Climate Goals: Wellbeing Economy

Clive Lewis Excerpts

Tuesday 30th November 2021 Westminster Hall

[Claire Hanna (Belfast South) (SDLP)]

I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) for bringing forward this debate and for many years of leadership, giving vision in this area and a lot of practical direction. The necessity for change, and the failures of the economic model that we currently operate, are all around us: in climate and nature breakdown, in inequality within and between nations of the world and between generations, in the depletion of resources and the hoarding of wealth, and in the mental ill health and lack of fulfilment that are beginning to engulf our populations.

The hon. Member for Stirling (Alyn Smith) outlined some of the absurdities of GDP as our sole measurement, with all of the negative effects simply written off as “externalities”. It is very clear that a system that accounts for tobacco sales and bets placed by gambling addicts, but does not find any way to capture time spent raising children or the value of clean air, is no longer fit for purpose. We have known that for decades.

The impacts of consumption and growth-driven production on our planet do not need to be articulated in this room. I know that because this country and others like it consume, drill, burn and dump at a rate that would require numerous planets to sustain it. That, of course, causes negative impacts for the planet and its inhabitants.

It would be one thing to keep pursuing this model if it resulted in a healthy and happy population, but it does not. We know that income inequality in the UK is higher than it has been for decades, and probably the highest in Europe. It affects people at every single point on the economic distribution scale, as well as overall societal cohesion. In the absence of any serious mitigation policies, that will unfortunately only get worse.

[Clive Lewis (Norwich South) (Lab)]

I thank the hon. Lady for giving way in her fantastic speech. She may agree that part of the growth delusion—this constant demand for GDP and growth—is that it will actually begin to trickle down to poorer members of society, both domestically and internationally, yet that does not happen. Rather than keeping on growing the pie, destroying the economy and the planet, would it not be better to better share out the pie we already have within the current limits of the ecology and the environment?

Health and Social Care Levy Bill

Clive Lewis Excerpts

Committee stage & 3rd reading
Tuesday 14th September 2021 Commons Chamber

[Jesse Norman]

My hon. Friend invites us to think of social care as a completely separate thing, but of course there is a tremendous overlap between social care and some aspects of health. It is important to make sure that the system, which I think all hon. Members realise is too disjointed, is more joined up. This treatment therefore appears to be more appropriate to an area where we want to see more integration.

[Clive Lewis (Norwich South) (Lab)]

Will the Minister give way?

[Jesse Norman]

The hon. Gentleman has not featured in the debate so far, so I will make a bit more progress before happily taking his intervention.

Amendment 7, tabled by my hon. Friend the Member for Yeovil (Mr Fysh), seeks to ensure that proceeds from the levy can be used in any tax year. As the Committee will be aware, the levy is designed to mirror the approach of the national insurance system, which has always operated on a pay-as-you-go basis. Indeed, that has been the case since the NHS and the National Insurance Fund were established in 1948. This means that national insurance contributions collected in one year are used to pay for the NHS and contributory benefits paid out in the same year. The pay-as-you-go basis provides a clear precedent for how the levy should operate and that also ensures simplicity and consistency across the NICs system. So I hope that my hon. Friend will not press his amendment, for the reasons I have outlined.

[Clive Lewis]

On the point made by the hon. Member for Christchurch (Sir Christopher Chope), one reason the Government have used the term “health and social care” is that they have established a principle that people pay at the point of delivery. As we see health and social care begin to integrate, the fear for many Labour Members is that this is a Trojan horse for introducing those payments for healthcare—for the NHS. One of my fears when the Prime Minister spoke of this delivering “profoundly Conservative” outcomes was just that danger.

[Jesse Norman]

It is helpful to have a diagnosis of why Labour Members might be opposed to or worried by this, but the fear is entirely without foundation. There is no suggestion that the Government wish to create a system that is anything other than free at the point of delivery, and that is the basis on which the Government have always proceeded and proceed now. We are trying to put a longer-term arrangement in place for social care that allows us to bring the same kind of clarity to it that people have enjoyed for many years with the NHS.

Oral Answers to Questions

Clive Lewis Excerpts

Tuesday 7th July 2020 Commons Chamber

[Steve Barclay]

The hon. Gentleman will know that the cost for local councils will be uncertain for some time, not least in terms of the impact of lost tax income. That is why we have addressed the short-term pressure through the £3.7 billion grant and additional funding that has been allocated, including the recent £600 million for infection control.

[Clive Lewis (Norwich South) (Lab)]

What assessment he has made of the potential merits of including a four-day working week as part of the Government's covid-19 recovery strategy.

[The Exchequer Secretary to the Treasury (Kemi Badenoch)]

The Prime Minister recently set out the first steps of the Government’s strategy to rebuild and fuel economic recovery in response to covid-19. The Government believe the best way to secure a recovery is to invest across the UK to level up, while ensuring that we create the conditions for private enterprise to flourish.

[Clive Lewis [V]]

The Chancellor will have received a letter signed by Members from across the House, including myself, asking him to consider introducing a four-day working week as a way of helping the country recover and creating a better future post-covid-19. So will he commit to the Treasury exploring a four-day working week as part of its economic planning for the recovery? Will he also meet me and other Members to discuss how we can work together to make shorter working times a reality?

[Kemi Badenoch]

The Government believe that the best way of dealing with these issues is for workers to look at existing options available for flexible working and discuss them directly with their employers, rather than the Government legislating for the entire UK work- force. However, I am happy to meet the hon. Gentleman to discuss this topic further, if he would like.

Oral Answers to Questions

Clive Lewis Excerpts

Tuesday 7th January 2020 Commons Chamber

[Mr Clarke]

I thank my right hon. Friend for that question. It is worth noting that between 1990 and 2016 the UK reduced its greenhouse gas emissions by 42% while growing its economy by more than two thirds. We should be proud of that record; it shows that we are on track to meet our targets.

[Clive Lewis (Norwich South) (Lab)]

First, let me associate myself with the comments welcoming you to your place and your Chair, Mr Speaker—long may you sit there.

For what have been described as a “post-truth” Government, here are two clear and simple facts: first, COP 26 is coming to the UK and, secondly, the eyes of the world will be on this Government’s climate crisis policies—or, rather, the appalling lack of them. As Australia burns, millions in African states face climate-driven famine and floods have swept the north of England, will this Government give a damn about this existential threat and act, not posture?

[Mr Clarke]

It must be said that that was a rather ungracious recognition of the Government’s work in this area. We are clear that COP 26 is the centrepiece of the Government’s work on climate this year; the Prime Minister gave a presentation to Cabinet on it today. There is no question but that, led by our former Friend on these Benches Claire Perry, we have an excellent head of the COP, and we will have maximum ambition. The UK is clear that we are committed to the Paris agreement and delivering on it in full, and by committing to net zero we have led the world in this area.

Economic Growth and Environmental Limits

Clive Lewis Excerpts

Wednesday 10th July 2019 Westminster Hall

[Caroline Lucas]

I thank the hon. Gentleman for his wise intervention. Certainly, if we are not going to make the economy bigger by growing it and growing it—we simply cannot, within environmental limits—arguments about redistribution become absolutely central to the whole debate. Everything that I am saying is about social justice and environmental justice being inextricably linked. They must be, because we have to tackle them together. Although it is quite hard to find opportunities when the environmental data is so grim, there is an opportunity to get our social systems and inclusiveness right, and to get our inequality sorted, at the same time as taking serious steps towards making the way we organise our economy genuinely sustainable.

On climate, as on biodiversity, I believe strongly that we must look at the science. The Intergovernmental Panel on Climate Change’s October report, entitled “Global Warming of 1.5 ºC”, says that we need

“rapid, far-reaching and unprecedented change across all aspects of society”.

We have barely a decade to cut global emissions by half. As the co-chair of an IPCC working group put it,

“The next few years are probably the most important in our history.”

The Treasury is doing a very good impression of ignoring the urgency of taking action. The Government boast about emission cuts and about legislating for a net zero emission goal to be reached in three decades’ time. However, the Committee on Climate Change said in its new report, which was published this morning, that the next 18 months are make or break, especially as the UK

“is lagging far behind what is needed, even to meet previous, less stringent, emissions targets.”

The UK’s carbon reduction statistics ignore consumption-based emissions. Our exported emissions are one factor that explains why global emissions continue to rise, and why we are still heading for a devastating 3° of warming, even if countries deliver on their Paris pledges.

This is all to say that the pursuit of economic growth is devouring our efforts to decarbonise. I will quote the work of Jason Hickel, a leading environmental economist at Goldsmiths. He has explained the situation by examining the IPCC’s trajectories on reaching net zero by mid-century. The IPCC is telling us that we have until 2050 to get to net zero, but the global economy is set to nearly triple in size during the same period, which means three times more production and consumption. It is hard enough to decarbonise the current economy in such a short time span. The idea that we will be able to do it three times over is, frankly, for the birds. However heroic our assumptions about the potential for decoupling, there is no evidence that it can be completed quickly enough in the timeframe that we have.

There is some hope, because the IPCC report contains one lifeline scenario that does not rely on speculative and harmful negative emissions technologies to keep global heating under 1.5°. That scenario is our emergency exit from climate breakdown. So what does it look like? Fundamentally, it is about scaling down material consumption by 20% globally, with rich countries such as the UK leading the way. As yesterday’s European Environmental Bureau report concluded,

“Policy-makers have to acknowledge the fact that addressing”

the climate and biodiversity crises

“may require a direct downscaling of economic production and consumption in the wealthiest countries.”

