Vehicle Excise Duty

Clause 4 – in the House of Commons at 12:15 am on 15th July 1991.

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Photo of Dr John Marek Dr John Marek , Wrexham 12:15 am, 15th July 1991

I beg to move amendment No. 18, in page 3, line 6, leave out '15.00' and insert '11.00'.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

With this it will be convenient to take the following amendments:

No. 19, in page 3, line 12, leave out '30.00' and insert '22.00'.

No. 20, in line 13, leave out '50.00' and insert '42.00'.

No. 21, in line 14, leave out '50.00' and insert '42.00'.

Photo of Dr John Marek Dr John Marek , Wrexham

The right hon. Member for Westmorland and Lonsdale (Mr. Jopling) referred in the previous debate to motor cycles. The amendments are an example of how the Treasury has gone the opposite way in terms of looking after the environment—motor cycles are reasonably environmentally friendly machines, at least when they have proper baffles fitted to their exhausts so that they cannot be heard from two or three miles away. Motor cycles travel a great many miles to the gallon. That means that they are environmentally friendly. Although vehicle excise duty on motor cars was not changed, the duty on motor cycles and some other vehicles was increased, and that is unfair.

The amendments are modest. They seek to raise the duty on motor cycles from £10 to £11 and not to £15. Where the duty was £20 we propose an increase to £22. Duty on the highest cubic capacity is to be raised from £40 to £50, but the amendments suggest an increase to £42. There is much concern that vehicle excise duty on motor cycles is being increased simply because there was much evasion. The last substantive paragraph in a letter from the Chancellor of the Exchequer to Mr. Peter Ryder of the British Motorcyclists Federation states: The widespread evasion of VED is of concern to Government because of both the revenue loss and the effective reduction in checks for MOT and insurance. It would appear that the penalties for evasion at the current level of VED are not a sufficient deterrent and I hope that the increase will help stop the slide. What does that mean? The letter continues: I know that as a responsible organisation you do not condone the activities of those who ignore the law, and I hope you will understand that the Government cannot tolerate them either. What does the Chancellor mean when he says the increase will help stop the slide"? Does he mean that the extra excise duty paid by motor cyclists will stop the decline in the Treasury's revenue? If he does mean that, he is advancing the unfair principle that simply because some people evade paying excise duty—and it is not only some motor cyclists who are guilty of that—a punitive increase in vehicle excise duty should be imposed to make up for the shortfall.

The ratio of motor cycle duty to car duty has remained constant for many years. Without notice the Chancellor decided to pick on motor cyclists and to increase vehicle excise duty, and he has not offered a rational or logical explanation for doing so. I do not expect the Government to admit that they were wrong and that they will cancel the increases, but I hope that the Minister will give a logical explanation for the increases or at least admit that the changes were for completely spurious fiscal reasons and that not enough attention was paid to the impact of the increases.

The Minister should ask the Department of Transport to look at the environmentally friendly aspects of motor cycles, cars and heavy goods vehicles and submit better proposals next year.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

I apologise to the House for jumping the gun and speaking about motor cycles during discussion on the last amendment. When the Minister of State, Treasury replied to that debate she said that the Chancellor did not have time in his Budget statement to refer to this massive increase in the excise duty on motor cycles. All that I can say is that if he had time to refer to the contentious issue of mobile telephones, it is difficult to believe that he did not have time to refer to an increase in excise duties on motor cycles that was proportionately far larger than that for cars, and that affected far more people than a tax on mobile telephones. That argument will not wash, so I hope that neither she nor any of her colleagues on the Treasury Bench will use that argument again.

12.30 am

I have yet to hear a proper explanation of why it was felt necessary to increase the excise duty on motor cycles by so much. In the previous debate, I declared my interest in this matter. Until today, I was the owner of a large capacity motor cycle, and I hope that I shall have another one the day after tomorrow.

Photo of Mr Philip Goodhart Mr Philip Goodhart , Beckenham

While my right hon. Friend can undoubtedly ride his machine with the greatest of skill, is he not aware that it is 12 times as dangerous to ride a motor cycle as it is to drive a car? It may be that the desire to reduce the appalling rate of casualties among motor cyclists inspired the Treasury.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

I understand my hon. Friend's point, and, like him, I am greatly concerned about the number of deaths and injuries among young people who ride powerful motor cycles when they are not particularly experienced. This is a matter of as much concern to me and to many involved in the motor cycling sport as it is to him. The Government are not backward in coming forward to tell us that they are putting up cigarette duty for much the same prevention reason. If this is why they are increasing the excise duty on motor cycles, let them tell us. As far as I am aware, that argument has not been used.

