Select Committee on Environmental Audit Minutes of Evidence


Examination of Witnesses (Questions 220 - 229)

WEDNESDAY 10 JANUARY 2001

MR STEPHEN JOSEPH, MR ALASTAIR HANTON AND MR STEPHEN POTTER

  220. If these two people worked for the same business and had to go to the same place, what stops them both claiming the allowance for going there whilst they both travel in the same car? That is going to be financially more beneficial than claiming the 4p.
  (Mr Potter) The proposal has gone through at a 2p a mile passenger allowance anyway and the Inland Revenue appears to be quite happy with the enforcement of that in terms of internal procedures dealing with companies. In my discussions with the Inland Revenue, enforceability of the measure has not been an issue. The only issue has been what is the relative level of the remuneration. They appear to be quite happy with the enforcement side, which in a way surprises me.

  221. They are not normally known for their lack of cynicism.
  (Mr Potter) That is true.

Chairman

  222. Coming to vehicle excise duty, you have commented already on lorries where you are unhappy with the situation. Coming to cars, do you think the proposed reforms will lead to more fuel efficient cars or are the differentials too small to make much difference?
  (Mr Joseph) They may make a difference to an extent. The anecdotal evidence suggests that there is some change in people's behaviour even at the small level we have talked about, but we do not think it is as good as could have been done. We, with the Institute for Public Policy Research, suggested a rather different banding structure including an 1800cc break point for existing cars. It is worth saying that other countries have far wider differentials in vehicle taxation. The Italians have a ten fold differential between the top and bottom. That is a country pretty similar in terms of vehicles and the size of GDP to us. A lot of countries have a purchase tax on new cars which is varied in order to encourage people buying particular types of vehicle. We do not have a new car tax in this country. We are one of the few countries that do not. That is one of the factors which, when you take it into account, changes some of the international comparisons. In your questioning of the previous witnesses, reference was made to the Scotland Office study. In that study, what makes the difference is three factors: road tolls, which you did question the previous witnesses about; purchase taxes which, once you take them into account, bring Britain down to about the middle of the table of international comparisons on motoring costs; and insurance, where in terms of premium and taxation of insurance premiums Britain has among the lowest costs across Europe. It is the fact that there is not a purchase tax on new cars that makes it rather more difficult to influence behaviour. Over the long term, we think that might have more of an impact in terms of changing what sort of cars people buy than VED, though variable VED will help and indeed the Italian example suggests that it does.

Mrs Brinton

  223. In your opinion, what are the new technologies that you would like to see the government supporting, both now and in the future? As a general point on the government's policy towards new technologies, are they operating the quick fix, low coherence strategy or do you think they have a real coherent, long term strategy to enable us to meet our targets of air quality both internationally and in the United Kingdom?
  (Mr Joseph) The research we publish today suggests that the answer to that question depends on which sort of vehicle you are talking about. The answer for cars is different than for lorries and buses. In relation to cars, the hydrogen fuel cell seems to be a better technology in the longer term than most of the others on the market. The issue is very much how hydrogen gets into the fuel cell. There are different sorts of ways apparently in which the hydrogen is put into the fuel cell. Depending on which form of technology you use, in the total life cycle of the car, the impact on carbon dioxide emissions changes radically. There is some Canadian work which shows that. You might find it worth asking that sort of question to your witnesses next week. In relation to lorries, the evidence seems to be that there is quite a significant, short term advantage, as well as long term, in compressed natural gas and the distribution of that is not particularly well organised at the moment. In these cases and in relation to LPG and CNG for buses, there is a case for more Powershift money, for increasing the grants and the total budget of Powershift to make a difference here.

  224. I am glad you have mentioned Powershift. I will come on to that in a moment. Presumably, like the AA, you would envisage any long term strategy to contain overlap?
  (Mr Joseph) Yes. The company car taxation system ought to make a difference here because such a large proportion of new cars are fleet cars. Therefore, that is a lever alongside other things we have been doing. Because the company car taxation system can affect new purchases so much—around half of all new cars in this country are company cars—the new system can be adjusted when it is bedded in to promote the longer term changes in technology that people want.
  (Mr Potter) This raises an important point about the impact of environmental taxes and the different points of where one should apply taxation. At the point of purchase, where it influences the initial user, is an extremely important place to get the taxation right. In a way, it does not matter two hoots what second hand car purchasers buy because they do not determine the car fleet. Having an influence upon the initial purchaser to have a fuel efficient vehicle that is using the most benign environmental technology is where you have to have your tax sorted out and working effectively.

