VEHICLE EXCISE AND REGISTRATION

§ Ms Primarolo

I beg to move amendment No. 27, in page 164, leave out line 23.

§ The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse)

With this, it will be convenient to discuss also the following amendments: No. 22, leave out line 26.

• No. 23, leave out line 27.
• No. 24, leave out line 28.
• No. 25, leave out lines 29 and 30.

§ Ms Primarolo

The amendments cover similar ground to the previous debate. I do not intend to delay the Committee by referring to each amendment, but I shall make special reference to amendment No. 27, which would maintain the status quo for electrically propelled vehicles. All the amendments would maintain the status quo of vehicle excise duty, as plan B in persuading the Government to undertake the review for which we argued in the past debate but, so far, have failed to secure.

There are no precise figures on the number of electric milk floats in use, but it is estimated that there are 25,000 milk rounds in England and Wales alone and on at least two thirds of those, electric vehicles are used. The imposition of even a reduced rate of £35 vehicle excise duty represents a considerable annual increase in costs to the industry. Any increase in cost targeted directly at doorstep delivery is a further threat to the viability of the milk round. The Government have maintained their support for the delivery of milk to people's doorsteps and we are sure that, on reflection, they will wish to reconsider the imposition.

A statement that the use of electric vehicles should not be penalised would be a positive contribution to the Government's professed claim to reduce carbon dioxide emissions. Because of their very nature, the use of electric vehicles should be encouraged, not penalised by the imposition of vehicle excise duty. Since taxation is used by the Government as a method of encouraging environmentally friendly use of vehicles, it is absolutely absurd that they now propose to extend to all vehicles of this class an initial vehicle excise duty which, no doubt in subsequent years, they will seek to increase.

Ministerial responses to representations made so far have been inconsistent, to put it politely. The Secretary of State for Transport has stated that the imposition of a £35 rate of duty on electric milk floats will 756 reduce evasion and be easier to understand and administer. What gobbledegook; what rubbish. How can there be any evasion if there is no tax in the first place? Perhaps the Government will explain why we need to propose a tax to prevent evasion in a category in which there can be no evasion because there is no tax.

The Minister of Agriculture, Fisheries and Food has said that it is a matter for the Treasury and that the imposition will make fraud more difficult and increase efficiency of administration. What utter rubbish. The whole purpose of introducing this taxation is to open up a new area of indirect taxes—a rich vein into which the Government hope to tap, in their efforts to establish for themselves a war chest of booty from the electorate that the Government can try to give back in electoral bribes by reducing direct taxes just before the general election.

The Minister added insult to injury by calculating the additional tax on a cost per pint of milk in an attempt to hide the reality that the industry will face enormous difficulties. The imposition of costs which in the first year may be as much as £500,000 will undermine the milk rounds' ability to continue to exist.

We stand by the speeches made by Opposition Members in previous debates. We urge the Minister to withdraw the imposition of vehicle excise duty on (he vehicle classes listed in schedule 4 and to consider bringing before the Committee a more rational, sensible and logically argued case for a new regime of vehicle excise duty.

§ Mr. Heathcoat-Amory

We recognise that electric vehicles have certain environmental advantages. That is why they will be taxed at such an advantages. That is why they will be taxed at such an advantageous rate. Some would say that the enviornmental advantages are not overwhelming because an electrically powered vehicle has to use power generated elsewhere; in a sense, one is therefore simply shifting the pollution from the vehicle to the generating plant.

I recognise that such vehicles have certain advantages, especially because they produce less noise, which is why they will be placed in a concessionary class and charged £35 per annum only. However, it is right that they should be removed from the totally exempt category, which we are reserving for emergency vehicles and those used by the severely disabled.

Electric vehicles have an additional advantage in that there is no excise duty payable on the fuel that they use—electrical power.

§ Ms Primarolo

VAT is paid on it.

