Schedule 19 - Capital allowances: cars with low carbon dioxide emissions

Finance Bill – in a Public Bill Committee at 11:00 am on 11th June 2002.

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Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport) 11:00 am, 11th June 2002

I beg to move amendment No. 18, in page 246, line 19, at end insert—

'(ia) is a car adapted to run on road fuel gas (with an applicable CO2 emissions figure not exceeding 240 grams per kilometre driven), or.'.

Photo of Joe Benton Joe Benton Labour, Bootle

With this it will be convenient to take the following amendments: No. 19, in clause 59, page 39, line 31, at end insert

'or

(aa) it is a car adapted to run on road fuel gas (with an applicable CO2 emissions figure not exceeding 240 grams per kilometre driven) or.'.

No. 20, in schedule 20, page 249, line 29, at end insert—

'''natural gas'' shall include ''road fuel gas'';

''road fuel gas'' has the same meaning as in section 168AB of the Income and Corporation Taxes Act 1988.'.

Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

The amendments are important because they probe the Government's commitment to liquefied petroleum gas. The Government say in the Bill that there should be enhanced capital allowances for several low-emission vehicles, but not for others. I noticed that a press release issued at the time of the Budget said,

''100 per cent. enhanced capital allowances for low emission cars''.

As with so many things, when one examined the small print, one found that that applied only to cars with low emissions of CO2 but not other pollutants.

The amendments would bring cars that run on LPG within the 100 per cent. first-year allowance. It would not address all cars that run on LPG, but cars that run on LPG and produce relatively low levels of CO2.

At present, it is not possible for an LPG car to meet the 120 g per km test but it is possible for such a car to meet the 240 g per km test, which is why the amendment has been drafted in such a way. There is suspicion that the Government are paying lip service to green technologies. However, when the ordinary man in the street thinks seriously of investing in an LPG-fuelled car or a dual-fuel vehicle, the Government start to go cold on whether they will provide a long-term incentive for such investment in greener technology.

The suspicions are not wild. They are supported by the Government's refusal to confirm that the fuel duty differential between LPG and other fuels—diesel and petrol—will extend beyond 2004. That is a near time horizon. I recently renewed my House of Commons pass and noticed that it now extends to 2006. We are dealing not with the renewal of a pass but with people investing in new models of vehicle. We should encourage vehicles that use both LPG and diesel or petrol and we should encourage people to consider LPG vehicles as a serious option.

Having read the Budget day press release, we read with some amazement the small print of the Bill, which states that LPG vehicles will be excluded from the benefit of 100 per cent. enhanced capital allowances,

notwithstanding the great benefits that accrue to the environment and people's health from LPG compared with diesel or petrol-powered vehicles. Box 7.1 of the Red Book shows the days on which United Kingdom air pollution is moderate or higher. UK air pollution is generated not by CO2 emissions, which impact on climate change, but by other pollutants that largely, especially in urban areas, result from the combustion of road fuels. In paragraph 7.7 on page 127 of the Red Book, the Government state:

''Poor air quality poses risks to human health, quality of life and the natural environment. It affects everyone, particularly children and elderly people . . . In general, air quality in the UK is improving . . . But much . . . remains to be done . . . exposure to air pollution continues to be associated with an unacceptable number of hospital admissions and premature deaths each year.''

All Committee members would agree wholeheartedly with those sentiments. However, now the Government have the chance to give an incentive for people to invest in LPG-powered vehicles that also have low CO2 emissions, and they have missed the opportunity—unless they take that which the amendments present.

I remind the Committee of some of the benefits that flow from LPG compared with diesel and petrol, the significance of which is sometimes ignored. Although LPG vehicles tend to emit less carbon dioxide than do conventionally fuelled vehicles, no LPG vehicle can yet meet the 120 g carbon dioxide test. If that is the sole criterion for what constitutes low-emission vehicles, LPG vehicles will be unable to meet it. However, LPG engines are 50 per cent. quieter than diesel engines and marginally quieter than petrol engines. As we know, noise is a big issue for many of our constituents. LPG emissions of benzene are about one thirteenth those of petrol and half those of diesel. Petrol emits about two and a half times the amount of carbon monoxide emitted by LPG.

