Budget Resolutions - Income Tax (Charge)

Part of the debate – in the House of Commons at 3:30 pm on 31st October 2018.

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Photo of Adrian Bailey Adrian Bailey Labour/Co-operative, West Bromwich West 3:30 pm, 31st October 2018

As a west midlands Member of Parliament for a constituency that has a long manufacturing tradition but is still heavily dependent on the success of our motor industry in general and Jaguar Land Rover in particular, I want to add to the thrust of the questions put by my hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for Coventry South (Mr Cunningham) and ask about the impact of taxation in the environmental programme in our motor industry.

I agree with the Minister. Our motor industry is a world leader and internationally recognised. It is at the cutting edge of research and development on current models and leading the way in developing new generations of electric and autonomous vehicles. It employs more than 1 million people, either directly or in the supply chain and related industries, and its exports amount to 12% of our total goods exports.

Notwithstanding this contribution, our motor industry is facing problems that unfortunately were not tackled in the Budget. Investment has dropped by a third in the past year, while new car sales have dropped by 20%—a reduction driven by a catastrophic drop of 40% in sales of diesel cars. This has particularly affected Jaguar Land Rover in the west midlands. Given this scenario, I would reasonably have expected a Chancellor of the Exchequer to consider measures to help an industry that is so important but in such a desperate situation.

Part of the problem is due to the chilling effect of Brexit, and I recognise that there is a limit to what the Chancellor can do about that, but the fact remains that consumer choice of new cars is heavily influenced by company car taxes and vehicle excise duty, and the current regime is both damaging to the industry and bad for the environment. The current messaging around diesel fails to recognise that new diesel engines have no more NOx emissions than petrol-driven cars and produce 20% less carbon dioxide. Perversely, the current move to petrol-driven cars is actually increasing carbon dioxide emissions.

This policy is being driven by our commitment to—I am sorry for the jargon—the new worldwide harmonised light vehicle test procedure. It is right that we have committed to this new testing procedure, which tries to demonstrate the real road experience of vehicle emissions, rather than just the laboratory testing, but it will have an unintended consequence, in that there will be an increase in the level of emissions demonstrated as a result of this taxation, and potentially millions of consumers will be driven into higher vehicle excise duty bands as a result. It will mean that the Government’s much-heralded cuts in income tax will be more than outweighed by their increase in vehicle excise duty.

The perverse outcome of the Government’s policy is, as Dame Caroline Spelman pointed out in her question to the Prime Minister last week, that people are holding on to their current, more heavily polluting diesel cars, rather than buying cleaner, new models. The Government’s policy is damaging to our motor industry, to our environment and to the consumer, and the Government have missed this opportunity do something about it. I urge the Minister, who I think understands the issue, and is committed to keeping our motor industry in the forefront of international development, to impress on the Treasury that if we have a new Budget next year—and even if we do not—action must be taken urgently to remedy this situation and save our motor industry.