Emissions and Vehicle Type Approval

Thursday 20th April 2017 Westminster Hall

13:30

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I beg to move,

That this House has considered the Third Report of the Transport Committee, Volkswagen emissions scandal and vehicle type approval, HC 69, and the Government Response, HC 699.

It is a pleasure to serve under your chairmanship, Mr McCabe.

In September 2015, the American non-governmental organisation the International Council on Clean Transportation discovered that Volkswagen had been cheating on emissions tests around the world. The purpose of such tests is to ensure that vehicles comply with standards on nitrogen oxides—a poisonous emission. Volkswagen eventually admitted that its cheating started in 2006. Defeat device software was installed so that emissions were reduced only when the vehicle was being tested in the laboratory and did not reflect what happened on the road. The consequence was 11 million VW vehicles worldwide—1.2 million of them in the UK —pumping out poisonous gases at many times the acceptable level. This is an issue of consumer confidence and public health. Emissions standards exist to protect our health; each year, in the UK alone, nitrogen oxides cause 23,000 premature deaths.

The Select Committee on Transport was determined to find out what had happened. In October 2015 we first heard evidence from Paul Willis, the managing director of Volkswagen UK. It quickly became apparent that this was not just a case of one rogue company—it exposed deficiencies in the vehicle testing process. We launched our inquiry into VW emissions and vehicle type approval in November 2015. Our report published in July 2016 made findings in three major areas.

First, Volkswagen showed a cynical disregard in its treatment of European customers. We were astonished to hear Volkswagen apologise for what it had done, and subsequently deny that it had done anything wrong. Its continuing refusal to provide UK customers with any compensation remains deeply unfair. Secondly, the vehicle type approval process was not fit for purpose; riddled with conflicts of interest, its inadequacy meant that VW was able to cheat the emissions standards for years without detection. Thirdly, much needed to be done to improve the emissions tests overall. Like the type approval process, emissions standards have undergone review at EU level, but before the emissions scandal they had been allowed to become hopelessly out of sync with developments in vehicle technology.

We have continued to pursue this issue as regards Volkswagen’s culpability for its deception and in pressing for fair treatment of its UK customers. Doing so raises the question of the adequacy, or inadequacy, of the action of UK authorities.

[Andrew Selous (South West Bedfordshire) (Con)]

I am listening carefully to the hon. Lady’s impressive speech. Does she agree that the Government are out of pocket because a higher level of vehicle excise duty should have been paid? The vehicles were not as environmentally friendly as they were made out to be, so, in addition to the claims of individual consumers who were misled, the Government are short of tax revenue, which we desperately need for public services. Does she agree?

[Mrs Ellman]

I certainly do. Indeed, I will refer to compensation later, because it relates to the taxpayer, and the Government, as well as to individuals who had purchased vehicles. The hon. Gentleman makes an important point.

We have continued to pursue this issue both as regards VW’s culpability for deception and in order to seek fair treatment of its customers and, indeed, the taxpayer. Let us look at what happened. Volkswagen’s response to the uncovering of the scandal in the UK has been pitiful. I regret that the Department for Transport has so far been unable to convert its strong words condemning VW’s behaviour into action that delivers concrete benefits for customers and the public, including fair compensation for both.

When Mr Willis first gave evidence to us, and when he came in January 2016, he told us that Volkswagen was committed to uncovering what had happened and making sure it never happened again, and the company apologised for its action. Indeed, if I recall, I do not think that Mr Willis and the company stopped apologising for what it had done for much of the session. We were told that it had hired the law firm Jones Day to investigate and produce a report that would be made public. We were told that the investigation involved 450 people looking through the equivalent of 50 million books. Great importance was attached to that; indeed, Mr Willis told us that he declined to answer a number of our questions because the issues would be dealt with in the Jones Day report that was to be made public and that we would clearly then have access to.

When we questioned the same Mr Willis in Committee two months ago we heard an entirely different story. He assured us that the Jones Day findings were contained in the statement of facts published by the United States Department of Justice as part of its deal with Volkswagen —a document that is 29 pages long—and told us that no other Jones Day findings would be published at all. He implied that a report might not even exist; it might just be this statement of facts—29 pages and not to be published. It stretches credulity that the findings of such an extensive investigation can be summarised in 29 pages. The statement of facts produced for the US Justice Department focuses on events in the USA, and Volkswagen itself repeatedly stated that the events in Europe are entirely different.

We pursued Mr Willis further to seek clarification of a number of points. One was that he appeared to speak in direct contradiction to the evidence given to us by the Minister, who followed him in the evidence session. We received a written response from Mr Willis. That response was not to my or the Committee’s satisfaction; it did not clarify the issue. I have therefore written, on the Committee’s behalf, to Hans Dieter Pötsch, chairman of VW’s supervisory board, seeking further information and, I hope, clarification of where the truth lies.

After so much effort, Volkswagen’s refusal to release in full the findings of the report that we were told so clearly would be published is deeply suspicious. I wonder what the company has to hide and why it is doing this. Mr Willis had told us at an earlier point that it was “implausible” that a senior Volkswagen employee would have known about the defeat devices; indeed, we were told that the scandal originated with a few rogue engineers. Clearly, that view is not shared by the American and German authorities, which are actively investigating several senior VW employees. Oliver Schmidt, who gave evidence to our Committee last year, is among those now being investigated in the States—a situation that hardly inspires confidence.

If VW’s position is that the scandal was caused by a few rogue engineers, it must release the full Jones Day findings to prove that contention. If VW refuses to do so, I ask the Department to act. I recognise that the Department has asked for the Jones Day report, but as far as I am aware, it has not been produced. Will the Minister update us on his efforts to secure the full Jones Day findings and place them in the public domain? Also, what discussions has he held with his American counterparts about the possibility of sharing the information already given to the US judicial system?

Compensation for UK customers is a critical issue. Mr Willis was full of apologies on the company’s behalf when he first gave evidence in 2015, but since then, his tune has changed dramatically. In fact, it is now VW’s position, as Mr Willis stated to us in Committee a short time ago, that the company has done nothing wrong in the UK or the rest of Europe and that therefore no compensation is due.