I should add, “among the wealthiest people in the wealthiest countries,” because I take the point made by the hon. Member for Luton North (Kelvin Hopkins); equality and justice needs to be at the heart of this process.

As I say, the ONS work on wellbeing indicators beyond GDP and on natural capital is important and welcome, but it is clearly not the priority. It is not a primary consideration in Treasury decision making. Nor is the wellbeing work integrated with environmental considerations. Will the Minister commit to ensuring the ONS has the resources and the direction required to integrate environmental limits into its “Beyond GDP” work, including, as a priority, consumption-based carbon emissions? While I am making requests of the Minister, can he tell us what has happened to the latest release of those “Beyond GDP” statistics? If they are quarterly, as the ONS website states, the latest were due a couple of months ago, back in May.

I turn to the positive case for ousting GDP as a measure of progress, and to some of the alternatives that we could adopt. There is an extensive and expanding evidence base to suggest that ousting GDP as a measure of progress is essential to achieve both environmental and social justice. Transitioning away from the growth dogma is not about hurting people’s welfare—quite the opposite. It is about placing wellbeing centre stage, reducing inequalities, cutting out waste and inefficiencies, and prioritising quality of life over quantity of things.

There is a chorus of experts—academics, economists and campaigners—proposing concrete, credible alternatives to get us out of the GDP gulag. Many of them are members of the global Wellbeing Economy Alliance. I will briefly give four examples. The hon. Member for Leeds North West (Alex Sobel) will be very happy, because the first example I will give is from the University of Leeds, where researchers are exploring a

“good life for all within planetary boundaries.”

This shows that the UK and other wealthy nations are well past the tipping point at which

“using even more resources adds almost nothing to human well-being.”

The researchers explain that this means countries such as the UK could

“substantially reduce the amount of carbon emitted or materials consumed with no loss of well-being.”

A second example comes in the shape of a doughnut. In her book, “Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist”, Kat Raworth sets out to replace the dominant image of the economy as a closed, self-generating loop with a picture of the economy that shows energy flowing in from the sun, and waste and heat flowing out. Her doughnut image requires us to recognise that all economic activity is embedded in the Earth’s living systems and in society. Instead of maximising GDP, we need to change our goals to meet

“the human rights of every person within the means of our life-giving planet.”

Crucially, this model combines environmental limits with social factors such as housing, equity, political voice, education and income. The inner boundary of the doughnut is the social floor, below which wellbeing suffers. The outer boundary is an ecological ceiling, beyond which we overshoot the Earth’s support systems. The doughnut’s fundamental point, which the Treasury seems to have not yet grasped, is that the current economic system is failing on both human wellbeing and environmental health grounds.

A third example is a call from 238 academics for the EU and member states to plan for a post-growth future, in which human and ecological wellbeing are prioritised over GDP. They say:

“Growth is…becoming harder to achieve due to declining productivity gains, market saturation and ecological degradation. If current trends continue, there may be no growth at all in Europe within a decade. Right now the response is to try to fuel growth by issuing more debt, shredding environmental regulations, extending working hours, and cutting social protections. This aggressive pursuit of growth at all costs divides society, creates economic instability, and undermines democracy.”

The academics end by offering some measured and moderate practical next steps, including constituting

“a special commission on Post-Growth Futures”

in order to

“actively debate the future of growth, devise policy alternatives for post-growth futures, and reconsider the pursuit of growth as an overarching policy goal.”

I would love to see citizens’ assemblies play a major part in that.

Secondly, the academics suggest prioritising alternative indicators over GDP in all economic decision making. Thirdly, they propose establishing a Ministry for economic transition, to drive the shift to a new economy that focuses directly on human and ecological wellbeing, and away from one that is structurally dependent on economic growth.

The fourth and final example is New Zealand, where the Treasury has conducted the world’s first wellbeing budget. Finance Minister Grant Robinson explained that GDP growth was simply not translating into higher standards or better opportunities. Instead, the wellbeing budget looks at spending on the basis of a project’s contribution to the wellbeing of the population, as measured through four dimensions: human capital, social capital, natural capital, and financial and physical capital. The former Cabinet Secretary, Lord Gus O’Donnell, recently launched a report by the all-party parliamentary group on wellbeing economics that makes a similar case for wellbeing to replace growth as the main aim of UK spending in the forthcoming spending review. Those are just some examples.

[Clive Lewis (Norwich South) (Lab)]

The hon. Lady is giving a fantastic speech. She has mentioned the views of four different people on the limits of using GDP, what it is, what good it does in our economy, and what good growth does. Some 51 years ago, Robert F. Kennedy—hardly an economic radical; he was a Democrat—gave a speech on the limits of GDP. I add that because he is someone that I and many people across the political divide can respect. He was well ahead of the curve on this issue.

[Caroline Lucas]

The hon. Gentleman is a very good friend and colleague, but he has just taken my final point; I was building up to that speech from Bobby Kennedy. I forgive him, because he is a good colleague and it was very good point.

I give a shout out to the all-party parliamentary group on economic wellbeing and the APPG on limits to growth, of which I am a co-chair, and which works closely with the Centre for the Understanding of Sustainable Prosperity under the leadership of Professor Tim Jackson, who does good work in this area.

I want to leave time for the Minister to respond, so I will conclude. The climate and biodiversity crisis means that urgency is becoming emergency, in terms of getting economic transformation going. I will skip most of my lovely Bobby Kennedy quote, but his words ring as true today as they ever did, so I will keep the last bit. He said that GDP

“measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”

I have three requests of the Treasury to which I hope the Minister will respond. First, will he put rocket boosters behind the ONS “Beyond GDP” work, ensure that the environment is fully integrated alongside social factors, and commit to adopting those indicators and using them alongside or, even better, instead of GDP growth? I would even let him use them alongside GDP growth, as long as that were done regularly, so that we could see those indicators as a key measure of the nation’s progress.

Secondly, from this year on, will the Minister publish consumption-based carbon emissions, material throughput and wellbeing statistics alongside quarterly GDP figures? Thirdly, will he meet me and some of the leading economists, academics and practitioners working on this issue, to inform the forthcoming spending review?

As Kenneth Boulding said more than 50 years ago,

“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”

Thankfully, we now have a new generation of environmentally literate economists, and it is time that we listened to what they have to say.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) for tabling this debate and other hon. Members who intervened or who came to listen to and support her. I am always partial to a good Robert Kennedy quote, so I am sorry to see that the hon. Lady’s thunder was stolen at the end of her speech, but I enjoyed it none the less.

As the hon. Lady eloquently set out, it is now more important than ever that the Government and institutions such as the Treasury, which is at the heart of this debate, confront head on the question of how we continue to grow the economy while protecting our environment and tackling climate change with all the vigour and urgency that she and others would like. I believe that the two can and will be done together, and can be mutually beneficial.

The UK is a world leader in this area, but I appreciate that many people—me included—would like us to go further. Between 1990 and 2016, the UK reduced its greenhouse gas emissions by 42% while growing the economy by more than two thirds, demonstrating that environmental action need not come at the cost of economic prosperity.

The Government are determined to continue to build concern for the environment into our economic model. In a moment, I will explain some of the workstreams that we have already undertaken and where we could go further. We want to ensure that environmental policies are well considered and that the Treasury as an organisation is leading them, as I believe it is. The hon. Lady argued that it is time fundamentally to change economic models if we want to address the climate emergency. She questioned in particular whether GDP is a sensible measure of our economic wellbeing, so I will begin by addressing that.

GDP remains one of the most important economic indicators, but it is by no means the only one that is of concern to us or which is used by other major economies around the world. It is closely correlated with employment, incomes and tax receipts, which makes it perhaps the most useful indicator currently available to us. It is used by the Government, the Treasury, and the Bank of England to set economic policy and manage the public finances and, as the system of national accounts framework is set at UN level, GDP is easily comparable across countries and time periods, both historically and in the future. It is important that any changes in the economic modelling that we use are made internationally, and the UK needs to show leadership on that.

The Government recognise, however, that GDP undoubtedly has its limitations and should not be seen as an all-encompassing measure of welfare and wellbeing, and we entirely accept that it was never designed to be. Former Chancellor George Osborne commissioned Sir Charles Bean to undertake an independent review of economic statistics. The review acknowledged some of those limitations, such as the challenge of capturing activities where no market transaction takes place, the challenge posed to GDP and to some of our existing modelling by technology, transforming the way that we measure welling and productivity and, as the hon. Lady mentioned, the fact that GDP estimates make no allowance for the depletion of natural resources,

The Government fully supported the recommendations of the Bean review, which we commissioned, and we have provided the ONS with an additional £25 million to help improve UK economic statistics and implement the Bean review. That was the “Beyond GDP” initiative that the hon. Lady mentioned, which aims to address the limitations of GDP by developing a broader measure of welfare and activity. In response to the hon. Lady’s question about the publication of statistics, the ONS is an independent organisation, so we do not control it in that respect, but I am happy to pass on her comments and ask the ONS to respond.

In the time left, I will briefly mention a number of other steps that the Government have taken. The Treasury’s Green Book, our guidance on the appraisal and evaluation of infrastructure and other investments, is essential to a number of decisions that are made by the Government. In 2018, we refreshed the Green Book to include additional environmental values, such as greenhouse gases, air quality and noise pollution. We also included a social cost-benefit analysis, which I hope is making a significant difference. It will be very important in the upcoming spending review. That work is well perceived internationally. My right hon. Friend the Chancellor of the Exchequer has now convened international Finance Ministers, and the area that the UK will likely lead on internationally is that of economic modelling and how we can do that better on a global scale.

