Clause 100 - Rates for light passenger of light goods vehicles, motorcycles etc

Finance (No.2) Bill – in a Public Bill Committee at 9:25 am on 27th April 2021.

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

Photo of Angela Eagle Angela Eagle Labour, Wallasey

With this it will be convenient to discuss the following:

Clauses 101 and 102 stand part.

Photo of Kemi Badenoch Kemi Badenoch The Exchequer Secretary, Minister for Equalities

Clauses 100 to 102 make changes to vehicle excise duty and the heavy goods vehicle road user levy. Clauses 100 and 101 relate specifically to vehicle excise duty, which is paid on vehicle ownership. The Government have uprated VED, as it is known, for cars, vans and motorcycles in line with inflation every year since 2010, which means that rates have remained unchanged in real terms during that time.

Since April 2017, cars with a list price exceeding £40,000 pay an additional supplement as well as paying the standard rate of VED, which means those who can afford the most expensive cars pay more than the standard rate imposed on other drivers. The expensive car supplement is paid in addition to the standard rate for a period of five years from the start of the second vehicle licence, but for a period of no longer than six years from when the vehicle was first registered. As a vehicle can change hands or be declared off-road through a statutory off-road notification, or SORN, the vehicle licence end date and the expensive car supplement end date will not always align.

Clause 102 relates to the HGV road user levy. That is an annual charge paid by UK hauliers alongside their VED, as well as a daily, weekly or monthly charge for HGVs from outside the UK accessing the UK road network. The levy was introduced in 2014 to ensure that all HGVs, which are heavy and can damage the road surface, contribute to the public finances and to reducing the wear and tear of the road network. In the light of the impacts of covid-19, the Government decided to suspend the levy last August for 12 months to support the haulage sector by reducing their costs.

Clause 100 makes changes to uprate VED rates for cars, vans and motorcycles in line with the retail prices index from 1 April 2021, meaning VED liabilities will not increase in real terms for the 11th successive year. The standard rate of VED for cars registered after 1 April 2017 will increase by £5 only. The flat rate for vans will increase by £10 and motorcyclists will see an increase in rates of no more than £3.

Clause 101 makes changes to ensure that registered keepers of cars with a list price of over £40,000 are issued with the correct annual VED refund, if they sell their vehicle or make a statutory off-road notification in the last year of the vehicle being liable to pay the expensive car supplement. Clause 101 will amend VED legislation, so that the rebate amount is equal to the number of months remaining at the higher rate of duty under the expensive car supplement and the number of months remaining at the standard rate of VED. This change in law will apply from 1 April 2021. Individuals and businesses will not need to do anything differently from what they do now, and this measure will not affect the amount of VED they pay.

Clause 102 will make changes to suspend the HGV road user levy for a further period of 12 months from 1 August 2021, to support the haulage industry and help the covid-19 pandemic recovery efforts. That means that UK-registered keepers of HGVs will save between £76.50 and £1,200 per vehicle again, as they will not have to pay the HGV road user levy when they renew their vehicle licence. Non-UK-based hauliers will also not need to pay the levy during this period.

In conclusion, the changes outlined in clause 100 will ensure that the Government continue to support motorists with the cost of living, while ensuring they continue to make a fair contribution to the public finances. The changes outlined in clause 101 will ensure that VED refunds are issued as intended when the expensive car supplement was introduced in 2017. Finally, the haulage sector supports many other industries, so the changes outlined in clause 102 to ease their financial burden temporarily will support them and help the economy to recover from the impacts of covid-19.

Photo of Abena Oppong-Asare Abena Oppong-Asare Shadow Exchequer Secretary (Treasury)

I will briefly respond to each clause in the group. Clause 100 would increase the rate of vehicle excise duty for a variety of vehicles, as mentioned by the Minister. We support the Government’s general approach to incentivise the use of greener and more environmentally friendly vehicles. We do, however, believe that we need to see more action from the Government on increasing the availability and affordability of green and electric vehicles.

