Rates for light passenger or light goods vehicles, motorcycles etc

Finance (No. 2) Bill – in a Public Bill Committee at 6:00 pm on 5 January 2022.

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Question (this day) again proposed, That the clause stand part of the Bill.

Photo of Angela Eagle Angela Eagle Labour, Wallasey

I remind the Committee that with this we are discussing the following:

New clause 5—Vehicle taxes: effect on climate change goals—

“The Government must publish within 12 months of this Act coming into effect an assessment of the impact of sections 77 to 79 on the goal of tackling climate change and on the UK‘s plans to reach net zero by 2050.”

New clause 15—Review of VED revenue from light passenger or light goods vehicles, motorcycles etc in context of future demand for electric vehicles—

“(1) The Government must publish within twelve months of this Act coming into effect an assessment of the expected level of revenues of Vehicle Excise Duty from light passenger or light goods vehicles, motorcycles etc in future years in the context of the expected uptake of electric vehicles.

(2) The Review must also consider possible alternatives to Vehicle Excise Duty on these vehicles

Photo of Richard Holden Richard Holden Conservative, North West Durham

It is a pleasure to serve under your chairmanship, Dame Angela. I apologise to the hon. Member for Gordon, who has the honour of sharing with me a great first name; I could not quite hear the muffled mask comments. I apologise for that, Dame Angela.

I wanted to speak in support of clause 77, because a couple of years ago the Government tried to change some of the regulations in this area to start taxing motorhomes, which are produced in my constituency, as expensive cars rather than light goods vehicles. I am delighted that my hon. Friend the Minister is not proposing such a change today. I will just ask her whether she can assure me that no such changes are planned for the future, because the hundreds of employees at Erwin Hymer in my North West Durham constituency have really benefited from the reversal of that change. I just want to get that reassurance from her.

Photo of Helen Whately Helen Whately The Exchequer Secretary

I will just pick up on some of the points made by hon. Members. I am glad to hear that the Opposition will not be opposing the clause. The hon. Member for Erith and Thamesmead said that she wants us to talk publicly about the future of vehicle excise duty. Clearly, we are well aware of—there is no secret—the expected future revenues from vehicle excise duty and fuel duty. In fact, I outlined in my opening remarks on the clause some of the data in the public domain about that, including the modelling by the Office for Budget Responsibility and in the net zero review. I can assure the hon. Member that my right hon. Friend the Prime Minister, in “The Ten Point Plan for a Green Industrial Revolution”, set out the need for motoring taxes to keep pace with the transition to electric vehicles.

The hon. Member for Erith and Thamesmead also said that she wants us to do more on electric vehicles. We are already providing substantial support for the uptake of zero and low-emission vehicles—for instance, there is no vehicle excise duty for zero-emission cars and vans. There are significantly beneficial company car tax rates for low and zero-emission cars, compared with conventionally fuelled vehicles. In the spending review 2021, we confirmed an additional £620 million to support the transition to electric vehicles, on top of the £1.9 billion announced at the spending review 2020, to address some of the barriers to uptake, including by accelerating the roll-out of charging infrastructure and supporting targeted plug-in vehicle grants to reduce prices for consumers.

The hon. Member for Gordon talked about wanting more chalk on the board. I think that, as a country, we should be proud of the achievements that we have already made in reducing harmful emissions, as well as of our substantial ambitions to achieve net zero by 2050.

I appreciate the comments from my hon. Friend the Member for North West Durham and have very much noted the point that he made.

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

I thank the Minister for making the point about the Prime Minister’s 10-point plan and about the Treasury’s commitment to net zero. I welcome that, but I also want to point out that the Treasury’s own net zero review said that much of the current revenue from taxing fossil fuels is

“likely to be eroded during the transition to a net zero economy”.

That is the area on which the Treasury has been really silent. Does the Minister think it important that the Treasury should have a clear plan about how to address the issue? It needs to be able to maintain income and to incentivise the switch to electric vehicles. We need a balance, so will the Minister set out what the Government plan to do? We have not heard much about that aspect.

Photo of Helen Whately Helen Whately The Exchequer Secretary

I heard those points before; the hon. Lady just reiterated them. I addressed those points in my comments just now as well as in my opening remarks. I could argue that here in Committee is not necessarily the place to have a substantial debate about the future of motoring taxes, but, as I said, we have been quite open and several documents in the public domain set out the forecasts. We recognise the need for motoring taxes to keep pace with the transition to electric vehicles. I commend the clause to the Committee.

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

I am not trying to be difficult, but can the Minister outline what plans the Government have? We have not really discussed the details.

Photo of Helen Whately Helen Whately The Exchequer Secretary

I have nothing further to add.

Question put and agreed to.

Clause 77 accordingly ordered to stand part of the Bill.