Company Cars: Imports (Hansard, 15 February 1990)

§ Viscount Ullswater
My Lords, 45 per cent. of the cars imported into Great Britain in 1989 were classed as company cars. I regret figures relating to the United Kingdom are not available.

§ Lord Jay
My Lords, in that case, and as I understand that at least 50 per cent. of the new cars sold are company cars, would not a tougher tax treatment of company cars be beneficial to the Budget revenue, the balance of payments, and probably to traffic chaos in London?

§ Viscount Ullswater
My Lords, I agree with the noble Lord that 51 per cent. of new cars registered are company cars. However, it would certainly be wrong to accept the noble Lord's proposals because companies have a greater propensity than private individuals to buy UK-produced cars. If the company car market is eroded then UK-based companies will have the most to lose as overall sales fall, while the level of import penetration is likely to rise.

§ Lord Renton
My Lords, is it not wise for more company cars and private cars to be British, bearing in mind that British cars today are of excellent quality and are sold at competitive prices?

§ Viscount Ullswater
My Lords, I entirely agree with the remarks of my noble friend, but the Government's policy is that buying British without regard to value for money would insulate suppliers from competitive forces. It would be against the car industry's long-term interests, and it would almost certainly conflict with our international obligations.

§ Lord Stoddart of Swindon
My Lords, is the noble Viscount able to tell the House what constitutes a British car? What proportion of the composition of a car makes it a British car? Is it 60 per cent., 70 per cent., 80 per cent. or 100 per cent.?

§ Viscount Ullswater
My Lords, the answer to that, so far as these figures are concerned, is a car made in this country.

§ Lord Elton
My Lords, is it not the case, if my noble friend wishes to base his policy on the Question by the noble Lord, Lord Jay, that the Question 1460 should not be what percentage of cars imported into the UK were company cars, but what percentage of company cars were imported into the UK?

§ Viscount Ullswater
My Lords, the figure is almost the same; it is about 48 per cent.

§ Lord Stoddart of Swindon
My Lords, I am sorry to come back to the noble Viscount, but he evaded my question. He said that what constitutes a British car is one made in this country. One understands that, but does it constitute a car produced in this country from British components made in this country, or does it also constitute a car put together in this country by a screwdriver, using parts imported from abroad?

§ Viscount Ullswater
My Lords, yes, it would. What has happened over the past 15 years is that car production has dropped from a level of 1.5 million in 1974 to 1 million in 1979. That is a drop of one-third. It has now risen to 1.3 million and we hope, with continued investment, especially from abroad, it will rise to 2 million by the mid-1990s.

§ Lord Hatch of Lusby
My Lords, is the noble Viscount aware that according to one estimate the taxpayer is subsidising company cars to the tune of £2.8 billion a year? Is he further aware that these company cars are emitting 14 million tonnes of carbon dioxide per year?

§ Viscount Ullswater
My Lords, the whole business of company cars is rather complicated because company car registrations do not include registrations by self-employed persons for business use.

§ Lord Rodney
My Lords, can my noble friend tell the House whether a company car emits more carbon dioxide than a private car?

§ Viscount Ullswater
My Lords, I do not think it would do so.

§ Lord Williams of Elvel
My Lords, since the Government are in fact subsidising company cars—I am sure the noble Viscount recognises that there are considerable benefits to an individual who has a company car —would it not be appropriate for the Government to take up the point made by his noble friend Lord Renton, that such cars should only be subsidised if they have a large UK component in them?

§ Viscount Ullswater
My Lords, I do not think I can go any further than my earlier answer. Buying British without regard to value for money would insulate the suppliers. As for the tax regime, that is a matter for the Chancellor.

§ Lord Jay
My Lords, can the Minister also tell the House whether, when the Government say that a higher proportion of our manufactured imports consists of capital equipment, they are classing company cars as capital equipment?

Viscount Ullwater
My Lords, I did not catch the noble Lord's question.

§ Lord Jay
My Lords, when the Government tell us, as they often do, that a high proportion of our imported manufactured goods are capital goods rather than consumption goods, for that purpose do they count these company cars as capital equipment?

§ Viscount Ullswater
My Lords, I shall have to find out and write to the noble Lord.

§ Lord Hatch of Lusby
My Lords, will the noble Viscount answer my question? Is he aware of the estimate —and is it the same estimate as the Government's?—of the subsidy by taxpayers to company cars which has been placed at £2.8 billion a year? As he said, more than half of the new cars purchased each year are company cars. Their use is also estimated to be three-quarters for private use.

Noble Lords
Question!

§ Lord Hatch of Lusby
My Lords, that is subsidising the emission of carbon dioxide into the atmosphere, whether they are company cars or private cars, but more than half of the new cars are company cars.

§ Viscount Ullswater
My Lords, the noble Lord's question —if there was one —does not take into account the benefit charged to the person using the car, the taxpayer.

§ Lord John-Mackie
My Lords, are not the people who own company cars taxed on them as a perk, or am I the only person who is charged by the Revenue for that?

§ Viscount Ullswater
My Lords, the people who use company cars for their own benefit are taxed on them.