That is treating the UK with contempt. I remind hon. Members of the position on compensation in other countries. In the US, Volkswagen has agreed to provide each owner with between $5,000 and $10,000, while a deal agreed in Canada will give owners between $4,000 and $6,000 US. Here, they will get nothing at all. Why has no action been taken by the Department for Transport, the Serious Fraud Office or the Competition and Markets Authority? I have asked that question in the past and been told that the issues were being considered, but as far as I am aware, no action has been taken; I hope that the Minister can give me the latest information.

A few moments ago, the hon. Member for South West Bedfordshire (Andrew Selous) raised the issue of compensation. Can the Minister update us on whether he has secured the additional £1 million that he demanded from Volkswagen? That is one of the issues over which we are in dispute with Mr Willis: the Minister told us that the company had not given the Department what it asked for, but Mr Willis appeared to tell us that it had. We are still trying to clarify that issue through correspondence, so if the Minister could help us on it when he replies, it would assist us very much.

I would also be grateful for an update on European Commission proceedings. The officials who appeared before the Committee in February spoke of an ongoing dialogue. What has that delivered, and what action will be taken? I am aware that the Commission proposes to take action against the UK Government for failing to act in relation to its responsibilities to enforce appropriate standards; it would be helpful to know the current position.

I will briefly address the technical measures implemented by Volkswagen in the wake of the emissions scandal. Again, Mr Willis recently told the Transport Committee that the fix had no impact on real-world emissions, and we were told that nothing was wrong. He was asked why, if nothing was wrong, the vehicles were being fixed, and we were told that the sole reason was to ease customers’ minds about how vehicles had got through the testing programme—the company is spending money on so-called fixing, but the company did nothing wrong and is doing it only to ease customers’ minds. I find that completely implausible. That cannot be the situation. We are also told that the technical measure had no impact on vehicles’ performance. I said to Mr Willis that if that was correct, surely he would have provided a warranty to cover the technical measure. I know that the Department has been seeking that warranty, but as far as I am aware, the company has done nothing.

I receive numerous communications almost daily from members of the public who report that their vehicle has been impaired since they had the fix applied. A closed Facebook group bringing together people who have been affected now has 1,400 members. Many have told me about the stress of suddenly finding that their vehicle was not working after the measure was applied. They relayed instances of the vehicle going into limp mode, or not going above a certain speed; in one case, it happened on a motorway, and other cars had to swerve to avoid a collision. In many instances, when customers raised concerns, they were told that it was a coincidence and asked to pay hundreds or even thousands of pounds for the fault created by the so-called fix to be investigated and put right.

Mr Willis told the Committee that he would give us an assurance on that matter and said that it could not be the case, but that the company would investigate free of charge all reasonable concerns raised by VW owners after the fix was applied. I suspect that Mr Willis’s definition of “reasonable” might differ from his customers’. Will the Department monitor what happens in that regard?

The scandal was not only a case of a rogue company; it could never have happened if the regulatory structures for vehicle type approval had been adequate. We must remember that the cheating was uncovered not by a regulator, but by a US non-governmental organisation, the International Council on Clean Transportation. European Community whole vehicle type approval is the process ensuring that vehicles meet the relevant environmental, safety and security standards. An approval authority—in the UK, the Vehicle Certification Agency—certifies that the vehicles meet the relevant standards. Approval authorities work on the basis of information collected by technical services organisations that witness the test and collate the information.

As well as being an approval authority, the VCA provides technical services to manufacturers. The Committee concluded that that constitutes marking one’s own homework; it is a clear conflict of interests. In addition, the VCA competes with other European approval and technical services agencies across Europe for business from car manufacturers. The incentive to be unduly lenient on car manufacturers is clear. That conflict of interest works against consumers and ultimately damages public health.

In their response to our report, the Minister told us of various measures being considered to manage potential conflicts of interest, including more independent assurance and audit and increased training for emissions engineers. We were also told that an end-to-end review of the technical service process was taking place. Can the Minister update us on the outcome of that review? What plans have been put in place for type approval as part of the Brexit negotiations? We currently use European standards; what will happen after Brexit? Is that part of the negotiations? Is it expected that the UK and EU countries will continue to accept vehicles type approved by one another? How will it work?

Our report emphasised the importance of in-service surveillance, or the process of spot-checking vehicles on the road to ensure that their pollution performance is still within an acceptable range. The Minister told us that a new, robust system of in-service surveillance was being implemented, which is to be welcomed, but in the first instance, that surveillance will focus on new vehicles entering the market. Can the Minister update us on the performance of the new market surveillance unit? What progress has been made in ensuring that that unit operates beyond new vehicles?

A gap exists between real-world emissions and those emitted in the laboratory; it is the result of developments in technology and flexibilities allowed in the test procedure. Can the Minister update us on the progress of setting the final requirements for Euro standards? Is he satisfied that they are sufficiently robust? The Department told us that it had written to the European Commission to press for further improvements. What has the response been?

A year and a half after the emissions scandal came to light, Volkswagen has still not been held to account. Instead of providing the information, compensation and warranties that have reasonably been requested of it, Volkswagen maintains that it has done nothing wrong. Surely it is time that the Minister committed to using the powers available to him.

The scandal goes much further than Volkswagen. In the course of our inquiry, it became abundantly clear that the type approval system and emissions standards were not fit for purpose. Their support for manufacturers at the expense of ordinary people, consumers and public health was well known, but nothing was done about it before the emissions scandal erupted. I ask the Minister today for clear information on how the situation has improved.

The Volkswagen emissions scandal was shocking, but it has shone a light on deficiencies in the testing process. UK consumers are being treated with contempt. What action is the Minister taking to correct this outrageous situation?

13:51

[Andrew Selous (South West Bedfordshire) (Con)]

I shall speak only briefly, because the speech by the hon. Member for Liverpool, Riverside (Mrs Ellman), the Chair of the Transport Committee, was all-encompassing and forensic in its detailed examination of the issue.

The Minister, his Parliamentary Private Secretary—my hon. Friend the Member for Finchley and Golders Green (Mike Freer)—and I all believe in free enterprise and salute what business does to pay for public services. However, that is not a blank cheque from the Conservative Benches. As the Prime Minister has said eloquently on a number of occasions, we believe in holding business to account and in holding it to high standards. Given what the Chair of the Transport Committee said, there are genuine questions to be asked. Why are Canadian and American consumers already receiving compensation, while UK consumers are not? Indeed, in my view the Government are out of pocket because of the tax revenue they should have received.

