Emissions and Vehicle Type Approval — [Steve McCabe in the Chair]

Part of the debate – in Westminster Hall at 1:30 pm on 20th April 2017.

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Photo of Louise Ellman Louise Ellman Chair, Transport Committee, Chair, Transport Committee 1:30 pm, 20th April 2017

I certainly do. Indeed, I will refer to compensation later, because it relates to the taxpayer, and the Government, as well as to individuals who had purchased vehicles. The hon. Gentleman makes an important point.

We have continued to pursue this issue both as regards VW’s culpability for deception and in order to seek fair treatment of its customers and, indeed, the taxpayer. Let us look at what happened. Volkswagen’s response to the uncovering of the scandal in the UK has been pitiful. I regret that the Department for Transport has so far been unable to convert its strong words condemning VW’s behaviour into action that delivers concrete benefits for customers and the public, including fair compensation for both.

When Mr Willis first gave evidence to us, and when he came in January 2016, he told us that Volkswagen was committed to uncovering what had happened and making sure it never happened again, and the company apologised for its action. Indeed, if I recall, I do not think that Mr Willis and the company stopped apologising for what it had done for much of the session. We were told that it had hired the law firm Jones Day to investigate and produce a report that would be made public. We were told that the investigation involved 450 people looking through the equivalent of 50 million books. Great importance was attached to that; indeed, Mr Willis told us that he declined to answer a number of our questions because the issues would be dealt with in the Jones Day report that was to be made public and that we would clearly then have access to.

When we questioned the same Mr Willis in Committee two months ago we heard an entirely different story. He assured us that the Jones Day findings were contained in the statement of facts published by the United States Department of Justice as part of its deal with Volkswagen —a document that is 29 pages long—and told us that no other Jones Day findings would be published at all. He implied that a report might not even exist; it might just be this statement of facts—29 pages and not to be published. It stretches credulity that the findings of such an extensive investigation can be summarised in 29 pages. The statement of facts produced for the US Justice Department focuses on events in the USA, and Volkswagen itself repeatedly stated that the events in Europe are entirely different.

We pursued Mr Willis further to seek clarification of a number of points. One was that he appeared to speak in direct contradiction to the evidence given to us by the Minister, who followed him in the evidence session. We received a written response from Mr Willis. That response was not to my or the Committee’s satisfaction; it did not clarify the issue. I have therefore written, on the Committee’s behalf, to Hans Dieter Pötsch, chairman of VW’s supervisory board, seeking further information and, I hope, clarification of where the truth lies.

After so much effort, Volkswagen’s refusal to release in full the findings of the report that we were told so clearly would be published is deeply suspicious. I wonder what the company has to hide and why it is doing this. Mr Willis had told us at an earlier point that it was “implausible” that a senior Volkswagen employee would have known about the defeat devices; indeed, we were told that the scandal originated with a few rogue engineers. Clearly, that view is not shared by the American and German authorities, which are actively investigating several senior VW employees. Oliver Schmidt, who gave evidence to our Committee last year, is among those now being investigated in the States—a situation that hardly inspires confidence.

If VW’s position is that the scandal was caused by a few rogue engineers, it must release the full Jones Day findings to prove that contention. If VW refuses to do so, I ask the Department to act. I recognise that the Department has asked for the Jones Day report, but as far as I am aware, it has not been produced. Will the Minister update us on his efforts to secure the full Jones Day findings and place them in the public domain? Also, what discussions has he held with his American counterparts about the possibility of sharing the information already given to the US judicial system?

Compensation for UK customers is a critical issue. Mr Willis was full of apologies on the company’s behalf when he first gave evidence in 2015, but since then, his tune has changed dramatically. In fact, it is now VW’s position, as Mr Willis stated to us in Committee a short time ago, that the company has done nothing wrong in the UK or the rest of Europe and that therefore no compensation is due.

That is treating the UK with contempt. I remind hon. Members of the position on compensation in other countries. In the US, Volkswagen has agreed to provide each owner with between $5,000 and $10,000, while a deal agreed in Canada will give owners between $4,000 and $6,000 US. Here, they will get nothing at all. Why has no action been taken by the Department for Transport, the Serious Fraud Office or the Competition and Markets Authority? I have asked that question in the past and been told that the issues were being considered, but as far as I am aware, no action has been taken; I hope that the Minister can give me the latest information.

A few moments ago, Andrew Selous raised the issue of compensation. Can the Minister update us on whether he has secured the additional £1 million that he demanded from Volkswagen? That is one of the issues over which we are in dispute with Mr Willis: the Minister told us that the company had not given the Department what it asked for, but Mr Willis appeared to tell us that it had. We are still trying to clarify that issue through correspondence, so if the Minister could help us on it when he replies, it would assist us very much.

