Vehicle Excise Duty

Part of Orders of the Day — Finance (No. 2) Bill – in the House of Commons at 7:45 am on 11th July 1984.

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Photo of Jim Wallace Jim Wallace , Orkney and Shetland 7:45 am, 11th July 1984

I beg to move amendment No. 95, in page 125, line 38, after 'Northern Ireland', insert 'or which (whenever registered) is of less than 1300 cc'. The effect of the amendment would be to establish a vehicle excise duty of £60 per annum for all private vehicles with a cylinder capacity of 1300 cc or less. This reduced rate already exists for that special class of vehicle, those registered before 1 January 1947. The amendment would extend the relief—two thirds of the rate which would otherwise apply — to a modest basic size of family car.

We do not make any great claims for this modest proposal. Many would suggest that we go further and challenge the very existence of the vehicle excise duty. Many of my constituents who live on the smaller islands have access to only a few miles of wee roads and they take great exception to paying the same rate of excise duty as those living near the centre of Birmingham with access to many hundreds of miles of motorways.

There are many who feel that it would be wise to abolish the duty and make up the revenue from petrol duty so that the road user, especially with a vehicle of inefficient fuel consumption, would have to pay. Unfortunately, we are lumbered with the duty for the time being and we seek to introduce some refinement of it.

First, we would wish to refine the system in the name of fairness. Having endured a number of years when the balance of the Budgets presented by the Government has almost certainly been tilted in favour of the rich, there is a strong case for somewhat redressing the balance and taxing the basic family car at a lower rate than a larger luxury car. In many instances, larger cars are part of company fleets and the tax is paid by the employer company. We do not say that the amendment is a great progressive tax measure, but it is a step in the right direction.

Secondly, the proposed relief is in the cause of oil conservation. It is estimated that 79 per cent. of the energy consumed by the transport sector in 1982 in the United Kingdom was consumed by road transport and that about 60 per cent. of total transport use could be attributed to the private car or the motor cycle.

Although it is impossible to plot a straight-line, direct relationship between cylinder capacity and petrol consumption — energy efficiency is also a significant factor—I think that it will be generally accepted that there is a relationship between cylinder capacity and amount of petrol that is consumed by a particular vehicle.

The shock of the 1973 oil crisis made everyone conscious of the need to conserve energy. Speed restrictions were introduced to promote that cause. Latterly —no doubt the trend has been due in part to North sea oil riches — there has been greater complacency. In 1970, 50 per cent. of private cars and vans were under 1300 cc, but by 1982 the proportion had fallen to 26 per cent. There has clearly been a trend towards the use of cars with much larger engines. We do not claim that the amendment would overnight change purchasing habits, but it would be a step in the right direction.

We are regularly told that the Government, or at least the Department of Energy, are promoting an energy efficiency campaign. The amendment is a practical measure that would back up such a campaign. It is in contrast to the lunatic proposals which were published recently, which would increase the mileage allowances of hon. Members in line with engine capacity. That is the sort of measure that brings the House into disrepute with the public and runs counter to the example that we should be showing to the public by giving a lead in energy conservation.

Many might quibble about the limit of 1300 cc. We have related that cylinder capacity to the size of a basic family car, which covers such a popular car as the Mini Metro. We believe that it is a reasonable cut-off point. I commend the motion to the House, in the interests of fairness and energy conservation