Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

HM Revenue and Customs

Supplementary Estimates 2009-10 — Department of Health – in the House of Commons at 4:47 pm on 10th March 2010.

Alert me about debates like this

That, for the year ending with 31 March 2010, for expenditure by HM Revenue and Customs-

(1) further resources, not exceeding £242,822,000, be authorised for use as set out in HC 257,

(2) a further sum, not exceeding £212,951,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and

(3) limits as so set out be set on appropriations in aid.

Photo of Louise Ellman Louise Ellman Chair, Transport Committee 4:52 pm, 10th March 2010

I am pleased to open this debate. I shall focus on the key issues identified in the report of the Select Committee on Transport, which considers the impact that road charges have on mobility, congestion and sustainability. By focusing on issues that are as yet unresolved, the report draws attention to key areas that deserve more debate.

The report and its topic come under the remit of the Department for Transport, but the report's content also involves the Treasury Department. I thank the Minister for Pensions and the Ageing Society for her important contribution to the Committee's deliberations. I understand that the Under-Secretary of State for Transport, my hon. Friend Paul Clark, will reply today on behalf of the Government as a whole, so I hope that he is able to deal with Treasury-related issues as well as those that are the direct responsibility of the DFT. One of the report's key conclusions was that the two Departments need to work much more closely on matters of this nature.

There is no doubt that road transport is critical to our economy. There are 34 million motor vehicles driving on 250,000 miles of road in Great Britain, and 67 per cent. of freight is carried by road, so it is not possible to consider transport policy properly without considering the great importance of roads. However, there are clear environmental consequences. The transport sector is responsible for 23 per cent. of the UK's carbon dioxide emissions, and roads account for 93 per cent. of those. The Climate Change Act 2008 requires the Government to reduce CO2 emissions by 80 per cent. by 2050. That means that very significant changes are required in the transport sector as a whole, and particularly in road transport. Those changes need to be very wide ranging, and must relate to issues such as new technology, alternative fuels, and investment in a much more integrated public transport system.

A key element of our report is the confirmation that taxation and charges on motorists engender a high level of mistrust between drivers and the Government. It is very unclear what the cost of motoring is, and there are unanswered questions about exactly how much is raised from motor taxation and how it is applied. Our inquiry looked at that specifically, because up to now it is an area about which the Government have not made the information explicit. We found that we could identify £48 billion per annum that is raised by taxes and charges on motorists, £30 billion of which comes from specific motor taxes such as fuel duty and vehicle excise duty. It is a matter of regret that that information has not been made available previously in any simple form. Moreover, the Government have not made clear exactly how the money raised is spent. Indeed, the various claims that have been made at different times have only added to the confusion and misunderstanding about how the money is spent.

For example, it has been claimed that fuel duty is at once a tool to reduce carbon emissions, a source of general revenue, and a means to fund transport investment. The Government's attempts to increase VED bands retrospectively by describing the duty as a green tax brought environmental taxes into disrepute. We call for much greater transparency about exactly what is raised and how the money is applied.

What is the real cost of motoring? Every year, £9 billion is spent on maintaining and improving the road system. That amounts to 41 per cent. of total transport expenditure, yet it is clearly much less than the amount raised by taxation and charges on motorists. The actual cost of motoring must include externalities such as the cost of policing on the roads, as well as health costs and environmental impacts. Some of those items can have financial amounts attached to them so that we can see exactly what the costs are, or at least make an assessment of them. However, financial costs cannot be applied to other items, including some of the environmental impacts.

These externalities add up to a great deal more than what motorists believe them to cost. The Department for Transport considers that congestion costs £20 billion per annum, and the Eddington report suggested that that amount could rise by £22 billion in 2025 unless major changes are made. The Campaign for Better Transport puts the overall costs of driving at between £70 billion and £95 billion a year, so it is clear that there is a very wide variation in the assessments of exactly what the costs of motoring are. Whichever way we choose to assess them, however, it is certain that to reach a reasonable assessment of the cost of motoring we have to consider the externalities-the extra costs-that motoring imposes on communities and taxpayers as a whole.

In its inquiry, the Committee supported the calls from most motoring organisations that a fair way to raise revenue was to base the process on miles driven rather than on car ownership. For example, people pay more fuel duty the more miles that they drive, although we could not agree with some of the representations made to us that road taxation should come exclusively from that source.

We also found in our assessment of the costs and charges imposed on motorists in other European countries that UK drivers are not taxed overall more than their continental counterparts, but we recognised that there will always be limits on what taxation and charges can reasonably be raised at any time.

Congestion is a key road traffic issue. The CBI repeats the concern in its most recent report that congestion harms business because of delays and a lack of reliability. Clearly, congestion also harms the environment. It must be tackled by the Government's smarter choices agenda, which must include better and more integrated public transport and active road management, but it is also true that direct road charges could be an important part of the package if the difficulties associated with such charges could be resolved. The Transport Committee considered that issue previously, and we returned to it briefly in this report.

Photo of John Redwood John Redwood Conservative, Wokingham

The Select Committee looked at the Dutch scheme for road charging, which will be introduced over the next few years. Was the hon. Lady attracted to that, and would it solve the problem?

Photo of Louise Ellman Louise Ellman Chair, Transport Committee

Yes, the Committee looked at the Dutch scheme in our deliberations, and we found that there seemed to be an almost national agreement for a road-charging scheme in Holland. We saw that that was accepted, which was very encouraging, and that the Dutch equivalent of the AA was actively involved in the development of the scheme from its beginning, which seemed to be a way to make real progress. However, we registered differences in how taxation on motoring is levied in Holland. For example, there is a very large charge on the purchase of vehicles in Holland, but its proposed charging scheme would do away with that major charge and put a charge on the use of vehicles instead. We recognise not only the great progress made in Holland and want similar progress to be made here, but the significant difference between that country and the United Kingdom.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I am interested in that observation. There is indeed some support for road pricing in Holland-hon. Members might find that surprising-but given the large charge on vehicles at purchase, one would expect motorists to oppose road pricing because they have already purchased their cars. Support for road pricing might be even higher therefore in those countries where there is no such purchase tax.

Photo of Louise Ellman Louise Ellman Chair, Transport Committee

The introduction of a charging scheme must always relate to the taxation system in the country concerned. One of the key aspects of the Dutch scheme was that motorists would consider the fact that they might pay the same, or even less, for the motoring that they undertake than the fixed charges that they were paying previously. So it is always important to consider such things in the round and to involve, as the Dutch did, the major motoring organisations in developing the tax proposals.

As I have mentioned, the Committee has considered impediments to a direct charging scheme-we refer to them in our report-and they must certainly be addressed before major progress can be made. It is clear that road pricing and, indeed, local congestion schemes cannot be implemented without public support. If we were ever in any doubt about that, it became clear when we saw the Government's reaction to the 1.7 million signatures on the Downing street website in opposition to a road-pricing scheme.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

Just to be clear on that point, the public seemed to oppose a road-pricing scheme that would take more money from the motorist. If motorists had been asked whether they were prepared to accept a revenue-neutral switch of taxation, the response may have been entirely different.

Photo of Louise Ellman Louise Ellman Chair, Transport Committee

The hon. Gentleman is right. The question put on the Downing street website was very simplistic and, indeed, misleading one, but it is also true that the public response was so strong that it seems to have produced the reaction of the Government stating that they would not proceed further with plans for road charging. Our Committee felt that the Government should be much clearer about what they intend to do about road charging, if they look at all the aspects that we identified in our sixth report and previous ones.

Looking at local congestion charges, decided on locally by local authorities, the decisive rejection of the Manchester congestion charge scheme, which was part of a much broader scheme involving massive investment in public transport in the Greater Manchester area, seems to have deterred local authorities from introducing their own scheme. London may well continue to be the only major city with a significant congestion charge, but although the scheme operated in central London has made that a more pleasant place to be by reducing the number of vehicles entering the central zone, it is worrying that the costs of the scheme account for almost 50 per cent. of its revenue. The costs of implementation would have to be borne in mind by any other local authority considering introducing a scheme of its own.

One way forward might be to consider voluntary pricing schemes, such as the one trialled in Oregon in the USA, where motorists could agree voluntarily to move from paying road taxation to paying according to how much they travelled, with access to entertainment, information and other services linked to participation in the scheme. Perhaps the Government or other organisations could consider that way forward.

The transport innovation fund was introduced by the Government as an important way to deal with congestion and, in its other strand, to improve productivity, but one of the problems in the fund's congestion strand was the requirement on a local authority to impose a congestion charge before it could access the fund. Our Committee stated that we wanted the funds made available for public transport through the TIF to remain available-indeed, we were worried that because of non-take-up of that fund, the money would go back to the Treasury, which we certainly did not want to happen-but we wanted the Government to change the rules, so that local authorities could use the scheme to reduce congestion and to bring innovative new ideas into play without being forced to impose a congestion charge scheme.

The Government have responded, albeit perhaps a little belatedly-in the past couple of weeks, in fact-by announcing that they will now phase out the TIF and replace it with a much broader urban challenge fund, which would be implemented after the next comprehensive spending review and which would not require local authorities to impose a congestion charge to access the funds available. We do not yet know the full details of that fund or exactly how it would operate, but it looks very promising.

