Supplementary memorandum submitted by
the Energy Saving Trust
In relation to the Braintree Council tax scheme,
we have now been in contact with both the Council and British
Gas who have been jointly funding the scheme. Apparently there
is a backlog in converting enquiries to the Council, partly as
a consequence of increased enquiries following energy price rises,
and as such these remain in the Council system. Therefore the
numbers on the British Gas system have only increased slightly
from the 300 installations previously advised.
However BG and Braintree Council plan a major
promotion when Council tax bills go out in March. BG are also
planning to expand the scheme to a number of other Local Authorities
and estimate around 2,000 installations by the year end.
VED REFORM: OPTIONS AND OPPORTUNITIES
SUMMARY
The case for action and principles for reform
This paper first builds a convincing case that
more must be done to boost sales of low-carbon cars to the private
consumer, based on a detailed market analysis.
VED reform—opportunities and impacts
The Energy Saving Trust has identified the following
principles for VED reform, which frame the rest of the proposals
in the paper:
1. Very low carbon cars (Band A) should pay
very low, or zero VED.
2. Very high carbon cars should pay significantly
higher VED than they do now.
3. A new Band G should be introduced for
cars with emissions greater than 210 g/km CO2.
4. The remaining VED bands should be graduated
to reward lower-carbon cars and penalise higher-carbon cars.
Impact of residual values and the "multiplier"
effect on the company car market
The final section of this paper explains the
interaction between VED reform and the company car market. If
VED were to be reformed in line with the Energy Saving Trust principles,
residual values for low-carbon cars would be strengthened, while
residual values for high-carbon cars would be weakened.
These changes in residual values would be reflected
in monthly leasing costs, making it far more financially attractive
for businesses to consider low-carbon cars. A further advantage
of this approach is that higher VED rates on high-carbon cars
would act against the current trend of people opting out of company
car schemes to take advantage of lower tax on high-carbon cars.
1. The case for action
1.1 Trends in carbon emissions from road transport
As illustrates, total CO2 from road transport
has stabilised in recent years (figure 1). Within the road transport
sector, emissions from cars have remained relatively stable, as
improvements in fuel economy have balanced increased mileage (figure
2).
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