  225. If I can take you back to Powershift, I have had some involvement in the project myself. Some might say that the government is already spending quite a lot of money as far as Powershift is concerned. I believe in March 2000 they increased its budget to ten million but you seem to indicate they should be doing even more to incentivise it. Could you answer that question and additionally perhaps give us some overview as to how you think Powershift is working?
  (Mr Joseph) The indications seem to be that it is working well and that it has good value for money in what it does, but that the grants it is currently able to offer are not really enough to make the impact on what vehicles people buy and what fuels they run them on. That is needed. The overall budget for Powershift is not enough to do this. The report we publish today makes some specific indications on where extra funding might be useful in promoting this. The road haulage sector—the trucks sector, in particular—seems to be a good candidate for increases in Powershift money.

  226. If I can take you back to the question I asked the AA about Michael Meacher's statement about rewarding those who drive cleaner, more fuel efficient vehicles, what further reforms along those lines would you like to see? Do you think at present that we have the right fiscal incentives to achieve what I know you want, and I am sure we want, which is an integrated transport strategy?
  (Mr Joseph) There are limits to how far a fiscal system is the way to achieve that integrated transport system, but it is part of it. The single thing that we would point to would be the use of the personal taxation system in the way we talked about before—in particular, the concept of the idea of travel vouchers where up to a limit of, say, 600 pounds a year, tax free travel vouchers could be given by employers to their employees which could be used to purchase not just ordinary public transport tickets and passes but also to give incentives to employers to buy in their own transport services, to provide community transport systems—van pooling, as it is called in the US. This tax system is used in other countries. It is used in the US where it has been applied through the Transport Efficiency Act which came in two years ago. It has been applied in the Irish Republic. In both cases what that does is to give those who generate travel, particularly employers, some incentives to reduce the environmental impact of that travel. We think that is a key and rather under-rated component of an integrated transport policy.

  227. You are called Transport 2000, so what sort of transport reforms had you hoped to see by 2000? Finally, we are now in 2001 so are you going to change your name?
  (Mr Joseph) The internal discussions on this have revealed a certain divergence of view but one says firstly that we are quite well recognised as Transport 2000 and we would have to go up a large learning curve for a lot of people to get our name recognised. Secondly, in principle, the name with 2000 could operate to 2099 so there is no need to change that yet. We will see how far it becomes a problem for us.
  (Mr Potter) Equally, it cannot afford the two million pounds for the rebranding.
  (Mr Joseph) We considered what one might call a Post Office style solution such as Transport Options or Transport Solutions. We found it difficult to come to a consensus on that. On your point about what we hoped to see, a number of the things that the government has done—mandatory local transport plans, more support for public transport and home zones, something I know you are concerned about—are things that we hoped for. Our concern is that there is still an interest in large scale projects as the way of solving transport problems rather than a mix of small scale measures. Returning to the commuter plan issue, we know that the first commuter plan that has been put in by the likes of Boots and Southampton Hospital has managed to achieve over two or three years reductions in single occupancy car commuting of over ten per cent. In terms of affecting the local road system, that is more than any large scale road improvement was likely to do. We are concerned that that kind of small scale initiative—safe routes to school and those sorts of things— has more real chance of solving problems but is possibly less attractive for local and national politicians who want to cut a ribbon on something like big projects. We are concerned that that kind of balance is still not quite there yet.

  228. It is very interesting that you have said that and perhaps national or local politicians should look at some of these things because they can be very popular, like home zones.
  (Mr Hanton) Could I add something in relation to safety? We are very concerned about safety and it was referred to by the AA. Although road deaths and injuries have fallen, there are still ten people killed on our roads every day. We do feel that, in terms of fiscal incentives, there are possible things that could be done to reduce the danger of cars. One specific proposal which we are floating is, since speed is a big element in this, there should be a fiscal incentive probably through VED on the voluntary installation of speed limiters. We feel this could have quite an impact because at least a third of road deaths and injuries are caused by speed.

Joan Walley

  229. Would you also put a tax on bull bars?
  (Mr Hanton) No. They should be abolished.
  (Mr Potter) There are some roles for tax and some roles for regulation.

  Chairman: Thank you. That too was an extremely useful session. We are most grateful to you.





 
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