The health implications of particulates are the most significant factor. Recent tests have shown that LPG emits 99 to 99.8 per cent. fewer ultra-fine particles than even ultra-low sulphur diesel. For every 1,000 parts that enter the atmosphere as a result of burning ultra-low sulphur diesel, LPG results in only between about two and 10 parts. That is an amazing improvement in terms of reducing particulate emissions, and the Government and the Committee should take note of that. Also, vehicles that run on LPG emit one fifth of the level of sulphur dioxide that is emitted by petrol vehicles, and one ninth of the level that is emitted by diesel vehicles. With regard to oxides of nitrogen, LPG engines offer a 90 per cent. reduction of NOx compared with diesel, and a 40 per cent. reduction compared with petrol.

Therefore, if the Government truly mean to provide 100 per cent. enhanced capital allowances for low-emission cars, there is a case for including all LPG vehicles within that enhanced capital allowance scheme. In that regard, this amendment goes part of the way. It says, ''Let us go along with the overriding objective of reducing carbon dioxide emissions because of the impact of that on global warming, but let us also include LPG vehicles, which are reducing carbon dioxide to a slightly lesser extent, but which are

also producing corresponding and much larger benefits by reducing pollutants of other kinds that impact on the health and environment of our people.''

I hope that the Government will take these amendments seriously, and that the Minister, in his response to the debate, will say something about why the Government are refusing to say anything about making a commitment with regard to extending the fuel duty deferential for LPG beyond 2004—which I hope that he will accept is a short-term horizon.

I hope that the amendments will find favour with the Committee.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

I hope that you will forgive me, Mr. Benton, if my contribution ranges over several aspects of this schedule—and if it also, perhaps, refers to amendments that are yet to be discussed.

The Minister said that I had been mealy-mouthed in my praise of his recommendations about community sport, and so on. I shall not be mealy-mouthed in this case. I shall not accuse the Minister or the Government of being insincere in their attempts to produce good behaviour by fiscal measures. They want us to use vehicles that produce less pollution, and thereby to create a better environment.

However, we must test what is being presented to us to discover whether it is a real improvement or simply a cosmetic improvement, and to see whether the recommendations, as they are currently framed, offer a sufficiently refined instrument to do the job.

There is a lot of premature optimistic talk about the environment and the absence of pollution. The Automobile Association states that, by the agreement of car makers alone, the Kyoto protocol's demands on motorists will be met in this country, and the Government White Paper of 1998 stated that there would be a 70 per cent. reduction in particulate emissions between 1996 and 2010.

All of that is good news and, in the Government's defence, we must accept that what we have before us is not an isolated recommendation, but part of a package—it does not stand alone, as I am sure that the Minister will say. However, we must ask ourselves whether the instrument is sufficient do the job that it is intended to do.

The Government have every encouragement to do a little more than they are doing at present. The recently published European Transport White Paper encourages Governments to go beyond the minimum goals. It states that the new Community rules

''will help member states create the necessary economic and legal conditions for exceeding objectives.''

In other words, Europe is giving a green light—and a rich menu to choose from. However, the Government appear only to be encouraging purchasers of cars to choose a car that has a low rate of CO2 emission, with the intention of encouraging manufacturers to produce more of them. In one sense, that is a sensible strategy, because the vast majority of people will buy standard petrol cars that have CO2 emissions, and it is far better that they buy cars with low CO2 emissions. However, the legislation does not sufficiently benefit or highlight alternatives, to which the amendment refers. The European Commission set

targets of 2 per cent. for the use of biofuels to be reached more or less now, and 6 per cent. by 2010. It also set a target of 20 per cent. for replacing conventional fuels with substitutes by 2020. The legislation seems a long way from producing that by itself—it is not sufficiently hard-edged. The Government have an opportunity to offer severe fiscal encouragement to alternatives such as biofuels and natural gas, and, in the long term, hydrogen.