The hon. Member for Wrexham referred to evasion. I was not going to mention that because I did not think that it was worth mentioning, but as he has, I should say that it is irrelevant when it comes to deciding at what level to pitch the duty. I see no point in penalising those who pay to make up for those who do not pay. I should have thought that if one pushes up the price of a road licence on a motor cycle, one encourages people not to pay it, so that is not the way to go about it.

I do not want to press this matter this year, but I should tell my hon. Friend the Minister that I feel miffed about the way that it has been handled. I feel miffed about the logic behind it, which I do not understand. This has been a raw deal for those who ride motor cycles. I hope that people will not again be given the opportunity for criticising the Government for picking on the motor cycling community by clobbering it with an excise duty. I hope that it will not happen again.

Photo of Jim Wallace Jim Wallace , Orkney and Shetland

The right hon. Member for Westmorland and Lonsdale (Mr. Jopling) was right to say that motor cyclists have been clobbered. The percentage increases are startling, especially when the vehicle excise duty for motor cars was not increased. The Minister tried in Committee to explain away the percentage increases by saying that the actual amounts were increases of £5 or £10, but for many motor cyclists the increases are not neglible. We are talking of sizeable increases for vehicles that are environmentally friendly. Mopeds, especially, are very economical in their use of fuel, and for many young people who live in rural areas they provide an essential lifeline. I am sure that the right hon. Member for Westmorland and Lonsdale, who represents a rural constituency, will appreciate that. Motor cycles and mopeds enable young people to enjoy social facilities and to undertake journeys to places of further education and training.

I have received a petition from Mr. Victor Thomas of the Old Manse, Stove, Sandwich, Shetland and some of his friends and neighbours. It emphasises that the motor cycle is an environmentally friendly vehicle and is a necessity to many. In most instances a motor cycle uses less fuel than a motor car.

The Minister sought to give an assurance in Committee that the Government were not seeking to penalise the honest motor cyclist by raising the cost of VED to cover the loss of revenue because one third of motor cyclists do no pay VED, but one cannot help feeling that that is precisely what the Government are doing. The hon. Member for Wrexham (Dr. Marek) read out correspondence that seemed to give that impression. He read out correspondence in Committee in which a Treasury spokesman was quoted as saying that it was a measure of inflation and that the higher rate would recompense the many evasions in the form of unpaid licences. If that is the Government's approach—a hidden agenda that means that those who are honest are having to bear the burden of subsidising those who are dishonest—their weak case is undermined.

The right hon. Member for Westmorland and Lonsdale protested against such a principle being incorporated in our taxation. I have no doubt that many people will welcome his support for local authorities that find that they have to place an added poll tax burden on many payers because of the non-payment of others.

Two months have passed since the increases in VED for motor cyclists were discussed in Committee. I hope that the Minister has been made well aware of the strong feelings of motor cyclists. They have been singled out, as it were, for increases in VED. In percentage terms, the increases will be punitive. I hope that the Minister has had a chance to reconsider her position.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I, too, have received many letters from constituents about the unfairness with which the Government have levied an extra tax on motor cyclists.

Motor cyclists attract a good deal of prejudice because sometimes their machines are not sensibly used. The exhaust systems of some machines are not properly fitted and are ineffective, and we know that motor cycles with defective silencers are ridden late at night. To criticise motor cyclists on that basis, however, is to criticise at one fell swoop all the keen motor cyclists who behave properly, who keep their cycles well maintained, who take pleasure in their use and who in many instances find them to be a necessity.

The Government's deregulation of bus services—not only in rural areas—has meant that a service can no longer be provided if a profit cannot be made. No bus company will be willing to tender if it is impossible to make a profit, and a passenger transport authority is not permitted to provide a subsidy for a service. There is therefore a greater emphasis on personal transport, and the cheapest form of that transport is a motor cycle or moped.

The Government are militating against its use. It has been suggested that an increase in the licence fee for a motor cycle will act as a deterrent and will reduce the high rate of accidents, but that is not the correct approach. If that were the Government's attitude, I am sure that they would have increased it to try to obtain some shadow of virtue from a situation which has very little virtue attached to it.

