Everyone accepts that the tax break would not have to last for ever. It could tail off. However, at present it is widely understood that the Government's proposed 20p per litre duty cut is not enough even to get the industry in this country started.

We have to create our own industry. The Curry report on the future of farming, which was commissioned by the Government themselves, refers to biofuels, saying that England—I apologise to Welsh and Scottish Members, but agricultural matters are devolved—

"needs a long-term strategy for creating and exploiting opportunities in non-food crops, including starch and oils. This area should be a high priority for the research and technology transfers we have outlined. We recommend that the Government should reduce duty on biofuels to that charged on other clean fuels. We believe this will help processors to drive the market forward".

Lord Whitty, a Minister in another place, has said that the 20p reduction on offer is not enough to deliver the investment needed to create a viable industry and achieve the outcomes that everyone would like. It is disappointing, given the chance to develop an exciting industry that would help the rural economy and the environment and improve our fuel security, that more is not being done to foster that opportunity. I therefore hope that the Government will reconsider their position.

Clause 4 deals with duty stamps on spirits, an issue that I raised with the chairman of Customs and Excise when he gave evidence to the Public Accounts Committee.