The Society of Motor Manufacturers and Traders described the 2021 Budget as falling

“short of the support needed to transform the industry and market to the net zero future to which both the Government and industry aspires.”

If UK car manufacturing is to survive the covid crisis and thrive as part of a net zero future, it needs the Government to develop a long-term strategy to support the sector. Labour urges the Government to do just that by implementing a strategy that accelerates the electrification process in a manner that provides a lifeline to the industry, stimulates investment and ensures the future of the automotive sector in the UK for the communities that rely on it. We have called on the Government to create new gigafactories by 2025, make electric vehicle ownership affordable by offering interest-free loans for those on low and middle incomes and accelerate the rollout of charging points, particularly in the areas that have lagged behind. That is the support the automotive industry needs.

Clause 101 is a simple change to allow for the rebate of the additional rate of vehicle excise duty where the vehicle was sold or declared off road, and we support that. As the Minister said, clause 102 extends the suspension of the HGV road user levy for a further year. We support the measures as the logistics and haulage sector continues to recover from the pandemic, as the Minister has just mentioned, and to ensure that vital supply chains continue to function.

I am concerned that the Minister has not mentioned the serious concerns that haulage firms have about the Brexit deal. Specialist haulage firms, such as concert trucks that service UK music tours, have been left in an extremely difficult position by the Government’s Brexit deal, as it allows for three stops in total across the entire European Union before they must return to the UK. That will have serious knock-on effects on other businesses that rely on the haulage firms to transport their equipment across the continent. Other haulage companies have felt the knock-on effect of the Brexit deal too, including having to prepare last minute for changes in customs requirements and a lack of trained staff at customs. While we welcome the extended suspension of the HGV levy, I urge the Government to do more to support the sector.

Photo of Kemi Badenoch Kemi Badenoch The Exchequer Secretary, Minister for Equalities

The Government are doing a lot to support the haulage sector. We have provided unprecedented support for businesses and individuals throughout the national restrictions, including the coronavirus job retention scheme and a number of access-to-finance schemes. We have decided to temporarily maintain support for the haulage industry as it plays a critical role in the functioning of our economy and supports many other industries, including our supermarkets and shops. Suspending the levy for a further 12 months is a significant measure to help not just pandemic recovery efforts, but also the industry as a whole. As the hon. Lady made reference to the point by the Society of Motor Manufacturers and Traders, that is something that the haulage sector specifically has received, but not every other industry has.

On the question of the impact of Brexit negotiations, I am afraid that is not a matter for the Treasury. I am sure officials will note her concerns and pass them on to the relevant Department. On the question of why the Government are not doing enough to incentivise the uptake of zero-emission vehicles, we use the tax system to encourage the uptake of cars with low carbon dioxide emissions to help us to meet our legally binding climate change target. Zero-emission cars and electric vans are liable to pay no VED. Furthermore, users of zero and ultra-low emission cars have beneficial company car tax rates in comparison with conventionally fuelled vehicles. From April 2021, the Government are applying a nil rate of tax to zero-emission vans within the van benefit charge. We believe that we are doing quite a lot to incentivise the uptake of zero-emission vehicles and electric cars.

Photo of Abena Oppong-Asare Abena Oppong-Asare Shadow Exchequer Secretary (Treasury)

I thank the Minister for her comments. I want to go back to the point I raised about the haulage firms and the Brexit deal. I am concerned about how the Minister mentions that Brexit concerns are not a matter for the Treasury, because they are, particularly as clause 102 extends the suspension of the HGV road user levy for a further year. The Government need to look at the impact of that on haulage firms, in particular specialist haulage firms such as concert trucks that service UK music tours. They have been left in an extremely difficult position. The Government need to take that seriously, so I would like the Minister to take that forward and to ensure that such individuals get support.

Question put and agreed to.

Clause 100 accordingly ordered to stand part of the Bill.

Clauses 101 and 102 ordered to stand part of the Bill.