Clause 18 - Motorcycles (and motorcycle trade licences): rates of duty

Finance Bill – in a Public Bill Committee at 10:15 am on 16th May 2002.

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Question proposed, That the clause stand part of the Bill.

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury 10:30 am, 16th May 2002

The purpose of the clause is to reform the structure of vehicle excise duty for motorcycles better to reflect the benefits that motorcycles offer, particularly where they substitute for cars. It contains a new structure of four tax rates based on engine size, which reflects the outcome of a major public consultation. I am sure that there is not a member of the Committee who has not received correspondence in the course of the past year on that issue, which excited a great deal of attention, particularly in the specialist press.

At the time of last autumn's pre-Budget report, the Government published a consultation document on the objectives of the new motorcycle VED system and the structure that would best achieve them. The consultation document attracted more than 12,000 responses, and in creating the new structure set out in the clause we have listened to the respondents. Motorcycle groups have warmly welcomed the new VED structure. One of the main motorcycle publications, ''Motor Cycle Fleet News'', said:

''We'll buy you a pint Gordon.''

It is all heart, and no doubt the pint would be from a small brewer, although I do not want to excite the interest of Opposition Members on that issue.

On the basis of those responses, we are proposing a new structure of motorcycle VED that not only reflects changes to the structure of the motorcycle fleet, but seeks to encourage smaller motorcycles, which bring congestion and climate-change benefits when used in place of cars. Under the new structure, there will be four tax bands based on engine size rather than the existing three bands. For many motorcyclists, rates of duty will fall by as much as £35, reflecting the principle that vehicle taxation should reflect use and environmental impacts rather than ownership. In total, some 600,000 motorcyclists will pay less duty under the new system.

Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

I congratulate the Government on their enlightened approach, which is reflected in the clause. When I was the roads Minister many years ago, I was unable to persuade the powers that be that motorcycles should be treated in that way because the prevailing view at the heart of Government was that motorcycles were inherently dangerous, and therefore

anything that was done to encourage their use was bad for both road safety and the wider economy. Obviously, different views now prevail, and I should like to put on record the fact that when I was the roads Minister I had free rides on very powerful motorcycles, but was never able to deliver anything in return. I recognise that the clause is a move in the right direction, and I congratulate the Government.

Photo of Edward Davey Edward Davey Shadow Chief Secretary to the Treasury, Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Chief Secretary to the Treasury)

I rise to congratulate the Government on a long-overdue measure, which I am sure will be welcomed by the many motorcyclists across the country, particularly the 600,000 of them whom we are told will benefit.

I have a probing question for the Financial Secretary. Will he tell the Committee—I presume that this was because of the consultation—why the Government decided to base the structure of VED for motorcycles on engine size as opposed to CO2 emissions, which is the basis of the structure for motor vehicles?

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

I have served in Committees for many years, but I have never served in one in which there was such a warm and unqualified welcome from the Opposition for a clause.

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

It is funny that the hon. Member for Arundel and South Downs should say that, because from a sedentary position one of my hon. Friends said, ''I think that we should quit while we are ahead.'' I do not want to give the hon. Member for Epsom and Ewell any prospect of this particular ministerial team quitting. However, I warmly welcome the measure, because it shows a sometimes cynical wider world that, as the hon. Member for Christchurch said, the Government can have their mind changed by effective consultation.

The hon. Gentleman is right in identifying the resistance to this measure. As a result of effective consultation and the Government being prepared for a change not only of heart but of mind, we have reached our current position. Motorcycle VED is still based on engine size because of the results of the consultation, as the hon. Member for Kingston and Surbiton (Mr. Davey) said. The industry association said that until carbon dioxide data become available, engine size is the only satisfactory and practical basis on which to set motorcycle VED. That was the overwhelming view, and we made our decision as a result of that. I am grateful to the Committee for its commendation of the clause.

Question put and agreed to.

Clause 18 ordered to stand part of the Bill.