The Chairman: I welcome all hon. Members to the Committee. I have just muttered to the Minister that our proceedings will go to the wire—a full one and a half hours of provocative and controversial, yet constructive debate.

The Parliamentary Under-Secretary of State for Transport (Jim Fitzpatrick): I beg to move,

It is a pleasure to see you presiding over the Committee, Sir Nicholas. I am sure that you will forgive me if I say that I hope your prediction does not come true.

Before I deal with the details of this legal amendment, I shall explain the background to the changes sought through the order. The Driver and Vehicle Licensing Agency’s primary function is to keep complete, accurate and up-to-date registers of drivers and vehicles. However, such records are effective only if they are made accessible to those with the rights to use them. For example, they are used by the police to ensure that the law is respected and upheld to support road safety. Key to such action by the police is their ability to identify drivers positively and to check that their entitlement to drive is valid and appropriate for the vehicle being driven. Without the link between the person and entitlement established through a photograph, any such checking becomes far less effective. It is important that the DVLA database and driving licence in issue retain a true likeness. Recognising the importance that that has for road safety led Parliament to legislate for the introduction of a photocard driving licence more than 10 years ago. The DVLA started issuing photocard driving licences in July 1998, with a validity period of 10 years. As part of the renewal cycle, the photographs included on the face of the first photocard licences need to be renewed from this July, after being in issue for the full 10 years.

The power to charge a fee for the renewal of a photocard driving licence bearing a new photograph was introduced under the Road Safety Act 2006. The DVLA has consulted five times on its fees strategy during the past seven years, including its latest exercise in 2007. The fees structure has become increasingly complex for its customers, so, with effect from 1 April this year, it is proposed to introduce a more simple fee structure that will mean a common fee of £17.50 for duplicate driving licences, removing endorsements and exchanging a paper licence for a photo licence.

It is estimated that the 10-yearly renewal of photcards will, in due course, represent about 25 per cent. of the agency’s driver transactions. The additional costs involved need to be covered as the DVLA is a trading fund. The agency has already been charged with significantly further reducing its unit costs during the next three years, in addition to the £50 million per annum total reduction in baseline costs that it has delivered over the past four years. That is important as we obviously want to minimise the need for fee increases. Even so, on 1 April 2008, the fee for provisional driving licences will increase to £50 in line with the previous fees and charges consultation in 2006 and as announced by my predecessor in January 2007.

It is important not to make the costs of first-time licences prohibitive as that could particularly affect younger drivers, who may need a driving licence for employment or higher education purposes. The important point is that if we do not charge a fee for 10-yearly renewals, the provisional driving licence fee may have to increase further—possibly to about £80 to £100. Public reaction to such suggestions in recent consultations has been consistent in that the cost burden should be spread and not concentrated on young drivers. I concur fully with that.

At the same time, we will continue to provide transactions free of charge for drivers who notify the agency of a change of name or address, for renewals for drivers over the age of 70, for the extension of vocational driving entitlements and for all medical renewals or notifications. The volume of those free transactions will continue to increase as more of the motoring public reach pensionable age, the number of medical condition notifications increases, and we see higher compliance with changes of details. We do not propose to introduce charges for transactions that we currently provide free. Any proposals along those lines have been soundly rejected in all recent consultations, and I fully agree with that response. However, recovering the additional costs for both the increasing numbers of free transactions and the new 10-yearly renewals means either charging significantly more for other transactions or using the powers under the 2006 Act to levy a fee for the 10-yearly renewals. We have concluded that the latter course is better, for reasons which are set out in the latest public consultation and for which we received support.

Let me explain the point of the proposed amendment. The DVLA’s ability to set its fees in that way, to maintain the free transactions and to provide simple fee structures is governed by an order made under section 102 of the Finance (No. 2) Act 1987—the Department for Transport (Driver Licensing and Vehicle Registration Fees) Order 2003 (S.I. 2003/2994). I shall refer to that as the 2003 order. The order lists the functions for which the Secretary of State can recover costs when setting fees relating to driver licensing and vehicle registration. It allows her to recover costs relating to vehicle licensing when setting driver licensing fees and vice versa, although that cross-coverage between drivers and vehicles is avoided as far as possible. It also specifies the matters that can be taken into account in determining the costs of the specified functions.

