Clause 33 - Employer-subsidised public transport business services

Finance Bill – in a Public Bill Committee at 4:15 pm on 16th May 2002.

Alert me about debates like this

Question proposed, That the clause stand part of the Bill.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

I seek clarification from the Government about whether, under the provision for season tickets, there is an intent to permit travel on trains, trams or park and ride. If not, what is the logic of limiting the clause to public bus services, when I assume that the general objective is to get people out of their cars and on to public transport?

Photo of John Pugh John Pugh Liberal Democrat, Southport

I hesitate to make any kind of contribution in such august company as this. I am on a learning curve, but I have a relatively simple contribution to make.

Labour Members are very much in favour of a taxation scheme that modifies behaviour, and one that modifies behaviour and encourages environment-friendly behaviour is doubly welcome. However, and I do not make the accusation directly, the clause could smack of tokenism.

Statistics show—I have the advantage of being on the Select Committee on Transport, Local Government and the Regions—that there is no increase in the use of buses across the country except in London, with a marginal increase outside London. The projected increase in the Government's 10-year transport plan is small, so the growth in the bus network will be fairly minimal. I dare say that the change in taxation law will make some difference, although I do not think any Ministers pretend that it will make a massive difference. When one adds to that the future fall in the cost of motoring, an eloquent plea can be made for the exemption to be widened to take in all kinds of travel plans.

Why are trains not included in the clause? In the area where I live, most people who commute do so by train or through an integrated ticketing system that involves trains and buses. Why are coaches not included and, particularly, why not park and ride? That is essentially a bus scheme, which makes an enormous difference in many town centres. To incorporate it into the Bill would be an example of joined-up government. How would the Paymaster General respond to that suggestion?

Photo of Mark Hoban Mark Hoban Conservative, Fareham

I am sorry to amplify the point made by my hon. Friend the Member for Arundel and South Downs and also risk the Economic Secretary to the Treasury calling out ''Focus!'' during my remarks.

The important aspect of the clause is its narrowness in referring only to subsidised bus services. Fareham will become the starting point of the South Hampshire rapid transit system, which is funded by Government money. At a time when the Government are trying to invest in other forms of transport to improve the road network and the public transport network in many

parts of the country, it seems odd that the tax incentive in the clause is limited to buses. Therefore, I encourage the Government to think again whether the clause could be extended to light railway systems to try to bring about some of the environmental benefits that we all want in densely populated parts of the country.

Photo of Michael Jack Michael Jack Conservative, Fylde

I want to follow the contributions that have been made and put an anomaly to the Minister. A worker at BAE Systems in my constituency, who lived in Fleetwood, could take the Blackpool tramway to its terminus on the Fylde border and then transfer to a stopping bus. The odd situation would arise that the journey from Fleetwood to the edge of St. Anne's would not benefit from the provisions of clause 33, whereas the journey from St. Anne's to Warton, where he might go to work, would.

The Government are reviewing several applications for public funding for the development of tramway systems or tramway and integrated light rail systems. If the measure's objective is to encourage the use of public transport—I notice that its emphasis is on local stopping services—it seems odd that travellers on local stopping tram services, which in many cases in Blackpool run on parallel routes to buses, get no help while bus travellers do. It would be interesting to hear from the Financial Secretary the reason for that apparent inconsistency and whether it is the intention of the policy.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I take the point that the right hon. Gentleman made about trams. A tram link serves my constituency, connecting Merton and Croydon, and many business people use it. However, we have to start somewhere, and although this is a small measure, it is a very sensible one. I believe that it will encourage people to use public transport more and it is to be applauded. London suffers greatly from excessive congestion, which is a huge problem in my Wimbledon constituency, and the measure will help.

I want to take issue with, or perhaps add to, the points made by the hon. Member for Southport (Dr. Pugh). The aim of the measure is not simply to change people's behaviour. Obviously, it gives people an extra incentive to use local transport if they will not be taxed for it, but we should not forget the measure's importance to business. Businesses recognise the significant costs to themselves of congestion in major cities such as London and the health costs attached to the pollution that congestion generates. Businesses have made many representations to the Government asking them to work through the tax system to encourage people to use public transport more. We must look to businesses to publicise the benefit to their employees, making them aware that they will not be taxed if they travel on local stopping services. Businesses should encourage employees to take up the benefit.

In a similar vein, perhaps we can look in a future Finance Bill at ways of using the tax system to encourage the use of school buses or other public transport by people travelling to school. It is people taking their children to school, especially between 8

and 9 am, that leads to most congestion in my constituency, creating a lot of trouble for people trying to get to work.

The measure is welcome and I hope that we shall build on it in future Finance Bills. It is about changing people's behaviour, but also about business, the Government and the community working together to reduce congestion in our cities for the benefit of everyone.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

Reluctant as I am to engage in too much more special pleading—there has been some from all parts of the UK—a concern in central London is the potential impact of the congestion charge from next April. I want to understand some of the thinking behind the clause where it refers simply to ''public transport bus services''. Was any thought given to including private transport bus services, those that are employer-subsidised for large numbers of employees who have to go from one part of town to another? [Interruption.] They will all be included. I am glad that they have been covered.

