Vehicle Excise Duty evasion
68. One of the principal functions of the Driver
Vehicle and Licensing Agency (DVLA) is to collect, and enforce
payment of, 'in vehicle excise duty' (VED). VED receipts amount
to around £4.5 billion per year 
In 2006-07, the DVLA's funding was increased by £50 million
over the previous year which, we were told, was partly intended
to fund an increase in expenditure on VED collection and enforcement.
69. Despite this increase in funding, the Committee
of Public Accounts found that the VED evasion rate actually rose
from 3.6% in 2005-06 to 5% in 2006-07. In the case of motorcycles,
the Secretary of State told us that that it was estimated that
38% of vehicles were untaxed.
This turned out to be incorrect, and the Director General of the
DfT's Safety, Service Delivery and Logistics Group wrote to the
Chairman of the Committee of Public Accounts, which had conducted
an inquiry into VED evasion, to correct the mistake.
70. VED evasion represents the loss of some £214
million in revenue.
However, the consequences go beyond the loss of revenue to the
Exchequer. The requirement to renew a vehicle's tax disc annually
provides an important opportunity for the DVLA to satisfy itself
that the vehicle is insured and that it has a valid MOT certificate,
if required. Some VED-evaders are therefore not only driving vehicles
which are untaxed, but also uninsured and potentially not roadworthy.
In the case of vehicles which cannot be traced to a registered
keeper, the driver of the vehicle can neither be served with fixed
penalty notices, for example, for speeding, nor traced in the
event of an accident where he or she flees the scene.
71. The Permanent Secretary told us that the
DVLA's failure to contain the growth of VED evasions was down
to its poor understanding of changing patterns of evasion. Although
it was not as high as she originally told us, the Secretary of
State suggested that the high evasion rate among motorcyclists
was due in part to the inability of Automatic Number Plate Recognition
(ANPR) technology to read motorcycle number-plates.
It is easier for a motorcyclist to avoid stopping for the police
or other enforcement officials and, in order to protect public
safety, police officers will often not give chase.
A motorcycle is also more easily concealed when not in use on
72. The growth in VED evasion is cause for
concern. It is not so much the lost revenuethough that
is a problem that the DVLA should be making every effort to tacklebut
the apparent growth in the number of motorists whose vehicles
are neither registered, taxed, insured nor roadworthy that is
a serious concern to us. The removal, in March 2007, of a specific
target for reducing the size of this group of illicit road-users
was clearly an error and we recommend that such a target be reinstated
73. We are also concerned about the Department's
significant over-estimation of the scale of VED evasion among
motorcyclists, which calls into question the reliability of all
the Department's VED evasion data. We recommend that the Department
review the systems it uses to estimate evasion rates.