Photo of Greg Knight Greg Knight Chair, Procedure Committee

Is it not the case that the Government are still arm-twisting local authorities? For example, the council in Nottingham has been told that it will not get access to certain funds unless it introduces a workplace parking levy. Is not that to be deplored?

Photo of Louise Ellman Louise Ellman Chair, Transport Committee

I thank the right hon. Gentleman for his comments. It is unfortunate if the Government put undue pressure on local authorities. I understand that that particular scheme, although controversial locally, was decided by the local authority. In our report we say that where a referendum or consultation is required, there should be more explicit rules about how that should be carried out.

Government investment in transport has increased dramatically in recent years. It has increased by 70 per cent. since 1997, which our Committee warmly welcomes. We are, however, concerned-our concern is reflected in a number of our recent reports-by the disparity in transport spending in different parts of the country. For example, the figures for 2007-08, which are the most recent transport spending figures available, show that £86 per annum per head was spent on transport in the north-west. That is a 16 per cent. increase in spending per head in the north-west on 2002-03. That might sound reasonable, until we look at the figures for London and the comparable figures for the south-east. In 2007-08 £1,658 per head was spent on transport in London-an 80 per cent. increase over 2002-03. We do not want transport investment in the capital to be reduced. We understand that there is a need for greater investment there, but we feel strongly that it is not in the interests of equity or of raising the GDP of Great Britain as a whole that there are such massive disparities in spending between London and the south-east, and other regions. We would like to see the Government look again at that and invest much more in the regions outside the south-east.

I said at the beginning of my remarks that the Treasury had important obligations and an important influence on transport policy. One of the issues is the cost of transport. We deal at length with the need to increase the movement of transport, to get cars off the road where that can be achieved, to encourage people to use cars less, and to encourage hauliers to use the road less where that can be achieved.

Cost and charges are important. According to a parliamentary answer in response to a question from Norman Baker, between 1997 and 2009 the real cost of motoring declined by 14 per cent., bus and coach fares increased by 24 per cent. and rail fares increased by 13 per cent. in real terms. That is hardly conducive to encouraging a significant change in car usage. That requires due consideration by the Treasury as well as the Department for Transport.

Transport is essential for individuals and for our economy. How it is funded will be increasingly under the spotlight, particularly as all of us consider how we can best take our country out of recession without damaging the economy, damaging our services or creating unemployment. Addressing congestion and environmental issues in an equitable way, without damaging essential mobility, requires a closer link between transport and Treasury policies. That relates to incentives to produce more efficient vehicles and to develop alternative fuels, as well as to invest in integrated public transport.

Photo of Bill Cash Bill Cash Conservative, Stone

Will the hon. Lady comment on the proposal from Lord Adonis for extremely fast trains to go through the west midlands? Does she think the potential cost of that is within the framework of resources likely to be available as a consequence of the financial recession and the Budget deficit?

Photo of Louise Ellman Louise Ellman Chair, Transport Committee

I thank the hon. Gentleman for his comments. I understand that a more detailed announcement about proposals for high-speed rail is imminent, and I hope that it contains more information about cost. However, I certainly support high-speed rail proposals, which are extremely important for the future economy of our country.

If the whole country is to be improved, high-speed rail must support the entire United Kingdom, and one advantage of high-speed rail is that it would allow existing track to be used more fully for other purposes: to develop more localised routes and more commuter routes; and to leave freight with more track access, which will be extremely important if we are to encourage rail freight. If the hon. Gentleman would care to look at the Committee's recent report on investing in rail, he would see that we want investment in the existing, classic, rail system, and support for high-speed rail.

I hope that the issues noted in the Committee's report will be helpful in identifying solutions to major issues: the importance of transport, financing it and ensuring that it continues to be important and equitable for the individual and for the economy of our country.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport 5:16 pm, 10th March 2010

I welcome the Transport Committee's report and the presentation given by the Chair, Mrs. Ellman. I agree with her about the economic and social importance of the road network, and I agree that motorists require a fair deal, involving intervention from the Government as appropriate. The Government's response to the challenge of the road network and the requirements of motorists is to look into congestion, emissions, road safety and any other small irritants that unduly affect motorists.

For example, the abhorrent behaviour of private sector wheel-clamping companies ought to be stopped. My hon. Friend Tom Brake made an attempt during proceedings on the Crime and Security Bill, which was recently before the Commons, to deal with that, but unfortunately, Conservative and Labour Members rejected it. There ought to be some agreement on that issue. I also acknowledge the Government's good record on road safety in recent years. There has been a significant decrease in the accident rate, and especially in deaths, which is very welcome.

At the centre of the debate, as the Chair of the Committee said, are charges and taxes, the extent to which they should be used for purposes other than raising money for good causes, such as schools and hospitals, and the method by which they are levied. I agree with the Government, who in response to the Committee's report said:

"Motoring taxes are primarily revenue-raising instruments, whose principal purpose is to support the public finances and raise funds for public services. Motoring taxes do also have an environmental aspect too...Where possible and appropriate, it is right for the structure of revenue-raising taxes to support environmental objectives."

That is a sensible policy. The question is whether it is being applied as effectively as it might be.

We sometimes hear from the motoring lobby that motorists pay a huge amount in motoring taxes and get very little back, and the Chair of the Committee dealt with that to some degree. Suffice it to say that if there were an exact in-and-out financial arrangement, there would not be enough money for other services such as schools and hospitals, and it is difficult to see how the money could be raised for those purposes. We cannot charge directly-at least, I hope we cannot-for schools and hospitals, so some elements of the economy have to provide a net income stream for those aspects that are for the general good.

It is also fair to say, as the Chair of the Committee did when she referred to the answer to my written question, that the relative cost of motoring has decreased by 14 per cent. since 1997, and that the cost of travelling by train and by bus has increased over that period. The cost of air travel has also decreased, so we have the rather odd arrangement whereby the more carbon one emits, the cheaper it becomes to travel, and the less carbon one emits, the more expensive it becomes to travel. That is somewhat out of line with the Government's strategy on carbon reduction.

Photo of John Redwood John Redwood Conservative, Wokingham

Will the hon. Gentleman confirm that motorists have to pay not only all the costs of the road systems that they use but all the costs and subsidies of the rail system, which have gone up massively under this Government? The main reason for the huge regional imbalance between London and the rest of the country is that London has such a big rail network that is so heavily subsidised. That is not true of the south-east, which gets less, with a smaller increase, than the north-west.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

There are two separate issues, one of which is the regional imbalance. I have some sympathy-as does the Select Committee, I think-with the view that there has been a regional imbalance as regards how much is spent on London, in particular, compared with other parts of the country. However, the thrust of the right hon. Gentleman's argument-that motorists are paying for the rail network-fails to take account of other factors such as the need to reduce carbon emissions, the social benefits of investing in rail, and wider Government policies of social inclusion. Moreover, investment in the rail network encourages people to shift from road to rail, thereby freeing up the roads for those who are obliged to use them, so the motorist also benefits from investment in the rail network. There has to be a sensible balance.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

The hon. Gentleman said that the cost of motoring had gone down by 14 per cent., although I missed the period that he was citing. In that context, is it a good or a bad thing that the proportion of the petrol price taken as tax has fallen from 75 per cent. in 1997 to 67 per cent. today?

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

The period in question was from 1997; I was citing a parliamentary answer, as was the Chair of the Select Committee. To be fair to the Government, however, a previous answer that I have received demonstrates that this trend has been ongoing for 30 years: it is not a new trend that the Government have created, but a long-term trend. I shall talk about fuel duty shortly, when I will be able to reply to the hon. Gentleman in some detail.

The Select Committee says in its report:

"Fuel duty has proven to be an effective way to reduce CO2 emissions from road vehicles. It influences the amount of fuel purchased, the types of vehicles purchased and, to a lesser extent, mileage driven."

That may be true to some extent, but there are significant downsides to using fuel duty as an environmental tax, and as a surrogate for any other measure. Those problems need to be taken into account if we are to come up with an equitable transport policy that is fair to the motorist and to society as a whole. First, many people have no choice but to use their car. Such a tax is therefore a crude mechanism to force up the price of fuel for people, particularly those in rural areas of Scotland, Wales and England, who have no bus service-or perhaps one bus on a Thursday afternoon, if it turns up-and no railway station, and therefore have to use their cars. An environmental tax, if we are to apply it sensibly, has to secure a change of behaviour. If no such change is possible, it becomes not an environmental tax but a stealth tax that is inequitable for many people.

Secondly, fuel is more expensive, by and large, in areas where there is no public transport. It is almost as if a mark-up mechanism is working whereby fuel is kept at a lower price in places where people can switch to public transport. London, in particular, is among the cheapest places to buy fuel. For fuel bought in the highlands-my hon. Friends Mr. Carmichael and for Caithness, Sutherland and Easter Ross (John Thurso) recently drew attention to this in an Adjournment debate in Westminster Hall-there is a premium of up to 13p to 15p per litre. Pushing up the cost of fuel adversely affects those who are most dependent on it, and have to pay the most for it.