We all know that there is a huge need for infrastructure investment for the ultra-low emission vehicles of the future. I know that the Minister is passionate about the subject. He shares my desire to roll out new-energy vehicles—as they are called in China—across the country. That roll-out will require considerable public investment. Volkswagen is Europe’s largest car manufacturer; it is not a poor company. I would like to see UK consumers being put back in pocket, the Government receiving the tax revenue they have lost, and a contribution made towards the infrastructure that this country will need in order to roll out the clean-energy vehicles of the future.

I have great confidence in my right hon. Friend the Minister. He is indeed a friend; he is a fine Minister and cares deeply about his briefs. He will have been as concerned as I was to hear the report that the hon. Member for Liverpool, Riverside put before the House in such an exemplary manner today.

13:53

[Mike Weir (Angus) (SNP)]

It is a pleasure to appear under your chairmanship, Mr McCabe. I congratulate the hon. Member for Liverpool, Riverside (Mrs Ellman) and her Committee on its excellent report. Her speech set out lucidly the problems that have been uncovered.

Clearly the actions of the company in this matter are utterly reprehensible and have seriously undermined confidence in a company that was previously a byword for reliability. In particular, the actions of Mr Willis before the Committee will have done nothing for Volkswagen’s future reputation in the UK and probably further afield. Nobody would argue with the Government’s response to the report when it states:

“The Government strongly agrees with the Committee that the actions of Volkswagen were completely unacceptable and is also concerned by Volkswagen’s more recent statements that underplay the severity of its cheating.”

The hon. Member for South West Bedfordshire (Andrew Selous) alluded to the fact that in Canada and the United States the company has come up with money and compensated consumers. He also mentioned the loss of tax revenue and perhaps vehicle excise duty, but I suggest that the impact on the public purse has been much wider. Because emissions have been much higher than we were led to believe, there will have been an impact on public health. Addressing that impact will have been funded by the taxpayer throughout the United Kingdom. Volkswagen’s actions have put people’s health in danger and caused greater Government expenditure, and the Government should take that into account in dealing with the matter. The same situation will apply in many countries throughout Europe that have a public health service.

The emissions scandal also feeds into the current debate about the future of diesel vehicles and their impact on air quality in our cities. Clearly, in order to have a rational debate on the matter, we need confidence in the data about the level, as well as the impact, of emissions. The actions of the company have destroyed much of the confidence about the levels of emissions that have actually been generated. Strangely enough, I received an email this week on that very subject from a constituent, Neil, who has a diesel vehicle:

“For the past two decades I have driven a diesel car, on the advice that this type of fuel was the best environmental choice. I am now in the position of being considered the demon of the roads owing to the pollution—particulates and nitrogen oxide—released by these cars. This is due to the car companies’ fraudulent use of pollution cheating systems… I would like to be sure that I will not be the one who ends up footing the bill to change my polluting diesel. Are there any UK schemes being planned to help people like me, who are victims of this scam?”

Perhaps the Minister might care to elucidate. That email illustrates that ordinary people who have tried to do the right thing and get vehicles that are less polluting have ended up with vehicles that appear to be even greater polluters than the petrol cars they drove before. That undermines public confidence and our efforts to reduce our emissions and clean up our air. Volkswagen cannot escape responsibility for what it has done.

I note that the Government response to the report states:

“We found no evidence that other manufacturers we tested were using a cycle recognition device like Volkswagen.”

That may be so, but it has become apparent since the Volkswagen scandal broke that many manufacturers have been using devices to similarly reduce or hide the true emissions of their vehicles. For example, The Guardian reported last year on concerns about Mercedes-Benz, Honda, Mazda and Mitsubishi, and the American magazine Road and Track reported on concerns about some of the same companies, as well as Opel, several American manufacturers, Fiat, PSA and Renault. It also reported that a class action had been instigated in the US against Mercedes-Benz. The scandal may go much wider than just Volkswagen. We have no idea what impact it has had on consumers in the UK or on air quality in many of our major cities.

All of that shows that we face a very large-scale and widespread problem with the data claimed by motor manufacturers, as the hon. Member for Liverpool, Riverside alluded to. Owners of diesel vehicles have been put in an impossible position. I would be interested to hear the Minister’s comments on whether the Department has looked at the wider issue and at manufacturers other than Volkswagen to ascertain the true extent of the problem. It seems to me that tackling Volkswagen is a start, but unless we get to the heart of the problem, find out how large it is and tackle it with all manufacturers, we will face an ongoing and serious problem for consumers and public health.

The Committee’s report and the hon. Lady’s speech have rightly drawn attention to the difference in the approach taken by Volkswagen in the US and Europe. Again, few would dispute recommendation 3:

“Volkswagen’s treatment of customers in Europe compared to its treatment of customers in the US is deeply unfair.”

The Competition and Markets Authority was alluded to, but the Government response makes the point that the CMA has no powers to intervene, as the vehicles concerned are mostly vehicles sold prior to the CMA getting appropriate powers. Given that all this apparently goes back to 2006, that is a heck of a number of vehicles on our roads that are affected.

The Government now talk of joint action with prosecutors across Europe. Can the Minister say whether that will continue? Obviously we are in the process of negotiating withdrawal from the European Union. Will that have an impact on any such action? I suspect that this is not going to be sorted in the next few months, so it may well have an impact in the future. Comment has also been made on the possibility of action under the Sale of Goods Act 1979.

[Andrew Selous]

Is there a reason why the United Kingdom and European legal systems should necessarily be so much slower than the American and Canadian ones? Drivers in those two countries have already received compensation. If that can happen in north America—somewhere that takes jurisprudence extremely seriously—surely it can happen in the United Kingdom and Europe in the same type of timescale?

[Mike Weir]

I see absolutely no reason why it cannot. Obviously the American consumer organisations are slightly different from our own and seem to be better at getting things into court and sorted out much more quickly than is the case under our system, but that should not be the case. Volkswagen, which clearly reacted quickly to the problem it had in the United States—presumably because of the damage to its reputation and market share in the US—should have done the same in Europe. That prompts the question as to why Volkswagen thought that it did not need to do that in Europe.

It is imperative that the UK, along with other European jurisdictions, takes action to show that they are not immune from what is happening in the United States. We must put consumer rights at the heart of this, as well as taxpayers’ rights, because the taxpayer faces a huge and ongoing bill, probably for many decades, due to what has happened over the last few years.

