Motor Vehicle Excise Licence (Amendment) (Hansard, 20 June 1990)

§ Mr. Roger King (Birmingham, Northfield)

I beg to move, That leave be given to bring in a Bill to make the issuing of excise licences for motor vehicles conditional on proof of valid insurance and roadworthiness for the period of the licence. In essence, my Bill is quite straightforward. It seeks to co-ordinate the length of time a vehicle may be licensed for road use with the validity of that vehicle's insurance and relevant test certificate.

At the moment, anyone seeking to obtain an excise licence for a motor vehicle must upon application also present a valid insurance certificate and a valid test certificate. In terms of the validity of the two certificates, it is necessary that they are valid only on the day of the excise licence. Thus, it is quite permissible for a certificate of insurance to expire 48 hours after an excise licence has been issued.

It is estimated that, at present, 20 per cent. of motorists drive around uninsured. Some do so wilfully; some because they have forgotten to renew, despite reminders from their insurance companies; and others have difficulty meeting the premiums and never get around to renewing. That total represents not only 1.5 million lost premiums, and an added burden for the majority of motorists, but the risk of the law-abiding being involved in an accident with someone who is uninsured. The consequent heartache and anger at that growing problem are known to most of us.

The innocent party can, of course, seek compensation from the Motor Insurers Bureau in the event of being involved in an accident with someone who is uninsured, but that does not mask the fact that the premiums that are paid into the central fund come from motorists who do adequately insure. It therefore follows that premiums reflect a percentage contribution to the fund. With claims ever rising in value, that can only get worse.

The annual test certificate is another requirement that is open to exploitation. Let us suppose that one applies for an excise licence in January for, say, six months. The vehicle in question may have passed its annual check-up in August of the preceding year, but the certificate would be still valid for the issue of either a 12 or six-month excise licence in January. Let us also suppose that subsequent to the expiry of the six-month excise licence, the motorist then renews on 1 July for a further 12 months. He can still use the valid MOT certificate with just one month to run, but does not need to present his car for a further test until he needs to renew the excise licence a year later. That vehicle need not have been tested for 22 months.

Critics will say that more spot checks are needed by the police and that fines should be greater to deter those who are tempted to ignore the legal requirements. I absolutely agree that that would be welcome, but however hard the police crack down, the chances of being caught are very much in favour of the motorist—and the police surely have better things to do. Others might say that the concept of an excise licence is obsolete anyway and that it should be done away with, with the loss of income being made up by additional duty on motor fuel. I do not object to that either. Indeed, I would urge it—in which case, in the 931 absence of an excise licence, the current insurance disc should be displayed. Without such progress, I believe that my Bill represents a worthwhile step forward.

Both the AA and RAC have expressed interest in my proposals. However, it is only fair to tell the House that while understanding the reasons for my proposals, the Association of British Insurers can see some practical problems. Its view is that a conterminus system as envisaged might present difficulties when owners change cars. Ensuring that insurance is in phase with excise licences would possibly require a huge amount of cashing up of current policies so that new ones could be issued. Equally, no-claims bonus calculations and implementation would be affected by such chopping and changing, calculated as it is on an annualised basis.

Although I understand the practical difficulties of adapting current insurance company practices to my Bill's requirements, I believe that the prize of bringing in a large percentage of those currently uninsured would be worth the effort.

Annual insurance polices could normally be sold in monthly increments. Many policy holders already pay their premiums by monthly instalments anyway, so it would not be much of a departure from present practice. It would make cashing in and renewal relatively simple. Besides, whenever a change of car takes place a new insurance proposal must be made. The procedure for calculating credits should be quite straightforward.

When a new or used car is purchased from a dealer, a new vehicle excise licence is usually part of the deal. Indeed, most dealers cash in a used car's excise licence unless a quick sale is expected. The prospective purchaser should have no difficulty in obtaining the relevant insurance to cover the period of the new excise licence.

Insurers will point out that cover notes to cover the time needed between car purchase and the issue of a proper policy would no longer be possible, but it would still be permissible under my Bill so long as the vehicle in question did not require the issue of an immediate excise licence. Used car sales might well be covered in that way, as might pre-registered new cars.

Private sales would involve the purchaser in notifying his insurance company of the relevant details; a monthly premium adjustment would be made and a new policy established to cover the excise licence renewal when the time comes. No-claims bonuses could be introduced at the appropriate anniversary month.

Owners of car fleets that are registered as businesses and covered by corporate insurance would be exempt from 932 the requirements of my Bill. I estimate that at least five vehicles would comprise a fleet for the purpose of that requirement.

The Bill would extend to cars and light vans, but would exclude commercial vehicles, buses and coaches, for which existing practices can be maintained.

Although I said earlier that the annual test certificate is open to exploitation, it is not possible to organise a totally conterminus arrangement with the excise licence in the same way as for insurance. Therefore, my Bill proposes that a vehicle's annual test certificate should have a validity of at least six months when an application for an excise licence is made.

The Bill may seem simple enough in its aims, but initially it will create new systems. Given the opportunity of starting afresh on a clean sheet of paper, I believe that some of the obtacles, or all of them, can be overcome. I understand the reservations that some might have, but I believe that driving a vehicle on our highways is a responsible exercise and that we must ensure that legal requirements are met by everyone. It seems reasonable to ensure that, when a car owner seeks a vehicle excise licence, his vehicle is adequately insured for the appropriate period and that it is in a reasonable state of repair. At no other stage does the opportunity occur to make those checks. The display of a current excise licence should signify that the vehicle is properly insured and roadworthy.

Some will say that too many owners do not purchase an excise licence as things stand. That may be true but at least one can see whether a current licence is on display. If the licence were brighter and stood out more, monitoring display would be much easier.

The Bill outlines broad concepts that I believe are entirely feasible. It represents a useful step forward, and that is why I commend it to the House.