[Clive Lewis]

The Minister spoke about the Green Book, which is still—despite the changes—essentially a neoclassical economic model based on equilibrium economics. Most scientists and economists on the fringes of economic thinking would tell us that we are moving into a disequilibrium position in our economic model. The two are completely incompatible and the Green Book is not fit for purpose as we enter a climate crisis in which many of its assumptions are no longer credible.

[Robert Jenrick]

I do not agree with the hon. Gentleman, but the theme behind his remarks is one of the reasons why we have amended the Green Book. We have created this concept of social value, so we now take into account negative externalities to the environment and to people’s lifestyles as a result of greenhouse gas emissions, for example. I am happy to have a further conversation with him on that after the debate, as there is very little time left.

We are working closely with Dieter Helm’s review and recommendations. I met him to discuss the issue of natural capital accounts, which we are taking seriously—it is a big endeavour. We are working with the ONS and the Department for Environment, Food and Rural Affairs to bring that forward. I hope that we will be one of the first countries in the world to take the issue forward.

Following the report by the Committee on Climate Change, the Chancellor and I met Lord Deben and accepted his recommendation over the summer that the Treasury should do a major and urgent piece of work on how we can fund in a fair way the changes that we need to make as a society as a result of the Committee’s recommendations. That work is under way. I am very happy to meet the hon. Lady to give her more detail on some of those initiatives, which are extremely important. We want to take them forward with gusto in the months ahead.

Question put and agreed to.

Oral Answers to Questions

Clive Lewis Excerpts

Tuesday 9th April 2019 Commons Chamber

[Robert Jenrick]

The UK Government are supporting tidal energy. We have looked at any schemes that have become available to us. We have to balance the interests of the ratepayer, the taxpayer, to ensure that the schemes that we do support are the right strategic technology and the right value for money for the UK.

[Clive Lewis (Norwich South) (Lab)]

Will the Minister join me in paying tribute to one of this country’s most successful publicly funded renewable energy programmes ever? I am of course talking about the last Labour Government’s export tariff, the feed-in tariff scheme, the biggest single democratisation of energy that the UK has ever seen, cutting 700,000 tonnes of carbon. This month, however, in an act of supreme national and international self-harm, the Government killed it off—kaput, finito, game over. In the real world, how can anyone, anywhere believe that this Government take their climate change obligations seriously?

[Robert Jenrick]

The facts speak for themselves. The UK is on track to over-deliver comfortably on the first three carbon budgets out to 2022. The clean growth strategy sets out how we will meet our fourth and fifth carbon budgets, which take us to 2032, while keeping down costs for consumers, creating good jobs in the clean energy market and growing the economy.

Oral Answers to Questions

Clive Lewis Excerpts

Tuesday 5th March 2019 Commons Chamber

[Mr Hammond]

I started work in 1977 and I am not sure I ever remember that traditional nine-to-five, but the Government are helping people to be more productive and work flexibly by committing over £1 billion of public money to next-generation digital infrastructure, including full fibre broadband and 5G. Obviously, the primary investment will come from the private sector, but the public investment ensures that those parts of the country that would not otherwise be served because they are not commercial can share in this important technology. We are also supporting workplace productivity in other ways, including by investing £56 million to help small businesses to develop leadership and management skills in partnership with “be the business” programme.

[Clive Lewis (Norwich South) (Lab)]

I am sorry, but when it comes to funding the new technologies that really matter, this Government, and especially the Treasury, have been abysmal. The climate crisis is upon us now, but this Government’s reaction has been to axe carbon capture and storage funding; to cancel the Swansea lagoon, despite the fact that we were poised to be a world leader in tidal technology; and to slap innovative emerging storage technologies with business rates. At the same time, they are throwing billions into new tax breaks for oil and gas. Does the Chancellor agree that this Government are not facing the climate emergency but creating it?

[Mr Hammond]

No, we are committing additional funding to innovation and to research and development—the Faraday battery challenge is a good example—and lots of that money is going into the technologies that will underpin the decarbonisation of our economy. However, we have to get the balance right. Consumers of energy in this country do not want to see their bills rising because we have made imprudent decisions. We have to do this in a way that takes public opinion with us as we decarbonise our energy sector, our homes and our industry in a sustainable way.

Draft Small Charitable Donations Act (Amendment) Order 2019

Clive Lewis Excerpts

Tuesday 12th February 2019 General Committees

[Clive Lewis (Norwich South) (Lab)]

Good morning, Mrs Moon. As the Minister outlined, the Small Charitable Donations Act 2012, which came into force on 6 April 2013, introduced a new scheme to enable charities and community amateur sports clubs to claim a gift aid-style top-up payment on small cash donations of up to £20 in circumstances in which it is not practical or feasible to obtain a gift aid declaration. The draft order will increase to £30 the maximum individual small charitable donation on which such payments can be claimed. My understanding is that eligible charities and CASCs can claim top-up payments up to £8,000 for small donations each year.

As hon. Members are probably aware, the gift aid small donations scheme was established in 2012 with cross-party support. The Small Charitable Donations and Childcare Payments Act 2017 then made several changes to gift aid small donations to simplify and increase access to the scheme, particularly for smaller and newer charities, including allowing small donations covered by the scheme to be made by contactless payment from April 2017. Although the Opposition welcomed that streamlining to create legislative clarity and coherence, we have continued to emphasise the need for robust Government monitoring of the gift aid small donations scheme, especially in relation to its use for fraud or tax evasion. Will the Government publish any information that they have on the matter?

Unfortunately, there have been cases of charities being used as vehicles for tax avoidance and fraud. It is incumbent on us to make it as hard as possible to abuse charitable status. During the passage of the 2017 Act, the Opposition tabled a new clause that would have required a review of the prevention of fraud and abuse in the small donations scheme. Such a review would need to address the number of penalties imposed under the 2012 Act and the circumstances giving rise to the imposition of such penalties. It should also include HMRC’s assessment of the extent to which charities have been established or have operated for the primary purpose of securing benefits from the small donations scheme, and of the evidence available on the role of the gift aid matching rule in preventing fraud and abuse. Will the Minister update us on whether the Government will consider such a review?

Has there been any evidence of the gift aid small donations scheme being used for fraud or tax evasion? Will the Government publish any information that they have on it? Will the Minister also update us on the Treasury’s monitoring of any potential loopholes? The explanatory memorandum to the draft order notes that

“20 per cent of organisations currently participating in the GASDS are already claiming at, or close to, the overall limit of £8,000 per charity (or community building).”

I note that charities can claim up to £8,000 per building; do the Government have data on how many organisations are claiming for more than one building? How much of the gift aid small donations scheme benefit has accrued to large organisations claiming for more than one building? Are there any plans to increase or decrease the £8,000 limit after the donation size has been increased?

The Government’s policy paper states:

“Following stakeholder feedback the government has decided to increase the individual donations limit for GASDS to £30. A consultation is not needed to make this small change.”

However, an increase of 50% from £20 to £30 is very significant. What is the evidence base for that figure? What estimate have the Government made of the effect on how and by whom donations are made? The policy paper further states:

“This measure will be monitored through information provided in correspondence and regular feedback from the charity sector.”

The draft order is exempt from the requirement to provide a review provision in accordance with section 28(3)(c) of the Small Business, Enterprise and Employment Act 2015, as it relates to

“the giving of grants…by…a public authority”.

None the less, as the Opposition have noted a number of times, it would be advantageous to have a more comprehensive and transparent process in place.

[Patrick Grady (Glasgow North) (SNP)]

The spokesperson for the official Opposition, the hon. Member for Norwich South, raised some interesting points, but I did not pick up whether he supports the draft order. It is important that his questions be answered and considered, but the draft order will make a relatively minor change that I think will broadly be welcomed by the charitable sector. In my experience in the sector before coming to Parliament, I have seen the difference that gift aid can make to the operation of charities, especially small and community-based organisations and churches, which the Minister mentioned. The opportunity to reclaim from the likes of street collections, where it is not physically possible to collect gift aid information, is valuable.

[Clive Lewis]

We will probably abstain, but may I pick up the point the hon. Gentleman is making? It is easy to assume that all charities are charitable in their nature and how they operate, but clearly there are some with the potential not to do what they say on the tin. According to the Lloyds Bank Foundation,

“the proliferation of larger public service contracts meant that new types of charity had emerged, which had little interest in meeting local community need, but were instead ‘driven by market share’ and ‘prepared to slash costs to win contracts, with little regard to service quality.’”

We also know that there can be fraud and that charities can be used as a front for it. Our position is simply that there needs to be transparency.

[Patrick Grady]

That is very helpful. I do not necessarily disagree with any of it, but I would be concerned about standing in the way of a relatively minor uplift that would be beneficial, taking into account inflation and the increasing frequency and popularity of contactless donations. I totally agree with the points on transparency and on the need for that kind of scrutiny to continue. On that basis, I will not oppose this measure.

I want to respond to one other point that the Minister made. He said that not all small charities—legitimate local charities—necessarily take all this up. Perhaps there is a job for some us as constituency Members to encourage smaller community organisations that do not realise that this opportunity is available to them.

On at least one note of consensus, I notice that paragraph 8.1 of the explanatory memorandum states:

“This instrument does not relate to withdrawal from the European Union.”

