Justine Greening leads attack on Darling's Vehicle Excise Duty hike

Justine Greening MP, Shadow Treasury minister, led unsuccessful Tory efforts to scrap Labour's hike in Vehicle Excise Duty.  Her contributions to yesterday's Commons debate - summarised below - will soon be appearing in campaign literature across Britain...

The scale of the tax increase: There is no doubt that the proposed increase in vehicle excise duty will lead to a massive tax rise. The Treasury has admitted that its take from graduated VED will increase by more than 100 per cent. over the next few years. Figures released by the Treasury to me reveal that the take from graduated VED will increase from £1.9 billion in 2006 to £4.4 billion in 2010. I repeat: green taxes have to be offset by decreases in taxes elsewhere, precisely to ensure that families are not overburdened by tax at this time of economic hardship.

This is not a green tax: "I use the term “green taxes” loosely when describing the vehicle excise duty changes announced by the Government. One would hope that a tax increase of several billions of pounds would lead to some impressive vehicle emissions savings, but that is not the case. The argument that the changes will help the environment is simply not true. The Government have admitted that minimal emissions savings will result from the changes to vehicle excise duty rates. According to the figure that I have been given by Ministers, they expect annual emissions from motor vehicles to reduce by 160,000 tonnes a year by 2020. That is a fraction of 1 per cent. of total transport CO2 emissions, which were 120 million tonnes back in 2006, just one year."

This retrospective tax will be more impactful than the 10p fiasco: "The result of this change will be more dramatic for taxpayers than the result of the 10p tax rate fiasco. About 1.2 million drivers will experience a tax rise of either £220 or £245, which they could not possibly have foreseen when they bought their cars up to seven years ago. A further 1.1 million will see retrospective increases of up to £100, and possibly more, between 2008 and 2010. That will mean that twice as many people will be worse off by twice as much money as we were talking about yesterday in relation to the 10p tax rate fiasco."

Low income families will be hurt most: "Those who will be affected by the proposals are people with older cars, people with family cars and people on low incomes who simply cannot afford to upgrade to a less polluting car. What kind of policy creates a situation in which the owner of a new Porsche will face a smaller tax increase than a family with an older family car? It is clear that we need to revisit this decision... From statements made by Ministers, and from the minuscule amount of data that I have received in answer to parliamentary questions, I understand that about 1.3 million people earning less than £15,000 a year will be hit by above-inflation increases in vehicle excise duty. Some of them will face rises of £245 a year. That is a week’s take-home pay that the Government are going to take out of their pockets through this proposal. We believe that up to 750,000 of them will face increases that are triple the rate of inflation. It is completely unacceptable that these changes to vehicle excise duty should have a greater impact on those on the lowest incomes."

A tax that can't be avoided: "People up and down the country are, frankly, furious about being confronted with a tax rise that they have no way of avoiding. They will face it not just for one year; they will be locked into it for several years. As my right hon. Friend [John Redwood] said, many people will be unable to afford to buy a new car because the value of their current car will have plummeted as a result of these tax changes."

MORE IN HANSARD.

Comments

[Matt Wright]

Very good points. There is also evidence to suggest that replacing an older car with a brand new slightly better emissions car is not overall a benefit as a significant proportion of the emissions are created in manufacturing the new car. In many cases it would be better for the enviornment to keep the older car slightly longer but maintain it thoroughly.

[RichardJ]

The government had better back down on this, in a few months I shall be in possession of a car first sold in 1998. It's fuel efficient but will not escape the tax.

[Phil C]

... but I can't see a government advocating that people keep their old car as long as possible, as that would upset vested interests in the automotive industry.

This tax issue really does show how out of touch the government is, it really does not seem to understand that there are people who run old cars because that is what they can afford, alternatively many people need a car but don't actually do many miles - so paying for anything other than a cheaper older car does not make financial sense.

Graduated VED is ridiculous. For a start, it is not a proper sliding scale, so once you go above a certain point there is no incentive to get a slightly less polluting car (what's the difficulty with, say, charging £1 per gram of carbon, for example?) And of course it's not owning a car that might damage the environment, it's driving it, so putting the tax on petrol would make more sense.

[Phil C]

RichardJ:"The government had better back down on this, in a few months I shall be in possession of a car first sold in 1998. It's fuel efficient but will not escape the tax."

Cars registered before 1 March 2001 are taxed according to engine size not emissions - £120 if below 1550cc and £185 above. My 2000 TVR Chimaera costs less to tax than my old 2001 Alfa 156 did.

