Examination of Witnesses (Questions 220
WEDNESDAY 10 JANUARY 2001
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
(Mr Potter) That is true.
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.
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 mucharound half of all new
cars in this country are company carsthe 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 sectorthe trucks
sector, in particularseems 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
(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
beforein 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
systemsvan 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 donemandatory local transport plans,
more support for public transport and home zones, something I
know you are concerned aboutare 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
initiativesafe 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
(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.
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.