I am sure that we all look forward to the day when we see that more frequently in explanatory notes.

Equitable Life

Clive Lewis Excerpts

Thursday 31st January 2019 Commons Chamber

[Clive Lewis (Norwich South) (Lab)]

I thank the hon. Member for Harrow East (Bob Blackman) for securing this debate, which has been thoughtful and considered. Both he and my hon. Friend the Member for Leeds North East (Fabian Hamilton) have persisted to ensure that this important issue remains high on the political agenda over the years. They have worked tirelessly and they should be commended by this House.

The hon. Member for Harrow East set out the situation clearly, and it is a very unsettling picture. Hon. Members have spoken of the debt of honour and of the erosion of trust in this House that we face for failing to rectify this injustice. My hon. Friend the Member for Stretford and Urmston (Kate Green) said that she herself has been affected by the collapse of Equitable Life, highlighting the sheer scale of the impact this issue has had across the country. My hon. Friend the Member for Lincoln (Karen Lee) explained how it has affected people across a wide swathe of society—nurses, doctors, teachers and civil servants. Hon. Members have spoken of the despair and distress that this failure and collapse has caused to so many of our constituents. My hon. Friend the Member for Leeds North East described it as one of the greatest financial scandals of the modern age. I hope that the Minister has heard the clear and unambiguous views of many Members from across the Chamber.

As has been set out, this issue stretches all the way back to 2000, when Equitable Life Assurance Society closed to new business and was forced to acknowledge that it could not deliver for its policyholders, leaving up to 1 million people out of pocket through no fault of their own. Following the society’s collapse, the Government of the day set up the independent Penrose inquiry, which raised serious questions about the practices that had been happening at Equitable Life. This decade of mismanagement, combined with maladministration, was a major contributor to the society’s collapse. As we have heard, the Penrose inquiry was followed by an ombudsman report in 2008 that found that this mismanagement had corresponded with

“a decade of regulatory failure”.

This included an inadequate response to the chief executive’s appointment; inadequacy of advice by the Government Actuary’s Department; and poor transparency on the part of other Departments, including the Treasury.

In 2009, the Government apologised and appointed an independent adviser, Sir John Chadwick, to provide guidance on how to determine and resolve various technical issues. During this time, both the European Parliament and the Public Administration Committee had published sympathetic independent reports. It is worth noting that in 2010, the Conservative party manifesto, as many Members have mentioned, included a commitment to making

“fair and transparent payments to Equitable Life policy holders”.

All this culminated in a payment worth £1.5 billion in compensation to policyholders. As we have heard, the Equitable Members Action Group campaigners remain unsatisfied with this response, arguing that their losses amounted to more than £4 billion. This leaves a significant disparity in the losses faced and compensation awarded that so far has not been adequately explained or addressed by the Government. Instead, the Chadwick report of July 2010 concluded that relative loss should be defined as “those who have suffered financial loss”, but pointed out that the ombudsman recognised that losses in policy values were only partly due to maladministration, and that the backdrop to cuts in policy values was a sharp fall in world stock markets that all life insurance companies were forced to respond to. Similarly, the report argued that compensation should be assessed on the cost of maladministration as opposed to the size of investor losses.

However, we are politicians, and we can revisit decisions and choices. The Minister has been asked to consider carefully whether the Government should make different decisions or choices today, with the benefit of hindsight. After all, regardless of how fault is distributed among the institutions involved, these policyholders have found themselves significantly out of pocket, through no wrongdoing of their own.

Many Members from across the House, including colleagues from the shadow Front Bench, as well as the leader of the Labour party, have met the campaign to listen to its concerns and the full details of the case. I would therefore like to ask the Minister whether he has met the campaign, and whether he might consider doing so in the days following this debate, to hear its case directly.

Given that the Government have accepted that there were regulatory failures and offered some compensation already, they may be open to further discussions, to respond to the clear dissatisfaction that so many policyholders feel about how this matter was resolved. I hope the Minister will give a clearer sense of the Government’s willingness to look again at this matter.

My hon. Friend the Member for North Tyneside (Mary Glindon) raised the important matter of policyholders’ data. The campaign is anxious that the necessary data is retained, to ensure that policyholders can be identified were there to be a change in Government policy. The campaign has hoped for reassurance from the Minister, and perhaps we will have that today.

Lastly, while I have discussed the position of Equitable Life policyholders throughout my speech, there is also the question of the regulatory environment now. We have to ensure that lessons have been learned, so that such an awful case can never happen again. The regulatory frameworks that operate in this country must be continually stress-tested and reviewed. Regulatory organisations need the appropriate resources to ensure that proper regulation occurs. We have to consider that 100 or 150 people are looking at 200 insurance companies. What protections have the Government put in place to guarantee that similar regulatory failures cannot happen again? That seems an important consideration, not only to reflect on the past and seek justice for those affected, but to ensure that we do not repeat the same mistakes.

I hope the Minister will be able to offer a satisfactory answer to the questions I have raised. Clearly a serious injustice was faced by policyholders at Equitable Life, which has been the source of much discussion, inquiry and debate over many years, yet those affected do not feel that this has been resolved adequately. The Government have looked at this matter before, and I hope they will resolve to look at it again and begin a full and proper process of consultation with the campaign. Ultimately, people’s savings are in question, lost through no fault or wrongdoing of their own but a combination of factors outside their control. I look forward to the Minister’s response.

Finance (No. 3) Bill (Seventh sitting)

Clive Lewis Excerpts

Committee Debate: 7th sitting: House of Commons
Thursday 6th December 2018 Public Bill Committees

[Clive Lewis (Norwich South) (Lab)]

I beg to move amendment 108, in clause 57, page 40, line 12, at end insert—

“(10) The Chancellor of the Exchequer must review the revenue effects of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the revenue impact of Clause 57.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 109, in clause 57, page 40, line 12, at end insert—

“(10) The Chancellor of the Exchequer must review the expected effects on levels of CO emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of clause 57 on CO2 emissions and climate change targets.

Amendment 110, in clause 57, page 40, line 12, at end insert—

“(10) The Chancellor of the Exchequer must review the expected effects on the volume of traffic on the roads of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of clause 57 on road congestion and traffic levels.

Amendment 111, in clause 57, page 40, line 12, at end insert—

“(10) The Chancellor of the Exchequer must review the expected effects on air quality standards of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 57 on air quality standards.

Clause stand part.

--- Later in debate ---

[Clive Lewis]

It is a pleasure to serve under your chairmanship, Mr Howarth. I am pleased to have the opportunity to speak to the clause and our amendments. As the Minister might outline shortly, the clause provides for changes to certain levels of vehicle excise duty, which I will refer to as VED, by amending the Vehicle Excise and Registration Act 1994, which will now be known as VERA—there are lots of acronyms in this.

Changes to the rates are due to take effect in relation to vehicle licences taken out on or after 1 April 2019. VED is chargeable on vehicles, dependent on various factors, such as vehicle type, engine size, date of first registration, carbon emissions data—indirectly—and other emissions’ impacts, such as air quality and public health. I will not go through all the changes to the various excise duty rates as they apply to the different types of vehicle covered by the clause. At this stage, I will simply note that they are relatively small.

The amendment would require the Chancellor to review the revenue impact of the clause and to publish the findings. That would allow the House, not to mention the drivers of those classes of vehicle and the public at large, to understand the impact on the public purse. Without such an assessment, neither the Government nor indeed Committee members would know how much additional money was available to redirect into measures to help drivers—in particular those on low incomes—to take up cleaner vehicles to the benefit of the natural environment and public health. Will the Minister tell us whether the Government have undertaken any such assessment? If so, will he commit to publish it? If they have not, will he undertake to do so?

The amendment would require the Chancellor to review the impact of the clause on carbon dioxide emissions and the UK’s climate change targets, and to publish that analysis. As the Minister might confirm, road transport accounts for 22% of total UK carbon dioxide emissions—a major contributor to climate change. The European Union has agreements with motor manufacturers that aim to reduce average CO₂ emissions from new cars. Colour-coded labels, similar to those used on washing machines and fridges, are now displayed in car showrooms, showing how much CO₂ new models emit per kilometre. However, as traffic levels are predicted to increase, road transport will continue to be a significant contributor to greenhouse gas emissions.

Given that light vehicles and other vehicles covered by the clause contribute substantially to carbon and greenhouse gas emissions, will the Minister explain why no such climate impact assessment has been carried out? How will the Government take a lead internationally in the fight to keep average atmospheric temperatures below 1.5° C in the absence of full monitoring and measurement of all greenhouse gas emissions from all sources? He will surely also need to apply “polluter pays” disincentives in the form of increased taxes, for example, including relevant changes to VED.

Finally, will the Minister give a commitment that any such planned or future increase in VED will be recycled into helping drivers to adopt low-emission fuel alternatives, such as electric vehicles or, in future, hydrogen-powered vehicles—that is particularly important to help drivers who must use their vehicles for work purposes as well as for leisure activities—or, where convenient, into helping public transport alternatives, which are rarely available in some parts of the country and many rural areas?

Amendment 110 would require the Chancellor to review the impact of the clause on road congestion and traffic levels and to publish the results. Vehicle use affects our whole quality of local life: traffic can be dangerous and intimidating, dividing communities and making street life unpleasant, while air pollution and traffic noise can make urban living uncomfortable. As the Institute for Fiscal Studies points out, taxing only fuel consumption and car ownership, no matter how the taxes are differentiated by emissions and engine size, cannot result in anything approaching an optimal tax, because neither is a good proxy for the impact of car use on congestion.

