Clean Air Zones Central Services (Fees) (England) (Amendment) Regulations 2026
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Lord Hendy of Richmond Hill
That the draft Regulations laid before the House on 20 April be approved.
Relevant document: 2nd Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, this debate will deal with both the statutory instrument and the regret amendment laid by the noble Lord, Lord Moylan. These regulations make two principal amendments to the Clean Air Zones Central Services (Fees) Regulations 2020. First, the regulations extend the period during which local authorities may be charged for using the clean air zone central services website from 31 March 2027 to 31 March 2031. Secondly, they increase the fee that local authorities will pay to use the central services from £2 to £4 per transaction as a step towards full cost recovery. The regulations are intended to come into force on 1 September 2026.
As background, clean air zones encourage green travel by charging older, more polluting vehicles a fee to enter such zones. They have been introduced selectively where evidence shows that air quality is worse than the standards set out in the Air Quality Standards Regulations 2010; where they are the quickest way to reduce nitrogen dioxide in the local area; and where other options would not deliver the same results so quickly. There are currently seven clean air zones operated by local authorities in England: Bath and north-east Somerset, Birmingham, Bradford, Bristol, Portsmouth, Sheffield and Rotherham, and Tyneside.
The evidence indicates that clean air zones are having a positive effect. Between 2019 and 2024, in the areas of these cities, annual average concentrations of nitrogen dioxide reduced by between 18% and 46%, including by around a third in Bristol, 40% in Bath and north-east Somerset, and by more than 40% in Tyneside. These results matter. In the UK, it is estimated that exposure to air pollution has an annual impact on shortening lifespans equivalent to 29,000 to 43,000 deaths. This is about children breathing cleaner air, building healthier communities, preventing illness and protecting our National Health Service.
To support local authorities with the introduction and operation of these clean air zones, in 2021 the previous Government established the “Drive in a clean air zone” central services. This allows drivers to check on a website whether their vehicle meets the air-quality standards for that clean air zone and, where necessary, pay the relevant charge. It also provides support for those who do not use digital services to make payments and assists local authorities with enforcement.
This brings me to the issues raised by the noble Lord, Lord Moylan, who in his regret amendment suggests that the statutory instrument would risk additional costs being passed on to motorists, who are already facing high fuel costs; would fail to provide sufficient assurance that drivers will be protected from any direct or indirect increase in clean air zone charges; and would extend the charging period until 31 March 2031, despite the continuing financial pressure on motorists.
I should say at this point that I wrote today to the chair of the Secondary Legislation Scrutiny Committee, the noble Lord, Lord Watson, to clarify government estimates of cost recovery likely to result from this fee increase. This letter corrects information sent to the Secondary Legislation Scrutiny Committee in May. I copied that letter to the noble Lord, Lord Moylan, and the noble Earl, Lord Russell. We expect the fee increase to £4 per transaction to result in greater cost recovery, but this is not expected to be 100%.
To explain the history of this instrument, the 2020 regulations made by the previous Government permit a fee of £2 per vehicle until 31 March 2027. This was based on the assumption that by March 2027, the clean air zone central services would no longer be required, as local authorities would have achieved compliance with legal air pollution limits. The previous Government were not able to achieve this, and it is now clear that in some areas compliance with these limits will not be achieved until the early 2030s. Therefore, clean air zones will need to remain in place for longer than envisioned, and this instrument, by extending the charging period, is necessary to continue operating the central services.
The previous Government also failed to increase—at all—the central service fee designed to cover the Government’s cost of administering the service since it was introduced in 2020. Raising the fee to £4 will increase cost recovery to an estimated 90% for the lifetime of the central services from the financial year 2020-21 to 2030-31. To be clear, this still leaves the Government and the taxpayer subsiding these services to the tune of 10% of the overall cost. Through this fee increase, we are putting CAZ central services on a stable, sustainable footing.
I wish to reassure noble Lords on the question of the potential impact of this increase on motorists. We have been very clear with local authorities by letter that we expect them not to pass on any increase in costs to motorists. Tackling the cost of living is this Government’s top priority, and we are ensuring that this change does not add to the challenges many people face. This will be manageable for the relevant authorities as most of the schemes are currently running a surplus—significant surpluses in some cases. It is not right that taxpayers across the country should be subsidising surpluses, in these few authorities, generated from a scheme that is designed to clean up our air, and not to generate income. For example, from the information published by the council in Bristol, we understand its CAZ surplus has been running to several millions per year, and the fee increase could reduce it by around £400,000 in 2026-27, £1.2 million in 2027-28 and £1 million in 2028-29.
