Approved Mileage Allowance Payment Rate Debate

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Department: HM Treasury

Approved Mileage Allowance Payment Rate

Elliot Colburn Excerpts
Monday 3rd July 2023

(11 months ago)

Westminster Hall
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Elliot Colburn Portrait Elliot Colburn (Carshalton and Wallington) (Con)
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I beg to move,

That this House has considered e-petition 600966, relating to the Approved Mileage Allowance Payment rate.

It is a pleasure to serve under your chairmanship, Mr Sharma. The prayer of the petition reads:

“The HMRC mileage rate for reimbursing the use of private cars (e.g. for employees but also volunteers) has been fixed at 45p/mile (up to 10,000 miles) since 2011. The lack of any increase since then is a serious disincentive to volunteer drivers particularly as fuel has gone up again recently.

Since 2011, inflation has gone up by over 25%; fuel has increased by over 20% over the last 5 years. Volunteer car drivers who did so much during Covid, and still do, to get people to healthcare settings, e.g. hospitals, vaccination centres, and to deliver shopping and prescriptions, are not being compensated fairly for the use of their cars. Consequently charities are struggling to recruit new volunteer drivers. These drivers help free up hospital beds and keep people independent and in their own homes.”

Janet Daby Portrait Janet Daby (Lewisham East) (Lab)
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I thank the hon. Gentleman for opening his speech so powerfully. Does he agree that the approved mileage allowance payment rate must increase because it has not increased since 2011, while motoring costs, including the cost of fuel and vehicle maintenance costs, have risen?

Elliot Colburn Portrait Elliot Colburn
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The hon. Lady has basically nicked the crux of my speech, but I thank her for making my point so succinctly.

The petition received over 41,500 signatures, including 25 from Carshalton and Wallington. On behalf of all parliamentarians, I should declare that MPs’ mileage rates, claimed through the Independent Parliamentary Standards Authority, are also calculated at 45p per mile, in line with the approach taken by His Majesty’s Revenue and Customs. However, I hasten to add that we are not debating MPs’ rates today.

I thank all those who signed the petition and have taken an interest in the debate, including the many volunteer and community groups that have been in touch. I also thank the petition creator, Rev. Nick Ralph, as well as representatives of the Good Neighbours Network, the Community Transport Association, Unison and the Association of Taxation Technicians, for meeting me to discuss the subject of the debate. As always, a massive thanks must go to the Petitions Committee team, who have worked incredibly hard to organise the meetings I just mentioned and to provide briefings in advance of the debate.

When I agreed to lead the debate, I did so with a focus on the charitable activity mentioned in the petition’s prayer, remembering the enormous volunteering effort that I witnessed and was part of during the pandemic, both locally and nationally. Our country has a proud history of volunteering. One route can even be traced back to the medieval age, when there was a strong link between religion and the aiding of the sick, needy and poor. Indeed, according to sources, over 500 voluntary hospitals were established in England in the 12th and 13th centuries alone. More recently, in this century, we London MPs think of the enormous army of volunteers who helped to spread joy and cheer throughout the Olympic park during the 2012 London Olympics and, as I have already noted, the hundreds of thousands of people who volunteered their time to help those in need during the covid pandemic. From taking part in befriending telephone calls to collecting and dropping off shopping or prescriptions, the effort was enormous. It made me incredibly proud of our country and, indeed, my own community.

Volunteering is an incredibly noble calling, endorsed by its long history of royal patronage. This year, the Royal Voluntary Service launched the Coronation Champion awards to recognise volunteers who have gone above and beyond for their charities, and volunteering was made an intrinsic part of Their Majesties’ coronation itself. Billed as a lasting legacy of that momentous occasion, the Big Help Out took place on the bank holiday Monday of the celebration, with hundreds of thousands of people taking part across the country.

The numbers speak for themselves. According to a survey in 2019-20, 64% of people had volunteered at least once in the past year, and just shy of 40% had volunteered in the past month. The following year, 62% of respondents stated that they had volunteered at least once in the past year, and the number reporting having volunteered in the past month rose to 41%.

That potted history of the relationship between our country, its people and volunteering featured so heavily in my introduction because it helps to set the scene for the petition and makes clear its importance. Many in our communities depend on volunteers, but it is important that those volunteers, whatever they may be doing, feel valued and appreciated. That is important not just for retaining volunteers but for recruiting new ones. Yet from the conversations that I have had with affected stakeholders, the current HMRC AMAP rate is proving to be a real sticking point for many charities in retaining their volunteers, particularly longer-serving ones.

Claire Hanna Portrait Claire Hanna (Belfast South) (SDLP)
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The hon. Member is outlining powerfully the benefits of volunteering for the community, but he will also be aware of its benefits for individuals. Does he share my concern that, as the cost of motoring rises, we are excluding many people from the benefits of volunteering to both them and their community, and does he agree that all community transport networks should be consulted in any review of the mileage rate?

Elliot Colburn Portrait Elliot Colburn
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I absolutely agree with the hon. Lady.

The mileage allowance payment rate currently allows volunteers to claim up to 45p a mile for the first 10,000 miles and 25p for each mile after that, yet the 45p rate has not been reviewed or increased since 2011. That affects not just charities but many employees of the variety of businesses that use the AMAP rate to regulate employees’ use of their private cars for business.

In their initial response to the petition, the Government stated that the rate

“is intended to create administrative simplicity by using an average, which reflects vehicle running costs including fuel, depreciation, servicing, insurance, and Vehicle Excise Duty.”

Indeed, I spoke to many stakeholders who agreed that the rate was probably the best approach for reimbursing volunteers and employees. It is easy to use and free from bureaucracy, and it minimises the burden of extra paperwork or the potential for inaccurate or incorrect payment.

