HC Deb 21 June 1995 vol 262 cc302-10

1 pm

Mr. Peter Butler (Milton Keynes, North-East)

I am grateful to the president of the House of Commons Motor Club, otherwise known as Madam Speaker, for permitting me my first Adjournment debate. I should also like to thank others who have raised with me, and supported, the concerns expressed about changes to the rules on vehicle excise duty, in particular, my hon. Friend the Member for Derby, North (Mr. Knight), whom I thank not only because he is a well-known old car enthusiast but because he is the Conservative deputy Chief Whip. I therefore feel that it is tactful to mention him.

I declare a number of non-pecuniary interests as a member of the Vintage Sports Car Club; honorary legal adviser to the Bentley Drivers Club; a member of the 750 Motor Club and as one of two Members of Parliament who is eligible to hold an international race licence. I also declare a rare victory for Conservatives—the winning of something—in the London to Brighton run last year, which is not, of course, technically a race, when I was the guest of the president of the Veteran Car Club in a 1900 Stevens Dogcart. My final interest is that after 34 years of assiduous graft, I have gone from having one Austin Seven, which was given to me on my 10th birthday, to being the proud owner of two Austin Sevens. That says something for the property-owning democracy.

I am grateful for the Minister's presence. He is an honourable man, who has said: It is not our intention to penalise the law-abiding motorists. He has also said: We are determined to produce workable proposals that will attract a wide measure of support and will not disadvantage honest motorists. I am happy to give my hon. Friend the chance today to achieve both those objectives. I know that he is a man who does not miss many chances and I am sure that he will take the one that I am offering. In doing so, I hope that he will reassure the many hundreds of thousands in the country who have been concerned about the proposed changes. I do not exaggerate. I would like to thank first the Federation of British Historic Vehicle Clubs. One of its constituent bodies was put together to fight a previous proposal for tax on possession put forward in 1980 by my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), but subsequently, on mature reflection, withdrawn. That federation alone has 285 affiliate clubs representing between one quarter and one third of a million members. I mention that because one sits in the Chamber sometimes and hears talk about "widespread concern", which amounts to no more than half a dozen letters.

I thank Lord Montagu, who has done a considerable amount of work with the Minister and others on the proposed changes. I also thank the more temperate of those who have written to me on the subject.

I make it clear that there is no objection to making the Driver and Vehicle Licensing Agency's records better. An accurate V5 confirms the identity and to some degree the history of a vehicle. It also helps to trace vehicles for defect recall, although I accept that that does not apply to many historic vehicles. It identifies the keeper of a recovered stolen vehicle and the current keeper immediately for breaches of the road traffic Acts. Everyone must agree with those excellent objectives. There is nothing but positive support for the improvement of the records.

It follows that of the two proposals, joint notification is not one which would be a problem, except to the extent that, in paragraphs 36 and 37 of the consultation document, a requirement is placed on the disposer of the vehicle to establish the "true identity" of the purchaser. Many might feel that that places an undue and legal obligation on someone disposing of a vehicle to act in some way as a policeman of the honesty of his purchaser. That is impracticable and I have no doubt that in due course the severity of that obligation will be reduced. The very idea of prosecuting someone for having been misled into recording the name of his purchaser incorrectly is abhorrent.

As part of the joint notification and the other proposals in the document, we look forward to the establishment of proper records to show when a vehicle has been scrapped or written off. A proper list of previous keepers should be shown, with the mileage on change of keeper visibly recorded on the document. Those improvements, to which we look forward, are greatly to be welcomed.

The difficulty comes under what is quietly called "continuous licensing". The documentation on that is headed: Proposals for reducing vehicle excise duty evasion. First, one must consider how much evasion occurs and whether it is reducible. It is estimated by so-called "professional statisticians" that 4.1 per cent. of vehicles currently on the road do not display a tax disc. That represents a reduction of nearly 50 per cent. since 1980 and suggests, first, that measures against evasion have been extremely effective in the past 15 years and, secondly, that perhaps we have reached a level that cannot be reduced still further except at disproportionate cost. I must concede that both those figures—8 per cent. in 1980 and 4.1 per cent. now—are estimates.