A further issue is that we are, of course, in the European Union-we are in a free market in that sense-and there is the opportunity for fuel tourism if we push prices up too far. The Chair of the Select Committee and the Minister will know of the concern among those in the haulage industry about the practice of vehicles loading up vast amounts of fuel before they come into the country, thereby gaining an unfair advantage over our own domestic hauliers.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

The hon. Gentleman makes an important point. The evidence from the Freight Transport Association is that the costs of operating a 40-tonne articulated vehicle are 8 per cent. higher in Great Britain than in our near continental neighbours, and 21 per cent. higher than in east European countries, whose carriers now regularly use the UK road network for that reason.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I am grateful for that intervention, which underlines my point. I say to the Minister in passing that along with the differential in the price of fuel-which, to be fair, I must add has narrowed in recent times-there is a safety consideration as to whether it is sensible to have lorries crossing through the tunnel or on ferries carrying vast amounts of inflammable material. We should consider that from a safety point of view, and see whether we can impose a limit on the amount of fuel that is brought into this country.

Another of the motoring taxes is vehicle excise duty. The Government have made changes to it this year, with the introduction of a first-year VED band-in other words, a showroom tax. They have also expanded VED from seven to 13 bands. I welcome that, because more sophistication of the bands is correct, but I think that VED as a concept ought to be time-limited. I say that because I firmly believe that we should tax elements of our activity as a society that are undesirable, rather than those that are neutral or desirable. In my view, owning a vehicle is not undesirable. Having been made, it causes no particular damage. There is a carbon implication in its manufacture, but there is no further carbon implication if it sits in the garage. The damage to the environment comes from the use, not the ownership, of the car. It therefore seems quite wrong that the ownership of the car should be taxed, rather than its usage. Indeed, the Select Committee refers obliquely in its report to the need to tax the use of a vehicle. I should like to see VED effectively removed at some stage. The enemy is not the car but the carbon, and the Government should bear that in mind.

I am conscious that cars themselves are becoming much cleaner. A recent report by the Society of Motor Manufacturers and Traders, which I visited the other day with Mr. Goodwill, demonstrated the significant progress that the industry has made in recent years in reducing carbon emissions. That is perhaps partly driven by EU targets, but it is also driven by significant innovation and good practice in the industry. From memory, I think that there has been a 21 per cent. reduction in emissions per car since 1997. The industry is doing its bit to make cars cleaner.

The hon. Member for Liverpool, Riverside mentioned the congestion charge in London. I agree with some of her comments and wish to associate myself with them. In particular, it is concerning that such a high level of the revenue received is spent on the administration of the scheme itself. That is not efficient or necessary, and it is a matter for Transport for London to sort out. Personally, I do not find TFL a terribly responsive organisation-it tends to be rather arrogant and self-satisfied on occasions. Another organisation might well have acted quicker to reduce administrative costs, and I hope that TFL will do so, spurred on by the Transport Committee's report.

I now turn to road pricing, because the logic of the Select Committee's position is that it wants such a scheme. Pay-as-you-use-or pay-as-you-pollute, if we prefer to put it in those terms-seems entirely equitable. I want to ensure that there is no confusion in the public mind, as there sometimes is, between congestion charging and national road pricing. They are different things. A congestion charge is over a local area, takes money from the motorist and, typically, invests it in public transport schemes. As the name suggests, it is designed to reduce congestion in a tight urban area. I happen to think that the scheme in London has worked quite well by and large, even if the administration of it is not particularly brilliant. National road pricing seems to have a different objective, at least to my mind. It is intended first to be more equitable to the motorist-I will talk later about how that will work-and secondly to reduce carbon emissions from the transport sector. That is one of the key challenges that the DFT faces, and it has singularly failed to match up to it so far.

Photo of Greg Knight Greg Knight Chair, Procedure Committee

The hon. Gentleman is making an interesting point. Does he accept that a road pricing scheme does not necessarily have to charge everyone who uses the road? It would be perfectly feasible and workable to have a scheme that set the charge at zero for those who chose to drive at unsociable times of the evening.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

That would indeed be possible. The parameters of the road-pricing scheme are interesting. I attended a conference on intelligent transport systems this morning, at which some of the things that could be achieved by such a scheme were discussed. One of the beauties of the new technology being introduced is that it enables Governments to make more sophisticated policy choices than hitherto. The option that the right hon. Gentleman describes is certainly one of them.

I believe that there is a case for introducing a road pricing scheme that charges for the use of motorways and dual carriageways only, and that charges should vary according to emissions-it could also vary by time of day, for the reasons that the right hon. Gentleman gave. It is very important that such a scheme is revenue-neutral for the average motorist. If the scheme is seen as a stealth tax, it will be rejected, just as we saw happen in relation to the petition on the No. 10 website. As the hon. Member for Liverpool, Riverside said, that was a misleading petition, but if the scheme were revenue-neutral, it might not be rejected.

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

Does the hon. Gentleman think that motorists will consider such a scheme as revenue-neutral if it is combined with the 90 per cent. reduction in the roads budget that he is also suggesting?

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I will happily deal with that subject in a moment, because the elements are linked. The traditional policy of Conservative Governments, and to some extent of the current Government, has been to use scarce public money to build our way out of congestion. That is an attempt to wash away the waves on the beach: it simply will not work, as evidenced by the increasing congestion throughout the country. Therefore, we must find a different way to deal with congestion.

Charging in a sophisticated way for the road network is a good way of tackling congestion. It is interesting to note that business organisations, including the CBI and the British Chambers of Commerce, support the idea of road pricing if it is introduced in a way that is fair to the motorist. That is what I am suggesting. In return for the introduction of road pricing on motorways and dual carriageways, I suggest that the fair, equitable response for the motorist would first be to abolish VED, which is a tax on the ownership of vehicles and therefore unjustified, and secondly to reduce fuel duty.

There would be no net take from the motorist in the scheme that I propose, but the motorist would be encouraged first to make a modal shift to rail, because by and large, the motorway and trunk road network will parallel the rail network-not exactly, but there is a close fit. Secondly, motorists would be encouraged to shift from dirtier to cleaner vehicles, because they could save money by doing so. Thirdly and most importantly-this is a concern to rural Members and, although there are none in the Chamber now, to the Scottish Nationalists-such a scheme would be rural-proofed, because those in remote rural areas where there are no motorways or dual carriageways simply would not pay, but they would benefit from the abolition of VED and the reduction in fuel duty.

That would be an equitable policy. It would allow people to choose their mode of transport and the car they drive, and to save money if they wished. Interestingly, as I said, if such a scheme were revenue-neutral, it would be supported by business organisations. I believe that a British Chambers of Commerce report due out shortly will reaffirm that.

As the hon. Member for Liverpool, Riverside will be aware, Sir Rod Eddington told the Transport Committee in 2009 that road pricing was, for him, "an economic no-brainer." In answer to Mr. Goodwill, the Conservative spokesman, he said that he thought road pricing could reduce new road building by 80 per cent., so there are other advantages of such a scheme for the public purse. I stress that that is not the only policy that the Liberal Democrats wish to introduce to benefit the motorist. I was taken by the references in the Committee's report to the proposals in the Netherlands, which are similar to mine, although they are made on a slightly different basis.

The Government response on the question of road pricing has been vacillating. They have said that they do not want to say very much about the matter for the time being-no doubt until they get past the election-and they are like a rabbit caught in the headlights. They did start a research programme and demonstration project in February 2009, and in their response to the Committee they say that they are working to further their understanding of the scheme. It would be helpful if the Minister could say exactly what progress has been made by the demonstration project, what issues have been raised, and when they expect to make a more detailed response to the Committee and to Members.

It is very important to use taxes and charges not simply to raise money for the public purse for good causes such as schools and hospitals-although they must be used for that, too-but to achieve environmental ends. I do not believe that the present arrangements for VED, tax and ownership, with a fuel duty that discriminates against rural areas, achieve those ends. A road pricing scheme could achieve those ends, and I encourage the Government and others to move in that direction.

Photo of Peter Soulsby Peter Soulsby Labour, Leicester South 5:36 pm, 10th March 2010

My hon. Friend the Chair of the Committee has given a clear exposition of the report, and it was a pleasure to serve under her chairmanship. She spoke of the vital importance of the road network, which was clear to us right from the start and from the evidence that we received. She also spoke about the high level of mistrust from motorists and more generally about the way in which charges and taxes are levied. I do not intend to cover the same ground as my hon. Friend, but I shall address three areas that the Committee considered.

The first was the issue of road pricing, whether by urban congestion charging or inter-urban road pricing. It was clear that although such road pricing has many attractions, it is by no means a panacea for the problems of congestion. We looked closely at the situation in London and saw the considerable success that congestion charging has had in the capital. However, as we considered the evidence, it was clear that London is very different from any other part of the UK. It is very different from other urban areas and, of course, that scheme shows us nothing about the prospects for inter-urban road pricing. London is very densely populated, it had pre-existing levels of congestion that were unacceptably high and the area chosen for congestion charging is one that enables those who do not need to go into the area to avoid it. The area is also served by high levels of public transport, which is not the case in many other urban areas-and certainly not public transport that is available for the hours that buses and tubes run in the capital. It is therefore not an especially good model for elsewhere, and it was evident from the experience in Manchester, where charging was considered, and the response to the No. 10 petition-misleading though it may have been-that the level of public support for road pricing is not sufficient to make it a politically realistic option nationwide or in any urban area in which it has so far been under consideration. That is not to say that it is not an attractive prospect, but its introduction would be politically fraught.

