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Finance (No. 2) Bill

We support aviation fuel duty and those increases would be fair, because the vast majority of gas-guzzling cars are expensive cars such as Ferraris that consume huge amounts of petrol. If words are to have an impact, they must be followed by action, but so far we have seen little more than posturing. Indications from the public, however, are that they want action. A Guardian poll of 22 February found that 63 per cent. of respondents approved of green taxes to discourage behaviour that harms the environment. People accept that we will have to change, so why do we delay the inevitable? It seems that the Government have yet to come round to that way of thinking. The fall in green taxes as a percentage of our national tax take should be reversed if we are serious about tackling carbon emissions. The headline issue in terms of environmental measures in the Bill, which was trumpeted in the Budget, related to changes to vehicle excise duty in clauses 13 to 15. However, the environmental impact of those provisions will be laughable. For many gas-guzzling cars, the new higher band will cost less than half a tank of petrol—a rise from £165 to £210 a year. The Energy Saving Trust calculated that the differential needs to be worth more than £2,000 to have an impact on behaviour. The changes proposed in the Bill fall far short of that. My hon. Friend the Member for Cambridge (David Howarth) received a written answer about the impact of the proposals on carbon emissions, which stated that the estimated carbon savings will be 0.06 metric tonnes of carbon emitted by 2010,"““though calculating this figure is complex and subject to a significant margin of error””.—[Official Report, 28 March 2006; Vol. 444, c. 972W.]" Can the Minister tell us on what basis the Treasury judged the proposal a good idea? How many drivers of gas-guzzling cars will no longer purchase such cars as a result of the measures? Were they intended to be only an eye-catching initiative rather than actually having an impact on behaviour? Another area where urgent change is needed is air passenger duty, which was highlighted by the right hon. Member for West Dunbartonshire, yet the Bill proposes no changes in the structure of that duty. It should rise by at least as much as inflation and should be replaced by a charge on aircraft movements, not on passengers. That will encourage more fuel-efficient aircraft and discourage half-empty planes. I urge the Government to accept the recommendation in paragraph 102 of the Select Committee report, which states:"““We recommend that the Government give urgent consideration to how it can best use the tax system to increase incentives to reduce the harmful environmental effects of aviation.””" Although we support some of the environmental measures in the Bill, the Government need to take a more systematic and fundamental approach if they are significantly to change behaviour. We support the revalorisation of fuel duty this year in line with inflation. Since 2000, when fuel duty began to fall, the rate of increase in greenhouse gases from transport has doubled. The revalorisation is not a rise in real terms, but merely halts the real-terms fall over recent years. Should not the Government have taken that opportunity to look at other options that will have a more direct impact on individuals’ behaviour? Should not there have been a move towards road user charging, or at least a more detailed and serious Government investigation of that option? Similarly, we support the revalorisation of the climate change levy in line with inflation—again because it halts real-terms cuts in the levy—but the Government should have looked at alternatives that might have a greater impact on behaviour and which are less complicated and cumbersome, such as a carbon tax. The introduction of the climate change levy was a welcome move in the right direction, but it is complicated. A carbon tax would be simpler and would reflect the importance of the principle that the polluter pays, but because of that it must be combined with energy efficiency measures and winter fuel payments for the elderly to ensure that vulnerable groups are not hit disproportionately hard. Although the Liberal Democrats are pleased that the Conservatives seem to be coming round to that point of view, I wonder whether they have grasped the fundamental point of the system. The Conservative leader seems to be proposing a carbon tax on general taxation, so there is no link to the polluter paying and I am not sure that he has thought through the consequences of his proposal. So at least the Bill may go some way towards halting the decline in revenues from green taxation as a proportion of the tax take, but it will not increase the tax take.