The Government calculate a £145 million loss to the taxpayer, by which, presumably, they mean a loss of gross revenue as opposed to a loss to the taxpayer net of the cost of collection. Of that loss, £16.5 million is accounted for by vehicles over 12 tonnes, which are to be exempted in any event from the continuous licensing or continuous taxation proposals, on the interesting basis, put forward by a spokesman for the DVLA, that The view is that it would have a detrimental effect on business. Hon. Members might feel that the first people who should not be running untaxed vehicles are those who are running heavy goods vehicles in the course of their business. No doubt the Minister will correct me if I have got that wrong.

One major fault that the proposals aim to tackle is the missed month—the slipped or lost month. That occurs when someone inadvertently or otherwise forgets to renew a tax disc. One must then fill out a form, which asks for the date of acquisition of a vehicle, or the date of expiry on the tax disc. It also asks for the date from which the licence is to run. If there is a gap between the two, one must sign a simple statement at the bottom of the form to confirm that the vehicle has not been used or been kept on the road between those two dates.

I respectfully suggest to the Minister two more effective, and certainly cheaper, ways of approaching that problem. When I say that a declaration must be signed, that simply means that a signature is put at the bottom of the form to confirm that the particulars given are correct. I believe that one signs a statement to the effect, "I understand that I might be prosecuted," but no one, of course, reads that. In certain jurisdictions a similar form requires a proper legal declaration to he witnessed. The signature must be witnessed to give it the form and substance of a proper legal declaration. I am told that that is an effective stop to evasion, because it makes people pause and think. They realise that if they sign that form falsely, they are committing a criminal offence. I commend that idea to the Minister for further consideration.

Secondly, I suggest an alteration to the law to permit the wheel-clamping of cars that are seen on the highway not displaying a current vehicle excise licence. I recommend both those suggestions as practical means of dealing with a serious problem. They are simple and effective. I appreciate that they may be too simple, but they would work.

If I intended to be fraudulent, the proposed new system would help me enormously. If I am prepared to sign a fraudulent declaration that my vehicle has not been on the road, I would equally be prepared to sign a fraudulent declaration to get an off-road licence. Whenever I was finally stopped driving it with an off-road licence, I would say, of course, that it was the first time that I had used the car with that licence—no doubt I would probably say that I was on my way to the post office to change it to an on-road licence. All of us who have been in magistrates courts professionally will know that the police always catch someone the first time that he goes out in an untaxed motor vehicle. The new system will make it easier because, instead of simply doing it for a month or two, I will get my off-road licence and use it until I am stopped.

Having made a couple of practical suggestions, I shall explain exactly what we are talking about. Who are those historic vehicle owners, what do they do, why do they do it and why is it a serious matter? What they do, first, is to maintain a living archive of British engineering and social history. For example, the original advertisements for the Austin Seven described it as being a car so simple that it could be used by one's wife or one's servant. I make no comment about that, except to say that my daughters also drive mine.

That archive is also a source from which industrial and motor vehicle historians may work. It maintains pride in the engineering achievements of some great motor manufacturing companies. It gives a continuum right through to today's Formula 1, Saloon Car championship and other racing teams. Eighty per cent. of the world leaders in those sports are based in the United Kingdom. There is a straight continuum in that—the same people having the same interest. Those sports, including rallying, are watched by outstandingly more people than the number who watch football matches. Even more people take part in them than go fishing.

The hobby also, frankly, is fun. Sometimes in the House we are suspicious of anything that is fun—the pursuit of happiness. Being British involves rights as well as responsibilities, and those include the right to enjoy a harmless hobby and not to be taxed in that enjoyment.

It is not a hobby only of the rich, as exemplified by the fact that various Members of the House own historic vehicles. I did some calculations and discovered that I could buy an eligible vehicle for less than the cost of a full set of fishing tackle, so it is not a hobby only of the rich, although I believe that my hon. Friend the Minister at one time indulged in it. It is also an enormous fund-earner for charities. Every weekend, almost throughout the year, charity events take place at which motor vehicles of one type or another form a major attraction.

The people who have that hobby are the ones whom Lady Thatcher described as the quiet people, who grumble a little but pay their taxes and are the backbone of England. Why are they so upset?