§ Mr. Heathcoat-Amory

The hon. Lady suggests from a sedentary position that VAT is payable on the electricity. That is, of course, not the case. If she were to think more carefully, she would realise that the electricity is supplied commercially and, therefore, the VAT payable on the electricity supply is recoverable as input tax.

The other amendments in the group cover snow-clearing, ice-gritting, street-cleansing vehicles, and so on. We covered the point in relation to those vehicles fairly comprehensively. However, the hon. Lady must face up to something that she persistently avoids: she wants street-cleansing vehicles to be exempt from excise duty even though it has been explained to her that when 757 the same type of vehicle is used for marginally different activities—for example, cleaning out an underground drain or sewer—it will bear, according to the Opposition amendments, or lack of them, a full rate of vehicle excise duty.

How can Labour Members tolerate the continuance of a glaring anomaly when their whole Budget strategy was apparently based—or so we were told at the time—on ending anomalies and loopholes? Until they clear up that confusion in their own thinking, I do not think that the Committee will take the amendment seriously.

§ Mr. Malcolm Bruce (Gordon)

I beg to move amendment No. 28, in page 164, leave out lines 31 and 32.

§ The First Deputy Chairman

With this, it will be convenient to discuss the following amendments: No. 32, in page 164, line 38, at end insert— '3A. In paragraph 21 of Schedule 2 to the 1994 Act the following shall be inserted after sub-paragraph (b)—"and, (c) for the purposes of agriculture, horticulture, and forestry.".'. Government amendments Nos. 42 and 43.

No. 35, in page 172, leave out lines 44 and 45.

No. 36, in page 173, leave out lines 14 to 19.

§ Mr. Bruce

This is an innocuous little amendment in terms of its place on the amendment paper and its length, but it is very important. It is astonishing that the Government should have thought that it would be possible to put into the Finance Bill the provisions which are enshrined in the lines that we wish to take out without accepting that that would create considerable concern in 761 the farming community. The exemption of farm vehicles from vehicle excise duty dates back to the 1920s. No Government have seriously considered changing that. Suddenly, without notice, farmers find that they are faced with having to pay vehicle excise duty on all farm vehicles. At least that was the situation until a couple of days ago, and I will refer to that matter in a minute.

I am sure that hon. Members who have connections with farming or agricultural interests will know of a number of matters which are relevant to farm vehicles and which are the reason for exemptions having been granted for so many years. A significant number of agricultural vehicles are used for only a few weeks of the year. Some combine harvesters might be used for only a few days a year. The Government now propose that farmers must pay the full rate of vehicle excise duty on them, which seems to be unreasonable and unfair. The previous ruling was that the exemption was restricted to vehicles that travelled no more than six miles from their point of registration.

Given the changes in agricultural holdings in recent years, there are fewer farms where there is no reason to take agricultural vehicles on to a public road simply to carry out the basic business of running a farm, because a farm straddles a public road, because fields can be reached only by going along a public road, or, increasingly, because holdings are physically detached and might be a mile or two apart.

In such circumstances, a very modest farmer might be expected to find vehicle excise duty for three, four or five vehicles for which he has never previously had to consider such a payment and for which there has been no warning, no discussion, no consultation and no sign that the Government were considering it. There has been no opportunity for farmers or their representatives in the National Farmers Union to make representations about the implications or to seek exemption or modification. That is reprehensible.

I represent a constituency in Scotland. Of course there are prosperous Scottish farmers. There are farmers for whom paying vehicle excise duty on three, four or five vehicles is a relatively small charge to their businesses, but there are an awful lot more farmers for whom that is a significant burden on top of other matters with which they must cope. In Scotland, 95 per cent. of agricultural land is in less-favoured areas. By definition, therefore, such farms require subsidy. The Government are providing a subsidy with one hand and clawing it back in additional taxes with the other hand. That does not seem to be fair, reasonable or even sensible.

8.45 pm

In the past few weeks, Scottish farmers have had a problem with sheep annual premiums that have not been paid, even though they have been paid throughout England and Wales. Scottish farmers were promised them in October-November. Two thousand farmers are due £8 million, but they have received no payment whatever, and they are told that the Scottish Office is unable to tell them when they might be paid, and that it could be some time after Easter.