The statutory instrument that I bring to Committee amends the 2003 order. My purpose is to update that order for more recent legislation by inserting a reference to section 99(7ZA) of the 2006 Act—the charging power for the 10-yearly renewal of a photocard driving licence that was inserted by the Act with effect from February 2007. That will allow the 10-yearly renewal fee level to be set in the same way as all other DVLA fees and allow implementation of the fee structures recently consulted on, which will deliver the simplified common fee for customer convenience. The new fee will be introduced by a later statutory instrument proposed to take effect, if approved, in mid-May 2008, coinciding with the first reminders that will initiate the 10-year renewal processes.

I shall take this opportunity to tidy up and clarify a second issue. In preparing the statutory instrument, the DVLA reviewed the 2003 order and concluded that greater clarity would be provided by a specific reference to section 105(2)(e) of the Road Traffic Act 1988. That sets out the power to prescribe a fee in respect of a replacement licence for one that is lost or defaced. The Department for Transport takes the view that section 97(1)(a), already cited in the 2003 order, is the key charging power for driving licence applications, whereas section 105(2) particularises and clarifies what can be included in regulations made under part III of the 1988 Act. The absence of a specific reference to section 105(2)(e) has not prejudiced the ability to apply the 2003 order when setting the fee for replacing a lost or defaced licence. However, given that the 2003 order needs to be updated, it seems convenient to do some housekeeping and remove any doubt in that respect. If the current view is misplaced and the absence of that specific reference has to any extent invalidated the setting of that fee, the invalidity would be remedied by section 102(6) of the enabling Act, which provides for a section 102 order to have retrospective effect.

In conclusion and in summary, I can confirm that the power to charge for 10-yearly renewals was covered by the passage of the 2006 Act in order to allow for recovery of the costs involved; that the principles incorporated in the 2003 order remain valid, and the update for the 10-yearly renewals fee introduced in subsequent legislation is consistent with those principles, allowing us to continue to provide free-of-charge transactions; that the updating of the 2003 order to clarify the position in relation to fees for lost and defaced licences is essentially technical and remains true to the principle adopted in 2003; and that the DVLA has already consulted on its overall fee structures and on the new fee level of £17.50 for 10-year renewal—in common with other fees—which it will introduce through a separate statutory instrument shortly.

I commend the order to the Committee.

Mr. Robert Goodwill (Scarborough and Whitby) (Con): It is a pleasure to serve under your chairmanship, Sir Nicholas. This morning’s order has at least one similarity with the European constitutional treaty, although this really is a tidying-up exercise. However, we will not be opposing in this instance, so we will not give the Liberal Democrats the opportunity to abstain yet again.

The order is very much a case of crossing a few t’s and dotting a few i’s. We broadly support what the Minister has said. Were I in his position—judging by the polls over the weekend, that will be only a matter of time—I might well have been making the same proposals.

I welcome the common fee, which simplifies the situation. The fee is the same for new, lost or defaced licences, or what were described as vanity renewals. I wonder whether the latter category is in connection with the botox era. Having looking at the websites of a few hon. Members whom I expected to see today, I have noted that some of their pictures are slightly out of date. The idea that one would want to update one’s licence photo for reasons of vanity seems somewhat the other way around, but perhaps it is in relation to botox or cosmetic surgery.

The £17.50 fee may be regarded as reasonable by the general public, bearing in mind that it is a fee and not a tax. May I ask the Minister the actual cost of processing the licences? Does the fee reflect the cost, or is there some leeway to account for further cost increases in the DVLA? Also, what is the fee for a change of address? I did not pick that up, but perhaps that is my mistake. When one moves house, one needs to update one’s photo licence, and I want to check what the fee would be for such a change of address.

I have one or two further questions, but I will not detain the Committee long. What is the process for increasing the fee? Would an order have to come to a Committee such as this, or could that be done with the stroke of a pen in the Department? The Minister says that he needs to minimise the need for increases. However, given inflationary pressures, it is possible that increases may need to be introduced in the future.