I was commenting earlier about the possibility of action under the Sale of Goods Act 1979. I was a solicitor before I came to this place—some years ago now, admittedly—and that is not an easy route for individuals to take. The Government note they are not privy to the terms of the contracts between individual owners and the company, but many individual owners will have contracts with the third parties who sold them the cars and will not generally have contracts directly with the company, although some may, depending on the type of contract.

However, the most problematic area is simply the impracticability of any individual car owner taking on a massive multinational such as Volkswagen in the civil courts. Such actions are not cheap at the best of times and when such a huge technical issue is involved, the costs are likely to escalate quickly. Also, whatever the sum that an individual may be claiming, there is an incentive for the multinational company to fight the case, because it is not dealing with just one such case but potentially thousands of such cases. There would be a real David and Goliath battle, and it is difficult to see how any individual would have any chance of success.

[Mrs Ellman]

The hon. Gentleman is making some very pertinent and interesting points. The change in Volkswagen’s attitude towards the Committee, from the first time they appeared before us to the last time, two months ago, was dramatic. Initially, they were full of apologies, but on the last occasion they said they had done nothing wrong. I can only feel that that is because they believe that they have got away with this and will not be challenged. Does he agree that that makes it even more important that the Department for Transport considers its powers to challenge, so that individuals are not left isolated and vulnerable?

[Mike Weir]

I was just about to make that very point. It is not within the power of the individual to take on these companies. It seemed clear to me from Mr Willis’s attitude when he last appeared before the Committee that Volkswagen would try to defend its actions, if it says it has done nothing wrong, which would leave the individual consumer in an impossible position. It will only be by Governments—not only in the UK but in other European nations—acting together and going after the company, and making certain that there is a compensation scheme akin to the one that has existed in the United States and Canada, to compensate ordinary victims of this scandal in the United Kingdom.

This is not an isolated case; there are other scandals in the motor industry. For example, there is the Vauxhall Zafira, which kept bursting into flames. The motor industry is an important industry in many parts of the United Kingdom and it may well become even more important as things progress. However, it must get its house in order, because if these scandals continue, there will be a great loss of confidence in many of these vehicles among ordinary consumers. I would ask the Minister to consider that and also to say whether he has discussed with other European jurisdictions the possibility of a joint and multilateral approach to getting a consumer compensation scheme to cover the European Union, or at least several countries together.

14:05

[Daniel Zeichner (Cambridge) (Lab)]

It is a pleasure to serve under your chairmanship once again, Mr McCabe.

I start by congratulating my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who has pursued this issue with characteristic vigour in her role as the Chair of the Transport Committee. It is absolutely right that we are having this debate on the back of the Committee’s report, because since the case broke back in September 2015 we have had Committee hearings, and the issue has been raised frequently at Transport questions; I am sure the Minister remembers those exchanges. Today, however, is a welcome opportunity to hear from the Government what they intend to do about it.

This issue is extremely important and we must ensure that our efforts to hold Volkswagen to account are not side-tracked, either by Brexit, which seems to be all-consuming for some parts of Government, or by the imminent general election. It is also important because the relationship between emissions and air quality is a fundamental issue—we discussed air quality in this Chamber only yesterday. It is increasingly clear to us that despite the Minister’s warm assurances that air quality overall is improving, parts of the country are suffering an air quality crisis, which in some places is literally choking some of our towns and cities. I have no doubt that Members from all parties are looking forward to the Government publishing their third attempt at an air quality strategy soon, particularly because a High Court judge described their last two efforts as “woefully inadequate.”

There are two distinct issues that we are discussing today that feed into the air quality crisis: first, the accuracy of emissions testing, and secondly, as we have heard, there is VW, which, despite the relative leniency of the EU testing regime, actively distorted its tests. I was greatly taken by the comments of the hon. Member for South West Bedfordshire (Andrew Selous) about how recompense could perhaps be made by one of these major companies so as to improve our air quality in the future.

It has been known for a while now that emissions tests are inaccurate. Given the challenges of technology and the importance of getting the variables as similar as possible for all tests, it should have been clear earlier that there was a yawning gap between the laboratory tests and the emissions produced in real driving conditions. Despite what the Government say, it is hard not to conclude that there has been significant dragging of heels in facing up to this matter.

I have been told that, prior to the VW case in July 2015, the Department for Environment, Food and Rural Affairs was briefing Members of the European Parliament to oppose measures on real driving emissions testing, and it is still not clear to us whether the DFT was consulted on that issue. Perhaps we can be told whether it was consulted or not. It was only when the VW scandal became a concern for the wider public and attracted publicity that the Government were compelled to act and support the changes to the EU testing regime last year.

A highly critical European Parliament commission of inquiry concluded last month that EU member states, including the UK, strongly opposed the more ambitious proposal by the Commission for conformity factors for limits on oxides of nitrogen. The commission of inquiry also said that it remained “debatable” whether conformity factors in the new real driving emissions procedures were justifiable from a technical perspective, given that several independent tests on Euro 6 cars are already achievable under existing standards. The commission also recognised that there are standards in the world that are much stricter than those in Europe. We know that EU car manufacturers already place diesel cars on the US market that must comply with the NOx limits in the US, which are much lower than in the EU, so it can be done.

It is crucial the Government are not complacent about any of this. For the sake of public health, we cannot afford to have open-ended emissions breaches. As well as advocating for research into measuring capabilities, there must be a constant review of the regime to ensure that manufacturers do not find ways of avoiding limits through other means, and that is putting it kindly.

In the longer term, the Government must be a leader outside the EU and press for a whole new approach that focuses entirely on real-life driving scenarios. Will the Minister set out his plans for reviewing the mechanisms? Will he commit to bringing down the conformity factor as soon as possible? Will he set out his plans on type approval outside of the EU and tell us what they are? The Government said in response to the Transport Committee report that they are

“considering new research to develop ideas for real world testing of CO2”

and other pollutants. Where has that research got to? Will he make clear his party’s commitments on air quality domestically? I have to say, I felt he did not set out the full detail in this Chamber yesterday. Will the strategy include investment in greener buses and public transport? Will it include a review of plug-in grants and excise duty rates for electric vehicles? Will it include measures to reduce other barriers to electric vehicle uptake? Will it include extending clean air zones to more local authorities?

