Clause 13
Finance Bill
3:30 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
As my hon. Friend the Member for Hammersmith and Fulham did on tobacco, I shall curtail my remarks on clause 13, on the basis that we have already debated vehicle excise duty for next year in Committee of the whole House. I have some fairly narrow points on clause 13.
It is, of course, a fact that the Government have significantly changed their position. I made that point last week. Much of the credit for that shift must go to my hon. Friend the Member for Putney (Justine Greening), who has done sterling work. I pay tribute to her once again.
I have been comparing the VED bands implemented by the clause with those set out by the Government. It is not entirely fair to use that announcement as a baseline and then compare pluses and minuses and say where there are increases and reductions—it is a trick of the Prime Minister to do that in other contexts, and I do not want to go down that route. However, by comparing what was announced in the 2008 Budget with what we have now, I note that vehicles that emit 150 g/km are being charged more than was originally proposed, while those that emit more than 150 g/km are being charged less.
It might be helpful if I give the Committee an example. Under proposals in the 2008 Budget, a car that emits 130 g/km would pay £90 VED under the provisions in clause 13. Now, the VED payable on that car is £120, which is £30 more. Equally, we could find examples for higher-emitting cars where there is a reduction in the VED to be paid if we use the 2008 bands as our baseline.
Will the Minister set out how many motorists will lose and how many will win when comparing those two measurements? Using the same test, and comparing what was announced last year with what we have now, it is clear that the measures are beneficial to those cars that emit more.
I do not want to overstate the environmental arguments because there are none, at least according to the Government’s figures. It appears that the change in VED announced last year will have a very, very small impact on the total amount of CO2 emitted. Nevertheless, when the proposals in the 2008 Budget were announced, the Chancellor stated that there was a need for an incentive to encourage drivers to choose the least-polluting cars, and one could argue that that incentive has been diminished. I do not want to overstate the point, as the environmental impact of what was announced in March 2008 appears to be so minimal that unwinding that announcement cannot, I assume, cause any harm. Nevertheless, I would be grateful for the Minister’s response on that.
By comparing the Red Book for the 2009 Budget with that of last year, I note that last year the VED reforms for 2009-10 were due to raise £465 million. The Budget announcement for 2009, which uses that as the baseline, has largely been unwound. The cost of using that baseline is £475 million—£10 million more than was going to be raised.
Why have the Government continued to introduce the banding on the basis of CO2 emissions this year, even though they have largely unwound the position set out in the 2008 Budget? They are not making a particularly environmental case for the reform of VED.