What is the expected increase in work load due to processing the additional licences? New photo licences were introduced 10 years ago. Therefore, not only will people be applying for new provisional licences—in addition, the process of people changing over to photo licences is ending—but there will be renewals for new photographs. I suspect that that will increase the work load. How many additional staff might need to be taken on, if that is expected?

I would like to ask the Minister about a specific problem. The process relates to not only the fee charged for renewing or exchanging licences, but the accuracy of that process. I am sure that the Minister is aware of a number of problems that have occurred when people have moved house and applied to have their licence changed, but their entitlement for a motorcycle driving licence had been omitted. I was talking this morning to former Chief Superintendent David Short, who is the campaigns director for the Motorcycle Action Group. He knows of at least 40 cases involving motorcyclists who have lost their entitlement to drive. When asked to provide proof of passing their test, they have found that impossible. One of his members had to spend £600 to get full direct access to a licence to once again drive his Ducati motorcycle. Is the Minister aware of the problem, and what has been done to ensure that it does not continue to occur? The concern is not only the cost of the licence renewals, but the quality of the service provided. I suspect that many people out there have not realised that their licence no longer includes the entitlement to ride a motorcycle.

Finally, have the Government considered how photo driving licences will dovetail with proposals on identity cards and passports containing biometric data? Will the situation still be that people will need three different documents—one to drive, one to leave the country, and one as an ID card—or is it proposed that one document will perform all three functions in the fullness of time?

I thank the Minister for his speech, which was fascinating, at least when measured against last week’s Budget. I assure him that Her Majesty’s Opposition will not oppose the order.

Mark Hunter (Cheadle) (LD): It is a great pleasure, as ever, to contribute under your chairmanship, Sir Nicholas. I apologise to you, the Minister and all other hon. Members for not being in my place at the commencement of our proceedings.

The Minister rattled through his presentation in his usual expeditious manner, and I tried to make a note of some of the key aspects of his introduction. At one point, he said that the Government did not propose to introduce charges for those aspects that do not currently incur charges—I think that that paraphrases what he said. However, during the debate on the original 2003 order, the then Minister said:

If that was the case, why was the decision not to charge for the 10-year mandatory renewal of photo licences revoked, and what are the key changes that have occurred since 2003 as far as the Department is concerned? Perhaps the costs have increased. I think that the Committee would find it illuminating to know the reasons for that. That is an example of an aspect of the service for which the Government are seeking to introduce a charge when there was not one previously.

Will the Minister confirm that the total amount received by the DVLA for driving licences will do no more than cover the overall costs, and will he explain what will happen if the new scale of fees and charges results in a profit or, indeed, in a shortfall in revenue?

I am also interested to know about the number of so-called vanity exchanges, where photo licences are renewed to update photographs—a point that was made by the hon. Member for Scarborough and Whitby. Much has been made of that as part of the rationale for the development. I cannot say that I am necessarily aware of that need myself, but I understand that an increasing number of young people choose to update their photo driving licences on a slightly more regular basis than the rest of us find necessary. Has the Minister any figures to illustrate that point? Is there a significant increase in the number of so-called vanity exchanges, and is that the real reason behind the measure being brought forward? If it is, can we quantify what that demand is and what the costs have been? Updated photo licences have been free up to now, so perhaps the Minister might also tell us who was bearing the costs of those renewals previously.

I certainly do not intend to divide the Committee on this issue, but there are a number of pertinent questions to be asked. I am sure that others will also have questions, but I would be grateful if the Minster would answer those that I have asked him.

Mr. James Gray (North Wiltshire) (Con): It is a pleasure to serve under your chairmanship, Sir Nicholas. I intend neither to delay the Committee for long nor to introduce an unreasonably discordant note into what has been a peaceable debate so far. None the less, when an issue such as this is brought before a Committee, it is important to examine it carefully. After all, a large number of people—although I do not know how many—have driving licences that they got for free, and all of a sudden they will now have to pay £17.50 to renew them. That is a significant activity affecting our constituents.

I was interested to hear the hon. Member for Cheadle, who has done his research better than I have, say that in the debate on the original order in 2003 the Government indicated that renewal of photocard licences would be free. If he is right, this is a significant reversal in Government policy, and perhaps the Minister would enlighten me on the reasons for that.