Of course, the public outrage is around the VW scandal. What VW did undermined not only trust in VW, but public trust in the whole automotive industry. A year and a half on since the case, we have seen a settlement of almost $15 billion for mis-selling nearly 500,000 vehicles to US customers, but in the UK there have been neither financial nor legal penalties to VW for the deception of 1.2 million vehicle owners. The Transport Committee has rightly been damning of the Department for Transport’s ambivalence towards the legality of VW’s actions, despite the strong words in the media recognising that the Department took five months before seeking preliminary legal advice on a prosecution. I strongly endorse the demands made by my hon. Friend the Member for Liverpool, Riverside, particularly on disclosing the data that seem to have been available in America, but not here. It is very important that we know.

The Government still have questions to answer, particularly on what they knew before 2015, what they have done besides the type-approval changes and what their plans are to actually hold VW’s feet to the fire, rather than just promising to do so. Before the scandal broke in the US, the European Commission’s Joint Research Centre raised concerns over the possible use of defeat devices back in 2013. Why was such an allegation not followed up? The Government have since established a market surveillance unit within the Driver and Vehicle Standards Agency, but the European Parliament report suggests that failure to organise a surveillance system beforehand constitutes a contravention of EU law and maladministration. Does the Minister therefore expect legal proceedings from the Commission to continue? How is the Department for Transport progressing with introducing requirements for manufacturers to disclose their emissions control strategies? Will that be affected by any interventions by the European Union?

Despite talk of steely fists and velvet gloves from the Minister in previous debates and monthly meetings with the Department, it seems that VW has not budged an inch in recompensing drivers in our country. Any technical changes that VW is voluntarily carrying out are supposedly to remove any doubt from customers’ minds and are promised not to affect vehicle performance, fuel consumption or driveability, but that is not the experience of some drivers, as we have heard. As my hon. Friend said, if nothing is wrong, why is VW doing that? What is the cost of letting VW sort out these problems in its own time? Can the Minister outline where we have got to with VW?

There are other concerns that the Government must address too. Despite years of false emissions data, written answers to shadow Transport Ministers suggest that the Treasury has found no miscalculation of VED rates. That point was raised by the hon. Member for South West Bedfordshire. The Government are clearly out of pocket. Can the Minister confirm that that is the case and tell us what he is doing about it? What other avenues has he considered in seeking remuneration from VW? We know that he has been in touch with the criminal counsel, but he has so far chosen not to disclose advice in order to avoid undermining ongoing investigations. When was the last time he sought advice? Can he share with us any more on that? Finally, he visited Germany last month to discuss the matter with counterparts. What was the outcome of those talks?

In conclusion, we have a lot of questions, to which I hope we will get answers. The development of an accurate emissions testing regime is fundamental to improving air quality and public health and must be a priority for the Department. The Government must now give strong support to reducing conformity factors and strive for a better testing regime. They must also outline their plans on air quality and emissions reductions. On VW, it really is time for the Minister to assure not just this House, but vehicle owners and those suffering poor air quality that he has more than strong words to offer. We need action, and we need results. I trust he will not disappoint.

14:15

[The Minister of State, Department for Transport (Mr John Hayes)]

It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the Chair of the Transport Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman), on securing this important debate and bringing this subject to our attention once again. Let me be clear—I apologise if this is repetition, but repetition from one’s own mouth always seems like re-affirmation or re-emphasis; repetition only seems to come from other people’s mouths—that the Government continue to take this matter extremely seriously.

As you would expect, Mr McCabe, I want to deal with a number of the specific points raised in the debate, but if I may, I will first address a couple of the issues raised by the hon. Member for Cambridge (Daniel Zeichner) in his remarks, which preceded my contribution. I do not want to be distracted from the main subject of the debate, and you would not allow me to be, Mr McCabe, but air quality is relevant, and we debated it yesterday in this place. The hon. Gentleman asked a number of specific questions. He will understand if I am circumspect about the exact details of what the draft plan on which we will consult will look like, but I am prepared to say —it is right that I am open with him and this Chamber—that I think it is important that public transport is part of our response to the air quality challenge.

My view, which I have made crystal clear in the Department, is that if we can get fleet purchasing and public transport, including buses and taxis, in a better place in respect of emissions—by that I mean getting those kind of vehicles moving to a low-emission metric, although I have no fixed idea of exactly what that might look like—we can make quite a significant difference in the worst-affected areas in particular. He will know that we have taken a zonal approach in the past, and I see no reason why that should change fundamentally.

That is not to say that air quality is not a national concern. The policy will, of course, be a national policy, but it will be focused on the zones where air quality is at its worst, because we know that air quality is closely related to wellbeing. It has a deleterious effect on health, particularly for vulnerable people—the sick, young children, elderly people and so on—and its effects are exaggerated in urban places, unsurprisingly, because of the density of traffic and population and the coincidence that that brings.

Similarly, the hon. Gentleman knows that that plan will be a matter for consultation. A draft will be published, and we will consult widely on that draft with Members of this House, local authorities in the worst-affected areas and others who have interests in this business. We are genuinely open-minded about that. I have worked very closely with my colleagues in the Department for Environment, Food and Rural Affairs. I have been meeting weekly with my hon. Friend the Member for Suffolk Coastal (Dr Coffey), which is a great pleasure in itself, but is also a productive, professional business. She and I have engaged our officials to ensure that we get a joined-up approach to this issue.

Of course, DEFRA leads on air quality, but as transport is so salient in finding the right solutions, we are very conscious that there has to be a close association between DEFRA’s perspective and ours, and that of other Government Departments. We have been in close liaison and association with them too. It will be an open-minded approach, founded on a clear determination to do the right thing.

Mr McCabe, we did not enjoy the pleasure of your chairmanship yesterday, so I hope you will not mind if I inform you and others of what I said then. It is absolutely my view that we must not, in our determined efforts to tackle air quality, disadvantage those who are already worse off—I am thinking in particular of the less well-off drivers of older diesel vehicles. We have to be careful that an unintended consequence of any otherwise efficacious policy should not put those people into a very difficult position indeed. Yesterday, in the debate secured by my hon. Friend the Member for Tiverton and Honiton (Neil Parish), we talked about a targeted scrappage scheme, as that was the case he made. I say now what I said to him: of course, we always welcome contributions to the discussion. He made his contribution and that will be fed into our work and our thinking. If one is to have a genuine, open-minded consultation, one must take into account a range of views and opinions, ideas and schemes. Forgive me for repeating—but that did not sound any worse than it did yesterday, at least not from my perspective.