The Government say that they are looking ahead, and propose in clause 60 to encourage imaginative developments, but there are things that they could do now which, especially in the case of LPG and biofuels, could be done at little cost. On our way here today, few of us would have passed many LPG or biodiesel vehicles, and I assume that none of us passed a hydrogen-driven vehicle or would have recognised one had we done so. In offering fiscal encouragement, the Treasury is hardly hampering its finances but, in the long term, it could send an enormously important signal as to where the future lies. The Government have missed the opportunity to do so in this legislation, and I should like the Minister to tell us how they might do so.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West 11:15 am, 11th June 2002

I should like to echo the comments of the two previous hon. Members who spoke, and urge the Government to reconsider. I am no expert on this subject and I would like my hon. Friend the Minister to tell us whether bioethanol or biodiesel are encompassed in the schedule, especially under the definition of diesel in paragraph 3(10). We should be encouraging the use of lower-polluting vehicles. At the moment, apart from milk floats, all vehicles pollute. The early returns on company car tax show that the Government have been very successful in encouraging the use of new types of cars. That change of behaviour is driven by—to coin a phrase—the fiscal regime introduced by the Government.

I believe that we could go further, and I urge the Government to consider the amendment moved by the hon. Member for Christchurch (Mr. Chope) and the suggestions made by the hon. Member for Southport about examining biodiesel and bioethanol. Perhaps my hon. Friend the Minister would explain some of the technicalities of the subject. Why do the Government feel that it is not appropriate to take such steps at this stage?

Photo of Chris Grayling Chris Grayling Shadow Minister (Health)

I am delighted to hear a considerable degree of consensus about the issue in the Committee. I commend my hon. Friend the Member for Christchurch for the amendments that he tabled. There is no doubt that LPG is a growing market, and one that is encouraged by the Government. For several years, both Conservative and Labour Governments offered incentives to develop the LPG market. Over the past couple of years, the number of filling stations has risen more than fourfold, from approximately 250 to more than 1,100, and is expanding at a rate of one a week.

There are some contradictions about the nature of the emissions from LPG vehicles, which have lower CO2 and much lower carbon monoxide emissions than petrol vehicles, for example, but which have problems relating to other pollutants that are produced. There are also benefits in relation to diesel vehicles. However, the practical reality is that LPG vehicles can offer a lower-emission alternative. Friends of the Earth recently highlighted the ability of a modern LPG car to meet the arduous standards established in Los Angeles, California—the smog capital of the world for many years—where there are tough restrictions on vehicle usage and emissions. Friends of the Earth believes that a modern LPG car can meet the criteria set in that environment.

Clearly, the Government should encourage the use of LPG vehicles in this country, but the issue goes further than that. We face significant energy problems in the future, and the Government face challenges in relation to future capacity for generating energy. The benefit that LPG offers is that it is, in effect, a by-product; it already comes from the process of extracting and refining existing fossil fuels. Given that this country has a substantial surplus of available LPG, compared with the demand and usage, encouraging the development of LPG when road use is growing can only help to improve the overall environmental picture. LPG already exists, so it must be disposed of or used. Thus making better use of a resource that is already being generated and is already available for use has to make sense, both economically and environmentally.

I hope that the Economic Secretary will reconsider this issue in the light of the comments made by Labour, Conservative and Liberal Democrat Members. My hon. Friend the Member for Christchurch has raised an important point, and the Government would do well to take it into account in this measure before the Bill receives Royal Assent.

Photo of John Healey John Healey The Economic Secretary to the Treasury

I start by welcoming the general support that the hon. Member for Christchurch has offered for using economic and tax instruments to pursue environmental objectives. He is rightly a very eloquent and strong champion of LPG, but in the context of clause 58 and this group of amendments, he is wrong to argue that we are ignoring the claims made for LPG. We already recognise the benefits that road fuel gas can offer and have introduced a range of other measures that can support such technology.

Those measures include grant-based schemes, such as the PowerShift programme, which offers targeted incentives to assist with the cost of converting vehicles to run on alternative fuels; lower vehicle excise duty for alternative fuel cars; less tax paid by employees on gas-powered company cars; and, from 2003-04, gas fuel provided free by employers will be taxed at a lower rate than for a similarly priced petrol or diesel cars. Finally, the rate of fuel duty on LPG is much less than that for diesel or petrol at 5p a litre, compared with about 45p a litre for the other fuels.

