All 2 Debates between Michael Connarty and Stephen Hammond

HGV Road User Levy Bill

Debate between Michael Connarty and Stephen Hammond
Tuesday 29th January 2013

(11 years, 9 months ago)

Commons Chamber
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Stephen Hammond Portrait Stephen Hammond
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I hope that I am about to address exactly that point. I welcome the hon. Member for Linlithgow and East Falkirk to his place, because he raised the point about the levy rebate, which I hope my opening remarks have addressed.

The BVLRA estimates that rebating the charge in tenths rather than twelfths might cost its members, as the hon. Member for Poplar and Limehouse has said, up to £2.7 million a year. That estimate is on the high side, to say the least, because the BVRLA assumes that half the refunds would be for vehicles in the most expensive levy band, whereas, in fact, only 4% of the UK fleet is in that band. Most UK vehicles—83%—are in bands costing between 36% and 65% less. I would therefore question whether the cost is as high as estimated.

The BVRLA also assumes that all refunds are claimed in the 10th month of the VED cycle for each vehicle, which is a worst-case scenario. In fact, there is a peak in vehicle disposals at around month three or four of the cycle, reflecting the fact that vehicles are often purchased in September and sold in January, to deal with Christmas business. The loss for any vehicle at this point is some 60% or 70% less than the worst-case figure.

We estimate that most vehicles will lose in the region of between £30 and £50 when delicensed. That is not a regular event, but it would happen, for example, when a vehicle is sold. The loss therefore needs to be set in the context of the vehicle’s whole lifetime, which can be about 10 years. For example, a typical vehicle that lasts 10 years and is sold twice during that period at a typical stage in the VED-levy cycle would incur between £60 and £100 in rebate costs over its life, because the loss is incurred only when the vehicle is sold or delicensed for other reasons. That cost equates to about £6 a year. Operators can avoid that cost by selling the vehicle taxed or by disposing of it only at the end of the VED-levy cycle so that there is no amount to reclaim.

As the hon. Member for Poplar and Limehouse said, the BVRLA gave oral evidence to the Committee and raised this point, but it did not give it the prominence that it has been given subsequently. I am pleased that we have been able to discuss it today because it did not feature in our discussion about levy rebates. I am pleased that I have been able to clear the point up. The BVRLA could have submitted written evidence on this point to the Committee, but it did not. It is helpful that it has been raised by way of amendment this afternoon.

Michael Connarty Portrait Michael Connarty (Linlithgow and East Falkirk) (Lab)
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The point I raised on instinct, on looking at the Bill, was that this was not a level playing field between those who come into the UK and pay the levy, and those who are in the UK and pay duty and now the levy. Although the Minister has said that the loss will be 70% less than the worst-case scenario and only about £6, it is still not a level playing field. There will be a loss for the leasing companies in the UK. The companies say that the loss will be £2.7 million a year. If it is 70% of £2.7 million a year, it is still a large hit for British business.

Stephen Hammond Portrait Stephen Hammond
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As I have said, the figure of £2.7 million is predicated on half the vehicles in the fleet being in the largest band, whereas only 4% are in that band. There will be a very small loss, if there is a loss at all. The £2.7 million figure is clearly an overestimate.

I seek to persuade the hon. Member for Poplar and Limehouse that under the amendment, all rebating would be done under clause 7(4), which is designed for shorter periods of time than one year. Rebating the annual levy under that subsection would not resolve the tenths versus twelfths issue, but it would allow some foreign operators to drive on the UK’s roads for free for up to two months when they purchase an annual levy. That is because, as we discussed in Committee, they would be able to claim a rebate for whole outstanding months at the monthly levy rate, rather than at the discounted rate.

As well as the potential for free use of the roads, a further consequence of using clause 7(4) as the rebating mechanism would be to allow anyone to make a claim for more than they had paid, without ever driving on the UK’s roads. For example, if an operator purchased a levy starting at a future point in time, say 1 February, and immediately asked for a rebate, they would be able to claim 12 times the monthly rate because the levy period would not have started. That would contrast with the actual cost of the 12-month levy, which is discounted to 10 times the monthly rate.

The consequential amendments would mean that clause 7(4) could also be used for annual rebating and would remove the references to clause 7(3) in clause 7(8), which deals with the level of the rebate. Given the unintended consequences of providing updates only through clause 7(4), and given the relatively small value of the typical loss, which is incurred only if the vehicle is delicensed or sold, we do not propose to change the rebating formula from tenths to twelfths.

I will keep the situation under review. I hope that with those reassurances, the hon. Member for Poplar and Limehouse will withdraw the amendment.

HGV Road User Levy Bill

Debate between Michael Connarty and Stephen Hammond
Tuesday 20th November 2012

(11 years, 11 months ago)

Commons Chamber
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Michael Connarty Portrait Michael Connarty
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The Minister is indicating that that is not the case. If he is about to tell me that the levy will come in at exactly the same time for everyone, that would be a vast improvement.

Stephen Hammond Portrait Stephen Hammond
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The Secretary of State confirmed that this afternoon in his opening remarks, and I confirmed that in the Ways and Means debate on 23 October. The only possibility of that not happening would be if there is a minor delay to the procurement of the database, but the reality is that we have moved it so that there will be simultaneous introduction.

Michael Connarty Portrait Michael Connarty
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I congratulate the Opposition Front Bench on winning that battle before it has even begun. That was a cause for concern for the Opposition, so I am pleased if that has now been swept away by their good offices and oration. It was an issue only a few days ago.

Will the Minister look again at whether there is a way to enable UK-based drivers to have the same options for payment as non-UK-based drivers? I made this point earlier. Why should it be that those not based in the UK will pay weekly, monthly or daily, but UK owners will pay every day, whether they run a vehicle or not? That seems to be somewhat strange.

Returning to the question of how to police the Bill, I have serious concerns. How does the UK guarantee collection of the fines—a point I made to the Minister? He indicated that it would be the driver who would be responsible. The reality is that the driver will be changed the next time the vehicle is sent into the country. The driver could be changed again, again and again. We are talking about a massive permutation of drivers. I have been attached to the police scheme twice in this place and have spent time with the Serious Organised Crime Agency. One difficulty we have is that people come into the country with the deliberate intention of stealing. They are brought to court, bailed and then disappear—they never come back to the country. Someone else will turn up in that or a similar vehicle to steal once again.

Is the Minister trying to tell us that they will be able to catch the driver, and that the next time the vehicle comes into the country it will not have a different driver? It is all right when there is a family car, and either the Minister or the Minister’s wife could have been driving the car when they were fined, as happened in the case involving a former member of the coalition Government, but it is not the same with a heavy goods vehicle. The owner can change the driver every single day, so why is it not the owner of the vehicle who gets fined? The fine would not be able to be avoided then.