I would also be grateful for an update on European Commission proceedings. The officials who appeared before the Committee in February spoke of an ongoing dialogue. What has that delivered, and what action will be taken? I am aware that the Commission proposes to take action against the UK Government for failing to act in relation to its responsibilities to enforce appropriate standards; it would be helpful to know the current position.

I will briefly address the technical measures implemented by Volkswagen in the wake of the emissions scandal. Again, Mr Willis recently told the Transport Committee that the fix had no impact on real-world emissions, and we were told that nothing was wrong. He was asked why, if nothing was wrong, the vehicles were being fixed, and we were told that the sole reason was to ease customers’ minds about how vehicles had got through the testing programme—the company is spending money on so-called fixing, but the company did nothing wrong and is doing it only to ease customers’ minds. I find that completely implausible. That cannot be the situation. We are also told that the technical measure had no impact on vehicles’ performance. I said to Mr Willis that if that was correct, surely he would have provided a warranty to cover the technical measure. I know that the Department has been seeking that warranty, but as far as I am aware, the company has done nothing.

I receive numerous communications almost daily from members of the public who report that their vehicle has been impaired since they had the fix applied. A closed Facebook group bringing together people who have been affected now has 1,400 members. Many have told me about the stress of suddenly finding that their vehicle was not working after the measure was applied. They relayed instances of the vehicle going into limp mode, or not going above a certain speed; in one case, it happened on a motorway, and other cars had to swerve to avoid a collision. In many instances, when customers raised concerns, they were told that it was a coincidence and asked to pay hundreds or even thousands of pounds for the fault created by the so-called fix to be investigated and put right.

Mr Willis told the Committee that he would give us an assurance on that matter and said that it could not be the case, but that the company would investigate free of charge all reasonable concerns raised by VW owners after the fix was applied. I suspect that Mr Willis’s definition of “reasonable” might differ from his customers’. Will the Department monitor what happens in that regard?

The scandal was not only a case of a rogue company; it could never have happened if the regulatory structures for vehicle type approval had been adequate. We must remember that the cheating was uncovered not by a regulator, but by a US non-governmental organisation, the International Council on Clean Transportation. European Community whole vehicle type approval is the process ensuring that vehicles meet the relevant environmental, safety and security standards. An approval authority—in the UK, the Vehicle Certification Agency—certifies that the vehicles meet the relevant standards. Approval authorities work on the basis of information collected by technical services organisations that witness the test and collate the information.

As well as being an approval authority, the VCA provides technical services to manufacturers. The Committee concluded that that constitutes marking one’s own homework; it is a clear conflict of interests. In addition, the VCA competes with other European approval and technical services agencies across Europe for business from car manufacturers. The incentive to be unduly lenient on car manufacturers is clear. That conflict of interest works against consumers and ultimately damages public health.

In their response to our report, the Minister told us of various measures being considered to manage potential conflicts of interest, including more independent assurance and audit and increased training for emissions engineers. We were also told that an end-to-end review of the technical service process was taking place. Can the Minister update us on the outcome of that review? What plans have been put in place for type approval as part of the Brexit negotiations? We currently use European standards; what will happen after Brexit? Is that part of the negotiations? Is it expected that the UK and EU countries will continue to accept vehicles type approved by one another? How will it work?

Our report emphasised the importance of in-service surveillance, or the process of spot-checking vehicles on the road to ensure that their pollution performance is still within an acceptable range. The Minister told us that a new, robust system of in-service surveillance was being implemented, which is to be welcomed, but in the first instance, that surveillance will focus on new vehicles entering the market. Can the Minister update us on the performance of the new market surveillance unit? What progress has been made in ensuring that that unit operates beyond new vehicles?

A gap exists between real-world emissions and those emitted in the laboratory; it is the result of developments in technology and flexibilities allowed in the test procedure. Can the Minister update us on the progress of setting the final requirements for Euro standards? Is he satisfied that they are sufficiently robust? The Department told us that it had written to the European Commission to press for further improvements. What has the response been?

A year and a half after the emissions scandal came to light, Volkswagen has still not been held to account. Instead of providing the information, compensation and warranties that have reasonably been requested of it, Volkswagen maintains that it has done nothing wrong. Surely it is time that the Minister committed to using the powers available to him.

The scandal goes much further than Volkswagen. In the course of our inquiry, it became abundantly clear that the type approval system and emissions standards were not fit for purpose. Their support for manufacturers at the expense of ordinary people, consumers and public health was well known, but nothing was done about it before the emissions scandal erupted. I ask the Minister today for clear information on how the situation has improved.

The Volkswagen emissions scandal was shocking, but it has shone a light on deficiencies in the testing process. UK consumers are being treated with contempt. What action is the Minister taking to correct this outrageous situation?