First, there is a suspicion that the Government have given up on tax dodgers; that the 4.1 per cent. is effectively irreducible so the Government will recoup the loss from law-abiding people who already pay tax. I mention that suspicion so that my hon. Friend the Minister may correct it.

Secondly, there is a suspicion that this is a tax on possession coming along again, 15 years after my right hon. Friend the Member for Sutton Coldfield first proposed it. That suspicion arises from the wording of the consultation paper, which says that for one's off-road licence there will be a small charge to cover administration costs (say £5)". I challenge my hon. Friend the Minister to state publicly, first, that the £5 mentioned is indeed the full administrative cost and, secondly, that it is limited to that recovery cost by statute law, and that to recover more than the administrative cost of £5 would require primary legislation, which the Government have no intention to introduce. I look forward to the Minister's response to that.

The test of the proposals is, in my hon. Friend the Minister's words: are they simple and are they workable? The proposals are alternatives. There would be either two categories of licence instead of the present one, or three categories of licence. Under two categories of licence, one would have the present licence, plus a new one called an off-road licence, which might run for six months or 12 months.

So far, so good and so far, so simple, but the problem comes if one does not want to have one's car on the road for a whole six or 12 months or indeed off the road for the whole six or 12 months. The proposal is explained in the following way: Two possible ways of allowing vehicles to be brought back onto the road before the expiry of the off road licence are:

  1. i) the keeper could be liable to pay VED hack to the beginning of the licensing period. This would mean that there would be no incentive to declare a vehicle off the road falsely, because VED would have to be paid back to the point of expiry of the previous licence; or
  2. ii) the keeper could be required to pay a surcharge (perhaps £15)"—
perhaps a lot more— on top of the full rate for a six or twelve month on road licence, commencing on the first of the month in which it was applied for". So far, so slightly less simple.

Let us assume that a vehicle is used for the London to Brighton run once a year. Under the scheme, the owner surrenders his old tax disc or allows it to expire. He then obtains a 12-month off-road licence at nominal cost, but that expires after next year's annual event so, in the meantime, he must apply for a six-month off-road licence. When that expires, he applies for another. To put the vehicle back on the road to go to the rally, he has to pay the back tax of five months. He buys a six-month licence, but after one month he surrenders it.

I paraphrase that because I would not wish to ridicule the proposals, which I am sure have taken much time to think out, but I give that as an example of the fact that they are not simple or, in a practical sense, workable. They require a full administrative system in the home office of every person who has one, two or more old vehicles.

However, the real problem with that in the minds of the proposers is that it is not complicated enough, so there is a second proposal. That is that there should be three categories of licence: an on-road licence, an off-road licence and a temporary off-road licence. I shall not go through that as I did the first proposal. Suffice it to say that, under the second proposal, there are at least two, and possibly three, further administrative steps. May I, slightly humorously, suggest a fourth and fifth category—that we have on-road, off-road and temporary off-road licences, coupled, from the owner's point of view, with an off-rocker and a temporary off-rocker licence, as he attempts to fill up the various forms?

What is all that to achieve? It is to achieve full and continuous registration—up to date and detailed. Joint notification will achieve that substantially, and with the good will and support of all the people involved in it. The proposal document says: Increased public perception of the value of the registration document"— with all that extra information in it— and a growing awareness of the benefits of compliance will encourage people to participate in the new system. When I first read that, it seemed like a new definition of optimism but, having considered the facts, I believe that it is correct. First, there should be full and continuous registration. Secondly, there should be full payment of tax on use only, not on keeping or owning, or on possession. So the full and continuous registration amounts already to an off-road record. I do not call it an off-road licence because it does not license or permit anything, but it is already, with full joint notification and the other amendments that we have supported, an off-road record.

One should then apply for a tax disc, which would amount to a declaration that the vehicle will be used on the road only for those months covered by that application, with automatic reversion, through a simple computer programme, to the off-road record status upon the expiry of the vehicle excise duty; no complex rules, no complicated applications, no off-rocker, no home office required.

Much of the problem of "on to off" and "off to on" arises from the occasional use—the charity rallies, the London to Brighton run and so on. With respect to Lord Montagu, who gave me the original idea, I make the following simple, radical and, dare I say it, workable proposal.

