LIVEBLOG: Finance Bill (No.3) 2018 - Public Bill Committee 7th sitting

6 Dec 2018

MPs on the Finance (No.3) Bill public bill committee recommenced their clause by clause scrutiny of the Finance Bill at 11.30 am on Thursday 6 December, starting with clauses 57-58 on vehicle excise duty (VED). No Opposition amendments were successful.

You can read the amendments tabled for debate here.

Clauses and amendments still to be debated

Clause 57 - VED: rates for light passenger vehicles, light goods vehicles, motorcycles etc

This clause provides for changes to certain rates of Vehicle Excise Duty (VED) by amendment of the Vehicle Excise and Registration Act 1994 (VERA). Changes to the rates take effect in relation to vehicle licenses taken out on or after 1 April 2019. 

Amendment 108 (Labour) would require the Chancellor of the Exchequer to review the revenue impact of Clause 57 - WITHDRAWN

Amendment 109 (Labour) would require the Chancellor of the Exchequer to review the impact of Clause 57 on CO2 emissions and climate change targets  - WITHDRAWN

Amendment 110 (Labour) would require the Chancellor of the Exchequer to review the impact of Clause 57 on road congestion and traffic levels -  - WITHDRAWN

Amendment 111 (Labour) would require the Chancellor of the Exchequer to review the impact of Clause 57 on air quality standards  - WITHDRAWN

Shadow Treasury Minister Clive Lewis said his amendment 108 will allow drivers and the public at large to consider the impact of the measure. Has the Government undertaken any assessment of its own and will it do so, if not? He went on to speak about other amendments, saying as traffic is predicted to increase, can the minister explain why no climate impact assessment been carried out. Vehicle use affects people's quality of life, especially those who live in urban areas. Many journeys happen on empty roads, so rural owners are over taxed compared to those in town. Vehicles are responsible for most local pollution, he added. Where is the Government's assessment of all this? London has been excluded from the near £500 million funding for measures to do with controlling the impact of air pollution on the public. London is not getting help with its ultra-low emission zone from the Government. Shadow Treasury Minister Anneliese Dodds said her constituency of Oxford is also not getting much support from the Government for its zero emission zone. What share of VED revenue comes for London now and when this measures comes into force? Lewis asked the Minister. Let's use some of this revenue to help London as is being set aside for the rest of the country.

Exchequer Secretary Robert Jenrick replied this measure is on top of constantly freezing fuel tax. Based on Co2 emissions of cars, 87 per cent of affected cars will pay no more than £5 extra only. Expensive cars will pay an additional supplement in the long-term. We will shortly publish Clean Air Strategy which will answer some of the questions asked by Lewis - it will be an ambitious strategy, he promised. On London, he said the city has a comprehensive funding settlement from DfT from Government which includes measures to deliver compliance with air quality legal requirements and the Mayor of London has powers. The funding settlement separate for London is a long standing policy. He said London was included in money set aside for fixing potholes in the UK. 

Lewis responded by saying there is an issue of transparency. If DfT has given certain funding to London, what is the harm in making public statistics on what funding is going to London, if this is done for the rest of the country? On the no assessment of this clause on traffic and congestion, he found Jenrick's response arbitrary. An impact assessment is not too much trouble along the lines Labour asks. 

Conservative Sir Robert Syms said special pleading should be for the shire counties, to fix potholes for example, rather than more money for London.

Clause 58 - VED: taxis capable of zero emissions

This exempts purpose-built zero emission capable taxis from the vehicle excise duty (VED) supplement for cars with a list price of over £40,000 first registered on or after 1 April 2019. The clause also provides for eligible taxis first registered from 1 April 2017 to become exempt from the VED supplement when their licence is renewed on or after 1 April 2019. This clause increases VED only by RPI and therefore there are no revenue impacts of this measure - no benefit from further information in that regard. The DVLA publish VED revenues on annual basis. In 2017/8, £ 6 billion was raised. The hypothecation of the tax, means it will go to improving strategic roads across the country. As VED is a tax on car ownership, it is unrelated to traffic volumes. In addition to keeping VED low, government's freezing of fuel rates helps people on low incomes. VED system does incentivise people to choose cars with low emissions, he added.