The other matter that the hon. Member for Cambridge raised, and quite properly so, was the upcoming changes to testing. It is important to be crystal clear about what the new emission tests are and why they matter. The changes introduce a compliance criterion that is defined as a conformity factor. The conformity factor is the ratio of emissions recorded during the real world test, which is the limit on the laboratory test that must not be exceeded during the real world, on-road testing.

In the proposal, the requirement for the real driving emission tests is phased in in a two-step process, to allow manufacturers time to bring compliant products to the market. Step one mandates a conformity factor of 2.1 for all new model types by 2017. Step two achieves full compliance with Euro 6 standards for all new model types in January 2020, with an additional conformity factor margin of 0.5 to take into account measurement uncertainties. That proposal means that after 2019 all new models brought to the market must meet the Euro 6 limits in the real world tests. That is the bottom line, with a margin for measurement error of the test equipment. The hon. Gentleman asked what the UK’s position had been on that. I can tell him, and I think he will be reassured, that the UK pushed very hard in the negotiations for the introduction of those changes on the timescale I have described. We were anxious to make sure that there was no delay in moving to those real world tests.

That point gives me an opportunity to deal with some of the specific matters raised by the hon. Member for Liverpool, Riverside and others and to say a word about how we got to where we are on air quality and emissions. I do not see the air quality challenge as a partisan matter, taking it as read that Members across the House take it seriously. Bluntly, the challenge has been compromised, and I would go so far as to say worsened, by the failure of the EU vehicle emissions regulations to deliver the anticipated reductions in air pollution—we know that now—and by neglect and cheating by some diesel car makers to avoid reducing emissions as they were supposed to. The pollution limits in EU law agreed under the Labour Government in directive 2008/50/EC were based on the assumptions that improvements in vehicle technology were deliverable. Although it is true that in the UK we meet the majority of our air quality limits, it has become clear that, like 17 other countries, we breach annual targets for nitrogen dioxide.

Yesterday I committed to make available to those who were in the Chamber then—my hon. Friend the Member for South West Bedfordshire (Andrew Selous) is one of them, and the hon. Member for Cambridge is another—the breakdown of the sources of that gas by transport type, which includes shipping, trains and all kinds of other sources. I will make that available to other Members present today, as I think it will be helpful in informing future consideration. However, we are certain, and other Members of the House will be too, that diesel vehicles are a significant part of the problem. They are not the only part, but they are significant. It is right that the hon. Gentleman emphasised buses and other vehicles, because we often think that is about only cars. It is about not just cars but light goods vehicles, HGVs, buses and so on.

The failure of Euro standards and the failure therefore of the anticipated improvements to air quality are a pressing problem across Europe. I hesitate to say it is a scandal, but I would say that it is a fundamental failure of the approach of the EU. As in so many other areas of our national life, we have been injuriously affected by the European Union. How wonderful that we will not have to face that prospect in the future as we leave.

[Mrs Ellman]

rose—

[Mr Hayes]

Oh, I have provoked the Chairman of the Select Committee to intervene.

[Mrs Ellman]

I am sure that the EU is not without fault, but national Governments are responsible for their own certification systems, and our certification system and the type approval process has been found severely wanting. I hope that the Minister will tell us in due course what he as Minister in this country is going to do about that.

[Mr Hayes]

The hon. Lady is of course right, and I will say more about that. She will know that some of the work we have been doing domestically, as well as that which we have been doing to change assumptions pan-nationally, is born of the fact that we agree with her that we can and must do more. Although it is true that a contributory factor to the problem has been the failure of the standards, she is right to say that there are other things that we do and can do better.

Let me move to the substance of today’s debate. A good starting point would be to begin where the hon. Lady began, which is with what Volkswagen actually did. Benjamin Disraeli said:

“Circumstances are beyond human control, but our conduct is in our own power.”

In our judgment, Volkswagen used a defeat device, as defined by EU regulation. The cycle recognition software that VW employed in the course of the albeit imperfect tests, which I described earlier, was a defeat device. We do not consider that any of the exceptions to the prohibition of defeat devices apply here, or that Volkswagen has established any justification for the use of that device. We do not think there is any get-out-of-jail card for Volkswagen, despite what it claimed or said to the Transport Committee. On that basis, the Department’s view is that Volkswagen used a prohibited device. I have been consistently clear that Volkswagen must therefore face appropriate consequences for the manipulation of those emission tests, and I am confident that progress is being made in the jurisdictions where the major wrongdoing occurred.

A number of contributors to this debate asked me about the work we are doing across jurisdictions, including Germany, for obvious reasons, and the USA. We intend to discuss this further with US and German counterparts. We have also been working with the European Union, because a number of EU countries were affected by the consequences. We plan, wherever we can and at whatever point, to ensure that the action that is taken by others is consistent with the action we take. We will not be laggards. Far from it: we want to encourage that sort of joint approach at every opportunity. Those discussions are continuing, and I hope they will be productive.

The issue of EU-wide action was also raised. I have to say that, at this juncture, the EU as a body does not seem to have moved with any great enthusiasm, and certainly not with any alacrity. That is why we plan to engage particularly with German counterparts. That is where the wrongdoing largely took place and where much of the evidence lies, as the Secretary of State said when questioned previously. Action across national boundaries would be the most effective approach. To be clear, it is not the only action we should take, but it is an important part of the determined approach we intend to continue to adopt.

[Andrew Selous]

Does the Minister have an idea of the timescale for when consumers and even the Government might receive some form of compensation?

[Mr Hayes]

My hon. Friend may have heard—I heard about it recently—that we are going to have a general election. The problem with that, in terms of the business of Government—he knows this well as a former very distinguished Minister with whom I worked very closely in office—is that it limits what Ministers can do and say. I have to be cautious in setting out an immediate timetable, given the events that are going to take place over the coming weeks. While this House is sitting—I remain a Minister through the election process—I will press my officials very hard, not least as a result of this debate, to ensure that there is no hesitation or undue delay within the bounds that I mentioned.

My hon. Friend is right—I can see where his mind is going—that we must not have a couple of months in which nothing happens. That would not be right. As much as I can, I will continue the work and reinvigorate my officials—I do that every day, but I will do so with even more vehemence than I usually exercise—to ensure that the eventuality that he postulated would be unhelpful does not come to pass.