As my hon. Friend the Member for Scarborough and Whitby indicated, we have no objection to the charge. It is a sound Conservative principle to make people pay for things that they are getting from the state, so it is right to welcome the underlying principle of the order, although it is interesting that the Government have changed their mind about it. However, some groups of people will continue to get the thing for free, while others will be perfectly able to drive and have totally clean licences but might not, on a particular occasion, be able to afford the £17.50. That figure might sound small to many of us, but to many people out there it is a significant amount of money and some may not be able to afford to pay it.

That leads me to think about how the DVLA process could become self-financing and about the exceptions and differentiations that the Government are making. Several categories of people renew their licences, one of which is those who deface or lose their licence, who currently pay £22. Under the order, that figure is to be reduced to £17.50, so if I scribble all over my driving licence, “Sod this useless Government”, as I might well do—

The Chairman: Order. I am not sure that I really like that language, but I am sure that the hon. Gentleman will moderate or change it.

Mr. Gray: You are absolutely right, Sir Nicholas; I apologise. I was merely reflecting the sorts of things that many people out there might be saying at this moment, so I apologise on their behalf for those awful thoughts.

If I were to scribble on my licence, it would currently cost me £22 to renew it, but all of a sudden it is going to cost £17.50. If I defaced my driving licence in the appalling way that I have just described, it would surely be right that I should pay more to renew it, not less. Why are the Government reducing the amount that I should pay? Why not make it £50 if we deface or lose our driving licence instead of reducing it to £17.50?

My hon. Friend the Member for Scarborough and Whitby referred humorously to vanity changes. I, too, find it difficult to imagine why anybody could possibly want to renew their driving licence for reasons of vanity. Presumably, we are all older than we were when we took the thing out in the first place. Perhaps we were having a bad day when the photograph was taken, or have had a facelift, or have other such reasons for wishing to do it, but if we wish to renew our licence for vanity reasons surely to goodness we should be asked to pay more for it. Why should ordinary drivers who do not particularly want to pay £17.50 to subsidise, for example, young people who think that their picture looks too young and as they get older want to look older on their licence? Fine, good luck to them, but surely they should be asked to pay more for that service rather than less.

Statistically speaking, how much does the whole exercise of renewing photocards cost? Presumably, it is quite a large amount of money. How many of those renewing their licence are doing so simply because the thing has run out—they have come to the end of the 10 years and need a new licence—and what is the cost of those renewals? How many renewals are vanity changes, which, although not illegitimate, are less virtuous reasons for changing a licence? How many of them involve people who have lost or defaced their licences? How many people are renewing because the points on their licence have expired? Many of us are in that position. Some 4 million perfectly ordinary drivers in Britain have, unfortunately, got nine points on their licence because of these dreadful flashguns that we get, for example, down the M4—the hon. Member for South Swindon will know them well. Thankfully, if we hold our breath, those points run out after a time and it is quite nice to have a clean piece of paper to show that we have gone down to six, three or even none at all. That is predominately for vain reasons—because I want to have a piece of paper that shows that I have a clean licence—rather than for any genuine reason. Surely if I want to do that it is only reasonable that I should pay more.

The first question that the Minister must answer is this: why have the Government changed the stance that they took in the 2003 order? It is perfectly legitimate for a socialist Government to say that a driving licence is free, but they have changed that position and become Thatcherite. They have taken our lead on the matter and are making people pay for the Government documents that they get. I welcome that, but he must explain why they did it.

Secondly, why is the Minister not differentiating more between those who are renewing their licence for different reasons? That would seem to be a good idea. Why should not people who are doing it for bad reasons, such as defacing, or for less legitimate reasons, such as vanity, be charged more? By charging such people more we could increase the categories of people who get it for free—some of which are important—or we, as ordinary motorists, could pay just that little bit less. If his civil servants are busy scribbling away, I would say that we need some careful statistical analysis about how much could be saved by charging those categories more and how much less he could charge the rest of us by doing so.

Conservative Members do not oppose the principle behind the order, but we as a Committee seem to be nodding through quite a large figure, and we must know precisely what is the Government’s thinking behind that.

Mr. Oliver Heald (North-East Hertfordshire) (Con): May I join other hon. Members in welcoming you to the Chair and saying what a delight it is to have you there, Sir Nicholas?