Amendment 112 (Labour) would require  the Chancellor of the Exchequer to review the revenue impact of Clause 58 - WITHDRAWN

Amendment 113 (Labour) would require the Chancellor of the Exchequer to review the impact of Clause 58 on the taxi and private car rental industry - WITHDRAWN

Amendment 114 (Labour) would require the Chancellor of the Exchequer to review the impact of this measure on CO2 emissions and climate change targets - DEFEATED

Lewis seems to be rectifying an obvious mistake which saw electric vehicles fall into the luxury car category, which is  a welcome correction. Dodds said that there are MPs in this Committee who warned about this at the time. Labour has tabled three amendments, each to ask for an essential review of this measure. Is the mInister able to give an assessment of revenue impact of this measure? He is worried about impact on taxis of the measure - are taxis 'low hanging fruit' to the Government? The Government has not done enough fiscal incentive for people to switch. Grants should be increased to help transition to electric cars. Where is the Charging Fund, the Government promised? Drivers face a postcode lottery on charging areas today. Even if there is an increase in grants, a poverty of infrastructure means taxis may not benefit form VED changes in clause 57. 

Exchequer Secretary Robert Jenrick said the London Electric Vehicle Company said it has sold 500 vehicles from the time of the Government announcement in March. An exemption will encourage a change of buying behaviour and make the system fairer. As the supplement is only due from second license onwards, this means almost all taxis that have purchased an eligible taxi from April 2018 will never have to pay the supplement. The Government has already published TIIN on this clause - found impact was negligible. This measure may have a small positive impact on the Government achieving the fourth and firth carbon budgets. On electric car charging points, there are significant investment in London on fast charging points - which the Mayor of London is leading. 

Lewis wanted the £200 million private funding for EV infrastructure is ready but Jenrick said it has not been launched yet but should be early next year.

Clause 59 - HGV road user levy

This introduces a lower rate of HGV road user levy for vehicles that meet the latest Euro 6 emissions standard, and a higher rate for vehicles that do not. The new rates have effect for levy purchases on or after 1 February 2019. 

Amendment 115 (Labour) would require the Chancellor of the Exchequer to review the revenue impact of Clause 59 - DEFEATED

Amendment 116 (Labour) would require the Chancellor of the Exchequer to review the impact of Clause 59 on CO2 emissions and climate change targets.- DEFEATED

Amendment 117 (Labour) would require the Chancellor of the Exchequer to review the impact of Clause 59 on road congestion and traffic levels - DEFEATED

Amendment 118 (Labour) would require the Chancellor of the Exchequer to review the impact of Clause 59 on air quality standards - DEFEATED

Lewis said DfT said HGV traffic has grown 2.3 per cent a year since 2008, second fastest type of traffic in this period. This has had an enormous impact on green house emission targets. Labour said the Treasury analysis should focus on costs and benefits of remaining on a time based charging system relative to one based on distance. Let's have a review on real marginal cost. There is a huge disparity of wear and tear on roads from HGV than from cars. Will the Minister give us a view if the tax take is fair, from drivers of cars and HGVs - appropriate costs. We need an analysis on how these changes will affect the Government's chance of hitting the Paris Climate agreement targets. The UK ranks as the fourth most congested developed country. There has been little or no improvement in fatal accidents involving HGVs. On amendment 118, he said the Treasury could review whether the changes proposed in this clause succeed in improving air quality standards; if not now, when? He doubts whether current incentives on reducing carbon emissions are really working.

Conservative Sir Robert Syms said HGV sector contributes substantially to the Exchequer. As our economy grows, traffic goes up in general. The solution is technological, which may include  people changing vehicles more regularly. 

SNP economy Kirsty Blackman said a lack of space on rail lines is an obstacle to reducing carbon emissions from road haulage. 

Exchequer Secretary Robert Jenrick said hauliers pay a range of taxes, duties and fuel fees - that is a considerable amount of taxes. The HGV levy is not hypothecated but the VED system is, which will make a significant contribution to roads. To Blackman, he said the UK will remain close to European standards (on emissions, for example) but no final decision has been made on it. Why VED system is not used on HGV, there are very few commercially available options for low emission vehicles.  

Treasury has introduced this to help the environment and not to raise revenue.

Lewis asked if the Government has made an assessment of whether HGVs really cover the cost of the damage they do to roads (100,000-times that of a family hatchback, he said). He said that 64 per cent of HGVs are either empty or partially full. Jenrick said there was a call for evidence before the levy was introduced in 2014 and at that point the time-based levy was the preferred method of respondents. 

Adjourned until 2pm today (Thursday).

By CIOT External Relations team.