I have been very anxious and determined to press Volkswagen executives consistently in person and in writing to address many of the outstanding issues that were raised by the hon. Member for Liverpool, Riverside. I have brought with me a list of occasions on which officials or Ministers have met or written to Volkswagen over recent weeks and months. It goes back to the very beginning of this sorry tale. I see no harm in setting out that chronology for Members. I will not read it out because it is quite exhaustive, but I will make information available about what we have done and when we have done it. Let it suffice to say for the purposes of this debate that the Secretary of State and I have met Volkswagen on many occasions and written to it on many more. My officials have been engaged with it steadily and determinedly to bring about many of the things that hon. Members call for.

It is right, as William Morris says, that

“all men should have work to do which shall be worth doing”.

I think this is work worth doing, because it is in the interests of the consumers who were adversely affected by the means I have described, who bought cars in good faith believing one thing, and who found that they were dealing with a very different product from the one they imagined they purchased.

There is disappointment in this House—it was reflected in the comments of the hon. Member for Liverpool, Riverside and is shared by the Government—about the lack of remorse and appreciation of the gravity of the deception that has been displayed by Volkswagen, not least in Mr Willis’s appearance before the Transport Committee on the same day that I gave evidence.

Let me go back to the start of this sorry business to fully explain where we are now and the progress we have made. If I do not, someone, perhaps the hon. Member for Cambridge, will rise to their feet with speed and say, “It’s all very well. You’ve had all these meetings, John”—well, he wouldn’t in fact say “John”, because you wouldn’t have it, Mr McCabe—“but what have you achieved?” Just weeks after Volkswagen’s supercherie actions were discovered, the Department launched an emissions-testing programme to understand whether there was widespread cheating across the industry. Alongside the Vehicle Certification Agency, we tested many of the UK’s most popular diesel cars. We were the first European country to publish a report of that kind in April 2016, with Germany, France and several others following shortly afterwards. The programme found no evidence that any manufacturers we tested other than Volkswagen had utilised prohibited defeat devices to manipulate emissions tests to gain a vehicle’s type approval.

It was clear to me then and remains so now that taxpayers should not have to foot the bill for the testing programme. Volkswagen’s actions cast doubt on the integrity of the whole industry and, following meetings and repeated requests, the company reimbursed my Department with £1.1 million. That was an important victory for the UK taxpayer. The money is being used for three important areas of work, which I want the Chamber to know about: first, to increase the UK’s capacity and capability to test real-world emissions, which is a response to a question and a point made by the Select Committee Chair, the hon. Member for Liverpool, Riverside, and the Opposition Front-Bench spokesman, the hon. Member for Cambridge; secondly, to increase the air quality fund, allowing us to provide funding for a city council’s HGV fleet to be retrofitted with emissions reduction technology, to reduce emissions in that location; and, thirdly, further investment to encourage the uptake of ultra-low emissions vehicles.

But we are not stopping there. Mr Willis may believe what C.S. Lewis did not—that an “explanation of cause” is a “justification by reason”—but I too do not. I am therefore pressing Volkswagen for a further £1 million to fund the first year of the new market surveillance unit. The Department set up that unit in the Driver and Vehicle Standards Agency in the wake of the VW scandal to source and test vehicles to ensure that they comply with the law. We will of course continue to be completely transparent on matters relating to that testing and, as I said previously but am happy to repeat, we will publish the results of this year’s programme when we have fully analysed the results. It is right for us to be as open and transparent about that to provide the further reassurance that Members have sought in this debate.

The new unit will provide essential ongoing reassurance to motorists and the wider public, and useful information to the Government and the House. In all my meetings and correspondence with the Volkswagen managing director and management board, I have been absolutely clear that the Government expect that further £1 million. I have emphasised that we will be relentless in our pursuit of the money, because we would not have been spending it had it not been for Volkswagen.

[Daniel Zeichner]

On a point of clarity, given that the welcome reimbursement of the Government by Volkswagen presumably means the company has conceded that there is an error and a problem, why can there not be similar good news for all the vehicle owners who also need compensation?

[Mr Hayes]

I agree. I believe that the consumers affected by the scandal should be compensated. I have called on the company to offer UK consumers a similar package to that given to their US counterparts—the point made by my hon. Friend the Member for South West Bedfordshire. The company will claim again, as it already has, that the United States has a different legal system with different requirements, and that that is somehow a justification for not doing what I have just called for. However, I think that the company has an ethical responsibility to do so.

We need a fair outcome for UK vehicle owners. To that end I have met legal firms that are considering taking action against Volkswagen on behalf of affected customers. I am now actively considering ways in which we can support the firms to optimise the chances of their claims succeeding—those discussions are ongoing. My officials are speaking to vehicle owners’ legal representatives, and I am happy to meet those people again. I encourage the owners of affected vehicles to look carefully at the actions the legal firms are taking and to consider whether it is right for them to join them. Compensation, far from being off the agenda, is still very high on my agenda for the reasons I have given.

Let us not forget that the issue has, as I said, left people with vehicles that they bought on one assumption but now know not to fit the bill. At the technical level, it is important that the consumers affected have their cars fixed. Volkswagen has developed technical solutions to remove the cycle recognition strategy for vehicles across their four affected brands. We have of course not relied on Volkswagen’s opinion that the solutions are appropriate, but have performed our own checks to verify the accuracy of the company’s claims and the efficacy of the devices.

As the original approval authority in the UK, the Vehicle Certification Agency has direct responsibility for signing off the Skoda technical solutions. The VCA checks that vehicle emissions, such as nitrogen oxides and carbon monoxide, and vehicle noise remain below the legal limits. As part of the testing, the VCA also checks for any adverse effect on CO₂ emissions and maximum rated engine power. I am aware that those factors have been of serious concern to affected consumers and I want to reassure people that we are closely monitoring the issue.

I have pressed Volkswagen to ensure that it implements those technical solutions as soon as possible. As of 10 April, Volkswagen had applied the fix to approximately 592,000 of the 1.2 million affected vehicles in the UK. It has put extra resources into the process as a direct result, in my view, of the pressure that I have exerted on it. I told the company I wanted that done quickly, properly, efficiently and conveniently for the customer. We are making progress, but the Department’s officials are monitoring the process carefully. I asked Volkswagen for regular updates on progress, which we are getting.