I return to the comments of my hon. Friend the Member for Arundel and South Downs. It strikes me that, to a large extent, given the environmental concerns that perhaps underlie some of the Government's thinking, buses can be among the worst offenders. It would be unwise, given the burgeoning growth in tramways, to exclude trams, if not trains, from the provisions of the clause.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I echo the comments made about tram services. There is an excellent tramway in my constituency, and I seek the Government's reassurance that they will look at trams as well as buses.

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

The brevity of that contribution was a relief. I say that because my hon. Friend is not only a former solicitor with Thompsons—there could not be a more distinguished firm—but is also a former bus driver. I was expecting that Ted was either about to take a bus or subsidise his employee. I did not want to fall victim to Ted in quite the same way that my hon. Friend the Paymaster General almost did.

Leaving Ted aside for the duration, the measure will allow employers to subsidise local bus services that are used by their employees to get to work, knowing that they can enjoy free or reduced-price travel, tax-free. As several hon. Members will know, it is a continuation of a process that began last year of encouraging a form of behavioural change. The hon. Member for Cities of London and Westminster made a specific point about bus services provided by employers. We are going further this year to encourage people to adopt what I believe Members of all parties agree is a desirable behaviour change, which will promote sound environmental objectives.

The hon. Member for Southport, who has just joined us, is much too modest about his own abilities in this area—he knows a great deal about the subject. I have been cross-examined by him in an appearance before the Transport Sub-Committee. I would be the first to concede to him that the measure is modest. As

I said earlier, it is a continuation of a process. Measures in previous Finance Bills have included, for instance, tax-free cyclists' breakfasts on cycle-to-work days, which was an even more modest assistance in changing behaviour, and tax-free lunchtime use of works buses—again, a modest contribution to changing behaviour and promoting good, sound environmental objectives. This measure is another step forward.

The tax exemption is limited to local stopping bus services. We believe that that is the most cost-effective way to benefit the majority of bus commuters, and there will be knock-on benefits to local residents who use the same routes. They are likely to be better served by more regular buses and, possibly, extra stops. The right hon. Member for Fylde, one of my predecessors as Financial Secretary, gave an example from his constituency of someone who started their journey on a tram and ended it on a bus. It is perfectly true that, unlike subsidy of buses, subsidy of trams will not attract the relief under the provision. Indeed, the provision is further limited in that the bus must provide a local bus service as defined by the Transport Act 1985. It must be available to the general public at separate fares. In the right hon. Gentleman's example, it would have to stop at least every 15 miles, so one could not get off a tram and get on a bus that went for 20 miles. That would be outside the definition.

Photo of Michael Jack Michael Jack Conservative, Fylde 4:30 pm, 16th May 2002

As usual, the Financial Secretary is giving us a clear and eloquent explanation for the move that the Government want to make. However, the tramway between Blackpool and Fleetwood meets the criteria that he has already enunciated and provides, in terms of a local stopping service, a parallel service to a bus operation because the road runs parallel to it. The man on the tram gets no help, but the man on the bus does. What is the logic?

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

I actually got that point, and I am about to come to it. I am afraid that I am not particularly familiar with the right hon. Gentleman's constituency, but I think that most Committee members have been to Blackpool and are quite familiar with Blackpool trams. I am familiar with the one that now runs on in the way that the right hon. Gentleman describes. I would be the first to accept that the measure currently does not apply to such tramways. Let me continue the explanation of how we came to the measure before dealing with the interesting point that he and several hon. Members have raised. It is worth examining in some detail.

The measure was recommended by an academic team that carried out research on tax incentives for encouraging green travel to work. We undertook careful research before deciding that the tax exemption was a worthwhile measure. We commissioned professional researchers to interview about 2,000 employers. The Revenue had a consultation document on its website, which the hon. Member for Kingston and Surbiton might have seen in his surfing of the net. In the assiduous way that the hon. Gentleman speaks on such matters—

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

It does feel like that, Mr. Gale, but there you are. It takes all sorts. The hon. Member for Kingston and Surbiton may have come across the website in his surfing, and may have given us the benefit—at some length, no doubt—of his views.

What we found was that interested parties, having been given an opportunity to contribute, supported the measure. More than 50 individuals and organisations replied. The extended tax exemption is another modest, but important, step in our fight against congestion and traffic pollution. It will encourage employees to leave their cars at home. It will encourage employers to take advantage of the opportunity provided to make a real contribution not only to the environment, but the welfare of their employees and the immediate local community.

There is a point, which I think is sound and valid, that as we take such matters forward in a modest and incremental way, we should consider other forms of transport. I am perfectly willing to do so, having listened very carefully to the contributions made by my hon. Friends the Members for Wolverhampton, South-West and for Wimbledon in particular. They follow their constituents very closely in those matters. I am particularly persuaded by them that it would be right for us to look at the proposal and see whether there is scope to take it forward.

I hope that, with that assurance, hon. Members of all parties will give the clause a fair wind.

Question put and agreed to.

Clause 33 ordered to stand part of the Bill.

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

In accordance with the order of consideration, we now come to clause 36, and will return to clause 34 afterwards.Clause 36 Exemption of minor benefits: application to non-cash vouchers