On average, that sum works out at £4,000 per head. It relates only to partnerships, but a partnership business is often a husband and wife or, possibly, a son or a daughter. Such businesses are being deprived of £12,000 of basic salary. Farm support income has been cut, hill livestock compensation allowances have been cut, and farmers now 762 have to pay additional taxes. That is unreasonable and unfair, especially without adequate consultation or consideration.

I welcome one matter. It is clear that, after we tabled our amendment, vibrations got through to the Treasury that perhaps there was a potential problem and that there was some resistance and resentment. The National Farmers Union has been busy, no doubt, contacting hon. Members with agricultural interests to point out the implications of the clause and schedule.

When we tabled our amendment, at least two Conservative Members put their names to it, as well as tabling their own amendment. Surprise, surprise, a couple of days later, the Paymaster General, apart from writing notes to several hon. Members, tabled his own amendment, which provides exemptions for all-terrain vehicles—no doubt he will tell us more about his proposals—and light farm vehicles. That is welcome. It is a recognition that the Government have overstretched the point, that they have not considered the matter, and that there is a need to respond. However, welcome as that response is, it means that all the arguments that I have put will still apply to the majority of farm vehicles affecting the majority of farms and farmers.

In those circumstances, our amendment is justified and desirable. That remains the view of the National Farmers Union, which also welcomes the pressure that has been brought to bear by hon. Members and which has generated a response from the Government. I always welcome evidence that action in the House is observed, acknowledged and responded to, and I give due credit to it.

Conservative Members who take the view that the Government amendment is adequate will find that the NFU does not agree, and many of their local farmers will tell them that the amendment neither affects nor benefits them. Farmers are faced with additional charges which have been introduced without warning or consultation at a time when Government support for many farmers is being withdrawn.

It is a little mischievous of the Government to cut subsidies while trying to claw back additional taxes from farmers. Why has a measure which has been accepted for 70 years suddenly been brought into the net? It does not seem reasonable or fair. The Government may have acknowledged that their proposal as it stands is unreasonable and needs qualification. It would be helpful if the Minister undertook to take the measure away, to consult farmers and their interests, and to bring it back in a form which takes account of those consultations.

I understand that one of the Government's arguments is that the administration of the scheme is somewhat bureaucratic. For 70 years, farmers have been perfectly happy to handle that bureaucracy and I have had no complaints about it from any farmer. It is funny that people in general think that bureaucracy is not a bad thing when they get a tax rebate, and that they are only opposed to it when they face a tax imposition. The serious point is that, if there is a bureaucratic problem, it can be addressed.

The NFU has suggested that a possible solution is a one-off registration with a requirement to notify changes. Nevertheless, the subject of bureaucracy was raised by the Minister after the Finance Bill was published, and no doubt there was justification. The matter has not, I 763 understand, been raised by farmers' representatives complaining about the existing system. The NFU has simply responded to the Minister's assertion.

A significant change has been introduced after 70 years of unchallenged and accepted practice, without warning or consultation. The Government could simply say that they still want the measure—if that is their position—but that they accept that it has implications which they had not fully considered. The measure is clearly resented within the farming community, and it is felt to be a burden for which the Government have not made a case to justify the change.

The Government should take the measure away, reconsider it and possibly bring it back in a revised form after consultation. I would rather that they did not bring it back at all, but consultation has not taken place and I hope that the Minister accepts that it should now take place. Whether we press the amendment to a vote tonight will depend to a significant extent on the Minister's response, but I hope that he accepts that farmers are extremely unhappy about the way in which the measure is being introduced.

§ Mr. Heathcoat-Amory

Government amendment No. 42 is, I think, entirely uncontroversial and removes an anomaly which might otherwise mean that a local authority which used tractors simply for the maintenance of roadside verges, hedges and trees would have to license them as haulage vehicles, and thus pay vehicle excise duty. They would also lose their entitlement to rebated diesel. As a result of the amendment, they will continue to enjoy their existing concessions to license them as agricultural tractors, and they will therefore pay £35 tax and use rebated diesel.

