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

With this it will be convenient to consider the following:

Clauses 68 and 69 stand part.

Clause 71 stand part.

Government new clause 1—Rate of vehicle excise duty for haulage vehicles other than showman’s vehicles.

New clause 7—Statements on HGV Vehicle Excise Duty (VED) and HGV Road User Levy—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to Parliament about the increase to HGV VED introduced by sections 67 to 69 and increase to the HGV Road User Levy under section 71 of this Act.

(2) The statement under subsection (1) must include details of the impact on—

(a) the haulage sector,

(b) the decarbonisation of the logistics industry, and

(c) the UK economy.”

This new clause requires the Chancellor to make a statement about the impact of increasing Vehicle Excise Duty on HGVs.

Clauses 67, 68 and 69 make changes to upgrade VED rates for heavy goods vehicles in line with the retail prices index from 1 April. They also make changes to the VED rates for rigid goods vehicles without trailers, rigid goods vehicles with trailers and vehicles with exceptional loads. Clause 71 uprates the heavy goods vehicle levy in line with the RPI from 1 April.

The registered keeper of a vehicle is responsible for paying VED. The rates depend on the vehicle’s revenue weight, axle configuration and Euro emission status. Furthermore, the HGV levy, which was introduced in August 2023 and frozen at the autumn statement in 2023, is payable for both UK and foreign HGVs using UK roads. Similarly to VED, the levy rates depend on the vehicle’s weight and Euro emissions status. Clauses 67, 68 and 69 will set the VED rates for heavy goods vehicles for ’25-26, increasing them in line with the RPI. For example, the annual VED liability of the most popular HGV—tax class TC01, VED band E1—will increase by £18, from £560 to £578. Hauliers will not see a real-terms increase in VED costs, as rates have increased to keep pace with inflation only.

The changes made by clause 71 will increase the annual rates for domestic and foreign HGVs using UK roads and the associated daily, weekly, monthly and six-monthly rates in line with the RPI. For example, the annual rate for the most common type of UK HGV will increase by £21, from £576 to £597. As part of that uprating, the £9 and £10 caps on the daily rates paid by foreign HGVs, which are a consequence of retained EU law and are now obsolete, will be removed.

Government new clause 1 corrects an omission in the Bill of an uplift to the general haulage rate announced at the autumn Budget. We are inserting a new clause to ensure that the legislation operates as intended by updating the currently recorded rate for the general haulage tax class—tax class 55—from £350 to £365 in line with the RPI.

New clause 7 seeks to require the Chancellor to make a statement about the impact of increasing VED on HGVs. The new clause is not necessary, as the Government have already published the tax information and impact note that sets out all the expected impacts of the measure. It makes clear that hauliers will not see a real-terms increase in their VED or HGV levy liabilities, as rates are being increased in line with the RPI to keep pace with inflation only. The measure is not expected to have any significant macroeconomic impacts.

Increasing both VED rates for HGVs and the HGV levy by the RPI for ’25-26 will ensure that VED receipts are maintained in real terms and that hauliers continue to make a fair contribution to the public finances in the wider context of a Budget in which hauliers have benefited from a further freeze in fuel duty, worth nearly £1,100 a year to the average HGV. I therefore commend clauses 67, 68, 69 and 71 as well as Government new clause 1 to the Committee, and I urge the Committee to reject new clause 7.

As the Minister says, clauses 67, 68 and 69 provide for changes to certain rates of VED, and clause 71 increases the rates for the HGV road user levy. We will not oppose the provisions, but we have some concerns and points to make about the timing of the changes and the lack of support for impacted industries, such as the logistics sector. As well as discussing those clauses, I will consider new clause 7, which is in my name and that of my hon. Friend the Member for Grantham and Bourne.

Heavy goods vehicle VED is a complex picture, with more than 80 different rates. The characteristics of HGVs determine their rates, and the increases to HGV VED represent the first rise since 2014. Heavy goods vehicles may also be liable for the additional HGV road user levy, which was introduced in 2014 and is a charge for using the road network, ranging from £150 to £749 a year. The levy was suspended in August 2020, demonstrating the previous Government’s support for the haulage sector during the pandemic. A reformed levy was introduced in 2023 and was frozen at the autumn statement in 2023. The new levy divides qualifying HGVs into six levy bands rather than the previous 22, which is a welcome simplification.

The Government’s decision to uprate HGV VED and the road user levy comes at a challenging time for businesses. I make no apology for referring once again to the increases in national insurance and the impact that that is having on the sector. Logistics UK estimates that that will cost its sector £1.2 billion alone, and has warned that it could lead to a reduction of 29,000 jobs. Does the Minister recognise figures from Logistics UK that the increases in VED and road user levy will cost the sector £172 million and £178 million respectively? When taken in the context of other tax rises in the Budget, what impact does the Minister think the increases will have on logistics businesses’ ability to invest in their growth and decarbonisation?

It is because of the issues raised with us by the logistics sector that we have tabled new clause 7, which would require the Chancellor, within six months of the Bill being passed, to make a statement about the impact of the changes. That statement must also consider the effect of the increases on the haulage sector, decarbonisation of the logistics sector and the UK economy. Industry has warned that these increases could impact its ability to invest, but will mainly lead to job losses. The Road Haulage Association has called for a delay, as now is not the time, in its words, to “clobber” UK hauliers with extra costs. We would welcome the Chancellor’s commissioning such a review. The Minister says that the tax information and impact note provides a forecast for what might happen. Indeed it does, but the point of this is that it is an after-the-event review, which should be an important part of any policymaking, particularly in the Treasury, to see what the real-world impact was and how accurate those forecasts were.

Logistics UK has also pointed to lack of progress in the Budget on transport and energy infrastructure investment. What assurances can the Minister give the sector to provide it with the confidence to invest? Although I know industry has welcomed the plug-in van grant being maintained, can the Minister provide an update on the plug-in truck grant? As I have set out, we will not oppose these measures, but we do think the new clause would add to the Bill.

I thank the hon. Gentleman for confirming that the Opposition will support these clauses. He asked about the wider challenges faced by the road haulage industry. Road haulage is key to the UK’s economy, and the Government acknowledge the pressures the industry has faced in recent years. As a result of the changes in these clauses, hauliers will not see a real-terms increase in their VED or HGV levy liabilities, as rates will be increased in line with the RPI to keep pace with inflation only.

Of course, revenue from HGV VED and the HGV levy helps to ensure that we can continue to fund the vital public services and infrastructure that people across the UK expect, so it is right that the taxes are regularly reviewed. In the wider context, hauliers will also benefit from the further freeze in fuel duty for 2025-26 that the Chancellor announced in the Budget, which is worth nearly £1,100 a year for the average heavy goods vehicle.

Question put and agreed to.

Clause 67 accordingly ordered to stand part of the Bill.

Clauses 68 and 69 ordered to stand part of the Bill.