Clause 16 - Vans registered on or after 1st march 2001: 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 Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

I wish to ask the Financial Secretary a couple of questions. Are there any vans on the market in the United Kingdom at the moment that would qualify under the clause? If there are, why are we saying that someone who purchases such a van before 1 March next year will never be able to qualify for reduced VED? Surely, anyone who is a pioneer and acquires a van that is environmentally friendly ought

to benefit from the reduction in VED. I should be grateful if the Financial Secretary would respond to that point.

Photo of Chris Grayling Chris Grayling Shadow Minister (Health)

I have a couple of quick points to make. I would be interested to know whether the Financial Secretary is considering the extension of the clause in future Budgets. I say that because there is quite an extensive range of emission levels provision for most cars, and we are now seeing significant changes in the van market. As part of a recent Select Committee visit to Japan, I visited the Japanese Electronic Vehicles Association. It had on display the first of what I believe will be quite a substantial market for a new generation of low-emission vehicles that are not yet freely available in this country.

As time goes by, we shall see more alternatives on the market, and more contradictions between relatively high-emission and relatively low-emission vehicles. Although the Government are putting forward a framework for cars that offers a significant range of incentives to purchase different sorts of vehicles, the same is not yet true of the van market. I should be grateful if the Financial Secretary would confirm that the Government might consider adjusting the very simple band structure as the market develops to reflect the broader range of vehicles that will be available.

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

The purpose of the clause is to establish a new lower rate of vehicle excise duty for vans meeting the Euro IV emissions standard to which I referred earlier. That is designed to offer an incentive to manufactures and purchasers to market and buy brands that meet the higher emission standards that will come into effect between 2005 and 2007. The clause provides that, from 1 March 2003, all newly registered vehicles that meet the Euro IV emission standard will pay a lower rate of duty of £105.

The hon. Member for Christchurch asked why we could not introduce the change before March 2003 to benefit those at the vanguard of progress. [Interruption.] I am glad that the hon. Member for Arundel and South Downs (Mr. Flight) picked up on that—quick off the mark, as ever. I can understand his point, but, sadly, to be a pioneer is not always to reap the benefits that follow. The Driver and Vehicle Licensing Agency needs time to set up systems that capture information not currently held on the vehicle record, and it must come to an agreement with manufacturers and traders on how that can be done.

We are introducing the new rate as quickly as we practicably can. We do not currently capture information on the vehicle record of the Euro standard, and it is not easy to identify vehicles without it. However, we will be able to do that once the clause takes effect. I do not know exactly how many such vans, if any, are on our roads; there may be some.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Does my right hon. Friend agree that electric milk floats, of which there are thousands, will come under the category?

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

I do not know that they come under category Euro IV. They are no doubt worthy vehicles, and they already receive some benefits. I cannot see how the benefits could be extended to any Euro IV vehicles out there.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

One understands why it is not practical to give the rate now, as everything must be in place, but if, after March 2003, existing vehicles meet the requirements, it seems unreasonable that they should not qualify for the new rate when in place—that was the second part of the question of my hon. Friend the Member for Christchurch. As I understand the clause, those vehicles that had not qualified on first registration will not qualify for the concession. Once everything is in place, if a vehicle meets that requirement, will it qualify?

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

That is a perfectly legitimate question. I should like to know whether any technical obstacles would prevent such an extension. I shall examine the issue.

A few hybrid vans meet the Euro IV standard. We do not know the number as there is no means of identifying them exactly. I do not know whether milk floats will be among them; certainly, electrical vehicles are exempt from VED, and most milk floats are electrical. I hope that that explanation of the clause, and my willingness to consider finding a way around a technical hurdle that would not impose undue expense or burden on the Exchequer or fiscal authorities, will enable hon. Members to give the clause a fair wind.

Photo of Christopher Chope Christopher Chope Shadow Spokesperson (Transport)

I am grateful to the right hon. Gentleman. He says that he will consider whether vans that qualify but were registered before 1 March next year will subsequently qualify for the concession. I should be grateful if he would say whether he will report to Committee members in sufficient time to enable us to consider whether we should revert to the matter on Report.

The Financial Secretary will probably know from his own constituency correspondence that many people who had acquired cars that should have qualified for reduced duty under the measure introduced for low-emission cars registered after spring 2001, would never be able to claim the reduced duty because they had purchased their cars in the previous six months or so and registered them before 1 March 2001. Bearing in mind that experience, the frustration that was caused and, frankly, the inability of Ministers to satisfy constituents who were adversely affected, I should be grateful if the Financial Secretary would reconsider the matter. The burden could be put on the car or van owner to supply the relevant information to the DVLA. With the help of the car manufacturer, it should all be available. Surely, we must be able to come up with a system that allows people who own vans that qualify under the scheme to benefit from it after 1 March next year, even if they acquired their vans prior to that date. I hope that the Financial Secretary will report on that before the end of the Committee, so that we can consider whether to revert to it on Report.

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

I hear what the hon. Gentleman says and shall write to him and other Committee members. However, I do not want to hold out too much hope. If Ministers could not satisfy the concerns about a category of vehicles in the past, and they will not, it may well be that we shall not be able to satisfy concerns about this category of vehicles either. One must not add undue administrative or financial burden or still more complexity to the system. As I said in my opening remarks, to be a pioneer is in itself a satisfaction, and that may have to be enough. However, I shall explore the issue and write to hon. Members.

Question put and agreed to.

Clause 16 ordered to stand part of the Bill.