That brings me to the second point on which the hon. Member for Christchurch pressed me: the road fuel gas differential beyond 2004. First, he accused me and other Ministers of refusing to say anything about that matter, but that is not the case. He asked why we should not commit ourselves to continuing the differential beyond 2004. The answer is simple: the environmental case for maintaining that fuel duty differential beyond 2004 for road fuel gases, such as LPG, has not yet been proved, so the Chancellor and the Government will consider it on a Budget-by-Budget basis.

Photo of Chris Grayling Chris Grayling Shadow Minister (Health)

Does the Economic Secretary that accept that uncertainty is perhaps not visible to the public who are continuing to invest in converting their vehicles, so the Government risk leading people up the garden path if they discover that the existing cost-benefits may not be there in the future?

Photo of John Healey John Healey The Economic Secretary to the Treasury

That may be a pertinent general argument, but it is does not relate to clause 58 and this group of amendments for reasons that I shall explain later.

Photo of Michael Jack Michael Jack Conservative, Fylde

I welcome the Economic Secretary to his post. Would he be kind enough to tell me on what basis the further assessment of the benefits of LPG will be made? Will that assessment be published?

Photo of John Healey John Healey The Economic Secretary to the Treasury

The focus of our concern in relation to clause 58 is CO2 emissions. The threshold that we have set is 120g per kilometre. So in the narrow context of that clause, the future relevance of LPG may come into play in relation to those criteria.

Photo of Michael Jack Michael Jack Conservative, Fylde

Does that mean that the Treasury will discount all the possible health benefits associated with LPG in any further assessment of that fuel?

Photo of John Healey John Healey The Economic Secretary to the Treasury

Of course it does not. The point is that there is a narrow focus on CO2 emissions.

As the hon. Member for Southport said, this is a modest, focused measure that must be seen as part of a package of environmental measures, using economic and fiscal instruments, which the Government have already introduced. I have described four or five of those, which are chiefly intended to encourage LPG development and use. It is in that wider context that arguments such as those advanced by the right hon. Member for Fylde (Mr. Jack) will be taken into account.

Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

The Economic Secretary has made quite a dramatic statement. He has said that the environmental case has not yet been proved for continuing the duty differential between LPG and diesel and petrol beyond 2004. What evidence has he for saying that the environmental case has not been proved? His party is encouraging people to invest in LPG-powered vehicles. Are those people now to take the view that the Government themselves are not convinced of the environmental case for switching to LPG?

Photo of John Healey John Healey The Economic Secretary to the Treasury

On the contrary. We are talking here about a matter introduced by the hon. Gentleman. We are talking about a time frame—a time limit. Clearly, in a fiscal regime the purpose of a time limit is to concentrate the boost that a measure may give, and increase its impact, in the early days.

I am merely saying that the case for extending the differential beyond 2004 is not yet proved. The decision on whether it has been proved will be considered, and any consequential decisions will be made by the Chancellor and the Government on a Budget-by-Budget basis. I hope that that is clear.

We are now on the territory entered earlier by the hon. Member for Epsom and Ewell (Chris Grayling). The hon. Gentleman was right to say that LPG could offer ''a low-emission alternative''. As he suggested, the schedule focuses on dealing with carbon dioxide emissions. As I have explained, we are encouraging the use of LPG vehicles in other contexts.

My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) began on the same territory, and then moved off it. He urged me to consider the wider application of the measure. As I have said, it is designed to deal with reductions in carbon dioxide emissions. It is part of a wider package of measures, many of which benefit LPG users.

Let me explain a couple of technicalities. My hon. Friend asked whether bio-ethanol was included in the schedule. The answer is yes. First-year allowances will be available if carbon dioxide emissions—here we return to the main focus and reference points—are not more than 120 g per km. That, indeed, applies to other cars.

In pursuing the question of biodiesel, my hon. Friend asked whether there were other provisions encouraging the use of that fuel. The new low rate of duty, 20p below that of petrol and diesel, will do just that.