Government amendment No. 43 concerns the all-terrain vehicles which are familiar to any hon. Member with an agricultural constituency. The vehicles have increased in use, and are now a common sight on hills where sheep are rounded up or hay is delivered. This is a clear example of where the old concessionary classes have simply not anticipated the development of such vehicles. If the legislation were being laid down today, those vehicles would undoubtedly be considered a form of small lightweight tractor. Under the amendment, we propose to recognise that farmers do use ATVs like tractors and, accordingly, we define them as light agricultural vehicles. That means that they will be taxed in the £35 a year class and, although most of them are petrol-powered, a number which are diesel-powered will be able to use rebated fuel because of the amendment.

The other issue touched on by the hon. Member for Gordon (Mr. Bruce) concerns the low-mileage vehicles which are often used by farmers between fields on a single farm. The legislation as drafted required farmers to pay vehicle excise duty for the first time. Most of the vehicles, of course, are tractors and therefore the duty was only £35. I must make it clear to the Committee that the proposals are not in this case driven by the need for extra revenue, but to end anomalies and to find a system which is administratively workable.

I must make clear at the outset that the current system for the vehicles—whereby exemption is based supposedly on the vehicles doing fewer than six miles a week on public roads—cannot continue. It is self-evidently 764 impossible to police the scheme. It may be possible for a police officer to stop a vehicle and check its distance, but it is certainly impossible when the criteria for evasion is not just distance, but time and how many miles have been covered by that vehicle during the week. It will not surprise the Committee to know that prosecutions are unknown.

The scheme is bureaucratic in the extreme. I have with me one of the forms which must be filled out each year by people claiming the concession. Of course, they do not complain about it. As the hon. Member for Gordon fairly said, who would complain about filling in a form if it means that one does not have to pay tax? However, it cannot be good taxation if every year, a person claiming the concession must fill in a detailed description of the route to be travelled, and any divergence or detour from that route—because of a temporarily blocked road, for example—must be sent in writing to the authority before that concession can continue.

Hon. Members with agricultural constituencies will know what I mean when I say that, in private, farmers often concede that there is a certain amount of abuse of that concession. It is difficult for the authorities and bureaucratic for the users.

I am not wedded to the concept of taxing genuine cases, however, when vehicles necessarily have to cross main roads in the course of business. If trade organisations—the National Farmers Union, Country Landowners Association and other trade groups—or hon. Members can come up with a system that involves none of the form filling, is workable and administratively simple and prevents evasion, I will willingly consider it in time to table an amendment on Report.

§ Mr. David Harris (St. Ives)

Before my hon. Friend sits down—

§ The First Deputy Chairman

Order. The Minister has sat down.

§ Sir David Mitchell (Hampshire, North-West)

First, I warmly welcome what the Minister said about all-terrain vehicles, as those were causing some anxiety in the fanning community and his words will be widely welcomed.

On exemptions from normal vehicle excise duty for certain agricultural vehicles, I have much sympathy with the Chancellor's wish to tighten the rules and to lessen abuse of former concessions that allowed six miles per week and were misused, especially as regards livestock. One could say that farmers have brought the problems on themselves because of the widespread abuse of the system, but the change means that the majority of law-abiding farmers are being penalised because of an unscrupulous minority.

9 pm

I must draw two genuine problems to the Minister's attention. The first concerns the substantial vehicle excise duty and the second, the subsequent need to MOT a vehicle to motorway standards, when it will be used merely for crossing a farm road or up a narrow lane to get to another part of the farm. Technically, the first change in vehicle excise duty would result in a further change in the MOT requirements. Those should not apply to harvest vehicles and others of that type.