First, you will he aware, Mr. Deputy Speaker, that pre-1948 manufactured vehicles have a reduced vehicle excise duty, currently £70. I know that it is already in the mind of the Minister that that should be altered to pre-1960, according to the press, or pre-1970, according to the more optimistic press. I respectfully suggest that that definition be changed to 25 years old or more. It will then continue forward, year on year.

Those vehicles should pay 25 per cent. of whatever the current vehicle excise duty is, and that should cover any period up to a whole year. In other words, whether the vehicle is used once, for one month, six months or the whole year, the owner of a vehicle that is 25 years old or more pays 25 per cent. of the VED. We should abolish the six-month licence for that category of vehicles and abolish the bureaucracy of unused months' refunds, for that class only.

While my hon. Friend the Minister considers that, I shall make three short suggestions. First, the definition of a vehicle must be included. It is not in the regulations at the moment. Obviously, it would be a vehicle of a type which at some stage would require a MOT test. Secondly, I commend him and encourage him to continue the protection for traders and museums that he has already included. Thirdly, I ask him to assure me that whatever licence is needed will be readily available at post offices, following the closure of local vehicle licensing offices.

I thank my hon. Friend enormously for listening so carefully to the debate and to the representations that have been received. As the proposals are demonstrably neither simple nor workable and as my hon. Friend is an honourable man, I know that he will, in due course, respond with substantially different proposals. If so, will he undertake a consultation exercise on the new proposals?

1.19 pm
The Minister for Transport in London (Mr. Steve Norris)

I know that when my hon. Friend the Member for Milton Keynes, North-East (Mr. Butler) used the term "honourable man", he was thinking of the parliamentary rather than the Shakespearean definition. On that assumption, I welcome the opportunity to respond to the points that he has made.

There is no doubt that our proposals to improve the quality of our vehicle records at DVLA and to reduce vehicle excise duty evasion have attracted considerable interest. We have received about 20,000 letters since our proposals for continuous licensing were first announced by my hon. Friend the Member for Salisbury (Mr. Key) on 20 July last year. The DVLA has issued 12,000 copies of the consultation paper and we have received 3,000 responses.

Dame Elaine Kellett-Bowman (Lancaster)

Quite a lot of those responses undoubtedly came from me. I must declare an interest as the owner of nine Morris Minors. I have received an enormous amount of post on the subject. There are strong feelings about it.

Mr. Norris

One of the delights of the House is to find out something new about one's colleagues almost every day. I now know that the possession of nine Morris Minors must figure large among the many qualities that I already attribute to my hon. Friend. My hon. Friend need not apologise for writing to me on the subject; I know the strength of feeling on the subject of my hon. Friend and other owners of vehicles that are not customarily on the road for 12 months of the year. It is important to put that on the record. None of the proposals has the slightest impact on someone who, like me, simply taxes his car from one 12-month period to the next. Such people have nothing to be worried about.

I shall explain why we want to look at how the present arrangements work.

Mr. Paul Tyler (North Cornwall)

Will the Minister give way?

Mr. Norris

Yes, but the hon. Gentleman must be quick as we are under time constraints.

Mr. Tyler

I congratulate the hon. Member for Milton Keynes, North-East (Mr. Butler) on introducing the debate. As the Minister recognises, there is widespread concern on the subject. Will the Minister address the point of principle raised by the hon. Gentleman? If the purpose of the tax is to tax usage rather than ownership, the hon. Member for Lancaster (Dame E. Kellett-Bowman) will be saved from any cost. But those who use the roads infrequently—even if they have vehicles other than vintage vehicles—will still be penalised.

Mr. Norris

I shall refer to that point in the remaining few minutes.

There has rightly and understandably been some criticism of our proposals and there has been much speculation about what they might lead to. There has also been widespread support for the overall objectives that we set ourselves in the consultation document. About 25 per cent. of DVLA records are out of date and inaccurate at any one time simply because people who buy vehicles do not immediately inform the DVLA—some people take up to a year to do so. They often do so when they want to retax their vehicles and realise that their V5 form is not in their name but in the previous owner's name. It astonishes me that more people do not realise that, when they sell their vehicle, it is in their interest to ensure that the DVLA is aware of the change of owner. There cannot be many of us who have not received a fixed penalty or a parking ticket relating to a vehicle that has long since been disposed of. If the DVLA was informed, it is highly unlikely that such trouble would be encountered.