The second area is the discussion of further road building. It was evident to the Committee that further extensive road building was not a panacea-

Photo of Greg Knight Greg Knight Chair, Procedure Committee

The hon. Gentleman is a valuable member not only of the Transport Committee, but of the Procedure Committee, and he is speaking-so far, at any rate-sound common sense. May I take him back, however, to the question of congestion charging schemes? Does he, like me, think that the idea being discussed in Leicester of banning 4x4 vehicles from parts of the city centre-it has been publicised in the local paper, the Leicester Mercury-is bonkers because it would affect the wealth of people living in the city, and could deter tourists and affect businesses? Does he agree that it would not be a good idea to pursue that proposal?

Photo of Peter Soulsby Peter Soulsby Labour, Leicester South

May I begin by thanking the right hon. Gentleman for his comments about my service on the two Committees? I must say that it is not always easy to serve on both, given that both meet at 2.30 pm on the same day.

The right hon. Gentleman is well aware of the situation in Leicester. We first crossed swords as members of Leicester city council and often found ourselves in agreement on issues relating to the well-being of the city, despite being on different sides, as we are now. Although I am not aware of the details of the scheme about which he talks, I can see many difficulties associated with such a scheme in a city such as Leicester-not least, in identifying which vehicles are to be penalised in the way suggested. I would also suggest that it would make very little impact on levels of congestion in a city such as Leicester or, indeed, any similar urban area.

I was making the point that, like road pricing, further extensive road building is not a panacea. Predict and provide, of which some will be aware, is now, thankfully, a fashion long passed. It was an era in which engineers-it was mostly engineers making these predictions-in justification of often grandiose schemes, would predict a level of traffic and seek to provide the flyovers, motorways and other grandiose projects supposedly necessary to meet their predictions. Fortunately, we have moved on from that, and I am delighted that the Government no longer take the view that it is possible to predict levels of road traffic and to provide the roads necessary to accommodate them, only to see them fill up in a couple of years and for further schemes to have to come along behind them to meet the new levels of traffic.

I was struck, when the Committee received its evidence on levels of congestion, by the fact that many of those seeking to argue for further road building did so on the basis of dubious methodology that costed congestion-costs that are inevitably very high-in a way that sought to justify additional spending on roads by setting it against those congestion costs. As I said, I found the methodology very dubious. It is based on the premise that if we build roads, we will reduce congestion, that if we reduce congestion, we will reduce journey times, and that if we reduce journey times, we will reduce the costs.

Frankly, those conclusions do not follow from each other. In the real world, building extra roads does not necessarily reduce congestion; it does not necessarily reduce journey times; and it certainly does not necessarily reduce the costs. The evidence for that is not there; the evidence of our experience is that building roads leads to those roads filling up. The Committee received compelling evidence from Dr. David Metz, who has written a book entitled, "The Limits to Travel", which I read after hearing his evidence. I was enormously impressed by the arguments that he put to the Committee and in his book. They are based on some simple measures of how people behave. He demonstrated to the Committee, and very clearly in his book, that when journeys are made easier, in general people travel further.

That is not necessarily a bad thing, but it significantly undermines the argument that the way to deal with congestion is to build more roads, which is something that in fact leads to people travelling further. David Metz demonstrates in his book that, over the considerable periods of time during which he researched the issue, as well as in different sorts of societies in different places, the time spent on journeys remains remarkably constant. What happens when journeys are made easier is that people travel further. Therefore, rather than having evidence of the so-called costs of congestion that supports building additional roads, we actually have evidence that suggests that people will travel further and more often, making journeys that are, in the broadest sense, not necessary.

The third set of points arising from the Committee's report that I want to address are ones on which I know that the Government are sympathetic, and concern the many ways in which better use can be made of our existing road network as an alternative to building more roads. I know that the Government are doing much on that, and no doubt in reply to this debate the Minister will draw attention to some of the things that the Government are doing already. Technology is increasingly available that enables roads to be used better and those driving vehicles to receive better information, whether on the roadside, in the cab, if they are driving a lorry, or through extensions of the information available through sat-nav technology.

Finally on those points, I know that the Government are also sympathetic to continued investment in public transport as an alternative to investment in roads. That includes investment in freight on rail, to which I know the Minister is committed, investment in high-speed rail, on which we could have an announcement shortly, as the Chair of the Committee said, and, of course, continued investment in the conventional rail network. Exciting as high-speed rail will be, it will not provide solutions for the majority of those using the rail system, which is already heavily stretched in many areas. Also important, particularly in urban areas, is continued investment in quality bus services-not services that pack up at 6 pm and are unavailable in the evening, or which are unavailable on Sundays, but services that provide a genuine alternative to people who wish to avoid using a private car.

I know that the Minister is sympathetic to this point and that he will agree with me, but we need quality public transport that not only provides a journey that people find comfortable, but is convenient and, above all, available at prices that make it attractive as an alternative to private cars and do not penalise those who want to avoid even more private car use and road building.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering 5:48 pm, 10th March 2010

I am delighted to serve on the Transport Committee under the wise guidance of Mrs. Ellman. I congratulate her on leading the Committee in preparing the report.

The hon. Lady is right that, for the first time, we have managed to get some decent statistics about how much money is raised from road users and how much goes back into the road network. The evidence given to the Committee included quite a lot of wide-ranging estimates of the sums of money raised from road users. The Chartered Institute of Logistics and Transport estimated the figure at £28 billion, the Automobile Association at £46 billion, the National Alliance Against Tolls at between £50 billion and £57 billion, and Her Majesty's Treasury at £32.8 billion. Adding all those estimates, and taking away various taxes and so on, the Committee ended up with its estimate of £48.1 billion for the sum raised from taxes and charges on road users.

Photo of Greg Knight Greg Knight Chair, Procedure Committee

Is my hon. Friend aware that, even if the British Government were to freeze all taxes on motorists and do nothing else, the situation is about to get worse? Did he know that that bloated and unaccountable organisation called the European Union is about to introduce, as its first direct tax, a petrol tax on people purchasing petrol across the European Union? Experts have estimated that that will add about £3.2 billion to the cost of motoring.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

I am alarmed by the horrifying news that my right hon. Friend brings to the Chamber. It will be greeted with alarm by most of his constituents and certainly by most of mine, especially if the revenue raised were not to be used in this country but instead used to prop up economically unstable countries around the Mediterranean. I am horrified by that news, but I am not surprised. Now that we have signed up to the Lisbon treaty, I am sure that this will be the first of many nightmares of similar proportions.

The Committee looked at how much money was spent on roads and services used by motorists. In his evidence to the Committee, the Under-Secretary of State for Transport, Paul Clark said that the figure was about £9 billion, and I would welcome confirmation of that when he responds to the debate. I think that we would all agree, however, that there is a huge disparity between the money raised from motorists and the money spent on the road network. In layman's terms, between 20p and 25p of every £1 of revenue raised goes back into the road network, and the sums involved are extremely large.

A motorist's basic requirement of the road network is that they should be able to drive along at a reasonable speed, without facing too much congestion or too many potholes along the way. This winter, our country has experienced one of the most damaging weather events ever. That was the case for everyone in the country, whether they live in Kettering in Northamptonshire, or Essex or Scotland-

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

Or Norfolk. Our roads are full of potholes.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

I am sure that Lewes has many potholes, too. There are far too many of them. This is a major issue; it certainly is for my constituents.

I asked the Secretary of State for Transport at a recent Select Committee evidence session whether he had a central estimate of the cost of the damage caused by potholes across the country. He told me that this was not his responsibility, and that it was the responsibility of the local authorities.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

Well, I was shocked. Indeed, I asked the Secretary of State whether he thought that our constituents up and down the country would be shocked by his admission. He said that he did not think so, because this was the responsibility of local authorities. Given that response, I went to the Table Office and tabled a question to the Department for Communities and Local Government, in which I asked what that Department's central estimate was of the cost of the potholes around the country. The reply was that this was a matter not for the DCLG but for the Department for Transport. A few days later, I got a written response to the same question from the Minister of State, Department for Transport, Mr. Khan, telling me that his Department had no central estimate of those costs. Most people up and down the country will be shocked that neither the Department for Transport nor the Department for Communities and Local Government has a central estimate of the cost to this country of the pothole damage on our road network.

Thankfully, however, we have the Local Government Association, which has provided a figure of £100 million. That is the best evidence that I have seen of the cost to our country of the pothole damage. That £100 million sounds like an awful lot of money, and indeed it is. When it is compared with the Select Committee's estimate of the £48.1 billion raised from taxes and charges on motorists, however, it is a very small number indeed. I would have thought, given the winter we have just experienced, that there is a perfectly reasonable case for some of that £48.1 billion-perhaps £100 million of it-to be put into our road network to get the pothole situation sorted out.

