Government calls for evidence on green van tax breaks
The Government has launched a two-month consultation into possible changes to the Vehicle Excise Duty (VED) that could incentivise van drivers to choose low-emission vehicles.
At present, VED for vans is charged at a flat rate of £250, regardless of the vehicle's emissions. But the consultation proposes the introduction of a graduated first year rate for new vans, with lower rates for lower emissions models, which would be similar to the current system for cars. After their first year of operation, all new vans would then be placed on a standard rate.
The Government estimates that less than one in every 200 vans (0.4%) purchased in the UK in 2016-2017 was classed as an ultra-low emissions model, while 75% emitted over 150g/km of CO2. It hopes the proposed tax breaks could balance out these proportions and “help the white van man go green”.
“Air pollution remains a significant threat to public health and everyone must play their part tackling its causes,” Environment Secretary Michael Gove said. “Businesses have a crucial role in this. That’s why we are setting out plans to make low emission vans more affordable and asking businesses how we can help them break down the barriers to the use of lower emission machinery.”
The consultation was welcomed by the Environment, Food and Rural Affairs Committee (EFRA), with chair Neil Parish MP dubbing it a “step in the right direction” to reduce “harmful roadside emissions”. However, Parish additionally called for the Government to account for nitrogen dioxide (NO2) as well as CO2 in any new taxation model and to revise VED across all vehicles rather than focusing solely on vans.
The launch of the VED consultation coincides with a separate call for evidence on whether the reduced duty rate for red diesel is holding back the use of cleaner fuels by non-road vehicles and machinery in towns and cities. The call for evidence excludes red diesel used for agricultural and fishing purposes, focusing instead on machinery such as cranes or generators used on construction sites in towns and cities.
Red diesel accounts for 15% of all diesel consumption in the UK and currently benefits from a reduced rate of 11.14p per litre compared to the standard charge of 57.95p. It is commonly used in agricultural and off-road vehicles and illegal to use the fuel to power a vehicle driving on public roads, but retailers and fleet operators can use it to power secondary engines for refrigeration units on trucks.
The two announcements follow up on Chancellor Philip Hammond’s recent budget announcements, which included a £3.5bn plan to improve air quality and reduce harmful emissions. The plan includes the £220m Clean Air Fund and a £40m support scheme for local authorities aiming to combat air pollution, and was launched after
As part of the strategy, the Government has committed to the phase-out of new car sales for petrol and diesel cars and vans by 2040. It is expected to publish its comprehensive Clean Air Strategy shortly, which will outline a wider range of actions on air pollution from all sources.
However, the Government has a poor track record on combatting air pollution levels. A recent study from the Royal College of Physicians found that 44 of 51 UK towns and cities breach air quality rules on an annual basis.
Ministers have been taken to court numerous times over failures to combat toxic air pollution. Earlier this year, the High Court ruled in favour of environmental law firm ClientEarth, marking the third time the organisation had won a court case against ministers.
Four MP committees have additionally published a damning report this year accusing the Government of viewing air quality as a "box-ticking exercise", claiming that air pollution is costing the UK £20bn annually.