The issue for the petition creator is not necessarily the system itself but the rate of the allowance. The “RAC Cost of Motoring Index 2011” concluded that that year was not an easy one for motorists; drivers had to contend with record fuel prices and a sharp increase in the cost of car insurance. Much of that remains true today—it is just a lot more expensive. All the costs associated with vehicle use have increased, but the disparity between today and when the AMAP was last adjusted is demonstrated most simply by the cost of fuel. The current average cost of petrol nationwide is 144.86p a litre, and diesel is at 145.54p. In 2011, the last time the rates were changed, petrol averaged 133.65p and diesel 138.94p.

Those averages do not reflect sporadic fluctuations over that time. One argument that has been made is that fuel costs were brought down by the temporary 12-month cut to duty on petrol and diesel of 5p a litre announced in last year’s spring statement, and the Government noted that in their response. Many people I spoke to in the run-up to the debate argued not just for a review of the rate but for regular reviews, which could take into account fluctuations and would make the system much nimbler, given the continuing uncertainty with respect to the costs of running a vehicle in general and of fuel specifically. Charities and employees could therefore properly fund and support those who currently find that the AMAP only partially covers the costs of running a vehicle, without fear of being penalised through the tax system for paying a more fitting rate.

The AMAP is only one way suggested to employers and charities to reimburse drivers. Some may argue that they could choose to pay more to reflect the increased cost of running a vehicle, but if a higher allowance is paid, an income tax and national insurance charge is placed on the difference. That is precisely why the petition was set up—to try to scrap the charge for those wanting to pay an allowance that better reflects the reality of driving a vehicle in 2023.

Can the Minister tell us how much revenue is collected through overpayment of the AMAP rate and how that would be impacted if the rate were raised to, say, 60p as outlined in the petition? It could be argued that with a more rigorous, up-to-date support system with regular reviews, our businesses and charities would be able to ensure that those using their vehicles for work or for volunteering are valued, and they would find it easier to retain them. The Government have worked to stabilise fuel costs by cutting fuel duty in the light of the knock-on effects of the invasion of Ukraine, among other factors. I believe that that stabilising work should filter down to our volunteers and workers through a regularly reviewed and increased AMAP rate.

The arguments in favour of the petition’s aims seem incredibly plausible, especially since, as I have noted—I am sure we will hear this a lot during the debate—the rate has not been adjusted since 2011. I hardly need to list the ways in which our world, our lives and the cost of things have changed over the last 12 years. Instead, in drawing my remarks to a conclusion, I will again draw Members’ attention to the workers and volunteers who have strived to get this country moving and growing over the last decade.

Bob Seely Portrait Bob Seely (Isle of Wight) (Con)
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It is a pleasure to listen to my hon. Friend, who is making incredibly important and sensible points. Does he share my hope that the Minister will listen very carefully to them? We have a very strong voluntary sector on the Isle of Wight. Mike Bulpitt, one of the lead volunteers on the Island and chief executive of a community action centre, contacted me because he is worried that a lot of our voluntary drivers will find it difficult to continue to volunteer due to the lack not only of an increase in the rate but of regular reviews. I say on his behalf that we thoroughly support what my hon. Friend is saying. Does he share my hope that the Minister is listening and feeling generous?

Elliot Colburn Portrait Elliot Colburn
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My hon. Friend is absolutely right. I know that the rate affects businesses and employees too, but the core principle is that volunteers, in particular, should not be penalised for their noble service and for giving up their free time to help others. It is clear that the rate is affecting the recruitment of volunteers to use their private vehicles at a time when those volunteers are so needed.

Janet Daby Portrait Janet Daby
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I thank the hon. Gentleman for being so gracious in giving way again. Volunteers must be appreciated, and ensuring that these allowances increase is one way to appreciate them, but does he agree that public sector workers—I was one in the past, and they did so much during the covid period and continue to do so—should also be given the allowances they are due, too?

Elliot Colburn Portrait Elliot Colburn
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The hon. Lady is absolutely right, too; public sector workers, particularly those working in our national health service, are also impacted by the reduced rate. That only enhances the petitioners’ call for the rate to be increased and reviewed more regularly.

Our volunteers in particular, but also our public sector workers, have shown themselves to be true engines of growth and betterment. It is surely time that they feel properly supported in their endeavours, whether entrepreneurial or charitable. If we are to ensure a brighter future for our country, those who drive it must be paid a rate that reflects today’s world and not the world of more than a decade ago. I look forward to hearing from all hon. Members. I hope that the Government will listen to our calls and look to introduce an increased rate, as well as a system of more regular review so that we do not have to come back to the issue every 10 years or so and just hope that the Government fancy doing it one day.

--- Later in debate ---
Elliot Colburn Portrait Elliot Colburn
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I promise not to detain the House until 7 pm. I thank all hon Members for attending today’s debate and, again, the petitioners for bringing us here to discuss this important issue.

I just urge the Minister to take back to the Treasury, in advance of the autumn statement, the fact that a strong cross-party consensus has been demonstrated here, and that we would like an uprating of the AMAP. I think that we all agree, as do the petitioners I met, that the system is not the problem; the frequency with which it is uprated clearly is.

I take the Minister’s point that the rate is voluntary, but there are two quick points that I would make on that. First, on employers, of course they look to HMRC to set the standard. Many of them use the system, and not many would be tempted to incur a tax liability for going over that amount. Secondly, on volunteers, again, while I appreciate that one could go further, the need to provide evidence seems an unnecessary administrative burden. It would be much simpler to increase the base rate that voluntary organisations could offer, because of course the general principle is that no one should be out of pocket for using their personal car for work or volunteering.

Question put and agreed to.


That this House has considered e-petition 600966, relating to the Approved Mileage Allowance Payment rate.