When the Minister outlined the reasons for the uniform charge for renewal, he explained that part of the thinking was to help youngsters who are applying for a provisional licence for the first time. To what extent is there evidence that a higher fee would put young people off applying for a licence or that the current level is putting them off? Does his thinking include the avoidance of crime in that if the fee were set too high, young people might not apply for a driving licence and drive anyway? We all know from local magistrates courts in our various constituencies that a proportion of young people choose to drive without a driving licence. Can he give the Committee any idea of how many such cases there are?

Finally, what is the subsidy? How much of the standard uniform charge will be used to subsidise the provisional licence, and how much of the £50 is paid for by the £17.50?

Jim Fitzpatrick: The hon. Member for Scarborough and Whitby is on very good form this morning. He is clearly buoyed up by the recent days’ opinion polls. I do not begrudge him that, but I just tell him to enjoy it while he has the opportunity because it might not last as long as he anticipates.

A question was raised about whether a change of address would be free. That is indeed the case. Further fee rises will be subject to public consultation and statutory instrument. That will be subject to the negative procedure and will have to come before the House in due course.

A number of Opposition Members asked about the moneys that are being raised, and the function of the trading fund and how that operates. The trading fund operates not for profit and therefore has to equalise its funding arrangements. That is generally taken over a three to four-year period so that an adjustment is not needed each year. There is an analysis over that period to allow for fluctuations. In the case of photo cards, which were introduced 10 years ago, it is expected that costs will not be covered for the next 12 months, but that they will be recovered in subsequent years. I will return to the costs issue raised by the hon. Member for North Wiltshire in due course.

The hon. Member for Scarborough and Whitby raised questions about motorcycle entitlement and the accuracy of records. I am advised that problems have arisen in two situations: where records were not converted appropriately in the 1970s from the old red book licences; and where the applicants failed to take up the test within the statutory two-year period. Any errors identified by individuals are fully considered by the DVLA and I am aware of anomalies.

The hon. Gentleman asked whether extra staff will be required. That is possible and that will be measured on the basis of the introduction of the additional work load, which we estimate will be about 25 per cent. As I said, there is a review of arrangements within the DVLA, so that will be a matter for management to consider in due course.

The hon. Gentleman asked about ID cards and whether or not the original proposal, which involved driving licenses, would be continued. The Home Affairs Committee changed that course and wholly separate cards were decided upon. Apparently, it would be possible to pull that together in 10 to 15 years’ time, but the two are covered by different legislation and would, therefore, be subject to additional scrutiny.

The current demand for vanity exchanges is apparently around 50,000 a year. Given that there are 30 million-ish licence holders, that is a small number. None the less, as the demographic is altering—the population is ageing—that might change. However, I outlined in my introductory remarks that the estimate of the increased work load for the DVLA was around 25 per cent. and so, in response to the hon. Member for North Wiltshire, the cost would be considerable. That cost would have to be met, to make sure that the trading fund stayed in balance.

The hon. Members for North Wiltshire and for Cheadle asked whether there was a change of policy. In 2003, the then Minister stated that there would be no fee for photocard renewal, because that was not considered necessary. However, that statement was superseded when the Road Safety Bill was debated in Parliament in 2006. Clause 40, when passed, inserted section 99(7ZA) into the Road Traffic Act 1988, thus giving the Secretary of State powers. That measure was considered, debated and subsequently consulted upon.

Mr. Goodwill: On that point, was the original promise made without thinking the matter through? If a person takes out a provisional licence at the age of 17, we are not looking at one renewal being covered by the cost of the provisional licence, but possibly six renewals every decade until that person ceases to drive or to exist. The Minister at the time had obviously not thought it through. He was possibly thinking of giving one renewal in 10 years, but would be looking at six renewals—one each decade—over the life of that person were the Government to have stuck to that promise.

Jim Fitzpatrick: The hon. Gentleman can speculate on the thought processes of my predecessor, but it is certainly clear now that the work load is considerably more than was anticipated. That is what led to the reconsideration in the 2006 Act and to us bringing forward the statutory instrument this morning—enacting the provisions debated during the passage of the 2006 Bill—to make sure that we can maintain the trading fund in balance for the years ahead.