Another issue is the number of people using our roads. I very much sympathise with the view put forward by Sir Peter Soulsby that if we build more roads, we will end up with more road users. I absolutely understand that and sympathise with that view, but this country faces a very real problem with the number of people living here. Estimates from the Office for National Statistics suggest that our population is going to increase from 61 million today to 70 million by 2029-and there is nothing we can do to prevent that from happening. If net immigration continues at its present rate of about 160,000 net immigrants a year, our population will go above 70 million.

I believe I am right in saying that the Department for Transport's central estimate of the number of vehicles on our roads is that it is going to increase by one third by 2025. Although I am hugely sympathetic to the argument that we should not build more roads because we will end up with more road users, I contend that we are actually going to need more road space, because unless we do, our country is simply going to come to a halt. This is particularly important in areas such as Kettering because under the Government's house building programme, the number of houses in my constituency is set to go up by one third by 2021. The A14 around Kettering and other nearby roads will simply come to a standstill unless more road space is constructed. I am afraid that we are going to have to tackle the issue of needing more roads.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

Is not one way forward to make better use of the existing road network and rather than sweating it for three or four hours a day, to make better use of it all day? We could also take some cognisance of my argument-also made by Mr. Knight-about using road pricing.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

I thought that the hon. Gentleman's argument about road pricing was very thoughtful. It may be one of those issues that is hugely unpopular with the public, but it needs to be looked at very carefully if we come to the conclusion that we cannot as a country afford to build more road space. This may be one of the very difficult decisions we will all have to take over the next few years because as a country we have maxed out on the credit card and do not have the money we would like to spend on these things. I would certainly concede that a difficult decision on road pricing might well have to be taken.

The Road Users' Alliance claims that congestion will rise 37 per cent. in the next 15 years-a very similar estimate to that of the Department for Transport-and it says that UK investment in motorway capacity is among the lowest in Europe. In the 10 years between 1996 to 2006, only Belgium, Austria, Italy and Lithuania built fewer roads, and three of those countries are far smaller than the UK. The alliance also makes the very good point that only 8 per cent. of UK commuters use the train. When we hear the announcement on high-speed rail, perhaps tomorrow, it will be interesting to compare the cost estimate for the high-speed rail scheme against the annual £48 billion we are levying from motorists in taxes and charges. It is roads, not rail, that moves 92 per cent. of passengers and 87 per cent. of freight. Those are the brutal statistics.

Photo of Greg Knight Greg Knight Chair, Procedure Committee

My hon. Friend is making a very good case, but does he agree that we could do more with our existing road network if the Department for Transport were better at warning motorists of congestion or accidents ahead? I believe that my hon. Friend's seat can be reached via either the M1 or the A1. Why oh why does the Department not ensure that when the M1 is closed, a warning sign is erected that motorists can see before they reach the M1, so that those who have a choice can switch their journeys and travel up the A1 instead? If more advance warning were given, there would be much less congestion on our motorways.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

As always, my right hon. Friend has made an extremely constructive suggestion. Amazingly, the Department for Transport is doing something along those lines around Kettering. At great expense, it is installing information signs advising motorists of just such problems.

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk

I have written to the Highways Agency about signage, pointing out that it is impossible to obtain accurate information about where a problem lies because only road numbers, as opposed to road and city names, can be put on the signs owing to shortage of space. Is that not nonsense, given all the other information that the agency is able to give us on the roads?

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

It is indeed nonsense. I am pleased that my hon. Friend has raised that point today, given that the roads Minister is present, and I hope that the Minister will be able to respond to it when he winds up the debate.

Let me give some other interesting statistics. Motorists pay 4p a mile to the Treasury, while rail travellers receive a subsidy of 21p a mile. Between 1998 and 2008 the major road network grew by 1 per cent., but had to cope with traffic growth of almost 10 per cent. Our country's population is growing at an unprecedented rate, and most people do not realise that. Our roads are crumbling at an unprecedented rate, but people do realise that, because they find it embarrassing to return from the United Kingdom from other European countries and see the appalling state of our local road network. We, as a country, must do something about that.

In comparison with the revenue raised from motorists in taxes and charges, the bill for the repair of the potholes is not that great, but it is clear to me that local authorities cannot afford to carry out the repairs themselves. This year, central Government should grant an emergency fund to local authorities throughout the country so that our local roads can be fixed. Ministers in whichever Department is involved, the Department for Transport or the Department for Communities and Local Government, should stand up and take a lead. They should say "The Government are going to fix this problem, because our country deserves better than this." Motorists up and down the land who are already paying a huge amount of money to Her Majesty's Treasury would be extremely glad if the Government took that bold and innovative step.

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk 6:04 pm, 10th March 2010

I want to make two or three specific points about the problems that we face in Norfolk. I have said in the House before, and am not embarrassed to say again, that Norfolk is the only county in England without a carriageway linking it to a national trunk road network. If Norfolk is to play its part in the economic success of our nation as we pull out of recession, it is incumbent on the Government to ensure that the upgrade of the A11 is carried out as soon as possible. We have fought for that upgrade for many years, because without it Norfolk will continue to suffer disproportionately.

Photo of Greg Knight Greg Knight Chair, Procedure Committee

Is not one of the problems in Norfolk the fact that, for whatever reason, the council has hatched out roads that are being constructed as three-lane roads, to allow for a middle overtaking lane, only as two-lane roads?

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk

Compounding the problem that my right hon. Friend mentions is the fact that Norfolk has struggled over the years to get a roads infrastructure that is fit for purpose. I share the ends of the A14 with my hon. Friend Mr. Hollobone-he has the other one. Whether Norfolk is able to put forward a plan for two or three lanes, the consequence of its endeavours so far is that the Government have not followed the proposals with the money and the initiative. That is where the main problem lies.

The issue of road pricing in Norfolk is somewhat anathema to us, because if we do not have the roads infrastructure there is nothing that can be priced or taxed. It is a highly rural county and people in my constituency, which covers more than 1,200 square miles, invariably use the car as a necessity, not a luxury.

Photo of John Leech John Leech Shadow Minister (Transport)

On that basis, will the hon. Gentleman accept that under a road-pricing scheme proposed by the Liberal Democrats his constituents would be better off when they used their car?

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk

The first thing that my constituents want is fairness in pricing when using the road, which includes fairness in the provision of fuel. In places such as Norwich, fuel is a lot cheaper than it is in rural areas and so elderly people on fixed incomes are disproportionately penalised. In a debate in Westminster Hall a couple of weeks ago, in which I participated, we considered fuel pricing differentials. I am afraid that the Government did not walk up to that problem, and the road pricing issue might well be another such case. I am not going to hold it against the Minister, who is a decent man, and I hope that he will consider this issue with sincerity and will take action.

The villages in my constituency are dying on their feet as local service provision is taken away. People do not use their cars as a luxury but as a necessity, so roads are all the more important. However, as my hon. Friend the Member for Kettering pointed out, the roads are in an incredibly bad condition-we have had a bad winter-but no one seems to be walking up to the fact that a lot of money needs to be put into their maintenance.

The nub of what I would like to say in my short speech is that in Norfolk, as in many counties, the people who use the roads are not just local people or British nationals but people coming from abroad. We have a thriving haulage industry in Norfolk because of the requirement to move goods from port to the public and from farms to the shops. An awful lot of the hauliers that use the roads in my constituency come from abroad. They often put in the fuel in France, deliver in this country and depart without having spent a penny. They do not necessarily get penalised on the price of fuel as my constituents do. I feel that there is a need to walk up to this important issue.

I want to ask the Minister a quite specific question. I was going to table it as a written question, but as I have the opportunity to look at him directly and ask it this afternoon, I shall do so. Will he tell us at the end of the debate what the true figures are annually for foreign road users? How many foreign cars and how many foreign trucks and lorries use the roads of this country each year? It is my contention that a contribution should be made by the foreign vehicles that use UK roads to pay for some of the upkeep, the need for which has been so well articulated in this debate.

After all, if someone goes to France on holiday with their family, they arrive in Calais or another port and before they have got terribly far along the motorway, they are stopped and charged quite a price for the privilege. When they arrive at their destination, they have paid for that privilege. I would suggest that if a family are going abroad, they will not stop going to France because they have to pay that cost. It is an accepted part of the travelling process. In Switzerland and other European countries, one is stopped at the border, they look at one's passport and, without hesitation, they stick a vignette on the windscreen. If one wishes to use their roads, it costs approximately £60 for the year. I hope that the Minister will tell us either this afternoon or very shortly afterwards the true figures for how many people use our roads, and how much money could be raised to maintain our road infrastructure from foreign vehicles visiting our country. I humbly suggest that if a family from France, Germany or Switzerland is spending £1,000 or £2,000 on a holiday in the United Kingdom, they would not be put off by having to pay a small contribution to use our roads for a year.

Photo of Louise Ellman Louise Ellman Chair, Transport Committee

May I draw the hon. Gentleman's attention to a section of the Committee's report that focuses specifically on hauliers who come from other parts of Europe? We have recommended a charging scheme for hauliers, for which there seemed to be general support across the industry.