Many journeys occur on relatively empty roads. Those journeys are overtaxed because the congestion cost imposed on other road users is minimal. Rural road users are overtaxed relative to those who regularly drive in towns during busy periods. The result is too much driving in towns relative to the amount of driving in less congested areas, and the build-up of noxious fumes and climate-changing pollution. Those adverse impacts are in addition to the disruption for all drivers, who are less able to move freely and go about their business or other driving activities efficiently and without wasting so much time stuck in their vehicles. Not only is that personally frustrating and a contributor to so-called road rage, but the impact on economic and social productivity should be minimised. Will the Minister therefore explain why there has been no assessment of the impact of the clause on road congestion and traffic levels, or publish any that has been carried out?

Amendment 111 is similar, requiring the Government to assess the impact of the clause on air quality standards. As the Minister must be aware, air pollutants in transport include nitrogen oxide, particles, carbon monoxide and hydrocarbons, all of which have a damaging impact locally on the health of people, animals and vegetation. Air quality in the UK might be slowly improving, but many areas still fail to meet the health-based national air quality objectives and European limit values, particularly for particles and nitrogen dioxide.

In town centres and along busy roads, vehicles are responsible for most local pollution. Vehicles of all types tend to emit more pollution during the first few miles of a journey, when their engines are warming up. Although new technology and cleaner fuel formulations will continue to cut emissions of pollutants, these benefits are being eroded by the increasing number of vehicles on the road, including motorcycles, and the number of miles driven. Can the Minister please explain why he does not believe that any such assessment, as set out in our amendment, is necessary to understand the impact of the clause on such a critical aspect of road use?

Amendments 108 and 111 also allow us to address a particular aspect of the total revenue impact and the impact of the measure on air quality: the specific amount raised from VED in London and the extra amount that would be raised as a consequence of the clause, and the consequent impact on air quality.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

Are our amendments not particularly important in the light of fact that the Government have been taken to court three times by ClientEarth for failing European air quality standards and have lost three times?

--- Later in debate ---

[Clive Lewis]

My hon. Friend makes a very valid point. The point has not been lost on many people, including in my own city of Norwich, where some people are part of a court case against the Government on this issue and on others relating to climate change. It is something that many people are concerned about, especially given the impact on very young children, who are often lower to the ground and closer to the fumes. I welcome the point my hon. Friend has raised.

This issue is directly relevant, because an element of VED revenue take, including the extra amount raised by the clause, is ring-fenced to provide a fund of about £500 million for air quality. Londoners are contributing to this, in common with the rest of the country. The Government have allocated about £255 million of that funding for clean air zone implementation and another £220 million for the clean air fund, including supporting measures to soften the impacts of clean air zones on the poorest and on small businesses. They also allocated an extra £20 million to £25 million in the Budget for city air quality measures.

London, however, is excluded from all that funding. The Government previously said that this is because London received a generous air quality settlement in 2015 under the then Mayor, who is now better known as the failed former Foreign Secretary. Frankly, that is an absurd claim, and I hope the Minister will not stretch his credibility by repeating it to the Committee today. In reality, the Government reduced the revenue grant by a far greater amount than any extra funding for air quality, reducing it from £700 million to nothing in this financial year. The Mayor’s office received no air quality funding from the Government as part of the last comprehensive spending review. Unlike other cities, London is not getting help to implement the ultra low emission zone, and nor can the Greater London Authority access the mitigation funding to help small businesses and low-income people in other cities to meet new vehicle emission standards. That is perverse.

In addition, that predates the changes to VED, which Londoners are contributing to, and ignores the fact that, quite frankly, the current London Mayor has far greater ambition on air quality than his predecessor did. London is introducing the first, biggest and most ambitious clean air zone—the ultra low emission zone—on 8 April 2019. This is an essential part of the national air quality plan to achieve compliance with our legal obligations.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

Is my hon. Friend aware that my city, Oxford, is due potentially to be the first city in Europe with a zero emissions zone? We need more support for such initiatives from the Government—more than has been forthcoming up to this point.

[Clive Lewis]

Yes, I was aware of that. Labour local authorities in Oxford and across the country do fantastic work on the issue, but they often do so in isolation and with limited support from central Government. The Government should really be getting behind them, given the severe impact that poor air quality can have, not just on children, but on all of us—it is now believed to be connected to the onset of Alzheimer’s and other degenerative diseases.

The London Mayor has proposed a targeted scrappage scheme that uses camera data to ensure that only vehicles that are regularly in the ultra low emission zone receive scrappage funding. The proposal meets the criteria set out in the five-case model in the Treasury’s Green Book and has a positive business case ratio.

Will the Minister confirm that none of the general VED revenue will be spent in London, because the Treasury plans to give it to Highways England to maintain strategically important roads outside London? Strategically important roads in London are maintained by Transport for London without any Government support or a share of VED income. Frankly, I suspect that any assessment made under our amendments would reveal that money is available from the proceeds of VED, which of course will rise under the new rates proposed in clause 57. I am also confident that any assessment under amendment 111 would show that reducing harmful emissions in London is vital to our national effort on climate change and air quality, let alone the fact that it would address the suffering of ordinary people in our most congested city.

It is fair to say that there is a strong suspicion that the Government’s political refusal to support Londoners owes more to Londoners’ refusal to support them at the ballot box than to the best interests of the city or the country as a whole. If the Minister wants to dispel that impression, will he clarify what share of VED revenue comes from London now and what share he expects to come from London after the passage of the Bill?

[Bambos Charalambous (Enfield, Southgate) (Lab)]

I am a London MP and my constituency borders the North Circular road. The Mayor has introduced a low emission zone for part of the road, but more is needed to reduce emissions. Does my hon. Friend agree that funding from this measure should go towards introducing low emission zones in other parts of London as well?

[Clive Lewis]

Yes, I do. I do not think that there is a lack of ambition from the Mayor of London or from local authorities around the country; ultimately what holds them back is a lack of resources. Will the Minister commit to using the revenue to offer London the same air quality funding that is being made available to other parts of the country, to ensure that ultra low emission zones are a success?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is good to be back, Mr Howarth. As we have heard, clause 57 will make changes to vehicle excise duty rates for cars, vans and motorcycles with effect from 1 April 2019. As announced in the Budget, those rates will increase in line with the retail prices index from that date. As a result, they will have remained unchanged in real terms since 2010, with additional significant incentives for ultra low and zero emission cars. That comes on top of the Government’s decision to freeze fuel duty rates for the ninth successive year, which by April 2020 will have saved the average car driver £1,000 compared with the pre-2010 escalator.

Cars first registered on or after March 2001 pay VED based on their carbon dioxide emissions; 87% of those cars will pay no more than £5 extra in 2019-20. From April 2017, a reformed VED system was introduced that strengthens the environmental incentives when cars are first purchased, with all cars paying a standard rate in subsequent years. The standard rate will increase by £5 only. Expensive cars with a list price of more than £40,000 pay an additional supplement for five years of paying the standard rate. That will increase from £310 to £320, so it is only a modest increase, and it will affect about 7% of new car purchases. Finally, the flat rate for vans will increase by £10, and for motorcyclists there will be no more than a £3 increase in rates. We believe that those are modest, incremental changes, which protect the public finances but also pay careful attention to the cost of living for motorists.

--- Later in debate ---

[Robert Jenrick]

I take the hon. Lady’s point, but the information is mostly already in the public domain. It is not clear to me what information is not available. With respect to air quality, the Government will very shortly publish our ambitious clean air strategy. I encourage her and other hon. Members who, perfectly understandably, want to scrutinise our clean air commitments to pay attention to that document and scrutinise the Environment Secretary at that point. No doubt he will come to the House to make an announcement on the strategy.

The hon. Member for Norwich South also mentioned London. London already has a separate comprehensive funding settlement from the Department for Transport, which includes measures to deliver compliance with legal air quality limits. The Mayor has significant powers to take additional measures. Londoners also receive further funding for ultra low emission vehicles such as taxis. Indeed, measures in the Bill support the uptake of ultra low emission taxis. We took those measures a year early, as we will discuss later, and they have had a significant impact on the number of taxis on the streets of London. There are now between 500 and 600 electric or ultra low emission taxis that did not exist at the beginning of the year, incentivised by the measures taken by the Treasury. We are also supporting low emission buses and charging infrastructure. The Committee has already discussed the £200 million public investment in charging infrastructure, which we hope will spur at least a further £200 million of private investment. That will support charging infrastructure in all parts of the United Kingdom.

I hope hon. Members respect the fact that we consider the funding settlement for London’s roads as separate from that for the rest of the United Kingdom. That is a long-standing convention. We occasionally provide additional money. For instance, in the Budget the Chancellor provided more than £400 million for potholes. He included London in that, so London boroughs are able to take advantage of that money, but in general the funding settlement for London’s roads is separate from the negotiation with respect to Highways England.

I urge the Committee to reject the amendments, as I believe the reports they would require are unnecessary. The changes outlined in the clause will ensure that the Government continue to support motorists with the cost of living while ensuring that they continue to make a fair contribution to the public finances. As a result of our decision to hypothecate VED revenues, we will see a major increase in investment in our strategic roads, which I hope will benefit everyone in all parts of the United Kingdom. I therefore commend the clause to the Committee.

