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Vehicle Excise Duty

Volume 959: debated on Wednesday 29 November 1978

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2.

asked the Secretary of State for Transport what representations he has received about his recent statement proposing to eliminate road fund tax.

5.

asked the Secretary of State for Transport what representations he has received on his suggestion that vehicle excise duty be replaced by a tax on petrol.

The Government's decision to phase out vehicle excise duty has been widely welcomed.

I recognise the superficial attractions of the Secretary of State's proposals, but is there not a danger that the main beneficiaries will be two-car families, where the first car is run by the company and the second car is the wife's runaround, while those who will bear the most hardship will be low income workers in rural areas who need their cars to get to work? Is the Secretary of State satisfied that he adequately and fully consulted everyone concerned before making his announcement?

I readily agree that if there are to be winners as a result of the abolition of VED, there will be some who will be worse off. But I have considered this very carefully. I ask the hon. Gentleman, and other hon. Members, to look with some attention at exactly what we say about rural areas in our information paper. The picture for rural areas is a great deal better than some people initially supposed.

Can the Secretary of State explain how his proposals will lead to savings, in view of the need to continue the Swansea centre for licensing diesel vehicles and heavy lorries, and also for checks on MOT and insurance? How will those checks be made if even the present checks on the tax cannot be made?

There is no doubt in the minds of all those most directly involved that there will be a substantial reduction in staff as a result of this proposal. I do not think that there are any arguments about that. The role of Swansea is far larger than merely collecting vehicle excise duty, and, given the normal length of stay in employment there, I am glad to say that there will be no compulsory redundancies. However, there will be fewer people working there once VED has been phased out.

Is my right hon. Friend aware that many of my constituents, and others in remote and rural areas, have to drive much further than the 16 mile round trip to work which is quoted in his proposals? Is he prepared to make a much deeper analysis into the effect of these proposals on rural areas?

Yes. If my hon. Friend will read the information very carefully I think he will discover that we do not say simply that those who travel 16 miles to work will be the beneficiaries. That is the average journey to work in rural areas, and this leaves a substantial extra amount of mileage which someone doing an average number of miles per gallon can drive. Additionally, and this is a very important point, I believe that these proposals will enable some people in rural areas who until now could not afford to put a car on the road, and who do not intend to do a long mileage, to do so.

How can it make sense, even in the name of conservation, to introduce a change which could make motoring cheaper in central London and yet more expensive in rural areas? If the Secretary of State is to make the transfer to petrol tax, which is not something to which one could object in principle, will he consider varying the tax regionally?

I confess that I had hoped that the House would rejoice at the ending of a tax. I am slightly surprised at the somewhat grudging approach of the Opposition. I am comforted to know that on the basis of the MORI poll, which has been published, there is a clear majority in favour of abolition, not only among Labour voters but among Conservative and Liberal voters, too. In practice, I think that the effect of abolition will be far more favourable than the right hon. Gentleman suggests.

Does my right hon. Friend agree that this is the fairest tax possible because it taxes the use of the road? The majority of the population realise that, especially the 8 million of the 14 million road users who will benefit.

My hon. Friend is quite right. This is much the fairest way of raising taxation from the motorist. The House has been concerned with the level of evasion. It was plain that evasion could not be eliminated without an unfair intrusion into people's privacy. The abolition of vehicle excise duty will get rid of the unfairness.

Is the Secretary of State aware that he is simply replacing one tax with another? Will he confirm that a new registration document will replace vehicle excise duty? Will he tell us how often that document will have to be renewed, whether it will have to be displayed and how much it will cost? Unless he can tell us that, it must cast doubt on all the estimates in the Department's booklet concerning administrative savings as a result of which the motorists will be better off.

I am surprised that hon. Members are so halfhearted about a proposal which will reduce a great deal of the bureaucracy about which they have complained in the past. It will make life a great deal simpler for the motorist, and as a result, the great majority of motorists will be delighted. I have taken full account of the need to maintain minimum form of registration. It is all in the document, and those details which have not been settled will be matters on which we shall be consulting while VED is being phased out.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Minister's answer, I beg leave to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible moment.

9.

asked the Secretary of State for Transport what changes he is considering in the rate and methods of charging road fund tax.

I have already announced the Government's decision to abolish vehicle excise duty on petrol driven vehicles and to review its future on diesels.

Unlike some of my hon. Friends, I welcome this initiative by the Government, but I do not think that the Secretary of State fully appreciates the great concern felt by those living in non-metropolitan areas about the levels of tax that will be introduced and about the schedule for the introduction of all those taxes that will replace the present road fund tax. Can the hon. Gentleman alleviate that concern and reassure the House that we shall have an opportunity to debate the matter?