It is not simply a bureaucratic ambition to ensure that the DVLA database is up to date and truly relevant. There are three obvious reasons for an accurate DVLA database. First, and most importantly, we operate a system whereby, once manufacturers identify a safety fault on a vehicle, they must send a notice to everyone who has bought that particular type of vehicle. They must tell the owners that their vehicles, which may not be new but may be two or three years old, have a fault. They must tell them urgently to go to any garage, where the fault will be put right straight away and free of charge. The House will understand the need for an accurate DVLA database in order to trace those owners.

We also need an accurate DVLA database to tackle vehicle excise duty evasion—the second main pillar of the proposals. We must, from the outset, have an accurate tax database.

The third and obvious reason for an accurate database is that we are increasingly moving into a world where traffic will be regulated by technology, whether that be camera or trip technology. If we are to use such camera technology, the sine qua non—the precondition—is that when the ticket is issued for an offence, we must have an accurate database to back up the system, otherwise there will be trouble.

My hon. Friend the Member for Milton Keynes, North-East suggested that there was a suspicion that we had given up on the £160 million a year that goes uncollected. The figure amounts to about 4.1 per cent.— I do not know the exact figure. Most of that figure is the result of short-term evasion. As my hon. Friend suggested, people simply try to skip paying the tax—they do so pretty regularly.

Many people are angry and say that we should do something about such evasion, which is a very visible form of tax evasion. In every constituency it is possible, when walking to the station or pushing a shopping trolley in a supermarket car park, to see vehicles with no vehicle excise duty disc or an out-of-date disc displayed in the windscreen. It has been estimated that, at any one time, there are up to one and a half million vehicles on the road without a valid disc. We must do something about that.

For all those reasons, we intended to eliminate evasion and improve the quality of the records. It is fairly clear that the joint notification proposals have received pretty unanimous support. They will deliver tangible benefits such as information on mileage and previous keepers, which we propose to show on the registration documents. In my experience, classic car owners positively welcome that because the thrill of ownership comes from the vehicle's history—it is part of the hobby's attraction. Other benefits will include a more secure registration document, which will make fraud and vehicle ringing more difficult. That, too, will be in the legitimate owner's interest.

The continuous licensing proposals have been less uniformly welcomed.

Dame Elaine Kellett-Bowman

That is an understatement.

Mr. Norris

That is a masterly understatement. I have never been known to exaggerate, so it is possibly appropriate to put it in that context.

We intend to close off the options for VED evaders, particularly the month dodgers. In the couple of minutes remaining to me, I shall outline our two propositions. First, there is the two-tier option, under which the owners of occasionally used vehicles will pay more. That is a fairly simple system to operate. The other option is what we refer to as the three-tier system, which is more complex to administer. It will cause more paperwork and is arguably more bureaucratic, but it will not involve additional cost to owners. It will, however, involve owners putting an amount down as a deposit at. the first point at which they take the vehicle off the road—an amount that is subsequently recoverable.

I shall now respond specifically to the concerns of my hon. Friend the Member for Milton Keynes, North-East. First, I know that Lord Montagu of Beaulieu has clearly said that we have adequately covered museum vehicles and vehicles undergoing restoration—there is no concern about that. Secondly, we have always made it clear that we do not wish to use the proposal simply to extend the tax base. The £5 charge to which my hon. Friend referred is a charge to recover DVLA costs. The DVLA is empowered by statute only to recover costs at the level at which they were incurred. The charge is not the thin end of the wedge, leading to £135. If there were to be any proposal to go further than recovering costs—that is, to tax rather than simply to recover costs—that would require specific legislative proposals. It is important that my hon. Friend should have that assurance and I am happy to give it to him.

We believe that the consultation has been extremely useful. Sadly, I have not had time to expand on the various arguments for and against the proposals. Suffice it to say, we have been very keen to bear in mind the fundamental objectives of improving the quality of the record and dealing with the issue of evasion. We have borne in mind the many expressions of concern about the level of additional cost or the additional paperwork. It may surprise my hon. Friend—but I hope that it will not surprise him too much—

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

Order. The time for the debate has expired.