If the Government are concerned—as we all are—about the rate of accidents involving motor cycles, other measures are required. They include better training, although a fairly comprehensive training scheme has been introduced in the past few years; a more comprehensive motor cycle test involving details of mechanical efficiency if lack of such knowledge is a contributory factor to accidents; and more courtesy from the other vehicles that we have discussed—the HGVs—which, by virtue of their size, are sometimes involved in accidents with motor cyclists because of the comparatively diminutive size of the latter. Those factors must be tackled separately. The increase in vehicle excise duty should not be used as an excuse to deter people who wish to take up motor cycling.

Hundreds of thousands of motor cyclists are sensible and careful; they operate their machines well and find them of great use and importance in gaining access to work and leisure activities. We must take those people into account, especially when they use British motor cycles—and not, as I suspect that the right hon. Member for Westmorland and Lonsdale does, imported BMWs—and when they take a specific interest in maintaining the vestiges of what was once, I suppose, the strongest and most powerful motor cycle manufacturing industry in the world, although, along with much other manufacturing industry, it has, alas, been reduced to a shred of its former glory. Such people have our added support, but in general, whatever machines motor cyclists ride, they deserve a better deal from the Government. I hope that, even at this late stage, the Minister will try to wrest some justice from an unjust decision.

Photo of Mrs Gillian Shephard Mrs Gillian Shephard Minister of State (HM Treasury)

It is interesting and perhaps rewarding to see that at this time of the morning the House can become emotional about this issue. I shall make three main points.

First, I fully accept that, although one third of motor cyclists evade paying vehicle excise duty, that means that two thirds pay it. The vast majority of motor cyclists are responsible, careful and, in view of this debate, very enthusiastic drivers. However, much mention has been made of motor cyclists receiving a raw deal, and swingeing and unfair increases of 50 per cent. have been bandied about. We are in fact talking about increases of £5 a year or £10 a year. They are not inconsiderable sums, but, balanced out over the weeks, they represent 10p or 20p a week which is less than the cost of a packet of crisps. Other people might more easily be able to equate that figure to fractions of the cost of a pint of beer or of a packet of cigarettes. I do not accept that such figures represent swingeing increases that cannot be met.

Secondly, part of our purpose was to restore the balance between cars and motor cycles by raising the VED by a modest amount to bring the two taxes more into line.

Thirdly, part of our purpose was to increase the VED paid by motor cyclists because a result of a decision taken in 1985 to freeze VED has been to reduce the real value to such an extent that the evasion rate has increased unacceptably. As I said, the latest estimate is that one third of all users avoid paying tax, and the consequential loss of £9 million is not inconsiderable. Some hon. Members might applaud the solution of abolishing VED, but to do so would create considerable difficulties in maintaining a vehicle register and making effective insurance and MOT checks.

12.45 pm

I made it clear in Committee that it is not our intention to recoup from the honest motor cyclist the revenue lost through evasion, or to penalise the motor cyclist relative to the car driver. Motor cyclists still pay less tax than car drivers in proportion to their share of the cost of the road network.

It is argued that as motor cycles are generally more fuel-efficient than cars, and usually use unleaded petrol, we should encourage their use. My answer is that they already pay considerably less in fuel duty per mile travelled. I do not disagree with the claim that motor cycles cause less wear and tear on the roads than cars, which is why their VED is still, at most, half that of cars.

People choose to use either a motor cycle or a car for a host of reasons, of which the tax payable is only one. Comfort, capital cost, running costs, and safety all play their part in their decision.

We have tried to achieve a more neutral taxation regime as between the car and motor cycle, and it is now less weighted towards motor cycles than it was. The increase of £5, or £10 a year at most, is small. The fact that motor cycles cause less wear and tear on the roads is reflected by the low rates of VED that they still attract in comparison with cars. Motor cycles that are more fuel-efficient pay less in fuel duty per mile—and that is another incentive. The proposed increase is modest, and I hope that the House will accept it.

Photo of Dr John Marek Dr John Marek , Wrexham

The Minister said that the increase is designed to bring motor cycle tax more into line with that charged in respect of motor cars. As far as VED is concerned, the ratio has been fixed for five or six years, but the Government have now altered it, so that motor cycles will attract an increased ratio of road tax in comparison with motor cars.

The Minister justifies that change by saying that motor cycles use less fuel, so she is effectively taxing an environmentally friendly mode of transport. The new tax reflects the Government's anti-green policy, and it is extremely disappointing that they show no regret or contrition, and can offer no logical explanation for their action.

Amendment negatived.