765 I have here a letter from a farmer in my constituency, who says that I should be aware that many farm harvest lorries have been un-MOT'd within the exempt ruling law, but will in future have to pay licence duty but also be liable to MOT to motorway standards. There must be many farmers with harvest grain transport trucks who will not MOT their vehicles to MOT motorway standard. We run two lorries for harvest work—that is all. Should the law change we would have to purchase two 14 ton trailers and hire two tractors—a considerable cost to their farming enterprise.

I also want to draw the Minister's attention to the views of the Country Landowners Association on "agricultural off-road vehicles", which is how it wants them to be described. I was glad to hear my hon. Friend say that he was open to suggestions. It suggests: The licence will only be valid within, say, x miles of the owner's place of business (the exact amount of miles to be determined by the distance from the postal address of the business to the furthest outlying field in the farm". The licence disc should be a special colour and include the address of the place of business so that if the vehicle is stopped on the public highway it should be immediately obvious to any policeman whether or not the licence is valid. The inclusion of the business address would avoid the policing difficulties that have been encountered and which the Minister mentioned.

I should have thought that that change from X miles per week to a specific distance from a farmhouse or tractor store to the boundaries of the farm plus two miles would eliminate the major problem to which my hon. Friend the Minister drew our attention. Will he consider that suggestion and consult the NFU, the CLA and other interests, as he said he would? I hope that he will be able to table an amendment at a later stage as a result of his consultations.

§ Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

I must place it on record that I am grateful to my hon. Friend the Minister for the courteous way in which he received me last week to make representations on vehicle excise duty exemption for agricultural vehicles.

I am also grateful for his announcement that he will consider further representations from the Country Landowners Association, the National Farmers Union and colleagues. Perhaps I should declare an interest, as I am a member of the NFU and the CLA.

I endorse some of the arguments by my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell). The Bill removes schedule 2, paragraph 21 of the Vehicle and Excise Registration Act 1994. It is worth dwelling for a minute or two on what we are doing and what we are abolishing. As the hon. Member for Gordon (Mr. Bruce) said, the provisions have been in place for 70 years. Paragraph 21 of schedule 2 to the 1994 Act states: Where an applicant for a vehicle licence for a vehicle satisfies the Secretary of State that the vehicle is intended to be used on public roads—

1. (a) only in passing from land in his occupation to other land in his occupation, and
2. (b) for distances not exceeding an aggregate of six miles in any calendar week,

the Secretary of State may, with the consent of the Treasury, declare that the vehicle is an exempt vehicle when it is being used on public roads as mentioned in paragraphs (a) and (b). So we are abolishing a concise and precise exemption, which has been in operation for 70 years for a good reason. The reason is that the agricultural business 766 involves travelling from one piece of land to another. It therefore seems onerous that farmers should suddenly be brought into the licensing net.

I understand the Minister's explanation that, by abolishing the exemption, he is making the law easier to enforce and police. It is generally acknowledged that the current concessions are widely abused, so we must come up with a better system, but I hope that he will listen carefully to suggestions made by the agricultural industry because, in some cases, the abolition of the concession will cause hardship.

The schedule shows that proposals with respect to some restricted HGV lorries, which may be used only on odd occasions in a year, such as during the harvest period or to transport a few sheep from one piece of land to another, could mean that a farmer who currently pays nothing may pay up to several thousand pounds under the new system. I accept that most tractors and agricultural vehicles, such as combines, will, under the concessions granted in the Bill, pay only £35. Under those circumstances, the obligation for farmers is not too onerous, but small farmers who must pay substantially more than £35 for HGVs which are used only on the odd occasion each year and which may only cross a road, may suffer hardship.

My hon. Friend the Minister already mentioned some of the ways in which the exemption could be kept. The Bill provides a new definition for "tractors" and makes it clear that we are dealing with vehicles that can travel at only up to 25 miles an hour, except the concession for ATVs, which I warmly welcome. As it is therefore unlikely that anyone in his right mind will drive those tractors or combine harvesters far on a public road, it must be possible to come up with a system whereby farmers apply for a normal licence but answer a question on the licence form about why they should be entitled to the exemption.

