Introduction
In 2002-03, the Driver and Vehicle Licensing Agency (the Agency) collected gross Vehicle Excise Duty (VED) revenues of £4.6 billion, a reduction of 5.6% on the previous year. A further £193 million of gross revenues from 1.75 million vehicles that should have been collected in that year was lost to the Exchequer through evasion. Estimates of VED evasion are derived from periodic roadside surveys and the 2002-03 estimated evasion rate of 4.5% is 0.6% higher than the 1999 estimate.
There are significant variations in the overall cost-effectiveness of the various enforcement measures adopted by the Agency to tackle VED evasion, but the benefits of partnership working with other public bodies has been consistently proven in several pilot trials and recent initiatives. The Agency needs to develop a better balanced portfolio of enforcement measures and targets, and cleanse its computer records to improve accuracy; particularly across the 'inactive' elements of its vehicle database.
The Agency failed to notice a change in legislation in 1997, and as a result more than 300,000 drivers were incorrectly charged a total of £3.35 million in fees for the renewal of medical driving licenses. Once this error was detected in 2003, the Agency swiftly made arrangements for repayment, but the cost to the public purse of identifying the affected drivers and processing the refunds was nearly £200,000.
The Agency's contract for its IS/IT services was re-tendered during 2002-03. The Agency took the opportunity to change the basis of this contract away from standard service provision to a ten-year flexible, partnership arrangement with the new contractor focussing on improved customer-facing services. The Agency had anticipated transfer costs of between £13 million and £29 million, depending on whether it switched or retained the same supplier. However, the final cost was some £4 million more than the £29 million maximum cost originally anticipated.
On the basis of a Report by the Comptroller and Auditor General,[1] we examined whether the Agency was doing enough to tackle the incidence of VED evasion; the financial impact of the various enforcement activities that it deploys to counter VED evasion and whether the Agency had done all that it could to introduce electronic means of payment of VED for the motoring public.