The hon. Member for Southport made a pertinent point. This was not an isolated measure, he said, but part of a package. He then asked whether that package itself would be sufficient. I suggest that he should regard the work we have done in this Bill, in last year's Bill and previously as policy and legislative work in progress. I refer him to the consultation paper that we issued in the summer of 2001, ''The Green Technology Challenge'', which was designed to encourage debate about further environmental issues that might be tackled through enhanced capital allowances and new technologies that might arguably merit support under such regimes. The hon. Gentleman should view that consultation as a sign that discussion and consideration will continue on a broader front.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

I can understand what the Economic Secretary is saying. He is suggesting to the Committee that the basic problem is that we are not looking at a narrow enough focus when we consider the legislation. The legislation will give a tax break or benefit to people who choose to use low-emission CO2 cars rather than high-emission ones, but its object is to reduce CO2 emissions. A piece of legislation that encourages people to use low-emission cars but does not give a similar break to liquefied petroleum gas cars or cars

that do not emit CO2 will create the kind of objections that we have brought forward. A simple adjustment to the legislation would provide those benefits for both cars that produce low CO2 emissions and cars that produce no CO2 emissions.

Photo of John Healey John Healey The Economic Secretary to the Treasury 11:30 am, 11th June 2002

I urge the hon. Gentleman to bear in mind the aggregate impact of the proposal on the wider package to which he drew our attention. If he will wait, I shall address the amendments after I have dealt with the general points that a number of Members have introduced. I was very struck by his point and will bear in mind his encouragement to us to introduce ''severe fiscal incentives'' for environmental ends.

I now turn to amendments Nos. 18 to 20, which would, as the hon. Member for Christchurch said, extend the special 100 per cent. enhanced first-year allowances to all road fuel gases including liquefied petroleum gas. They would enable LPG-powered cars to qualify, even if their CO2 emissions were up to twice those of other qualifying vehicles. Amendment No. 20 would extend those first-year allowances to LPG refuelling equipment.

The amendments miss the point and purpose of the clause. It may help if I reiterate to the Committee the purpose of the new measures. Clauses 58 and 59 aim to encourage business investment in cars that emit the lowest amounts of carbon dioxide, to expand that market and further to encourage innovation in low CO2 cars. I do not need to tell members of the Committee that CO2 is the key greenhouse gas, and the scheme forms part of a raft of measures to help reduce the UK's emission of that gas to meet our Kyoto and domestic targets. It is not a scheme that aims to support all alternatively powered cars without regard to their CO2 emissions. It therefore focuses deliberately on those cars with the lowest emissions of that gas. Cars that meet the 120g per km limit can qualify for the first-year allowances regardless of how they are powered, and making exceptions for particular fuels runs counter to that purpose. Focusing on a single CO2 figure provides a straightforward and consistent measure for the application of the provision.

Clause 60, to which amendment No. 20 relates, aims to encourage the installation of refuelling equipment for new types of gas fuels, such as natural gas and hydrogen, that will potentially play an important role in future. It targets those new-technology fuels to help increase availability and reduce the barrier to greater take-up and innovation.

There are already 1,000 LPG outlets and the rate of expansion has increased considerably in recent years, with some 350 new refuelling points being installed in the last year alone. Given that growth, I am not convinced that there is a need for further tax incentives.

The Government recognise that road gas fuels such as LPG can deliver the environmental savings that have been ably articulated by a number of hon. Members this morning. That is why there are grants to

help people buy or convert vehicles to run on LPG. That is why employees with gas-powered cars pay less company car tax and, from 2003-04, will pay less tax on free fuel provided by their employers. That is why LPG attracts a much lower rate of fuel duty. In that context, I recommend that hon. Members reject the amendment.

Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

The Economic Secretary's response is very polite and measured, but unfortunately I find the content extremely disappointing. He makes the assertion that the amendment would result in vehicles emitting twice as much carbon dioxide as the limit set out in the clause. He makes it seem as though that would be a disastrous state of affairs. Let me remind the Committee that the amendment would confine the 100 per cent. capital allowances to the top tier of vehicles on the PowerShift register. That is the top tier of low-emission vehicles. I do not think that the Economic Secretary has dealt with that problem adequately.

PowerShift register bands reflect the emissions performance overall compared with prevailing European standards, currently known as stage 3 or Euro III. The key regulated pollutant emissions targeted by the Powershift programme are nitrogen oxide and hydrocarbons. To be eligble for PowerShift funding, vehicles must also offer clear reduction—compared with the conventional fuel alternative—in emissions of carbon dioxide responsible for climate change. If such vehicles comply with the top band under the PowerShift register, why are they not eligible for the 100 per cent. capital allowances?