[Sally Roberts]

This is not a Green Tax - this is punishment of the car driver, pure and simple! We should never forget that although Labour betrayed their Socialist origins long ago, vestiges of it still remain and transport is a case in point. Socialism disapproves of anyone travelling when they want, where they want in their own private space....

[doriangrape]

With you there Sally this is more green-eyed envy than green the planet.

Factoring in the VED on a 08 reg SUV (4x4) is fully covered by the current over supply and even if we can’t beat down the dealers, a couple of hundred on a thirty grand purchasing decision is hardly a deal breaker.

Ergo. The well off will continue to make lifestyle purchasing decisions and continue to cart Tabitha to the toddler group in a 3.5 ton behemoth whilst the lentil baking crusties spit in rage.

In the used market, again, there is over supply because Tabitha’s mum and the ladies that do lunch trade in their four year old Landcruisers and Discoveries. This, again, makes a SUVs a more attractive and still affordable option.

Matt Wright makes the valid point that the CO2 is in the manufacturing as well. 75% of Landrover 4x4 made since 1948 are still operational even at 20 MPG. How many complex and costly Toyota Pious will be around in 60 years? How many earth friendly hybrids do you have to manufacture to match the longevity of a 4x4?

[Alan.S]

I tend to view all tax innovations by this government as an additional tax (stealth or otherwise) as I know that there will never be a corresponding decrease in any of the taxes I pay.
This 'green' tax is no exception. It will have virtually no impact on the environment except perhaps by forcing some people off the road (why don't the just ban cars? :-) )
All it will do is to help plug the black hole that Brown left in the country's finances.

[Norm Brainer]

I don't get what the excuse for VED is in the 1st place.
Maybe there needs to be a small fee for keeping the DVLA updated etc. but any environmental concerns should be in the fuel price (which it is already) - that way the more you use the road, the more you pay and also the more you pollute, the more you pay.
Any other fancy scheme is going to be unfair on people who may not have a very fuel efficient car, but don't drive it much (like me, but mine's 1998), and unfair non-foreign drivers too!

[Paul Savage]

Whilst Justine Greening makes some very good points why does she not simply say that when the Conservatives win the next election they will repeal this unjust and ill thought out tax. That will either get the government to U turn on the subject or to go for it and be out of work in two years anyway. One year of paying the extra tax would be worth getting this incompetent socialist lot out for ever!

[Yogi]

Anyone driving in London and on the motorways over the past few months would have noticed that the traffic is definitely less now than a year ago. This is primarily due to the increase in petrol prices and is also in the data published recently - the 20% fall in volume of petrol/diesel.

This is welcome news from any angle - be it environmental, conservation or simply congestion. What has happened is that unnecessary journeys and short journeys are no longer made by car and people are using the public transport or even walking. It has also cut down on joy riding. Again all this is good news.

By increasing the VED, we will save even more road space as people stop buying a car.

The time when a car was a status symbol amongst the aspiring middle classes is long gone and it is amongst the lower income group that it remains so.

The government should not cut the excise duty on fuel nor we should press too hard to cut the VED if we are serious about the environment and it also helps in our balance of payment as well as improves people's general health, less burden on the NHS, no need to invest in more roads - overall helps the budget deficit too.

[Virginia Wiltshire]

I have never felt so oppressed and depressed by the actions of a government as I do now. Everywhere we are threatened in some way. Drivers pay vast amounts of tax already. Why penalise them further, especially the vulnerable such as elderly and retired?
There must be people who cannot afford to go to work without a car, as it costs too much in wasted time, inadequate pay, separation from family and so on. No wonder sickness benefit is substituted.

[doriangrape]

Hi Yogi

‘The time when a car was a status symbol amongst the aspiring middle classes is long gone and it is amongst the lower income group that it remains so.’

So I take it that you’ve never been to Cheshire then? Cayenne is not just a variety of pepper.

And a nice sneer at the plebs too who will actually be the ones who will suffer the consequences of your brave new world of taxing the motorist until the wheel nuts squeak. It will not impact upon the financially robust driving their gas guzzlers around your empty motorways. It will be the ordinary amongst us who will pay your price.

[Norm Brainer]

@Yogi ... I've not noticed a drop in traffic, but even if there was I fail to see how petrol prices have cut down in joy riding (do they buy petrol for the car they've TWOCed?!) and how high VED will mean people won't buy a car.
Sure, there may be a slight reduction in those that had a car they used rarely as the car tax would become a significant part of the running costs - but they use it rarely anyway so will make little impact on the congestion/environmental aspect.
Those that drive a lot would just lump it but it wouldn't affect them too much given the cost of fuel is more significant.

