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Vehicle Excise Duty

Volume 961: debated on Wednesday 24 January 1979

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asked the Secretary of State for Transport when he expects to start phasing out vehicle excise duty.


asked the Secretary of State for Transport when he expects to start phasing out vehicle excise duty.


asked the Secretary of State for Transport when he expects to start phasing out vehicle excise duty.

We shall consider the timetable in the light of our consultations with those principally concerned.

When the Minister considers his timetable, will he reflect on his statement in the House before Christmas suggesting that the number of people employed at the Swansea licensing centre would be reduced because of this new scheme? Surely there will still be a registration document, for which a fee will be payable. Surely the motorist will still have to show an MOT certificate and an insurance certificate. Will not that mean just as many staff at Swansea to carry out this work?

I always reflect on the statements which I make in the House. However, our calculations suggest that 800 fewer staff will be needed at Swansea as a result of the changes, out of rather more than 5,500. That will result from the abolition of VED. That will still mean an annual registration, possibly involving the production of MOT and insurance certificates. That has still to be settled in the process of the consultations that we are having. None the less, that is the figure which we think is likely to emerge at the end of the day.

Has the Minister any statistics of the number of additional vehicles that there will be on the road as a result of the abolition of the excise duty? There must be a large number of people who now use their cars only on peak days, during holiday periods and at weekends. Secondly, until the duty is abolished, will the Minister assure his colleagues that the present licence will be enforced properly? Finally, with regard to the new registration system, has the hon. Gentleman considered the difficulties of the police in looking at registration documents to make sure that the MOT certificate is current? These are important problems.

As regards the hon. Member's final comment, he makes a sensible suggestion which I shall convey to the appropriate quarters. As for enforcement, of course one of the principal difficulties about the present VED is the difficulty of enforcement. That is one reason why we took the decision which we announced recently. There is large-scale evasion at the moment, and it is costing the taxpayer £70 million or £80 million a year. That has to be stopped. As regards the number of vehicles on the roads, I do not think that abolition of the duty will make a significant difference.

In calculating the 7,000 miles break-even point, the miles per gallon have been worked out on the basis of new cars. Is it not true that some poorer-paid people use rather older cars? What is the average mileage for a one-car family? Presumably the average takes in the two-car family. Is not the 7,000 miles break-even figure misleading?

No. We have undertaken considerable research into exactly where the break-even point rests. Obviously it will vary according to the type of car and the mileage done. I accept that. But, broadly speaking, just a majority of people will be better off as a result of the change.

In what form will the Government seek the approval of the House, because a majority in this House will be needed for this measure? Will it be done during the Finance Bill, or by some other parliamentary process?

There will be a long process of consultation on this. But eventually, obviously, it must find its way into the Finance Bill because there will be a change in the rate of tax on petrol.

What is the source of the Minister's statistics indicating this massive evasion of the vehicle excise licence? Has he ever, as I have recently, walked down a street and noticed how many cars have no road fund licence? I must confess that I am unable to find them. Is he convinced that this massive evasion takes place?

My officials produced these figures. I must discover the source of them. Perhaps they were not from the same source as that referred to by the hon. Gentleman.

Will my hon. Friend ensure that special regard is paid to the position of relatively low-income families in remote and rural areas, especially in those districts represented by Opposition Members, where the local authorities have very little time for public transport?

My hon. Friend hits a very important nail firmly on the head. In both urban and rural areas, however, low-income families will gain from the change. This is one reason why the proposal was included in Labour Party policy, and one reason why we are now implementing it.

But surely my hon Friends are right. If the public are to be able accurately to judge the Government's proposals, they must be told how much the registration document will cost, how often it must be renewed, and whether it will have to be displayed. Why cannot the Government give that basic information?

Because we have taken the decision in principle, and many of the most important details remain to be worked out.