I should greatly welcome a debate at a time convenient to the House, because I think that sober consideration of the proposal will bring more hon. Members than earlier appeared apparent to the same view as the hon. Gentleman's, namely, that the change makes good sense. It will also give me an opportunity to spell out the broad timetable that we have in mind. We shall be consulting on all the outstanding issues and phasing out the duty by 1983, but it will be for my right hon. Friend the Chancellor of the Exchequer to make the particular decisions at the appropriate time.

Is my right hon. Friend aware that his announcement about the abolition of the road fund licence has been generally welcomed, but does not he think it strange that Conservative Members, who in other contexts are in favour of a tax on expenditure rather than direct taxation, should be against this measure?

I agree with my hon. Friend. It is strange, but the Opposition never fail to amaze me by their lack of judgment on issues of this kind. It is clear that the abolition of vehicle excise duty is a fair way in which to proceed. I think that the fact that the change will fall more harshly on a man who owns a Rolls than on someone who owns a Mini is a move in the right direction.

Does the right hon. Gentleman realise that the answers that he has been giving recommend us to jump from the Swansea frying pan into the fire, without the benefit of abolishing the Swansea licensing centre? Will he recognise that his figures show that motoring and delivery costs in rural areas will rise significantly?

I do not agree. Exactly how an individual's motoring costs will be affected will depend upon how much he uses his car, the size of his car and the miles per gallon that he obtains. It is plain that in the rural areas a number of people who today lack mobility will be able to achieve it by putting a car on the road for the first time and using it for a relatively modest mileage.

19.

asked the Secretary of State for Transport what timetable he envisages for the discussions and subsequent action on the Government's proposals for phasing out vehicle excise duty.

Consultations with those principally concerned will begin as soon as possible. We shall then consider the timetable for phasing out.

If the phasing out of the existing computers is crucial to the timing, what is the difference in scale and costs between ordering new computers to replace the present system, including those used for vehicle excise duty, and ordering computers to deal with registration and insurance? So that we can judge the proposal fairly and properly, will the Secretary of State now answer the question asked by my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) and tell the House what will be the level of fee for drivers to cover registration, insurance and so forth?

I cannot answer the latter question. This is an issue on which there must be consultation. Phasing out will take place by 1983, so there is adequate scope for working out a satisfactory formula. The overall administrative saving as a result of abolition will be about £20 million. Had we proceeded with re-ordering the computers we should have faced the possibility of a considerable amount of abortive expenditure, running into several millions of pounds.

Does the Secretary of State propose to consult the moped and lawnmower lobby? Does he realise that many people will feel that they are being badly treated when they realise that there is to be an increase in their petrol costs, without any compensating advantage?

I shall be delighted to consult such people and to receive a deputation led by the hon. Member for Rutland and Stamford (Mr. Lewis).

Is the Minister aware that he has got it wrong when it comes to the rural communities in these matters? Whatever he says, his proposal will bring about more unemployment and depopulation in the rural areas. Will he bear in mind that this shows once again the bias of the Government against the rural community?

That is the most awful nonsense. I appreciate the anxiety felt by hon. Members on both sides of the House about transport problems in the rural areas. But the Government, in the past year, have made provision in a Bill—which the Opposition voted against—for improving public transport in the rural areas and for introducing more flexibility.

Does my right hon. Friend agree that the Opposition always ignore the needs of the majority of people who live in the country—those who do not have cars? Perhaps the new taxation system will do something to help public transport in the rural areas.

My hon. Friend is right. The provision for better public transport in rural areas and more flexibility, which has been welcomed by a number of Opposition Members, is designed to help those who are most in need. It is certainly a move in the right direction for people to be able to use a car to go to work, or for other reasons, when they could not previously afford to do so. I am surprised that hon. Members do not endorse that.

The Minister may have my support for his intentions, but will he come to my constituency with me to explain to car drivers there, first, why they have been paying an extra 10p a gallon for petrol over the past three years. and, secondly, that his proposals will probably add another 20p to their costs? How will he get away with that one?

As the hon. Gentleman recognises, there will be no relative cost to his constituents as a result of any increase in the price of petrol which may occur in due course. I agree with the hon. Gentleman, however, on the matter to which he has drawn our attention before. The Isle of Wight and some other remote parts of the country have to pay more for their petrol, and I appreciate entirely the price which falls to be paid by the hon. Gentleman's constituents.