Budget 2011 and environmental taxes - Environmental Audit Committee Contents


Written evidence submitted by the Motor Cycle Industry Association

INTRODUCTION

The MCI

1.  The Motor Cycle Industry Association (MCI) is pleased to submit written evidence to the Environmental Audit Committee Inquiry on the environmental impact of Budget 2011 and green taxes.

2.  The MCI is the UK trade association that represents the supply side of the motorcycle industry, including manufacturers and importers of mopeds, motorcycle and scooters; the suppliers and distributors of associated goods and services. With approximately 120 members, MCI represents approaching 90% of the UK industry.

3.  The Motorcycle industry in the UK today employs around 62,000 people in 6,300 businesses. The UK industry has been valued at over £7 billion per annum. A sister Association, the eMCI will be launched in June this year to represent the growing alternative powered motorcycle sector, which according to the answer to a recent Parliamentary Question (Zak Goldsmith MP 28 Feb 2011) is currently twice the size of the eCar sector, in terms of new vehicles sold.

4.  The MCI has played an active role in the development of sustainable policies for motorcycling over many years and has worked closely with the Government, police and other delivery bodies to implement strategies and to encourage a holistic approach towards motorcycling.

5.  The MCI does not request a specific opportunity to present oral evidence, though if called by the Committee to give evidence, will be happy to do so.

MOTORCYCLE INDUSTRY RESPONSE

Summary

6.  The lack of powered two wheeled (motorcycles, scooters, mopeds; both alternative [electric/hydrogen] and conventionally powered) awareness by in the Budget seems to point to a basic misunderstanding (or lack of awareness or an unwillingness to recognise) that a powered two wheeled vehicle is a viable and practical commuting option and has a role to play in a low carbon sustainable transport architecture.

7.  It is interesting that all of the UK funding for EV's is being focussed on commercial vehicles and buses, cars and trucks. Powered two wheelers (PTW) are noticeable only by their absence from the 2011 Budget—despite the fact that the ePTW sector is one of the largest in the alternative powered vehicle sector

8.  We can conclude only that the Government have missed a significant opportunity to reduce green house gasses and emissions by using the tax system to encourage the use of efficient PTW's for commuting, which would have had the effect of increasing the likelihood of ePTW take up in the future.

9.  Indeed, those tax measures that have impacted on the PTW sector have had the opposite effect and may see those currently commuting on a PTW switch to a car.

The Committee's Questions

10.  The Committee has asked the respondents to consider a number of points. These are set out below, accompanied by the motorcycle industry's response, where appropriate.

11.  Whether Budget 2011 furthers the Government's green objectives, including the impact of the cut in fuel duty on greenhouse gas emissions and air pollution;

12.  Whilst relief for the motorist is both a political and economic imperative doing can have a positive impact on greenhouse gas emissions if such support is matched with support for viable low carbon transport alternatives. The budget is too one dimensional in so far as it seeks only to show concern for the motorist by reducing fuel duty. A greater driver of lower green house gas emissions and air pollution has been the high levels of fuel tax, combined with high oil prices, which has resulted in congestion on Britain's trunk roads and motorways dropping by 12%* on 2007 figures (*Trafficmaster/RAC Foundation Journey Time Index). However, the wider the consequences—inflation—have mitigated many of the benefits and time savings of the lower traffic levels.

13.  Approaches to shifting the burden of taxation from "goods" (eg labour) to "bads" (eg emissions) and factors that need to be considered when designing and introducing green taxes;

14.  There is limited evidence of the Government's intention to shift the burden of taxation to emissions in this budget. People are making transport choices because of fuel prices, which are being influenced by global factors rather than UK Government policy. The disproportionate cost of public transport compared to even expensive refueling of petrol cars also maintains the dominance of the private car. In such an environment, the Government should be using its powers of "taxation persuasion" to enable "green" transport choices, but not by further increasing carbon fuel costs which in these economic times would be a "stick" to far. It should seek to extend "carrots" such as tax breaks or grants to all areas of green technology, in particular low CO2 or cleaner transport, thus driving invention and innovation. Such incentives need to be applied with an even hand. For example, the motorcycle industry is very concerned at the deliberate exclusion of ePTWs from the "Plug in Grant" and would ask the Committee to scrutinise this decision.

15.  The scope for the tax system to create a "modal shift" from high carbon transportation to low carbon alternatives, including Fuel Duty, Vehicle Excise Duty, and Air Passenger Duty and issues the Government should consider when developing strategies for sustainable aviation and motoring;

16.  Given the European profile of the EV sector at the moment; the recent EU investment in green transport technologies (€24 million as part of the cross-European Electromobility initiative Green eMotion), it must be concluded that the Government have missed an opportunity to place the UK at the centre of the Low Carbon transport revolution. There is little in the Budget that indicates overt support for a shift to low carbon transport. Indeed, two measures in the 2011 Budget will effectively dissuade people from engaging with low carbon transport options:

17.  VED on Motorcycles has increased by over 4%—more than the increase in VED for cars. Current motorcycle production produces on average 30% lower Co2 (industry survey [ACEM] and ADEME research [French institute]).

18.  The mileage rate for car business use has increased by 12.5% to 45p. There has been no increase in the business mileage rate for motorcycles.

19.  These two measures alone demonstrate that the Government either does not recognise the "green" currency of conventionally powered two wheelers or is actively using the tax system to disincentivise commuters to avoid PTW's.

20.  The announcement in Budget 2011 on the Green Investment Bank.

21.  There is an opportunity for investment in Low Carbon transport technologies, but may be too late in 2012. They key to the success of the Green Investment Bank will be its openness to smaller companies and entrepreneurs who are always central to the development of these new technologies. There is a very real danger that much of the funding will be soaked up by large corporates or research institutes, when in fact significant green technology "drivers" come from SMEs and other smaller concerns.

ADDENDUM

Parliamentary Question from Zac Goldsmith MP, 28 February 2011, on the current size of the e-vehicle market:

Zac Goldsmith: To ask the Secretary of State for Transport how many new ultra low-emission vehicles were registered in the latest period for which figures are available.

Norman Baker: The Department for Transport uses the term "ultra-low emission vehicles" to refer to vehicles with significantly lower levels of tailpipe emissions than conventional vehicles. In practice, the term currently refers to electric, plug-in hybrid and hydrogen fuel-cell vehicles.

Data from the DVLA suggests that 1,277 electric and plug-in hybrid vehicles were registered in Great Britain during 2010: 268 cars, four quadricycles, 547 motorcycles, mopeds, scooters and tricycles, six buses, coaches and minibuses, and 452 commercial vehicles, including light vans. Data for hydrogen fuel-cell vehicles is currently limited.

21 April 2011


 
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Prepared 7 July 2011