Ministers see off duty challenge

The government has defeated a challenge to its plans to raise vehicle excise duty on the most polluting cars.

An attempt by Tories to stop the road tax changes applying to vehicles registered before March 2006 was lost by 303 votes to 240.

Shadow Treasury minister Justine Greening branded the move “unfair and ineffective”, saying it was likely to hit those least able to afford it.

But Treasury Minister Angela Eagle said the Tory plans were “unworkable”.

The proposals also concerned Labour backbenchers, with 49 of them signing a Commons motion calling the changes “retrospective” because they will apply to all cars registered since March 2001.

Older cars

However, only six Labour rebels voted with the Conservatives. They were: Kate Hoey, Kelvin Hopkins, Peter Kilfoyle, John McDonnell, Albert Owen and Linda Riordan.

A number of Labour MPs said they had received assurances from ministers that the issue will be looked at again in the chancellor’s pre-Budget report in the autumn.

The vote came after a heated debate in which the Tories claimed 2.3 million families will pay between £100 and £245 more on each car they already own as changes apply to cars registered since 2001.

Under the government plans, owners of some of the oldest cars could face a tax rise of around £200 – a move which the Conservatives and many Labour MPs say will hit poorer drivers the hardest.

However, the Treasury argues that the changes, designed to cut pollution from cars, will mean two thirds of drivers will pay less or no more.

But Ms Greening said: “The people who are being affected are people with older cars, they are people with family cars, they are people on low incomes and they are people who can’t afford to upgrade to a less polluting car,” she told MPs.

“What kind of policy creates a situation where the owner of a new Porsche will face a smaller tax increase than a family driving an older car?”

‘Penalise people’

She claimed it would have “no benefit to the environment” and would “penalise people” who made decisions about the cars they bought up to seven years ago.

She also said the Treasury’s take from the rising costs of car tax would increase from £1.9bn in 2006 to £4.4bn in 2010, but without helping the environment.

But Ms Eagle said the Tory plans were “undesirable, unworkable and down right peculiar”. Previous changes to vehicle excise duty had always applied to cars already on the road, she said.

Applying new road tax rates to vehicles after a certain date would be “difficult to determine, understandably complex” and would “create confusion” particularly in the second-hand car market, she added.

Climate change

Lib Dem Treasury spokesman Jeremy Browne said his party agreed with having variable car tax rates – and would make the differences greater to encourage consumers to buy more fuel efficient cars.

But he said he would back the Tories because he did not agree with the retrospective element of the plans because it would make it difficult for people with older cars to sell them.

Labour MP Ronnie Campbell, whose early day motion asked the government to reconsider the “retrospective effect” of the tax, said he was backing the government “with a heavy heart” in the hope it would come back in the autumn with an alternative proposal.

SNP deputy leader Stewart Hosie said measures should be introduced to reduce fuel duty in the event of a “super spike” in global oil prices.

Greenpeace executive director John Sauven has said the plan to bring in higher taxes on cars which people have already bought “gives green taxes a bad name” and should apply to new cars only.

But Tim Yeo, the Conservative chairman of the Commons Environmental Audit Committee, said the principle was correct.

‘Difficult decisions’

He told BBC Radio 4’s Today programme: “Three times as many people buy a second-hand car as buy a new car so if we are going to use bigger differentials in vehicle excise duty to influence car purchasing decisions they have to apply to existing second-hand cars as well as new ones.”

The Treasury says people on low incomes are more likely to drive cars which are in the lowest car tax bands and will pay less or the same as they do now.

At the regular morning press briefing, the prime minister’s spokesman appeared to dismiss the idea of a climb-down on the car tax measures.

He said the policy was “set out by the chancellor in the Budget” and that remained the government’s position.

The government acknowledged that “difficult decisions” had to be taken if you are serious about the green agenda, and that the proposals would save 1.3m tonnes of CO2 by 2020.