Vehicle Excise Duty

Oral Answers to Questions — Treasury – in the House of Commons at 10:30 am on 5 June 2008.

Alert me about debates like this

Photo of Nadine Dorries Nadine Dorries Conservative, Mid Bedfordshire 10:30, 5 June 2008

If he will reconsider his proposals on vehicle excise duty changes announced in Budget 2008.

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

The vehicle excise duty reforms announced in the Budget are due to be legislated in the 2009 Finance Bill. The Chancellor keeps all taxation policy under review. Tackling climate change is the most serious environmental challenge that we face, and road transport contributes about a quarter of the total UK carbon dioxide emissions. As part of a package of measures to reduce emissions from transport, the VED reforms will send strong signals to motorists to purchase more fuel efficient new and second-hand cars.

Photo of Nadine Dorries Nadine Dorries Conservative, Mid Bedfordshire

This morning, all over Britain, many British mums have finished the school run. During the day, they will probably pop into Tesco, where they will have to leave on the shelves treats for their children that they could have afforded a few months ago. [ Interruption. ] Well, that is how it is. Those mums will be unaware that the road tax on the family second-hand car in the car park is about to increase dramatically. How much misery does the Chancellor want to heap on to the shoulders of struggling British mothers?

J

If the treats the chidren have to forego are sweets, chocolate, cake, biscuits etc, then that can only be a good thing. Surely as a former nurse, Mrs Dorries should realise that?

Joan

Submitted by Joan Reeves

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

Many of the mums about whom the hon. Lady seems to be so concerned have benefited greatly from tax credits, which the Conservatives would abolish.

Photo of Ian Lucas Ian Lucas PPS (Mr Liam Byrne, Minister of State), Home Office, PPS (Mr Liam Byrne, Minister of State), HM Treasury

In my hon. Friend's consideration of the Tory fuel escalator, will she look again at the excellent proposal by my constituent, Mr. Peter Bernie, to end the cap at the top end of the vehicle excise duty rates, so that the most polluting vehicles pay the most vehicle excise duty?

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

I note that the quality of life policy group report published by the Conservative party last September suggested introducing a purchase tax on new cars of up to 10 per cent. of sale value, which would be far more than the £950 that we are proposing.

Photo of David Heath David Heath Liberal Democrat, Somerton and Frome

In a rural constituency such as mine, there are a lot of working vehicles, many of which are older vehicles, which will be caught by these VED changes. There is a very strong environmental argument for doing something about VED on new cars, but what on earth is the environmental argument for doing that to cars that have already been purchased?

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

Agricultural vehicles are exempt, and there is, of course, the red diesel concession for those who use vehicles for farming. We understand and are considering the issues for those who live in rural areas.

Photo of Brian Jenkins Brian Jenkins Labour, Tamworth

Will my hon. Friend consider holding the tax band for the present owner until the vehicle is sold on, which would inform the new owner of the tax that they will have to pay?

t

Gordon Brown is really putting the nail in his coffin. Unless he has a radical rethink he will be losing to the...

Submitted by tulsi mitra Continue reading

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

Changes to VED have always been applied in such a way. There is nothing new or unusual about applying new car tax rates to existing cars. Indeed, the Conservative party put up VED rates 13 times when it was last in power, and those increases applied to all cars, not just to some.

A

Yet again, the best a Labour minister can come with is look at the history books. Who cares what happened under the last Conservative goverment, that was over 11 years ago.

Submitted by Andrew James

Photo of Patrick Cormack Patrick Cormack Chair, Northern Ireland Affairs Committee, Chair, Northern Ireland Affairs Committee

Is the Minister aware that this is the most intellectually threadbare argument that the House has heard for a long time? How can she conceivably justify such retrospective taxation, and how does that show any understanding of the plight of the rural community?

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

It is not retrospective legislation. Will the hon. Gentleman explain to Labour Members why the quality of life policy group report, which Mr. Cameron welcomed and said would form part of the Conservative manifesto, suggested an even greater increase between the top and bottom bands based on CO2 emissions?

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

I appreciate that the Minister represents an urban constituency, but what thought has she given to livestock farmers in the hill country of the UK, who need a powerful 4x4 not only to transport livestock to cattle markets and elsewhere but to undertake their job in difficult terrain? Is it not unfair that those cash-strapped farmers face a huge increase in vehicle excise duty?

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

I hope that the market will develop so that such cars and vehicles produce lower emissions in the future than they do now. That is what these dynamic changes are intended to produce.

Photo of Justine Greening Justine Greening Shadow Minister (Treasury), Vice-Chair (Youth), Conservative Party

In a parliamentary answer that I received today, the Minister stated that

"of all households sampled with incomes less than £15,000, 41 per cent. had cars in current VED bands B or C."—[ Hansard, 4 June 2008; Vol. 476, c. 927W.]

Will the Minister confirm that that must mean that 59 per cent. of those households that earn less than £15,000 have bought new cars in higher bands than B and C, and will therefore pay more VED? In some cases, the increase will be getting on for £250, which is more than a week's take-home pay. How does the Minister expect those households to financially plan ahead when she will not even admit that this retrospective tax will hit them worst? Is it not time to drop this plan and listen to the— [ Interruption. ]

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

Of the poorest 20 per cent. in income terms, half do not own a car at all. Low-income households are far more likely to own a pre-2001 car, and such cars are unaffected by the changes.