Mr. Gray: The Minister is somewhat skating over this point. Surely it is terribly important that a Labour Government promised that the renewal of photocard driving licences would be free of charge. Only four years later, that same Labour Government are turning around and saying, “Actually, we are going to charge you £17.50 each.” Surely, at the very least, the Government should apologise for making whatever statistical error led them to make that promise. Surely it is right that the Minister should say to the people of Britain this morning, “We, the Labour party, promised you free photo driving licences, but you can’t now have them.” Incidentally, might there not be something to look forward to with regard to ID cards? The Government promised a cheap charge for those. If the Government can turn around their policy on this issue, might they not do the same on ID cards?

Jim Fitzpatrick: I do not accept the hon. Gentleman’s premise, or his suggestion about apologising. This matter was fully debated in 2006, and the order that was passed five years ago was debated then. The decision was taken to vary the calculations and to give the power to the Secretary of State, on the basis of the additional work load, to consider whether or not it was appropriate to introduce the fees. That consideration has been undertaken and the calculation has been made.

The hon. Gentleman asked about costs for renewing licences. A back-of-the-envelope calculation suggests that given that we have around 30 million drivers and there is 10-year renewal, there would be about 3 million renewals each year, on average, at £17.50 a time, so the cost would come in at somewhere between £50 million and £55 million.

Mark Hunter: It might well be that, as the Minister said, the decision in 2003 was superseded. Clearly it did not take the Government very long to have a change of mind on this. The hon. Member for Christchurch (Mr. Chope) pursued the point at the time and the Minister’s predecessor replied:

I take the Minister’s point that things have moved on, but that certainly did not take very long, given that it seemed that a pretty blanket commitment was given back then.

Will the Minister address the second concern that I mentioned regarding the debate in 2003: the concept of trying to recover no more than the overall costs involved? That, again, was something that his predecessor made great play of.

Jim Fitzpatrick: I assure the hon. Gentleman that the whole premise is that the trading fund should break even, but should not make a profit. It should obviously not make a loss. The DVLA has a duty to break even over a 10-year term. I said earlier that that is reviewed on a three to four-year basis to ensure that we are not waiting until the end of 10 years and then realising that things have gone badly wrong. The DVLA reviews the cost-fee coverage annually to try to inform those short, medium and long-term decisions. We come back to Parliament, after scrutiny by the Treasury and the Department for Transport, to ensure that we stay within the rules.

On that basis, I can assure hon. Members that this is not designed to make a profit. It is designed to make sure that the trading fund stays in balance and that the additional work load—around 25 per cent.—that has been identified would levy considerable costs on to the DVLA. There were consultations to consider how best to ensure that the fund stayed in balance. It was very much a strong response from the consultation that we should not levy the additional cost on new drivers. It was also strongly suggested that we should try to simplify the procedure as much as possible because different fees were being asked for different requirements. Making the process more understandable to the general public will make it easier to ensure that we maintain the level of commitment from the public to renew their licences and keep them up to date.

Mr. Goodwill: What does the Minister estimate that the cost of a provisional licence would be if it had to include the five or six renewals that the driver would be expected to make during the course of his or her driving career?

Jim Fitzpatrick: I think that I mentioned the estimate if we were to load the costs on to new drivers. The cost for a provisional licence is supposed to be £50, but it could be between £80 and £100. Again, through the consultation and our analysis, it was considered that it would probably bear too heavily on novice drivers. We want to make sure that young drivers take out a provisional licence. We want to encourage them to make sure that they stay within the law. We should not put too many difficult obstacles in their way that would discourage them from getting that licence and learning to drive the right way, given that, as the hon. Gentleman knows, we have a recognised problem of driver training and testing, which we will come on to later this year. We want to ensure that that system is as effective as possible.

The hon. Member for North-East Hertfordshire asked about the powers. The powers were agreed in the 2006 Act, which I have covered previously. As I might also have mentioned, three consultations have confirmed the public’s view of these fee structures. We have been round this issue through public consultation a number of times over recent years. I hope that I have responded to the points that hon. Members have made. I commend the order to the Committee.

Question put and agreed to.

Resolved,

Committee rose at eleven minutes past Eleven o’clock.