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk

I thank the hon. Lady. I am not here to make party political points, because I do not think that this issue needs to be party political. I accept what she says, I know what she is referring to, and I rather hope that the Government will walk up to this problem. The report articulates brilliantly some of the problems that have been mentioned in the debate, and I look forward to hearing the Minister's response.

In conclusion, there are fundamental problems, and there is a disproportionate responsibility on the British road user and taxpayer to deal with those problems. Our roads, alas, are not up to the usage of this day and age, which is a pity. [ Interruption. ] Sir Peter Soulsby may not know about that, but he should come to Norfolk and see how bad our roads are, how many potholes there are and how long people have to wait to get into the county because of the lack of a decent road system. He might then accept the points that I am making out of genuine concern for the road user. People know that with the use of a vehicle comes responsibility and cost, but my constituents have for too long paid too much for too little.

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport) 6:12 pm, 10th March 2010

I thank Mrs. Ellman for presenting her report. When I first arrived in the House, I served on the Transport Committee under the chairmanship of Gwyneth Dunwoody, and I know that the hon. Lady is carrying on her doughty work. I think that, to some extent, matters have moved on since the report was published, but I shall touch on that later.

I thank Sir Peter Soulsby for his comments about the end of the "predict and provide" era, but there are other factors to take into account, particularly the point that my hon. Friend Mr. Hollobone made about the population increases in certain parts of the country. That issue needs to be addressed. The Conservative shadow Communities and Local Government team has announced plans to allow local authorities to keep the first six years' of council tax, plus a top-up, when new development takes place. Some of those funds could be used to build the schools and infrastructure needed to support such development. There are also quality of life issues to consider. For those living in congested town centres, a bypass can literally breathe fresh air into the community. Although I take the hon. Member for Leicester, South's point about reducing journey times and generating traffic, other issues need to be taken into account.

I am a little surprised that the Government have selected this subject for today's estimates day debate, because we had an opportunity to explore these issues only yesterday in Westminster Hall in a debate initiated by my hon. Friend Mr. Evans. I guess it is the nature of transport that we can wait weeks for a debate to come along and then two come together. [ Interruption. ] It gets worse. I am also surprised by the selection because the Government have a lamentable record on investing in roads and because their flagship policies on urban congestion charging and road pricing lie in tatters in the face of public opposition. In fact, I would not be surprised if the Minister were to revise The Highway Code to exclude the road sign forbidding U-turns.

Photo of Louise Ellman Louise Ellman Chair, Transport Committee

The hon. Gentleman might be interested to know that the decision to have this debate today was made not by the Government but by the Liaison Committee, which comprises the Chairs of all the Select Committees. Perhaps that it is another illustration of the importance of Select Committees.

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

And there was I thinking that the Whips organised everything in this place. I am heartened to hear that.

I suspect that the real reason why the Liaison Committee suggested this debate may be that, once again, we will not have an opportunity to discuss transport as part of the Finance Bill debate. That makes me very concerned about what further delights the Chancellor may have in store for the beleaguered motorist.

Motorists and other road users make a massive contribution to tax revenues. In the 2009 Budget, £26.6 billion was raised through fuel duties, an increase of £2 billion on the previous year. A total of £4.7 billion was raised through VAT on fuel, and £5.6 billion through VED. That was formerly known as the road fund licence but, as we know, it alone raises more than the Government spent on investing in roads last year.

Photo of Greg Knight Greg Knight Chair, Procedure Committee

Has my hon. Friend seen last year's report by Professor David Newbery of Cambridge university, who looked into the question of taxation on fuel? Taking into account the environmental effect of motor cars, he concluded that fuel taxes are twice as high as they should be if fuel tax were to be viewed as an environmental tax. There is therefore absolutely no case for increasing the duty on fuel any further.

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

My right hon. Friend makes a very valid point. However, having just visited the US, where the price of petrol is low, I think one can see the effect of not having a realistic fuel price that takes into account the externalities that the hon. Member for Liverpool, Riverside pointed out.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

My hon. Friend mentioned VED and the amount that it raises. Would it not be helpful if the Minister, at the close of this debate, were to give the House the up-to-date figures on the number of road users who do not pay VED but should, and on the number of uninsured drivers on our roads?

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

I hope that the Minister will refer to that. Norman Baker said that he wanted to abolish VED, but I believe that the need to make sure that a vehicle is insured and MOT'd at least once a year helps to clamp down on uninsured vehicles. I hope that the Government-although perhaps it will fall to others-will do something to address the problem of cloned vehicles and the ease with which counterfeit number plates can be obtained.

The Royal Automobile Club has calculated that only a third of the £37 billion raised from vehicle taxation is spent on motorists. The figure for tax revenue does not include VAT on new vehicles or revenue accruing from servicing, repairs and parking. On top of that, of course, the new showroom tax will come in in the new financial year, and that will levy up to £1,000 on the cost of some most polluting vehicles.

One could be forgiven for assuming that this Government included road investment in their massive splurge of spending, which was often funded by irresponsible borrowing, over the last few years, but the facts show that road investment has lost out. The following figures are based on real prices for 2007-08, and so allow for inflation. In the 10 years between 1987 and 1997, the average annual spend on road investment was £6.3 billion-and I do not need to tell the Minister who was running the country then-but in the 10 years between 1998 and 2008 the average was £4.3 billion. That represents a cut of a third in the money going into roads.

In fact, the peak year was 1992-93, when £6.89 billion was invested in roads. The lowest year was 1999-2000, when the figure was only £3.821 billion. So although the Government make big claims about all the money spent on transport, it certainly has not been spent on our country's road infrastructure. It is no wonder that congestion has continued to be a problem over the life of the Government. They failed not just to mend the roof when the sun was shining, but the driveway lost out, too.

Two flagship policies have foundered on the rocks of public opposition. First, the transport innovation fund was established in 2004 and promised generous funding for local transport projects if proposals were presented for local congestion charging. Some people have described that as bribing councils to introduce congestion charging. Of the 10 councils or groups of councils that expressed an interest, only Durham looks like delivering a scheme, at £2 a time. The final nail in the coffin was the referendum in December 2008, when 78.8 per cent. of voters in Manchester rejected congestion charging there, despite the fact that it had already cost £24.1 million to develop the scheme to that stage. That aborted congestion charging policy has still cost the taxpayer £41.7 million nationally. Secondly, the rebranded urban challenge fund will no longer include a requirement to introduce tolls. What an embarrassing and expensive U-turn by the Government.

We have heard from the Chair of the Transport Committee how the Government have backed away from their spy-in-the-sky road-charging scheme in the face of the 1.8 million people who signed on to the No. 10 website. That may possibly even merit an entry in "The Guinness Book of Records". The fact is that drivers did not trust the Government when they said they would reduce other types of taxation on drivers if a road-user charge was introduced. Drivers saw that as another stealth tax and another way to persecute the motorist. Now, of course, the Government have backtracked under pressure, but I am pleased that the Liberal Democrats have picked up that unpopular policy and are trying to run with it. I think they will get the same reaction from the electorate when they try to promote it, particularly as they take the irresponsible view that they can reduce investment in roads by 90 per cent. at the same time. That would have a devastating effect on our country's infrastructure and our ability to attract investment, jobs and all the other ways that the efficiency of a country's transport system can help the people who live there.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

The hon. Gentleman is being uncharacteristically ill-informed. Let me make it clear that, first, we do not propose spy-in-the-sky technology. Secondly, the cut would be made to the major roads budget, not to the roads budget, which is an entirely different matter. Thirdly, the entirety of the money that we propose to cut from the major roads budget would be reinvested in railways. Fourthly, the road pricing would be made revenue-neutral for the average motorist by abolishing VED and cutting fuel duty. That is quite a good package.

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

Well, time will tell. I should be obliged if the hon. Gentleman gave me a detailed run-down of those policies.

We welcome the scrapping of the scheme, but we worry that the Government may have thrown the baby out with the bathwater, given that the intention was to introduce a lorry road-user charging scheme. We are concerned about the uncompetitive situation that faces the British road haulage industry. The difference in diesel prices between the UK and the rest of the EU is marked, despite the fact that that has been addressed somewhat by the devaluation of sterling. In April 2009, the differential was about 10p in the nearest countries, but diesel was 26p cheaper on average in the 26 member states than in the UK. That has resulted in a very real problem for the British road haulage industry. In fact, when the vehicles entering the country through the ports and the tunnel were monitored, it was found that 81 per cent. of vehicles using those links were foreign trucks. That is a measure of the degree to which the British road haulage industry has had difficulty competing on this very unlevel playing field.

In 2001, when the price of fuel peaked, there were widespread demonstrations up and down the country-the fuel protests-and the then leader of the Conservative party, my right hon. Friend Mr. Hague, suggested a Brit disc-a vignette for which foreign trucks would have to pay. The Government of the day regarded that as being against European rules, but in the meantime countries such as Austria, the Czech Republic and Germany have introduced their own schemes for lorries, with Germany using a satellite-based scheme and the other two countries a tag and beacon scheme. As transit countries, they are able to regain the revenue from the trucks crossing their country, which often fill up outside their country.

