Clause 16 - Duty at higher rate: exception for tractive units
Finance Bill
3:00 pm
Mr Stephen O'Brien (Eddisbury, Conservative)
We have moved from betting and gaming to vehicle excise duty. We have passed through clause 15 on Northern Ireland and reached clause 16. The clause provides that an articulated lorry is not chargeable at the higher tax rate if used with fewer axles than when licensed. Provided that actual weight, rather than plated weight or design weight, is used to determine the tax rate, the vehicle will not fall into a higher tax band than when licensed. That will take effect from 9 April.
I am sure that the Economic Secretary will be as aware of that matter as I am. He will not be surprised that I have been made aware of it by the Freight Transport Association, not least because it has been
instrumental—and successful—in making representations on the matter. I generally support the clause, but there is useful background material, and I shall place just some of that history on the record.
I am grateful to the Freight Transport Association for having ensured that the provision is well understood. That is important because, as a constituency Member, I have had many cases on it. I dare say that that is the case with Members across the Room, and I see one of my neighbouring Members of Parliament from across the border in Wales in his place, the hon. Member for Wrexham (Ian Lucas). He is aware that there are many trunk roads in our part of the world, but not that many motorways. Since the introduction of the 44-tonne limit, an increase under European law, the question of axle weight has become key.
Axle weight is causing concern because, clearly, lorries can now be larger. Many of our roads were built after houses were already there, which had been built when the road was a track. There is much grave danger. People have recognised the importance of axle weight as they have come to understand the cost to the Exchequer and to local councils and highways authorities. These heavy lorries are, unquestionably, the greatest determinant of road maintenance costs. With the company for which I used to work, I used to be the leading supplier of aggregates in the FTSE 100, so that situation was very advantageous to us; but it is very poor in terms of the competitive economy of the nation.
The change that the clause contains will protect operators from prosecution if they opt for the flexibility provided by the seven bands of vehicle excise duty introduced in the 2001 Budget. There is a slight history to that, which is building up. I agree with the Freight Transport Association that the change is sensible and will prevent articulated vehicle operators from being prosecuted because of the previous somewhat ambiguous legislation. That is not intended as a criticism; this is a sensible tidying-up. It will also avoid extra administration for the Vehicle Inspectorate and the Driver and Vehicle Licensing Agency. Those costs could be quite significant, and the clause will assist to temper the administrative burdens that there would be on the public purse if operators were required to up-plate and down-plate vehicles according to their circumstances.
It would be gilding the lily to go through the history from 2001—those who wish to know more can always look it up—but the new vehicle excise system introduced that year gave operators of articulated vehicles the choice of seven taxation bands. The main thing to recognise is that as a result of the sensible and determined representations of the FTA, among others, the Treasury has included in the clause an addition that is helpful in relation to the Vehicle Excise and Registration Act 1994. It confirms the flexibility for articulated vehicles to operate at maximum weights with trailers that have fewer axles without attracting a higher rate of duty.
I hope that all that is not as clear as mud. It is enormously important to recognise changes in road usage, even if they may be somewhat unwelcome. It is a fact that weights have been allowed to increase, thereby putting trunk roads under much more pressure. The more we can do to reduce the administrative costs of up-plating and down-plating for such vehicles, the better for all of us.