[Clive Lewis]

I thank the Minister for trying to answer some of our questions, but I still find myself with questions. It seems that there is a basic issue of transparency here. If, as he is saying, the Department for Transport has given certain funding to London—I am sure that is true—it would do no harm to make transparent what other funding is going to other parts of the country, so that the figures can be compared and contrasted to ensure that London is getting its fair share. The Mayor of London clearly does not believe that it is getting its fair share. It is the capital city—it has a large population, many vehicles on the road and a high population density—and all that is being asked for here is transparency.

On the issue of there being no assessment of the impact of the clause on road congestion on traffic levels, the Minister said that VED has a limited impact on that, but that is quite an arbitrary statement. Taxes have two effects: they can raise revenue and they can change behaviour. It is normally one or the other, but there are variations and it is sometimes a bit of both. I do not think it is beyond the ken of the Government to assess the potential impact of the VED increases on congestion levels, given that we have all agreed that air quality in this country is in a pretty poor state. Tens of thousands of people are dying prematurely or are adversely affected every single year.

To echo the sentiment of the hon. Member for Aberdeen North, it would not be too much trouble to write a report along the lines that we have asked for and make it available to Parliament. So go on, please.

--- Later in debate ---

[Robert Jenrick]

My hon. Friend makes a very important point. It is certainly important to me, as a midlands and northern MP. The Government have made a significant effort both to increase the levels of public investment in infrastructure over the course of this Parliament to the highest levels in my lifetime—the highest level since the 1970s—and to redress the regional imbalance. Over the course of this Parliament, for example, investment in transport will be highest in the north-west of England, and London and the south-west will be among the lowest. There is a great deal more to do, not least because London has the ability to raise significant amounts of money from local government, which has co-funded projects such as Crossrail. My hon. Friend makes an extremely valid point.

[Clive Lewis]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 57 ordered to stand part of the Bill.

Clause 58

VED: taxis capable of zero emissions

[Clive Lewis]

I beg to move amendment 112, in clause 58, page 41, line 16, at end insert—

‘(6) The Chancellor of the Exchequer must review the revenue effects of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.’

This amendment would require the Chancellor of the Exchequer to review the revenue impact of Clause 58.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 113, in clause 58, page 41, line 16, at end insert—

‘(6) The Chancellor of the Exchequer must review the effects on the taxi and private vehicle hire sectors of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.’

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 58 on the taxi and private car rental industry.

Amendment 114, in clause 58, page 41, line 16, at end insert—

‘(6) The Chancellor of the Exchequer must review the effects on levels of CO emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.’

This amendment would require the Chancellor of the Exchequer to review the impact of this measure on CO2emissions and climate change targets.

[Clive Lewis]

I am pleased to be speaking—again—to our amendments relating to clause 58, on vehicle excise duty and taxis capable of zero emissions. The clause seems to rectify an obvious mistake made by the Treasury during the 2017 Budget, which saw electric vehicles fall into the luxury vehicle segment of the new VED regime for cars costing over £40,000.

VED rates are based on carbon emissions, and zero-emissions vehicles below £40,000 have a zero standard rate and a first year rate. Standard rate on zero-emissions vehicles above £40,000 is currently £310 a year for the first five years. To include electric vehicles in that policy was clearly a major oversight by the Treasury in last year’s Budget. The correction, although somewhat late in the day, is none the less welcome and, indeed, essential if we are to seriously encourage the uptake of electric vehicles, specifically taxis.

[Anneliese Dodds]

I am sure that my hon. Friend is aware that back then, Opposition Members warned about the potential unintended consequences of those measures, including for the private hire and taxi industries. Those warnings were not heeded at the time. It is rather frustrating that they have only now been dealt with.

[Clive Lewis]

My hon. Friend makes a very good point; that is one lost year of support.

To include electric vehicles—ah, I have already said that. I will recap, though. [Laughter.] To include electric vehicles in that policy was clearly a major oversight by the Treasury in last year’s Budget. The correction, although somewhat late in the day, is none the less welcome and, indeed, essential if we are to seriously encourage the uptake of electric vehicles, specifically taxis.

That is particularly pertinent as local regulations are tightening around clean air and greenhouse gas emissions, as we have seen with the implementation of the ultra low emissions zone in London. Amendments 112 to 114 require the Government to undertake a review that we believe is essential to understand the consequences of the clause, which range over the impact that it is likely to have on the Exchequer, on the taxi and private car rental industry, and on CO₂ emissions and climate change targets. Amendments 112 and 113 focus on the economic impact of the clause, both on the Exchequer and on taxi and private car rental companies. Can the Minister provide an assessment of the revenue implications of the measure?

Similarly, while we understand from the published documents relating to the clause that industry response to the Government consultation was supportive, will the Treasury do further analysis of the potential economic impact on taxi companies and the private car rental industry, should the change come into effect? The Minister may wish to resist the amendments, but regardless of any legal obligation, will he commit to conducting such an analysis and presenting it to the House in due course?

Amendment 114 refers to carbonisation and improving air quality. It would seem, in that respect, that taxis are low-hanging fruit. They are used frequently, often in urban areas with poor air quality. Similarly, according to the Mayor of London, drivers stand to benefit from lower fuel costs—by around £2,800 a year—and from avoiding present and future congestion and air quality charges. We believe, however, that the Government have failed to put in place necessary fiscal incentives to encourage the transition to the electric vehicles needed to ensure a reduction in CO₂ emissions. Simply removing the excess tax for luxury vehicles, as the clause would do, does not go far enough to encourage the uptake of zero-emission vehicles.

The primary driving forces behind the reluctance to take up electric vehicles are cost and an anxiety about range. The costs of electric vehicles are explained by high manufacturing costs, specifically of their batteries. The anxiety about range affects taxi drivers far more than private vehicle owners or private car hire companies, as they do not have access to the range in the ultra-low emissions vehicle segment of the market for mid-range to luxury. That is due to licensing conditions, as they need to fulfil accessibility requirements. In London, for example, that means that many drivers are mandated to buy a London-style hackney taxi in many districts. Will the Minister agree to assess the impact of clause 58 on CO₂ emissions and the UK’s climate change targets, and whether that policy goes far enough in encouraging the purchase of zero-emissions taxis?

I have a few questions on the clause. At present, a grant of £7,500 is available for new zero-emissions taxis. We believe that the Government should be looking to increase available grants and encourage the transition to electric vehicles, specifically taxis, in areas outside Greater London. There are currently only a few limited pots of funding, not all of which are available for taxis, and they are largely skewed towards Greater London.

Similarly, the Government have yet to invest a penny of the £400 million charging fund announced in the 2017 Budget, half of which should be public money, with the other half contributed by the private sector, as we have already heard. Will the Minister tell us whether the issue that the clause seeks to rectify will aid the Government in finally setting up the charging fund that they promised to deliver to encourage the use of zero-emissions vehicles? Will he give us a clear timetable of when that fund will be operational? Will he commit that he or another relevant Minister will come back to the House with more detail when it is due to launch?

Available charging infrastructure is a requirement of accelerating the transition. Outside London and a few select places, availability is poor. Drivers face a postcode lottery that is a barrier to electric vehicle growth. For example, there are more chargers available in the Orkney Islands than in Blackpool, Grimsby and Hull combined. Even if grants are available, drivers in some areas will be unable to perform their work using EVs, due to the unavailability of charging infrastructure. It could therefore be argued that even if the Government increased grants and ensured that availability, poverty of EV infrastructure would mean that a majority of taxis would not be in a position to benefit from the change suggested in clause 58. Will the Minister comment on that? What assessment has been undertaken of the availability and adequacy of the infrastructure, and what steps are being taken to ensure that it does not undermine the good intentions behind the clause? Although the current situation is a mistake, it should not have happened in the first place. The measure is important in seeking to undo the bias created by classing zero-emissions taxis as luxury vehicles, and in encouraging the uptake of zero-emissions vehicles.

We will support the clause—we ask only that the Government assure us that the right analysis will be done to assess the impact of the measure on the Exchequer, the companies that will be affected, and the environment. We urge the Government to take such matters into consideration. I hope the Minister can give us some assurance on those points.

[Robert Jenrick]

I thank the hon. Gentleman for those questions. I hope that I can answer them all and reassure him. Clause 58, as we have heard, makes changes to ensure that purpose-built taxis that are capable of zero emissions do not have to pay the VED supplement applicable to expensive vehicles, which are those with a list price of more than £40,000. Having listened to representations on the issue, the Government announced in March that the exemption for such taxis would be brought forward a year earlier than planned.

We do not believe that the purchases of many vehicles, if any, were adversely affected. For example, the London Electric Vehicle Company, which manufactures these vehicles, had sold almost no vehicles by the time of the announcement and has subsequently sold more than 500 vehicles—I do not have the exact figures but I am happy to supply them to the hon. Gentleman—so from the time of our announcement in early March to the present day, the incentives have clearly made a significant difference in stimulating the market. We do not believe that many purchases, if any—I will confirm that point—were disadvantaged as a result of this matter, which was an unintended consequence of the earlier policy.

An exemption will encourage the transition to ultra-low and zero-emissions taxis. The figures show that, certainly in London, there has already been a significant take-up in vehicles, although it is less in other parts of the United Kingdom. I believe that the manufacturers are now targeting other cities, including Manchester and Nottingham—my nearest city—to improve their air quality. We want to see that rolled out as soon as possible in all part of the United Kingdom.