I further reassure noble Lords that, should any local authority be in a shortfall because of the operating costs relating to its clean air zone, this will be covered by the Government under new burdens rules. We have ensured both that any costs will not be passed on to motorists and that any additional costs to local authorities whose schemes are not in surplus will be covered by the Government.
The noble Lord raises a concern about rising costs to motorists, including fuel charges, but this issue is separate from the administration of a clean air zone service and the internal fees we are speaking about today. We are backing drivers and businesses by extending the 5p fuel duty cut and extending the 12-month road tax holiday for hauliers. This extension to the 5p duty is keeping taxes at a 16-year low and saving the average driver £120. The Government are also making record levels of investment in our road network, including a £7 billion commitment to tackling potholes and improving local road maintenance. Furthermore, we are delivering long-term funding through the road investment strategy, ensuring that a strategic road network continues to support economic growth and connectivity across the country. These measures demonstrate our commitment to easing the immediate pressures on motorists and investing in the future of our transport system.
I also wish to address the point raised by the Secondary Legislation Scrutiny Committee that the fee has not been reviewed or updated in line with inflation for six years and that charges set out in legislation should be reviewed regularly to avoid significant step changes in amounts. I cannot account for the previous Government’s inattention to this principle, as clean air zones have been operating for some years, but this Government now have the necessary data available from the past 12 to 18 months on the usage costs and revenue, and therefore it is an appropriate moment to revisit the fee structure considering the improved evidence base.
We will continue to monitor usage costs and revenue from the central services over the coming years, so that we can anticipate any further changes needed. Local authorities are expecting this fee change from 1 September, and officials continue to help them prepare. The Government will also work closely with the DVLA, which manages the clean air service, to ensure the smooth implementation of the revised fee when the regulations come into force. The Secondary Legislation Scrutiny Committee requested that, should further instruments be required to increase the fee or extend the period for which it is charged, the Explanatory Memorandum should include information, and we will do this in future, should it be necessary.
In conclusion, these regulations will ensure that the central services underpinning clean air zones continue to operate effectively and sustainably, supporting continuing improvements in air quality in towns and cities with clean air zones. I hope noble Lords will join me in supporting these regulations. I beg to move.
Lord Hendy of Richmond Hill (Lab)
My Lords, I thank all noble Lords for their consideration of the draft regulations. The noble Earl, Lord Russell, referred to the observations of the Secondary Legislation Scrutiny Committee. I agree that, if we need to pursue this matter again, we should volunteer the information that the committee observed was not supplied in 2020 and again more recently.
The four areas with surpluses are Birmingham, Bristol, Bradford, and Bath and North East Somerset. I will write to the noble Earl with the information we have about how big those surpluses are. I put it to him and the noble Lord, Lord Moylan, that while the surpluses may be useful for local transport purposes, it would be foolish to guarantee that they existed simply because, as the noble Earl and the noble Lord remarked, the park of these vehicles and the income will change over time. Notwithstanding that I cannot give the figures, in the case of the larger local authorities they are not hugely material sums—but I agree that they are sums, and I will write to him detailing what they are.
The fee was set at £2 by the previous Government, without knowing the volume of vehicles that needed to pay the fee. I am sure it was not an unreasonable calculation and it would have been made by sensible people, but the review that we have done suggests that the taxpayer is making up the difference, rather than it being borne more locally and, in particular, by the authorities that make a surplus. We will review the matter again. I feel confident that in the next 12 or 18 months we will have another look. The noble Earl asked for annual data and we will look to publish something annually. I am not sure when it will start, but that is a reasonable point.
The major point is that this is an air quality measure and not a revenue measure. When local authorities are able to comply with the air quality standards for two consecutive years, they can close the clean air zone. That is what we want them to do. We do not want charging mechanisms; we want clean air for people in those towns and cities.
I think I have answered all the relevant points. I will not test your Lordships’ patience by going through again what I said 10 minutes ago. I commend the regulations to the House.