The exemption would specify the address from which the vehicle operated, and it would be reasonable to have a different colour licence that specified up to what range the vehicle could go. I urge my hon. Friend the Minister to give that idea serious consideration. If a vehicle crosses a road only once or twice a year, it is unnecessary to go through the rigmarole of paying a considerable extra amount.

§ Sir David Mitchell

Does my hon. Friend accept that it is not just a case of crossing a road through a farm, but it may be a case of going a short distance along a road to enter another field?

§ Mr. Clifton-Brown

I entirely accept that.

My suggestion about how the matter could be implemented and enforced by the police so that it would not be abused as at present would be less bureaucratic and easier to enforce than the present arrangement.

May I make a final plea to the Minister? I understand that the Department of Transport is carrying out an investigation into which agricultural vehicles should be subject to the MOT and what provisions should apply to them. It is ludicrous to suggest that combine harvesters should jam up MOT testing stations which are not big enough to cope with them in any case. I hope that my right hon. Friend will make representations to his colleagues in the Department of Transport to ensure that those types of agricultural vehicles will not be subject to the same testing and plating regulations that currently apply to commercial vehicles.

§ Mr. Nick Ainger (Pembroke)

I support amendment No. 28. I represent a farming constituency in west Wales and the representations that I have received from my constituents about vehicle excise duty have led me to believe that the Government have made a big mistake in not accepting the opposing arguments that have been advanced. Following tonight's debate, I hope that they will begin to listen both to their own Back Benchers and to the Opposition.

Farmers throughout the country are saying, "What has the Tory party got against the farming industry?" At the end of last year, the Government announced that hill livestock compensatory allowances would not be increased, even though hill farming incomes had declined by more than 20 per cent., and they also cut grant aid for pollution measures. That shows that, for some reason, farmers are not particularly popular with the Government.

As several hon. Members have said, the Government should have consulted widely before introducing the proposal to remove farm vehicles from the exemption from duty. We are not talking just about tractors or heavy goods vehicles; Britain has a successful, specialised farm sector and the farm engineering industry has produced an enormous range of vehicles to service it. One has only to visit agricultural shows every summer to see the enormous range of specialist vehicles that are now available to farmers.

Most of the vehicles are designed to perform a specific function and cannot be used for any other task. Recent developments with large bales of hay and silage require the use of extremely specialised vehicles and there is no question but that such vehicles can be used only on the farm to perform legitimate farm business.

In order to run a successful enterprise, farmers must own a great variety of farm vehicles—these are usually well maintained, although sometimes, sadly, they are not. Because of the Government's move, the introduction of MOT and the licensing of farm vehicles as HGVs may impose enormous costs on farmers.

The Paymaster General has said that the measure was introduced not to raise revenue but to address certain anomalies in the system. As I said earlier, I am sure that he could have addressed those anomalies by consulting with the farm unions and the Country Landowners Association and coming up with some more favourable, concrete proposals.

Several Government Members have made very sensible suggestions about how those anomalies could be addressed and, at the same time, how the Government could reduce the size of the bureaucracy and solve enforcement problems. I urge the Paymaster General to listen not just to what the Opposition are saying but to his own Back Benchers and to bring forward a sensible amendment to solve all our problems.

§ Dame Elaine Kellett-Bowman (Lancaster)

I agree with my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown). I must declare an interest in the debate as I am a farmer and I have to cross a road in order to get to part of my land. It is outrageous to suggest that I should have to license my farm vehicles in order to do so; and many of my farming constituents are in a similar position.

I do not wish to annoy my hon. Friend unduly, but I must point out that small farmers such as those I represent often do not buy new machinery—we rely on wealthy 768 farmers like him to sell us their second-hand machinery. Therefore, we are the ones who will be clobbered by the MOT; his vehicles are new.

§ Mr. Clifton-Brown

rose—

§ Dame Elaine Kellett-Bowman

I cannot give way to my hon. Friend. I have been told that I must be brief.