It has been estimated by NERA Economic Consulting that the cost of foreign trucks running on British roads is £195 million in road wear, plus environmental costs of more than £35 million and costs of accidents of almost £33 million. We suggest introducing a lorry road user charging scheme in the UK-for all trucks, not just foreign ones, to meet the European rules-leading to a gain to the UK Treasury of about £400 million in fuel duty revenue that currently goes to other EU treasuries. In addition, we would gain the increase in tax, national insurance and corporation tax paid by UK haulage companies, which would benefit.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

Lorries would be caught by our proposed road pricing scheme, but as I explained, as part of the offsetting, we would cut fuel duty and reduce VED to the minimum under EU rules for lorries. Is the hon. Gentleman proposing offsetting savings for lorries in his scheme?

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

Yes, because the only way to incentivise people to fill up in the UK is by, in effect, by making fuel cheaper in the UK than abroad. Measures would need to be introduced in conjunction with the lorry road user charging scheme to balance its cost with changes to VED or fuel duty revenue, and perhaps a rebate. For administration of the scheme, we already have arrangements whereby VAT is regained, so the administrative burden would not be so great. Varying fuel prices in different countries and exchange rates would have to be taken into account, of course.

I should make it clear that the system would apply only to lorries. We are not proposing a scheme that would apply to cars. Car drivers rightly feel that the roads in our country have already been paid for through the taxation that they have paid over the years. We do, however, feel that the model of the M6 tool and the Mersey gateway project, which is in the process of being planned and constructed, offers the way to attract private capital into improvements in our infrastructure. I believe that motorists would accept that, because they would be paying for something over and above what already exists. What they do not want to do, as the No. 10 website petition showed, is pay again for something that they have already paid for.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

My hon. Friend mentioned foreign-registered vehicles other than lorries. Does he agree with me that there is a real problem in this country with the rules on MOTs and VED? Under EU rules, such vehicles are allowed on UK roads for up to six months, after which our domestic regulations must be complied with, but there is no effective way to enforce that.

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

My hon. Friend is absolutely right. I recently spent a day with the North Yorkshire police vehicle monitoring unit, which has the automatic numberplate detection system. We pulled up a Romanian car, but the officers told me that, by and large, they do not pull up foreign cars because even if the people inside can speak English, they pretend that they cannot. I do not believe that there is any mileage in trying to charge foreign cars to use our roads, not least because other countries might bring in reciprocal charges for British vehicles using their roads.

Finally, I shall say a word or two about the greening of our roads and vehicles. Yesterday, with the Minister for Business, Innovation and Skills and Norman Baker, I attended the launch by the Society of Motor Manufacturers and Traders of its report on CO2 emissions from vehicles. We were heartened to see that average emissions from vehicles sold last year had fallen to 149.5 grams per kilometre, a reduction of 5.4 grams. We are well on target for the 2012 target of 130 grams per kilometre. That is in marked contrast to the situation in the United States, whose equivalent of our industry agreement is the corporate average fuel economy agreement. The CAFE agreement calls for a 40 per cent. reduction by 2016, but if that target was met, it would mean only that vehicles were achieving 35 miles to the gallon. Since 1993, fuel taxation in the United States has been fixed for political reasons at 18.5 cents, not per litre but per US gallon.

The UK has the most expensive petrol and diesel in Europe. Motorists understand the environmental impact of their mode of travel, and the need to pay taxes and charges that they judge to be fair. For many in rural areas there is no alternative to the car-or Land Rover, for that matter-so the potential for modal shift using the stick of taxation must be rural-proofed. I welcome moves by the Government to incentivise new green technologies such as electric vehicles by promoting places to plug in, and I hope they will address the flaws in the renewable transport fuel obligation certificates scheme.

As the Minister knows, the 20p per litre for green fuels-biodiesel and ethanol-is being phased out at the end of the current financial year. It was supposed to be replaced by a trading scheme, but because of the mistakes made in specifying which fuel was relevant, there is concern that the embryonic biofuels industry will be strangled at birth and will not be able to continue. I hope the Minister will consider how that can be addressed.

The real debate will start on Budget day and continue during the ensuing general election campaign. With flagship policies such as road charging and congestion schemes in tatters, people are asking where the vision and commitment are to provide green, convenient and cost-effective transport solutions for road users. The Government have run into the sand, run out of ideas and run out of money. We cannot go on like this. If the Government cannot change, voters will soon have the opportunity to vote for real change.

Photo of Paul Clark Paul Clark Parliamentary Under-Secretary, Department for Transport 6:32 pm, 10th March 2010

I welcome the work of the Transport Committee and its inquiry into taxes and charges on road users. I thank the Committee for its work over the year in helping to identify critical issues in transport matters.

We had interesting contributions from the Chair of the Select Committee, my hon. Friend Mrs. Ellman, from the Opposition Front-Bench spokespersons, the hon. Members for Lewes (Norman Baker) and for Scarborough and Whitby (Mr. Goodwill), and from my hon. Friend Sir Peter Soulsby, and the hon. Members for Kettering (Mr. Hollobone) and for South-West Norfolk (Christopher Fraser), as well as a number of timely if not well-informed interventions, to which I might return before the end of my speech.

It would be sensible for me to set out at the beginning the context in which the Government's decisions on transport taxation and spending are made. The core point is that Governments do not and cannot make transport tax or spending decisions in isolation. Many of the contributions to the debate today concentrated on one aspect, without considering the subject in the round. The report from the Transport Committee recognised that taxation and spending need to be considered in the round in order to get a fuller picture.

Each choice has to be seen in the wider context of the Budget and the spending review. As I said in the debate in Westminster Hall on Tuesday, it is essential to emphasise that taxes on motorists are primarily revenue-raising taxes that serve to support public finances and fund public services. It should be remembered that motorists are not just motorists; they are consumers of public services and, of course, taxpayers like many other people. I set that out at the beginning so that people are absolutely clear about the basis for taxation.

Motoring tax revenues are combined with those from other taxes in the Consolidated Fund, where they support a range of Government spending priorities. It is therefore misleading to compare motoring tax revenues with road or transport spending. Hypothecating revenues to particular spending programmes imparts inflexibility and can lead to a misallocation of public resources, reducing the value of taxpayers' money. Some contributors said, "This was the revenue from vehicle excise duty and fuel duty, but it is not the money being spent on roads." As several speakers recognised, however, that money funds not only roads, but many other aspects of transport, and many other public services to which I have referred.

It is true, as the hon. Member for Lewes recognised, that when possible and appropriate we should structure revenue-raising taxes to support other Government objectives, a classic example of which is environmental policy. So, vehicle excise duty is structured to incentivise the uptake of lower CO2-emitting cars, while fuel duty gives added incentives for greater fuel efficiency. Decisions on tax are a matter for my right hon. Friend the Chancellor of the Exchequer, who considers each tax as part of his wider fiscal judgment within the normal Budget-making process. In taking those decisions, he considers all the relevant social, economic and environmental matters that must be taken into account.

On transport spending, we start not with a clear sheet, but with a structure and transport network that has been built up by incremental changes-some big, some small-over many decades. The choices and the drivers behind them have sometimes been local and sometimes been national, but more often than not they have been a combination of both. Sometimes the choices were uncontroversial, and other times they were far from it. From the creation of the Bridgewater canal in the 1760s, which led to the canal boom, to the building of Heathrow terminal 5, however, every change to our transport network has mattered.

Even seemingly small changes and decisions can have great implications. Changes to the railway timetable after some 40 years can shake up the working patterns of thousands of commuters, and the closure of a bus stop can trap an elderly person in their home and lead to social exclusion; but the opening of a new bus route can create new job opportunities, and opportunities for those in rural areas-a matter that was touched on earlier and to which I shall return specifically. All those issues place great responsibility on the Department for Transport, and there are certain things that we simply have to do. We have to maintain the roads-with record levels of investment, despite the comments from the hon. Member for Kettering-and we need to support local authorities, keep the railways running and stick to our contractual obligations.

I shall now address some of the issues that hon. Members raised. We have responded fully to the Transport Committee's recommendations, and that work helps to guide the Department's work. Let me assure hon. Members that we have a close relationship with the Treasury-as with all spending Departments, not surprisingly-and take part in proper discussions about spending commitments, value for money and taxation. As regards the issues of mistrust that were referred to by the Select Committee, let me put it on record in this House that we certainly recognise the importance of transparency on revenues and spending. That is why statistics are published as part of the Budget and pre-Budget report process.

The issue of rural communities is fundamentally important, and this Government have very much sought to reduce the exclusion and isolation that we recognise that rural communities can suffer from in comparison with urban communities. That is why we introduced the Local Transport Act 2008, which gave powers to local authorities to enable them to negotiate, discuss and take forward proposals with bus companies, for example, to provide for better schemes to cover rural areas. Indeed, we went further in helping to deliver a better system by improving the facilities and provisions for community transport schemes.

I have heard what has been said about car use, with people arguing for a differentiated fuel duty in rural areas. Let me make the position very clear. Fuel duty is levied on the producer at the point it leaves the refinery-it is currently set at a rate of 56.19p per litre-and it is set according to where one is in the United Kingdom. I recognise the business about fuel being more expensive at the pump in some rural areas than in urban areas. That is not to do with fuel duty, but with market forces such as the additional transport costs that are involved to get the fuel to that particular petrol station and less competition among suppliers in a given market.

