Vehicle Excise Duty (Coaches)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 10th March 1988.

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Photo of Mr Robert Adley Mr Robert Adley , Christchurch 12:00 am, 10th March 1988

To ask the Chancellor of the Exchequer what representations he has received seeking changes to vehicle excise duty for coaches.

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

My right hon. Friend has received a forceful representation from my hon. Friend.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch

To avoid framing any questions that would enable my hon. Friend to make a bland comment about not revealing Budget secrets, may I ask whether he is aware that vehicle excise duty is £100 for a small private car but £84 for a 50-seat coach? In view of the pollution, congestion and road damage done by those coaches, is that not a grotesque distortion of the tax system? So that we may know whether to blame the Treasury or the Department of Transport, can my hon. Friend make it clear whether he has received any specific proposals on that matter from the Department of Transport?

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

The Government have only one policy on every issue, and that is the collective responsibility of the whole Government. However, I note my hon. Friend's point. I advise him that this country is unique in operating a policy whereby categories of vehicle are required to cover, both by VED and their fuel taxes, the track costs that they generate. Coaches cover their track costs.

Photo of Mr Peter Snape Mr Peter Snape , West Bromwich East

Instead of increasing vehicle excise duty for coaches, will the Minister consult his right hon. and hon. Friends at the Department of Transport and suggest that the Treasury charges British Rail £84 for every passenger vehicle while, at the same time, meeting its track, signalling and infrastructure costs, which is what happens with the coach business at present? That would at least lead to lower rail fares and go some way towards the principle of fair competition about which the Conservative party is always talking.

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

I note the lion. Gentleman's point. Of course, in assessing whether fair competition applies between rail and road, one has to take into account not only vehicle excise duties but the fuel costs borne by the different industries.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

I welcome my hon. Friend's statement that road taxation should cover vehicle track costs. Will he consider carefully whether that policy is being implemented in relation to coaches?

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

Before I came to the Dispatch Box today I checked to confirm that coaches cover their track costs through a mixture of VED and fuel duties.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Does the Minister accept that any additional VED on coaches would make them less competitive? Does he understand that that has implications for my constituency, where most of the United Kingdom's coaches are built? We would not want additional VED on coaches and the Minister should not go down that route.

Photo of Peter Lilley Peter Lilley The Economic Secretary to the Treasury

I shall certainly ask my right hon. Friend the Secretary of State for Transport to take note of that point as well as all the other points that have been made in this exchange.