Ecological Cars (Hansard, 16 December 2002)

§ Mr. Jamieson

In order to introduce a VED scheme based on carbon dioxide CO₂ emissions (in turn, based on information obtained during the EU Type Approval test) it was necessary to develop systems to enable emissions information to be held on the vehicle register at the Driver and Vehicle Licensing Agency (DVLA). It was also necessary to allow time for motor manufacturers and dealers to make changes to their IT systems to accommodate the new system. Although CO₂ information has been available for most new cars registered since 1997, it would have been major and very costly bureaucratic exercise to collect CO₂ information retrospectively.

The Chancellor of the Exchequer took these factors into account in setting 1 March 2001 as the date when the scheme should take effect. Whatever date the Chancellor had set, apparently identical vehicles registered either side of that date might have paid different VED rates.

A further reason for choosing the date took into account the effect on the second hand car market. The March 2001 date coincided with the introduction of the "Y" registration prefix letter and accordingly would make for a clear indication of what vehicles were, and which were not taxed under the CO₂ scheme. That was particularly important as we expect and intend that the scheme to have a strong impact on incentives in the second hand market.

Since CO₂ emissions data are not readily available for vehicles registered before 1 March 2001 these cars are taxed on the basis of their engine capacity as a rough indicator of CO₂ emissions. There are now around 9 million cars in the lower band of the engine size scheme (set at under 1549 cc) benefiting from a rate of £105, a reduction of £55 per annum on the standard rate.