Even if we did have a rural fuel duty, we could not guarantee that it would be passed on to the consumer, as it could be absorbed in the bottom line of the commercial operator selling the fuel. Equally, it could have a perverse effect in that we ended up with people driving from what would be perceived as high-duty areas to low-duty areas and adding to congestion on the roads, and carbon emissions, in those areas. The level of tax is not the reason why fuel is more expensive in rural areas.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

Her Majesty's Government could, of course, consider differential charging on vehicle excise duty whereby motorists living in rural areas paid a very low rate while those living in cities paid a far larger amount.

Photo of Paul Clark Paul Clark Parliamentary Under-Secretary, Department for Transport

I am delighted that the hon. Gentleman raises the issue of vehicle excise duty. We have introduced the 13-band system for vehicle excise duty, which is linked to carbon emissions. Of course, people in rural areas do not have to have vehicles that are in the highest band. As I believe the hon. Member for Scarborough and Whitby pointed out in the recent debate in Westminster Hall, not all large vehicles fall into the highest VED bands. The carbon emissions produced and the technology in the vehicle are the most important factors. Under the new VED rates, 68 per cent. of all vehicle owners will either pay no more or pay less than they did in 2009. The change is very much about the green agenda, and I am delighted that the hon. Gentleman recognises the work that this Government have done in that field. VED bands are not retrospective, and there is nothing new about introducing VED rates that apply to existing vehicles. That has been the case since day one of the tax.

Photo of Robert Goodwill Robert Goodwill Shadow Minister (Transport)

Has the Minister given any consideration to having a sliding scale of VED rather than bands? That would incentivise people to select greener vehicles within a particular category. I have certainly received representations along those lines.

Photo of Paul Clark Paul Clark Parliamentary Under-Secretary, Department for Transport

There are always a number of schemes to be considered at any given time. We have introduced ours because we believe it will have the desired effect as part of our carbon reduction and climate change policies, and we will need to see how it works. I should say that VED raises some £5.6 billion annually.

Photo of Christopher Fraser Christopher Fraser Conservative, South West Norfolk

The Minister's point about tax bands is valid in relation to emissions, but even accepting that, somebody who lives in a rural area and has to use a four-wheel-drive vehicle is doubly penalised unless we have a scheme based on geographic area in the way that my hon. Friend Mr. Hollobone set out.

Photo of Paul Clark Paul Clark Parliamentary Under-Secretary, Department for Transport

There is not a three-line whip that requires people in any given setting to have the most polluting and largest vehicles. Equally, because of the technology under the bonnet, not all large vehicles fall within the higher bands. We have been incentivising vehicle manufacturers to work together in partnership to reduce emissions levels from any particular model.

To pick up on a point that the hon. Member for Lewes made, he suggested that abolishing VED and reducing fuel duty would make everything much better. He said that people would shift to the railways and so on. I recognise what he says, but I do not believe that it would work, and I am sure that he does not either. The first thing he said was that motorists deserve a fair deal, and I doubt whether they would recognise cutting 90 per cent. of the road budget as a fair deal.

The railways are undoubtedly a beacon, because of the investment and changes in the system. There are 49 per cent. more people travelling on our railways-the highest level since the second world war-and all the changes have made a real difference to people. The hon. Gentleman will know about the levels of patronage and use. There is still further work to be done, and it will be interesting to see what further developments the Government will suggest as we go forward.

Equally, however, I wish to point out that I attended an urban logistics conference this morning, and I am grateful to my hon. Friend the Member for Leicester, South for recognising my commitment to freight. It is absolutely essential that we have a strong freight logistics business in this country. That includes road, rail, inland waterways when that is sensible, and coastal shipping. I strongly believe that, which is why the Government will continue to invest money via the various modal shift grants that we provide. I must recognise, however, that there are limitations. Sixty-eight per cent. of freight moves within the same region. With the best will in the world, and given that we are geographically a relatively small country, it would not be common sense to shift that freight on to the railways or some other means of transport. We must take a balanced approach.

Photo of Norman Baker Norman Baker Shadow Secretary of State for Transport

I thank the Minister for answering my points, but I am looking at policy in the round. Of course most freight will need to go by road, and in fact, space for freight movement will be created by the introduction of a road-pricing system.

However, on the switch from the major roads budget to the rail schemes that we are proposing, the Minister will recognise the tremendous growth in the railways and the growth to come. Notwithstanding the announcement on high-speed rail that I am anticipating tomorrow, the Government have not produced any new rail schemes for the localised reopening of stations and lines, for which many people in the country are clamouring. That has happened in Scotland with Stirling-Alloa and in Wales with Ebbw Vale, but it has not happened in England. The Minister will know that many schemes, such as Skipton and Colne, have a good economic case. Money must be found for them if we are going to find a space for the railways to grow and meet the needs of passengers in future.

Photo of Paul Clark Paul Clark Parliamentary Under-Secretary, Department for Transport

The record investments that have been going into the railway system at a national level have been made to ensure that, for example, we have a decent west coast main line that is reliable and punctual. We must have investment in that. Further investments have been made, including, for example, in Reading station. We have always said that the case for the reopening of stations can be made through the regional funding allocation process and other via routes. If there is a case for the schemes and if resource is available, they could move forward, but each case must be considered on its merits.

Photo of Rosie Cooper Rosie Cooper Labour, West Lancashire

I wonder why we are discussing that kind of thing if we cannot bring to the Minister's attention two cases in my constituency. First, Skelmersdale has no railway station at all-there is low car ownership among its 38,000 or 40,000 people, but they have no access to the rail service. Secondly, the Burscough curves proposals would make such a major difference at the north end of my constituency.

Photo of Paul Clark Paul Clark Parliamentary Under-Secretary, Department for Transport

I recognise my hon. Friend's arguments. It is about striking a balance in our transport infrastructure, which might involve investment in the railways or in the bus network, in which we have put some £2.4 billion. That investment, free local travel for older people across the country, ensuring that the roads are safe and secure enough for people to walk or cycle, and ensuring safety for motorcyclists make a difference.

Let me move to one or two other matters that were raised in the debate. My hon. Friend the Member for Leicester, South said that further road building is not the answer. I recognise his arguments, and he referred to a very good publication by Dr. David Metz. It is about getting the balance right. We must recognise that bottlenecks appear because of, for example, engineering set-ups and lights. Let us take as an example the Hindhead tunnel under the A3, a project in which we have invested some £376 million. The tunnel goes under a major environmental area, and will make a great difference to air quality, people's quality of life, and motorists, for whom it will save time and money. It is right that we look at how we can best use the assets that we have, and that is why we announced a £6 billion programme, to be rolled out in coming years, to accommodate traffic better and improve flow on motorways, including hard shoulder running and active traffic management.

We need to get the balance right, and that is why we have invested in the west coast main line. People wanting to travel further now have a decent rail service to choose, because of that investment and the improved reliability. High Speed 1 will be critical, and I suspect that further high-speed opportunities will take us a long way.

The Chair of the Select Committee and my hon. Friend the Member for Leicester, South both mentioned continued investment. We are clear that if we cut back on investment in our infrastructure, it will not be good for UK plc, including business and enterprise, as well as individuals trying to go to work, visit relatives or go on holiday.

The hon. Member for Kettering raised the issue of a European tax on fuel, but no such thing is in the pipeline. The Government are clear that tax is a matter for member states, and there is no case for harmonisation. Nor has any proposal been tabled for such a tax, and I put that clearly on the record. The hon. Gentleman said that for every £1 collected only 20 to 25p goes on building the road network. That is the whole point. He does not take into account the externalities involved, including the policing of the highways, clearing up after accidents or the cost of lighting, let alone addressing the effect of road use on the environment.

I hear what hon. Members have said about potholes. It is interesting that when it suits them, people want diktats from Whitehall, but the rest of the time they want local decision making. It is obvious that local authorities are best able to assess the damage to their roads that was caused by the winter weather. The costs for February last year are only just being put together. It was claimed that the cost would be £50 million, but we expect the final figure to be some £12 million. The Local Government Association has suggested that this year's bill will be £100 million, but its letter also recognises that it is far too early to say what the cost will be and that current estimates are very broad figures. We are considering that issue, as well as some specific claims that we have received.

The hon. Gentleman referred to house building and the fact that we had far too many people in this country. The actual growth in vehicle numbers over the past 50 years has been steady and has not peaked or fallen in connection with various events. The whole idea of regional funding allocations is to bring together programmes such as those for house building with transport requirements, and the Government are investing in schemes such as Fast Track to help to ensure that transport systems are in place for people.

We have had a wide-ranging debate, and time is too short to allow me to respond to all the points that have been raised, but we will continue to take on board the work of the Transport Committee. I am grateful for the ability to debate some of the issues relating to taxation and spending. One of the things that this Government are certain off is that investment in infrastructure and our transport system is important for business, individuals and UK plc.

Question deferred (Standing Order No. 54 (4)).

The Deputy Speaker put the deferred Questions (Standing Order No. 54 (5)).