Of the seven technical solution clusters that Skoda proposed to the VCA, we have so far signed off two. Since then we have been made aware of concerns that the durability of the emissions regulation system may be adversely affected by the technical solution. The Department’s technical experts have frequently requested—I have been to meetings with Volkswagen about this—detailed information from Volkswagen, which it has often taken far too long to provide. As a result, we have had to delay the sign-off of the remaining vehicles while we continue to assess the evidence presented so far.

Separately, we are pressing Volkswagen to provide UK customers of the four VW brands that have the technical upgrade applied with a meaningful statement of its goodwill policy. Volkswagen must provide a meaningful statement of its goodwill policy—I repeat that for the sake of emphasis, though I do not want to become a creature of habit in employing the device of repetition. The company must investigate any complaints that arise from the service action, taking appropriate measures to rectify them swiftly and appropriately.

[Andrew Selous]

I am exceedingly grateful, as the Minister is being very generous in giving way. Obviously, Volkswagen sells cars all around Europe. Is the Minister aware whether Volkswagen’s dealings with France, Spain, Italy or Denmark are at the same level as ours? Are such countries managing to get a better deal from Volkswagen, or are we all chugging along at the same sort of level? If he does not know the answer now—it was a bit unfair to spring the question on him—perhaps he will kindly put a letter in the post to the Members present.

[Mr Hayes]

I have been a Conservative Front Bencher for 18 years and a Minister since 2010. I did not know this immediately, but it did not take me long to work out that when one does not know an answer it is better to say that one does not know; so, I do not know the answer. We are working with our counterparts across Europe, but I do not know specifically what questions have been asked in the particular area of concern my hon. Friend raises. I will happily check that speedily and let him, the Chairman of the Select Committee and the Opposition spokesman know. My hon. Friend is right that, as I said earlier, our work will be better if it is consistent with the approaches adopted by other countries in similar circumstances so that consumers here know that they are getting all that they should and so that we learn from one another about how we handle this matter. He can be confident that the answer will be provided to him with great speed, given the imminent events to which I referred briefly earlier.

I urge any consumers who are not satisfied with their vehicle or the service they have received to contact the Volkswagen customer services department immediately. I have had a personal reassurance from Volkswagen Group’s managing director that he will investigate personally—I emphasise that strongly—any complaint about the technical solution on a case-by-case basis. I fully expect that commitment to be honoured. It is time for the company to demonstrate that it is serious about looking after existing customers, not just those who are about to purchase a new vehicle.

Of course I recognise that Volkswagen cannot be held responsible for everything, as I said to the managing director. If something goes wrong with someone’s vehicle, they cannot first claim that it has something to do with the technical fix. If the issue was entirely unrelated, that would not be right or fair. But where there is any doubt about the origin of the issue, Volkswagen must definitively rule out that it could have been caused by the fix. The idea that Volkswagen knew nothing—that it had not the merest inkling—at the outset about the fact that there was a problem is just incredible, and “incredible” is the best way of describing the evidence that was given to the Select Committee. The burden must not be borne by consumers. I want to ensure that UK consumers are treated fairly and receive the service they deserve.

Volkswagen also continues to disappoint in its own investigation into what went wrong with the company. Given the governance and accountability that one would expect in a large multinational company, that should be straightforward. In answer to numerous questions from the Transport Committee, as the hon. Member for Liverpool, Riverside said, Mr Willis repeatedly responded that we will have to wait until the Jones Day report is published. I do not know whether Mr Willis is an imaginant, prone to ideas entirely at odds with what other people might conclude, but it is not unreasonable— rather, it is entirely sensible, moderate and measured—to expect Volkswagen to publish the results of the Jones Day investigation. To claim that a report never existed is beyond incredible.

Volkswagen instead provided the Department with a copy of an agreed statement of facts drafted for the purpose of the plea agreement between it and the US Department of Justice. It suggests that that statement gives an overview of Jones Day’s findings, which is of course impossible to verify without access to the complete report. That is unacceptable, and it has been a key issue in the three letters I have written to the managing director of Volkswagen since I gave evidence to the Transport Committee in February, to which I am still awaiting a full reply. Looking to the future, I reassure the hon. Lady and others that the Government are committed to taking action on vehicle emissions testing to restore consumer confidence and deliver our wider air quality and climate objectives.

The hon. Lady raised the VCA, which has more than 30 years’ experience in testing and certifying vehicles and their systems and components for the UK Government. The VCA is striving to ensure that it continues to take a robust approach to the approval process that delivers the highest rigour and independence.

I have spoken about the changes to real driving emissions. I am happy to provide further information about that should any Member present wish me to do so. It may be worth my writing again to the Select Committee Chairman to re-emphasise the points that I made about that during our considerations.

As we come to the end of this short debate, I conclude by making clear that the Government continue to challenge Volkswagen’s unacceptable view that it does not need to compensate British motorists who have been affected by its manipulation of emissions tests. Ruskin said that endurance is nobler than strength, and my enduring determination is to ensure that we not only closely monitor the progress of Volkswagen’s implementation of technical upgrades and oversee that it deals appropriately with issues and complaints related to those changes, but press for it to do what it should have done all along: admit its failure and offer recompense for it. It is, in the end, as straightforward as that.

W. B. Yeats said that we should not

“wait to strike till the iron is hot; but make it hot by striking.”

I believe that the introduction of the Government’s market surveillance unit, the more rigorous approach that is being finalised for type approval testing and the implementation of real driving emissions testing will greatly improve our air quality and minimise the possibility of manufacturers doing what this large and, it seems to me, careless company did. As I said yesterday, Governments can be a force for good. The Government must, on this occasion, with a steely fist and an iron will, be a force for good and call Volkswagen to order.

14:56

[Mrs Ellman]

All hon. Members have made important points about the scandalous behaviour of Volkswagen and the broken testing and type approval system. I am encouraged by the Minister’s response about the work that he has done, and I urge him to continue it so that individuals and the taxpayer receive compensation and the promised fix. I ask him to keep pursuing the Jones Day report and, so far as he is able to, to enable its publication, because it contains vital information. It is a shame on Volkswagen, a major international company, that it seeks even to deny the existence of a report that could expose the horror of its shortcomings.

Question put and agreed to.

Resolved,

That this House has considered the Third Report of the Transport Committee, Volkswagen emissions scandal and vehicle type approval, HC 69, and the Government response, HC 699.