It will make the system fairer. The Government recognise that a number of technical requirements exist for purpose-built taxis, including, as the hon. Gentleman said, access for disabled passengers and turning circles, meaning that only a limited number of options are available. Most other motorists have a range of vehicles available to them, many costing less than £40,000, and can therefore choose not to pay the supplement.

In passing, the hon. Gentleman mentioned other private hire vehicles. Our argument—a valid one, I think —has always been that there are a range of other options available to drivers of private hire vehicles. They do not have to purchase a vehicle costing over £40,000. That would be a choice because they want to enter a particular segment of the market. Those driving a registered London taxi do not have that discretion. Therefore, it would not be right for drivers buying a taxi capable of zero emissions to pay the VED supplement targeted at cars at the luxury end of the market. As the supplement is only due from the second licence onwards, this means that almost all taxi drivers who have purchased an eligible taxi from April 2018 will never have to pay the supplement. This will save those drivers up to £1,600 in total.

The changes made by the clause will provide the power to exempt purpose-built zero-emissions taxis from the supplement for expensive cars, through regulations. This will enable the Government to apply the exemption to further models as they become available in the future.

I will turn briefly to the amendments tabled by the hon. Member for Norwich South. Amendment 112 would require the Government to review the revenue effects of the changes made by the clause. The Government have already published a tax information impact note, in line with normal practice, which sets out that the revenue impact of the changes will be negligible. Amendments 113 and 114 would require the Government to review the effect of the clause on the taxi and private hire sectors, and the impact on carbon dioxide emissions and our carbon budgets. The measure applies to purpose-built taxis only, enabling a quicker switch to greener models by saving drivers that £1,600. It is not expected to have an impact on the number of taxis on the roads, but it is intended to increase the proportion of those that are capable of zero emissions. By strengthening the incentive to purchase such taxis over conventionally fuelled alternatives, the measure is expected to have a small positive impact on our ability to meet our fourth and fifth carbon budgets, although isolating its impact would be challenging and uncertain. I am not sure what value, if any, that analysis would provide. Again, these impacts were covered in the published tax information and impact note. I respectfully urge the Committee to reject the amendments, on the grounds that they are unnecessary.

The hon. Gentleman asked important questions about electric vehicle charge points. Clearly it is important for taxi drivers in London, and indeed in any other part of the United Kingdom, to know that the relevant charge points are available to them. Range anxiety is just as valid, if not more so, for a taxi driver as it is for a private citizen. Significant investment is underway in London, particularly for fast charge points, which are critical for taxi drivers, so they do not have to spend hours waiting to recharge or top-up their vehicle. The Mayor of London is leading that effort and making good progress.

With regard to the charge point infrastructure fund, which I spoke about in relation to the previous clause, we are close to appointing a fund manager and expect it to be launched in January or February. I am happy to write to him with more details and to inform him when it is launched, but I expect that to be at the very beginning of the new year.

[Clive Lewis]

There is £200 million in public money and £200 million in private money. Will the Minister confirm whether the £200 million in private funding has actually arrived and is available for the Treasury to spend on EV infrastructure?

[Robert Jenrick]

The answer is that the fund has not actually been launched yet. We are committed to the £200 million, but we will not know until the fund is launched the amount of private capital we are able to crowd in as a result of that. I am happy to write to the hon. Gentleman with more detail about that. As I said, I expect in the first two months of the new year to be in a position to launch the fund and to inform hon. Members across the House of its detail, should they wish to direct businesses in their constituencies that are interested in this area to it. With that, I commend the clause to the Committee.

[Clive Lewis]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 114, in clause 58, page 41, line 16, at end insert—

“(6) The Chancellor of the Exchequer must review the effects on levels of CO₂ emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the Vehicle Excise and Registration Act 1994 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”—(Clive Lewis.)

This amendment would require the Chancellor of the Exchequer to review the impact of this measure on CO₂ emissions and climate change targets.

Question put, That the amendment be made.

--- Later in debate ---

HGV road user levy

[Clive Lewis]

I beg to move amendment 115, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the revenue effects of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the revenue impact of Clause 59.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 116, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the effects on levels of CO₂ emissions and the UK’s ability to meet its fourth and fifth carbon budgets of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on CO₂ emissions and climate change targets.

Amendment 117, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the expected effects on the volume of traffic on the roads of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on road congestion and traffic levels.

Amendment 118, in clause 59, page 44, line 9, at end insert—

“(11) The Chancellor of the Exchequer must review the expected effects on air quality standards of the changes made to the HGV Road User Levy Act 2013 by this section and lay a report of that review before the House of Commons within six months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to review the impact of Clause 59 on air quality standards.

Clause stand part.

[Clive Lewis]

I begin by welcoming the long overdue change to the heavy goods vehicle road user levy. As the Minister will no doubt lay out, the clause will differentiate the rates paid by efficiency, rewarding freight operators for using less polluting trucks on the UK’s roads.

Department for Transport statistics show that HGV traffic has grown on average by 2.3% per year since 2008, making it the second fastest growing type of traffic in that period. That has resulted in HGV traffic increasing, on motorways and rural A roads in particular, to an overall 17.1 billion vehicle miles. Inevitably, that has had an enormous impact on greenhouse gas emission and climate change targets, road congestion and traffic levels, road safety, and air quality—the key issues on which our amendments are based.

Amendment 115 would require the Chancellor to review the revenue impact of the clause. We believe that there is an urgent need for a financial assessment of the measure, as the freight sector has been left in the dark about the overall impact of these tax reforms. The Department has failed to publish any conclusions from its call for evidence, which closed in January. We therefore argue that it is the Treasury’s responsibility either to produce the evidence and conclusions or to undertake any new research that is needed.

We believe the analysis should focus on the costs and benefits of remaining on a time-based charging system rather than one based on distance. Will the Minister tell us what comparative analysis has been undertaken to date by Government, and agree either to publish it or to commission the relevant work and publish it in due course?

The analysis should also assess how well the HGV road user levy reflects the costs imposed by road freight on other road users, the road network itself and society at large. Metropolitan Transport Research Unit research, issued in April 2017 and sponsored by the DFT, suggests

“that a very significant amount of the real marginal costs imposed by the largest HGVs is not being met.”

That has led to poor economic efficiency and a misallocation of scarce resources. Will the Minister undertake a review of the real marginal costs imposed by the latest HGVs so that we may assess their relative economic efficiency?

Similarly, when considering the overall revenue effect of differing levels of road user levy for different categories of heavy goods vehicles, we believe it is important to factor in the huge disparity between the costs of wear and tear on road surfaces caused by HGVs and those caused by cars and lighter vehicles. The Campaign for Better Transport estimates that the standard 44-tonne HGV does 100,000 times more damage to road surfaces than a Ford Focus.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

One hundred thousand times!

[Clive Lewis]

Yes. An update of the DFT’s mode shift benefit values technical report in 2015 doubled previous estimates of the cost per HGV mile to road infrastructure. Campaign for Better Transport research suggests that HGVs are paying for only 11% of their UK road infrastructure costs, predicting a shortfall of about £6 billion.

Will the Minister tell us whether the Government have made their own such estimate during the development or passage of the Bill, or does our amendment give them the opportunity to assess it for the first time? Will he produce a fresh assessment of the cost shortfall that the new HGV road user levy rates will leave for other road users and taxpayers in general to pick up? In any case, will he give us the Government’s view of whether the total revenue raised will reflect a fair share of the total tax take from road users, as compared with that of those who drive smaller vehicles? In the Chamber, many MPs complain about potholes and funding for them. The statistics give a clue as to where in part the responsibility lies for so many potholes on our roads.

[Bambos Charalambous]

As the driver of a Ford Focus, I want to clarify something. Does my hon. Friend agree that yes, a greater proportion of the money ought to go towards repairing potholes, because that will leave more money available for schools and other resources?

[Clive Lewis]

My hon. Friend makes an interesting point from his Ford Focus. The issue is that there is a massive externality that those HGVs are causing on our roads. No one wants to see HGV businesses go out of business, but everyone in Committee would agree that it is right for people to pay the appropriate level of tax for the damage that they cause to our road infrastructure. If they are to be subsidised, that subsidy ought to be transparent, so that we can appreciate and make a proper assessment of the value that HGV companies contribute to our economy, while taking into account the externalities that they create as well, because there are impacts on other tax areas where the Government would need to spend—he mentioned schools, and there are hospitals and so on and so forth.

Amendment 116 would require the Chancellor to review the impact of the clause on CO₂ emissions and climate change targets. As I have described, the use of HGVs has increased hugely in recent years. Inevitably, that has had an adverse effect on the UK’s greenhouse gas emissions. Studies from the Government’s own 2017 freight carbon review proved that HGVs are also disproportionately responsible for pollution when compared with other road vehicles. In 2014, HGVs were estimated to account for about 17% of UK greenhouse gas emissions from road transport, and about 21% of road transport nitrogen oxide emissions, while making up only 5% of vehicle miles. Will the Minister confirm those figures?

Clearly, if we are to stay in line with EU emissions targets, which have themselves been agreed at the necessary level to ensure that we meet our Paris climate agreement targets, CO₂ emissions from HGVs must drop by at least 15% by 2025, and be at least 30% lower by 2030. Will the Minister agree to conduct an analysis of just how far the changes in the clause go towards the country’s ability to meet our climate targets? Will he also consider addressing the generality of the need to meet those targets with either taxation of the sector, or other measures that the Government might put in place to meet our obligations and to safeguard our shared environment?