Such an imposition would be disastrous. Some farmers use combine harvesters that are 20 years old. That machinery could not be expected to pass the MOT test, yet it does a perfectly good job of bringing in the harvest. The same applies to silage-making machinery—it may not be new, but it works. To insist on MOT testing would be outrageous. I ask my hon. Friend the Paymaster General to temper the wind to the shorn sheep. It would be difficult for some farmers to go through all that rigmarole, and I hope that my hon. Friend will think again.

§ Mr. Alan Haselhurst (Saffron Walden)

I emphasise the comments of my right hon. and hon. Friends, and welcome the indication by my hon. Friend the Paymaster General that he is prepared to re-examine the issue. He did so in sufficiently open terms to satisfy the hon. Member for Gordon (Mr. Bruce).

§ Mr. Malcolm Bruce

indicated dissent.

§ Mr. Haselhurst

The hon. Gentleman is not as reasonable as he presents himself to the Committee. My hon. Friend said that he is prepared to consult. I find that satisfactory, and I am sure that that is true of the farmers in my constituency.

As my hon. Friend said, it is not primarily a revenue-raising matter. I wonder whether it is such a burning issue that it must be resolved for the purpose of removing an anomaly. In so far as there has been an increase in diesel and petrol duties, any extra mileage covered by such vehicles will cost farmers more in any case—so additional revenue will be raised if there is the supposed abuse of the present system.

The point has been made well that certain vehicles are used so little that it would be unreasonable to impose on them the panoply of taxation and regulation. I hope that a common-sense solution can be found. We should be attempting not to remove anomalies but to find a sensible answer relevant to the needs of the industry.

§ Mr. Heathcoat-Amory

I am fully persuaded by the Committee that there is a good, strong case for trying to, find a way of responding to the case for agricultural vehicles that occasionally cross public roads or travel short distances along them. The present system is administratively too complex, and more or less impossible to enforce. In the pursuit of good government and administration, we must find a better way of granting exemptions, and one that is easy to understand and possible to enforce. Together with the industry and other hon. Members, I shall seek a way forward over the next few weeks.

My hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell) and others raised the question of MOT testing. It is my understanding that no requirement exists for tractors or harvesters, but vehicles such as lorries that are used on public roads even for short distances must meet MOT test basic safety requirements. My hon. Friend's former Department, the Department of 769 Transport, is examining the whole question of vehicle testing. It may even be that he started that review, given that the good that Ministers do is generally harvested by those who succeed them. I undertake to draw to the Department's attention the remarks made by members of the Committee this evening.

§ Mr. Malcolm Bruce

The Minister seems a little confused. He accepts that the matter should be reconsidered but places the onus for devising alternative options on hon. Members and farmers' representatives rather than on the Government and civil servants, who have the resources and responsibility for doing that. When a Minister says, "I accept that this matter needs to be reconsidered," he usually accepts also the amendment to remove the measure in question, so that he can return with revised proposals after consulting. The Minister has introduced a measure granting exemption across the board to all-terrain vehicles. They are precisely the kind of vehicles whose owners can abuse the system—yet they are to be entirely exempt.

A farmer who keeps a combine harvester, however, will in future have to pay tax, as will farmers who keep balers or hayrollers on their farms. The Minister has acknowledged that that is unreasonable. His hon. Friends have said that they are unhappy with the idea, but they have more confidence than I do that the Minister will come up with an answer.

§ Dame Elaine Kellett-Bowman

I am puzzled by the hon. Gentleman's reference to haybalers. Usually they are towed vehicles, not self-propelled.

§ Mr. Bruce

The hon. Lady knows perfectly well that all sorts of farm machines never leave the farm but will now be taxed. She herself has said that this is an unreasonable proposal—

§ Mr. Heathcoat-Amory

The hon. Gentleman seems confused. If vehicles never travel on public roads, there is no question of catching them—that is certainly not our proposal.

