§ Mr. Robert Sheldon
I beg to move amendment No. 67, in page 39, line 15 leave out subsection (6).
We are on the old familiar territory of benefits in kind and considering an extension of them to cover access to motor cars. In this case we are dealing with fuel. Under the existing legislation no benefits in kind are held to obtain from the provision by the employer of fuel. That loophole has existed for some time and the Government have now rightly brought forward this legislation, but unfortunately they are proposing a change in the period of introduction from 1983–84 to 1984–85. It is not easy to see why there is a need for such delay in this important matter.
The problem with which the House is concerned is the entire operation of benefits in kind as they apply to the provision of motor cars. For a long time the scale charges 919 have been hopelessly under-estimated compared with other benefits in kind. As the benefits in kind are in essence identical to some of the schedules of charges for the benefits in kind of motor cars, perhaps I can refer to the scale of motor car benefits in kind.
The Automobile Association produces a technical services leaflet in the spring of each year. The leaflet, dated April 1982, shows a schedule of the estimated standing and running costs of a motor car. The standing charges include licences, insurance and depreciation and the running costs per mile cover petrol, most importantly, but also oil, tyres and servicing.
If we examine the schedule of engine capacity that ranges from below 1,000 cc to 4,500 cc, the document shows that the cost of running such cars, including standing charges and running costs, ranges from £2,079 a year to £6,048. The scale of charges in the Finance Bill shows that the benefit that is held to arise ranges from £270 to £540. That is £540 against £6,000 and £270 against £2,000. That is an astonishing difference between the benefit in kind as estimated by the Automobile Association and the estimate in our legislation. The Government have examined that legislation in order to assess the benefits in kind of the fuel charge. They have gone straight to schedule 7 of the Finance Act 1976 as it has been updated, taken those figures and said that that should be the benefit in kind for fuel. Schedule 7 contains a range of figures in tables A and B. It is hard to see how that relates to the cost of petrol because we are dealing with 1984–85 and the assessment of benefit will occur two years from now. It will be difficult to say how much benefit will be derived from the provision of petrol by the company. Why has there been such a delay?
Britain's problem is that it has the largest number of company-owned cars. Other countries do not have the same system of company-owned cars, which are an inducement to recruitment and to retention of staff. When the Government came to office they believed that the perks provided by companies to their employees would decline as taxation declined. They believed that the provision of perks was a direct consequence of high taxation, so they provided benefits that would avoid the high taxation that was then prevalent. However, although the highest rates of taxation have declined, company perks have not so declined. The proportion of company cars is a matter of great concern to those who are not provided with them. They see their neighbours with more modern and better maintained cars, although they may earn the same. That is a cause of great dissatisfaction, and the inability to raise, for taxation purposes, what is held to be an assessable benefit is a matter of some concern.
We tabled the amendment in order to have some clarification. I hope that the right hon. and learned Gentleman will assure the House about the way in which benefits will be increased. If he will change his mind about the date of introduction, perhaps we can avoid a Division.
§ Mr. Brittan
The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) has rehearsed usefully some considerations of the taxation of this benefit in kind. I hope that I can explain some, if not all, of the points that he raised, because I am sure that he does not wish his amendment to have the effect that it would have if passed.
920 The postponement was from 1982–83 to 1983–84. The right hon. Gentleman suggested, no doubt inadvertently, that there was a further postponement to 1984–85. Clause 42 shows that section 69(1)(b) is a new provision on car fuel that will not have effect until 1983–84. Accordingly, in subsection (2), 1983–84 should be substituted for 1982–83. I can well understand the right hon. Gentleman being puzzled by the reference in subsection (6) to 1984–85. I hope that I can explain the purpose of that subsection.
The general scheme envisaged was that in the year of the actual introduction of the scales the scale should be provided for in the Finance Bill itself, but that there should be a provision that in the following year a decision could be made as to what the relevant scale should be, if a change was to be made, by order subject to the negative resolution procedure.
When the matter was originally envisaged to start in 1982–83, the scales were laid down for 1982–83 and resolutions by the negative procedure were the appropriate method to deal with orders which would set out provisions for 1983–84. However, with the change in the year of the actual introduction everything, as it were, slipped forward. The year 1982–83 becomes 1983–84 in clause 42(1)(b) and 1983–84 becomes 1984–85 in clause 42(6). It is simply a procedural matter that ensures that there is proper debate in the first year and for subsequent years it is done by orders.
The right hon. Gentleman asked why there should be deferment. There was opposition by employers to the scheme as it was first announced on the grounds of complexity and administrative cost. It was, therefore, necessary to postpone it to allow preparatory work to be carried out so that the scheme can be implemented in the way proposed. All that has been before the House and discussed. Similarly, the question what the scales should be and the principles that should be applied have been ventilated in the House and in Committee. I did not expect the right hon. Gentleman to seek to engage in a general debate on that, or I should have been prepared to do so. The amendment related simply to the different procedure for establishing what the scale, in years, should be.
I readily confess that the scheme is not without complexity, but I hope that I have assisted the right hon. Gentleman and the House in explaining that we are simply shifting everything forward one year and that no principle is involved.
§ Mr. Robert Sheldon
I thank the right hon. and learned Gentleman for that explanation. I was anxious about the way in which the period had slipped forward. I note the differences between the new provision for 1983–84, and the provision to vary this by order in 1984–85. I was particularly concerned about what appeared to be a lack of urgency in the introduction of these changes. I look forward to the changes coming from the orders on the scales of benefit. We shall debate these fully in due course. I hope there will be much tighter action by the Government in these matters.
I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.