The Economic Secretary said that because there were already 1,000 LPG outlets and there was an increasing use of LPG, he was not convinced that there was any need for extra incentives. At the moment, the proportion of vehicles in the vehicle park that are fuelled by LPG or indeed by fuels other than petrol or diesel is very small indeed. Every extra vehicle that we can get in the vehicle park that is a low-polluting vehicle is of benefit to the environment and the health of the people of this country. The Government have the opportunity to give a joined-up signal in the Bill. In other policies, they have linked the issues of air quality and environmental benefit, but in this case they seem to stick solely to the criterion of whether the vehicles contribute an enormous amount to the reduction in global warming, and have set a limit so low that even an LPG vehicle cannot meet the limit, given present technology.

It appears that the Economic Secretary may be motivated by the protection of the revenue resulting from the clause. If that is so, let us be open about it. Let him say that he does not believe that it is reasonable that the Exchequer should subsidise new technologies to the extent that we encourage. If that is his argument, we can debate it. However, it seems that the Government are duping people into switching to LPG, and after 2004 they will remove the fiscal benefits that come from having a lower rate of duty for an LPG vehicle. The Economic Secretary said that he did not

think that there was any need for extra incentives, but that view is not shared by his own Government's quango, TransportAction, whose website states:

''The research also considered the importance of a number of market factors in influencing decisions to switch to clean fuels . . . The strongest concern was a lack of confidence in the Government maintaining the fuel duty differential''.

I know that the Economic Secretary is new to his portfolio but, although he may have been convinced that there was no need for extra incentives or for maintaining existing incentives beyond 2004, I hope that he reviews his position in light of what TransportAction says. I repeat:

''The strongest concern was a lack of confidence in the Government maintaining the fuel duty differential.''

I am told that a fleet manager or a car purchaser needs a long planning horizon; if an individual is not given an assurance beyond 2004 that LPG will be favoured by a beneficial tax regime from the Government, he may wonder what is the point of investing long term. At the moment, only Vauxhall and Volvo produce dual-fuel vehicles at a significant volume. The Government should encourage other vehicle manufacturers to invest in the technology, but they will not be able to do so if they are not prepared to extend their planning horizons beyond 2004; if vehicle manufacturers are to consider extending manufacturing lines and producing dual-vehicles, they need clearer signals of a longer time frame. I am disappointed that the Economic Secretary has not gone further than his colleague, the new Chief Secretary to the Treasury, went in a debate in the House last October; he also said that he could not say what would happen beyond 2004.

The amendment would restrict the capital allowance to vehicles that are at the top of the PowerShift register in terms of low emissions, so I hope that Committee members will press it to a vote. I hope that the hon. Member for Wolverhampton, South-West, who spoke so eloquently from the Back Benches, will join us by voting in favour of the amendment. He may be outvoted by his colleagues, but if he does rebel he will reflect the balance of debate in the Committee. Although Committee members from both sides—Conservatives, Liberal Democrats and Labour Members on the Back Benches—have spoken with one voice, the Minister has spoken with another. How can the people be sure that their spokesmen will take action against the Government when they are wrong unless those spokesmen join together and vote accordingly? I will be disappointed if the hon. Member for Wolverhampton, South-West does not vote with us.

I hope that the Minister realises that today's debate is another consequence of his Department using misleading language in its press releases. When the Inland Revenue issued its press release on 17 April, it announced the 100 per cent. enhanced capital allowances for low-emission cars. We now find that cars at the top of the PowerShift register will not qualify—we have discovered that only during the debate and as a result of reading the Bill's small print. If the Government had referred to 100 per cent. enhanced capital allowances for some low-emission

cars, it would have been a more accurate press release. I hope that the Economic Secretary will report back to his spin doctors that they have once again been involved in counter-productive spin.

Photo of Michael Jack Michael Jack Conservative, Fylde

I wish to add to my hon. Friend's comments after reading paragraph 21 of the notes on clause 58 and schedule 19, to which the amendment refers. It says that part of the measure's purpose is

''to encourage a shift towards cleaner cars.''