§ Mr. Bruce

As I said earlier, farms are increasingly divided by public roads, or farmers need to use roads to gain access to other fields, separate from the farm. It is extraordinary that a rule which has worked perfectly satisfactorily for 70 years should suddenly be abolished without notice or consultation.

§ Mr. A. J. Beith (Berwick-upon-Tweed)

I hope that my hon. Friend will bear in mind the fact that some farmers, such as those with farms along the A1, have chunks of public roads through their farms, and thus find that they have to move combine harvesters from one field to another along busy dual carriageways, as well as bearing a tax burden for doing so. If the Government think that farm vehicles can be moved about the farm without going on public roads, they do not know much about farming.

§ Mr. Bruce

I agree. A number of farms in my constituency, for instance, are divided up by a railway line. Until the Government decided to privatise the railways, the farmers were allowed free access across the line, but British Rail now refuses to grant that access. Farmers are thus forced to go many miles around to get to fields on the other side of the line—and the Government now insist that the vehicles used for such journeys pay VED.

770 My main point is a simple one: the Government and the Minister have said that they accept that there is a problem. The Minister has admitted that wide consultation has not taken place. He has said that he is willing to hear alternative proposals. I suggest that he accept the amendment, consult and then consider the position. If he is not prepared to rise to his feet now and do that, we shall have no hesitation in pressing the matter to a vote.

§ Mr. Matthew Taylor (Truro)

I beg to move amendment No. 29, in page 165, line 10, at end insert— '(c) if it is a vehicle with engine size under 1,200 cc, the fuel efficient rate.'.

§ The Chairman of Ways and Means (Mr. Michael Morris)

With this, it will be convenient to discuss amendment No. 8, in line 12, at end insert— '(3A) The fuel-efficient rate is 60 per cent. of the general rate.'.

§ Mr. Taylor

The amendment has two aims. First, it would help those who have been hard hit by rapid increases in petrol prices, a policy that the Government have pursued since the last general election. Secondly, it aims to reinforce the environmental benefits which the Government claim will flow from such changes.

It is ironic that so many Conservative Members attacked the Liberal Democrats during the general election campaign for proposing fuel duty increases because, since the 1992 general election, petrol duty has gone up from 27.79p to 36.14p per litre. That is a 30 per cent. hike and an average increase of 9.1 per cent. a year. When VAT is 774 added to the duty, it means that people are paying nearly 10p a litre, or 44p a gallon, more at the pumps. That is double the rate of increase that we proposed, and those hon. Members—there are some in their places—who attacked us for that policy ought to reflect on their position if there is a vote on the amendment.

The Government claim that their policy is intended to have a material impact on emissions and is part of their drive to tackle our environmental problems, not the least of which are air pollution and global warming; but such increases are a very rough tool with which to seek to achieve those aims. It is calculated that a 10 per cent. increase makes a difference of 1 per cent. or less in the amount of fuel consumed. The tool is relatively ineffective and falls hard on people in rural areas and those who depend on car ownership to get about.

The alternative strategy is to use increases in petrol duty to cut vehicle excise duty. That has clear material benefits. First, it is vastly more effective in terms of the environmental aim. It gives people a direct incentive to invest in cars that are more fuel economic in the band that attracts lower vehicle excise duty. That means that the Government's emission targets can be achieved more effectively. People will have a direct financial incentive to downsize their vehicles.

Ultimately, despite catalytic converters and other efforts to achieve greater fuel efficiency and lower emissions, the best way to cut vehicle emissions is to burn less fuel and only two options would achieve that: we can either directly dissuade people from driving, which is the hard option given the modern society in which we live, or persuade them to drive vehicles that burn less fuel. That is relatively easy with financial incentives.

Everybody knows that a fuel-efficient vehicle will cost less to run, and we can add to that incentive by using revenues from petrol price increases to cut vehicle excise duty. Such cuts have another benefit in that they compensate those who are hardest hit by the Government's policy of increases in fuel duty; the money is put back in their pockets because they do not have to pay so much vehicle excise duty.

Moreover, it is an affordable poli