It's just another tax to grab money from those that can afford it whilst ignoring the misery it causes on those that cannot because to a labourite it doesn't matter if the poor get poorer as long as they are stealing as much as possible from the rich.

I have a car and a motorbike, and I know those with cars and travelcards.
If the cost of car tax went up too much then there would be "I've paid for it so I might as well use it" attitude so the bike/travelcard would be the thing to go.

.. or if the car did go, it may end up being scrapped which isn't exacly good for the environment.

[Yogi]

Driving a gas guzzler has not been and is not the past time of the financially well off. Somehow it has become a personal statement of the new rich aided and abetted by Hello magazine.

The motor car has resulted in massive out of town shopping malls and superstores, blightinng the countryside and at the same time ripped the heart out of the high streets across Britain. There is no point in Conservative MPs and the front bench campaigning to save our small shops if the local population does not support those shops.

Higher petrol prices and higher cost of owning a car will definitely put life back into town centres and it will also drive the yobs and hooligans out.

When it comes to rural Britain, once again it will enhance the overall cohesion of the villages.

[Stewart Geddes]

Yogi is talking nonsense. Out of town shopping centres are here to stay. People will adapt. Businesses will not return to towns as there is nowhere to go, rents are too high and there is no parking for shoppers.

The idea that you can use public transport in anything other than large Cities for some of your shopping is simply nonsense. Have you tried to do your weekly shop from Tesco or the likes using the bus? no I thought not.

[Norm Brainer]

In large cities it's hard too... unless I want to walk miles or go to asda there's no shops near me and I'm in zone 2 London!

Just had a drive down to sainsburys just now and congestion seems to have increased as people are pulling away so slowly at the lights to conserve fuel that only 1 or 2 cars make it through before it turns red again.

If I didn't have a motor vehicle of my own then I'd use internet shopping so it's hardly going to put anything back to the towns.
Yogi talks as if the car was invented in the past 20 years and is the sole cause of out of town shopping centres, built out of pure evil.
I can see some logic, although don't agree, in making running a car more expensive - but I fail to see how making it more expensive to own one is anything but jelousy from those that are too unco-ordinated and scared to pass a driving test.

[doriangrape]

'When it comes to rural Britain, once again it will enhance the overall cohesion of the villages.'

Hi Yogi,

I live in rural Britain, thanks. The post offices are closing down along with the local shops for local people, the pubs are going up in a lack of smoke, we have virtually no public transport, the urban escapees and retirees have stuffed the housing market and then oppose the building of affordable housing in their new back yards.

The young leave, the schools close and then we get shafted for actually needing cars to get anywhere and spit roasted for actually needing to use a 4x4.

I am a revolting peasant.

[Matt Wright]

Suggestion - scrap VED. I can't see the point in it at all and we desire simpler taxes. There are already large taxes on fuel which effect those that wish to burn more of it. I see car tax on a par with TV licenses and struggle to see the point in the 21st Century.

[Sally Roberts]

Yogi is absolutely right and I have to say that I have noticed that the huge gas guzzlers are invariably driven by Mr or Mrs Essex rather than Mr or Mrs Gloucestershire...!

[Sally Roberts]

I once managed to infuriate a very "noovo" woman driving one of these beasts near to where I live in West London by fixing her with a Paddington Bear stare and enquiring in my best frosty voice where EXACTLY WAS her country house...?!!!!

[Susan Wade Weeks]

None of the green arguments hold water when this Government has done nothing to improve public transport in rural areas - there is almost none -and allows train companies to increase fares all the time to breathtaking levels.
Visitors to the UK CANNOT BELIEVE how much we pay for train travel. I'd love to use the train all the time. Can't afford it.
In Italy people can travel in comfort on a train for two hours for 12 euros. Here two hours train travel costs about 80 quid.

[John Moss]

Fairly easy compromise here is to only apply the higher VED when a vehicle changes hands. Original buyer does not have iniquitous retrospective change, new buyer knows what they're getting.

[Julian Melford]

Why not go one better, Justine, and be straight that carbon emissions are junk science? The clued-up will know that the earth has actually been in a period of cooling since 2002 (with some polar variations caused by changes in the earth's rotation about its axes).

Even the most hard-core Al Gore fanatic would have to admit that drivers are being taxed a multiple of what the Stern Report suggested.

Have a look at Conservative Way Forward's pamphlet against the war on the motorist; interestingly David Cameron has endorsed their statement of principles.