In his reply, the Minister used the sort of logic that says that, because the clause only defines—in this context—a cleaner car as one with lower carbon dioxide emissions, all arguments that support help for other forms of cleaner cars are off limits. He then told us that he felt that he had done his bit on behalf of the Government to encourage LPG cars because he had put before the Committee a range of other measures. That is a slightly bent piece of logic. It says that we will not have a consistent policy across all areas

''to encourage a shift towards cleaner cars'', in the words of the Treasury. We will do some things in some areas but not in others. My hon. Friend the Member for Christchurch put his finger on the lack of consistency in encouraging the uptake of cars that use embryonic technologies. In CO2 terms, perhaps the LPG car is marginally behind best practice in diesel or petrol. However, in cost-benefit terms, the LPG car has many benefits, if one believes the science on the relationship between air pollution and health.

The Economic Secretary says that he is happy to sustain only a partial package to support cars that do not cause certain health problems. I hope that his conscience is happy with that, because one advantage of LPG emissions is that, in many cases, they do not present the health risk to the public that are presented by the cars included in the Minister's measure on CO2. At a time when the Government have told us that their priority is the improvement of the nation's health, it seems odd that they are ruling out help to do exactly what they want to encourage—in their own words, a ''shift towards cleaner cars''.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West 11:45 am, 11th June 2002

I would like to say for the benefit of the Committee—certainly for the benefit of the hon. Member for Christchurch—that, despite the hon. Gentleman's eloquence, I am not convinced. I am reassured by the comments of the Economic Secretary, because he has said that the measure is part of an overall package, and I accept that. I am also convinced that the Government will keep the matter under review as time goes by. That is what is necessary to reassure me, and I am reassured.

Photo of John Healey John Healey The Economic Secretary to the Treasury

In the first place, let me reassure the hon. Member for Christchurch that I am far too junior a Minister to have any spin doctors to tell me what to do. The right hon. Member for Fylde urged consistency across the board. We face different challenges in the environmental field, and different measures are required to deal with them. It is less a lack of consistency and more a question of judgment about

the appropriate economic and fiscal instruments for particular environmental objectives that underpins the clause and my arguments this morning.

I am delighted that my hon. Friend the Member for Wolverhampton, South-West has resisted the sweet encouragement and temptations from Opposition Members. Finally, I say again to the hon. Member for Christchurch that the single focus and purpose of the clause is to tackle greenhouse gases and the global warming problem by reducing CO2 emissions from vehicles on the roads in this country. However, I shall pass on to my right hon. Friend the Chancellor the comments of TransportAction on the fuel differential duty and of the hon. Gentleman as very early representations for the Budget in 2003.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 15.

Division number 4 Adults Abused in Childhood — Schedule 19 - Capital allowances: cars with low carbon dioxide emissions

Aye: 6 MPs

No: 15 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

I beg to move amendment No. 85, in page 248, line 25, at end add—

'7 In section 82 (qualifying hire cars), in subsection (1), in paragraph (b) substitute ''(3) or (4)'' with ''(3), (4) or (4A).''

8 In section 82 after subsection (4) insert ''(4A) The fourth case is where the car concerned falls within subsection (1) of section 45D''.'.

This is a short point. The amendment would extend the 100 per cent. allowance for low-CO2 emission cars to companies that lease cars to members of the public. That would widen the scope of that benefit so that individuals, rather than just corporate owners, could benefit. That could be passed on to private owners via lower leasing costs. I should have thought that that would be consistent with the Government's objective of ensuring that there is a higher take-up of such vehicles on our roads.

Photo of John Healey John Healey The Economic Secretary to the Treasury

As the hon. Gentleman explained, the amendment would ensure that cars with low carbon dioxide emissions that are for hire to, or for carrying, members of the public are excluded from those special rules that apply to cars that cost more than £12,000. I can confirm that the Bill will achieve that result, and will widen the benefit that the hon. Gentleman is keen on. The effect of the measure will be that all new business cars with low carbon dioxide emissions that are registered or purchased on or after Budget day will be excluded from the special rules that generally apply

to cars costing more than £12,000. That includes low-emission cars for hire to, or for carrying, members of the public.

I hope that the hon. Gentleman will regard his amendment as unnecessary and be prepared to withdraw it.

Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

I am grateful to the Minister for that explanation, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 19 agreed to.

Clauses 59 and 60 ordered to stand part of the Bill.

Schedule 20 agreed to.