Amendment 117 would introduce a similar requirement to review the impact of clause 59 on the overall volume of traffic on roads, which is fairly self-evidently a major contributory factor to road traffic congestion. The Centre for Economics and Business Research estimates that congestion will cost the economy as much as £307 billion by 2030. Similarly, the latest INRIX figures show that the UK currently ranks as the fourth most congested developed country, and the third most congested in Europe.

Will the Minister tell us what assessment the Government have made of the economic—not to mention environmental —impact of traffic congestion? I hope he will agree that it is undeniable that the increase in HGV traffic is contributing to the problem. Is he willing to undertake a formal assessment of the impact of HGVs on overall road congestion and traffic, which in turn clearly has a significant impact on the economy? If he intends to resist the amendment, perhaps he will tell us what assessment the Government have made to date and how it informed their choice of the relative levels of taxation that the clause sets for more or less polluting vehicles.

The amendment also addresses the important issue of road safety. The volume of traffic is clearly relevant to road safety outcomes. The Campaign for Better Transport’s analysis of Department for Transport road safety statistics shows that HGVs are twice as likely to be involved in a fatal collision on minor roads as they were 10 years ago. In 2016, HGVs were almost seven times more likely than cars to be involved in fatal collisions on minor roads, despite making up just 5% of overall traffic miles. There has been little or no improvement in recent years in the rates of fatal collisions involving HGVs either on motorways or on A-roads. In 2014, HGVs were involved in almost half of all fatal collisions on motorways, although they accounted for only 11.6% of the miles driven on them. Will the Minister tell us whether, in the course of considering the relative levels of taxation for different types of HGV, the Government have made any assessment of the impact on road safety of HGVs on motorways and A-roads across the UK? In developing the clause, did they consider whether the tax system for vehicles might in any way be used to improve the safety record of HGVs?

Amendment 118 would make equivalent provision in relation to air quality standards. In launching its call for evidence about the HGV road user levy, the DFT conceded the importance of working

“with industry to update the Levy so that it rewards hauliers that plan their routes efficiently, to incentivise the efficient use of roads and improve air quality.”

As the results of the consultation are yet to be published, I ask the Minister whether the Treasury is able to review whether the changes proposed in clause 59 will succeed in encouraging an improvement in air quality standards.

If the Minister does not intend to accept the amendment, perhaps he will tell the Committee whether, and when, the Government intend to publish the evidence they have gathered, and their formal response to it, for scrutiny by the House and the public. Perhaps he will also confirm that the evidence that they have gathered to date shows that, nationally, 20% of lorries are now driving around completely empty and only 36% are full by volume. Not only is that a highly inefficient use of scarce road space, but it exacerbates the existing problem that more than 40 towns and cities in the UK have already exceeded air pollution limits set by the World Health Organisation. Can he confirm that air quality standards will be assessed when looking at the important impacts of the HGV road user levy? Can he give us any timetable or detail?

The Committee will note that our amendments have a similar theme. Perhaps I can ask the Minister to outline in general terms what assessment or review of the success of these measures the Government have planned, what impacts they will consider, how they will measure them and how they will publish their results. I also reiterate my point about the Government’s various calls for evidence that relate to the measure in clause 59. Will he commit to publishing the evidence received and giving a formal response from the Government? We often hear about evidence-based policy making, but as legislators we, too, need to hear that evidence if we are to agree to the legislation that implements that policy.

I look forward to the Minister’s response to our amendments, but I want to make one final argument about the clause itself. While it is to be expected that the reforms in clause 59 will lead to improvements in fuel efficiency and reductions in pollution from HGVs on Britain’s roads, we believe that those reforms are incomplete and unsatisfactory because the HGV levy will continue to be charged according to time spent on UK road networks. It is widely acknowledged that the existing time-based charging system is inefficient and not cost-effective. As it stands, the current daily charge bears no direct relationship to the amount of use of the network and therefore the system does not incentivise efficient use of the network. To improve economic efficiencies, there should be a direct relationship between taxes per mile travelled and the marginal cost that a distance-based charging system can provide.

--- Later in debate ---

[Robert Jenrick]

I shall try to respond to the many points that have been raised. My hon. Friend the Member for Poole in part answered the challenge from the hon. Member for Norwich South as to whether hauliers pay their fair share. It is worth remembering that they pay a range of taxes, as my hon. Friend pointed out. They pay the levy that we are discussing and vehicle excise duties. They also pay tax on fuel. Taken as a package, hauliers pay a considerable amount of tax. British hauliers as an industry are highly taxed, going by European and international comparisons. The reforms mean that some hauliers will pay more. The VED system is based on both weight and axles, so to some extent it reflects wear and tear on the roads, although I appreciate the point made by the hon. Member for Norwich South that HGVs make a significant impact on the roads. I did not realise it was 100,000 times that of a Ford Focus, but that puts things in perspective.

The hon. Gentleman asked whether the HGV levy was specifically hypothecated to tackle such issues as potholes and strategic roads. It is not. However, as I have described, the VED system will be, which will significantly increase the amount of investment that the country makes in roads at every level: £28.8 billion is the spending envelope for roads investment announced by the Chancellor in the Budget, and £25 billion of it will be spent on strategic roads in the road investment strategy that will be announced later next year. That will be about 170% of the first road investment strategy, so there is almost double the amount of investment going into roads to tackle congestion and improve strategic roads in all parts of the country.

The hon. Member for Aberdeen North made a valid point about the European standards. It is our intention to remain closely aligned to those. That seems sensible and it is our intention in a number of respects, such as climate change, emissions and carbon budgets, as is indeed set out elsewhere in the Bill. For example, we have not yet made a final decision on carbon trading, but we shall monitor it and review the matter. If I can give the hon. Lady any further information I will write to her to set out the position of the Department for Transport.

On the broader question of why we are not using the VED system for HGVs to encourage greater take-up of zero-emission or ultra-low emission HGVs, it comes back to the point made by the hon. Lady: currently there are very few commercially available ultra-low emission alternatives for HGV drivers, which prevents the broad uptake of new vehicles. Clearly, we would like to do all we can to stimulate the market and see rapid progress, but we have to be mindful of that. Through the Road to Zero strategy that was published earlier this year, the Government have committed to working with the industry to reduce HGV greenhouse gas emissions significantly by 2025. The strategy sets out the Government’s plans to use a variety of different tools to meet that commitment.

The hon. Member for Norwich South made a number of important points about HGVs and road safety. I will write to him on that and find out what information I can about DFT’s work, because it is important that we take note and see what can be done to improve road safety, particularly as the number of vehicles going down smaller roads and country lanes as a result of online shopping is becoming more important. Through the Road to Zero strategy and other initiatives, DFT is paying attention to how we can improve the last mile of delivery to tackle air quality and reduce the number of vehicles on our roads.

The clause introduces a lower rate of HGV levy for vehicles that meet the latest emission standard, and a higher rate for vehicles that do not. As we have discussed, the change will incentivise hauliers to move to cleaner, less-polluting vehicles. It is only right that everyone plays their part in protecting our natural environment so that we leave a cleaner, greener Britain for our children. HGVs currently account for approximately 20% of harmful nitrogen oxide emissions from road transport but only 5% of total miles travelled, so they will play an important part in tackling the problem.

The changes made by the clause will reduce HGV levy rates by 10% for vehicles that meet the latest emission standards, reflecting the fact that they generate 80% less NOx emissions than the older HGVs. The clause will also increase rates by 20% for HGVs that do not meet those standards. Many hauliers will pay less as more companies move to cleaner lorries—we have introduced it to improve air quality and not to raise revenue.

On amendments 115 to 118, to which the hon. Member for Norwich South spoke, the Government have published a tax information impact note outlining the impact assessment of these reforms, including the forecasted revenue effects, which have been certified by the Office for Budget Responsibility. I believe those amount to £25 million over the scorecard period. These reforms to the HGV levy are part of wider action by the Government to tackle challenges in the areas highlighted by the amendments. Isolating the impact of the HGV levy reforms would be extremely challenging and, I suspect, of limited use, as they cannot be separated from other actions the Government is taking in these areas.

The Government’s draft clean air strategy sets out an annual reporting process for the monitoring of air pollution, which is the appropriate mechanism for assessing the effectiveness of those changes and others over time, rather than introducing a new method to review it, as proposed by the amendments. I therefore urge the Committee to reject the amendments. The changes outlined in the measure will ensure that both foreign and domestic HGVs play their part in meeting the Government’s air quality targets.

[Clive Lewis]

I thank the Minister for his contribution. I note that he was unaware of the 100,000 figure between the damage caused by an HGV compared with the damage caused by a Ford Focus. Have the Government made any assessment of whether HGVs currently cover the cost of the impact they have on UK road infrastructure? It sounds like they have not, but the Treasury should be able to amend VED or the taxation system that it will use in order to better reflect that.

To pick up on some of the comments made by the hon. Member for Poole, we are talking about externalities. Everyone wants to see everybody pay their fair share, and I am aware that haulier companies pay not just the excise for HGVs, but road tax and fuel tax. So do drivers of Ford Focuses: they also pay their fair share of tax, including income tax and other taxes as well. We all pay our fair share of tax, but if HGVs are damaging the roads to that extent and having such an impact in terms of road traffic accidents, that calls into question whether they are paying excise duty appropriately, and whether that excise duty is a genuine reflection of the cost that those HGVs are exacting on society and on our road systems.