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Thinktank Policy Exchange calls for diesel car tax rises

Policy Exchange has called for a rise in road tax for new diesel cars to fund a scrappage scheme.

The group's proposal states the Government should increase the first year Vehicle Exercise Duty (VED) rate for new diesel cars by up to £800 to reflect the higher levels of air pollution they cause compared to petrol cars. 

Announcing the recommendation ahead of a major report on air quality expected later this month, Policy Exchange says that the proposal could generate £500 million a year of additional revenue, the equivalent of increasing fuel duty by 1 pence per litre.

The thinktank says the revenue should be used to fund a new diesel scrappage scheme with matched funding from car manufacturers, providing £2,000 grants to motorists who scrap an old diesel car or van and purchase a new lower emission vehicle. 

Policy Exchange believes that encouraging motorists to switch from diesel towards lower emission alternatives such as petrol, hybrid, or electric cars would lead to a dramatic improvement in air pollution levels in the UK. A previous Policy Exchange report found that 12.5% of London’s total area - containing 3.8 million workers, as well as 979 schools attended by a quarter of London’s school population - exceeded legal and healthy limits for nitrogen dioxide (NO2) in 2010.

Diesel cars and vans cause 70% of NOx emissions in London. 

It says that existing diesel drivers should not be penalised, as they bought their vehicles in good faith. For the last 15 years, motorists have been encouraged to purchase diesel vehicles, with road tax (Vehicle Excise Duty), Company Car Tax, and Capital Allowances are all geared towards lower CO2 vehicles. Consequently, diesel cars have increased from 14% of the car fleet in Great Britain in 2001, to 36% of the car fleet today.

It is estimated that if air pollution stayed at current levels it would reduce the average life expectancy across all Londoners born in 2010 by up to 2 years.

The proposed VED increase as discussed by the group would only be applicable to new diesel cars, not to existing diesel cars or other vehicles such as vans.

Richard Howard, head of environment and energy at Policy Exchange, said: “London and many of the UK’s other major cities are facing an air pollution crisis, with residents exposed to illegal and unhealthy levels of NO2 pollution.

“If we are to clean up air pollution, then Government needs to recognise that diesel is the primary cause of the problem, and to promote a shift to alternatives. This needs to be done in a way which does not unduly penalise existing diesel drivers, who bought their vehicle in good faith, and gives motorists sufficient time to respond. 

“Instead of increasing diesel fuel duty or banning diesels from city centres, the government should look to increase taxes on new diesel cars and offer scrappage grants to take old polluting diesels off the road.”

AA’s head of roads and transport policy Paul Watters added: “We wouldn’t support an increase in VED. Overall air pollution is actually falling – yes, there are hot spots of about eight to 10 cities, but these cities are looking at measures to reduce the problem – it’s not just vehicle pollutants.

“We would, however, fully support a diesel scrappage scheme; to get rid of older diesels, which are way out of line with current emissions standards, can be nothing but a positive thing.”

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  • Adam Rollins Midas FMS - 11/03/2016 12:41

    So we encourage diesel drivers in old, polluting vehicles to stay in those cars and demonise increasingly cleaner diesels? At the same time we can also stifle the motivation for developing greater improvements that may be required until geniuinely cleaner technologies are available. By cleaner, I also refer to the generation side of electric, hydrogen, etc., and to environmentally friendly production and disposal of raw materials for alternative technologies. As soon as the income stram dries up from from one demonised technology, let us be sure another will be demonised in turn to replace it.

  • Nigel Boyle - 11/03/2016 13:04

    It is cuckoo land policy. Diesel is used by fleets because of 55 mpg. nothing else gets close. Petrol - 28 mpg Hybrid 200mpg for 8 miles, then 28! This quango would be better placed getting funding to take NOX out of diesel emmisions. It would only be a new tax that the govermnet hangs on to as no fleet will swap diesel to petrol/hybred. Only when electric or hydrogen get 500 miles from a 'fill up' will there we mass abtoption.

  • Rob Chisholm, Applewood Vehicle Finance Ltd - 11/03/2016 14:42

    And the point of Euro 6 is what exactly?

  • Morgan Devereux (Hilton Vehicle Leasing) - 11/03/2016 17:31

    What is remarkable is that all of this information was available and brought to the debate when discussing car taxation and the company car driver way back in 2000. At that time I wrote an article titled "The true cost of MPG" which then highlighted that more efficient Petrol engines would be a better way of reducing the level of toxins put in to the environment as we are not taking in to consideration the other, more health destroying, side effects of Diesel exhaust gases. Toyota's Prius Market was making headway at that time and it was apparent that the hybrid was a worthy credible solution. The later conundrum will come when we start to look at the environmental impact of the fully electric vehicle and work out how best to tackle the taxation issue on this. Some are not as green as you might think.

  • Dean Hendricks - 12/03/2016 00:45

    'Old, polluting vehicles' don;t have diesel particulate filters, one of the worst culprits of the modern diesel engine. The contaminants are so tiny they can be ingested through the skin. I don't want to drive in cities, in my 'Old, polluting vehicle'. In fact I would place a ring of bulldozers just inside the M25 and instruct them to keep pushing until we are left with 'Mount London', where 'a river runs through it'. If you want people to drive petrols then the taxation on fuel needs to be reduced significantly because to run a petrol 4x4 instead of a diesel one is a massive hike in fuel cost

  • Iain - 12/03/2016 17:56

    Greater investment in our roads infrastructure, together with scrapping bus lanes to maximise the full potential of the roads capacity would go a long way towards keeping vehicles moving thereby reducing emissions. Not only would this approach improve air quality, it would also have the added benefit of reducing fuel bills for companies and drastically reducing lost time sitting static in traffic congestion. When will these people realise the impact and cost they are imposing on business and the travelling public generally who, quite often, are only trying to get to and from work. Our public transport network is heavily over subsidised and its still not value for money.

  • Vzzbcks - 13/03/2016 21:11

    We need to get rid of diesel for good since the evidence of direct harm - including from the very latest - is now so overwhelming. Why not make the pump price reflect the 20% energy density difference between petrol and diesel?

  • Trevor Langford - 20/03/2016 05:13

    In general, I agree with your thinking on how to deter new diesel fuel vehicles into the market. However, should this also apply to diesel hybrids such as the Citroen model in that such OEM's would have to rethink their production strategy? Commercial vehicle diesel hybrids should be exempt from additional taxes and recieve grants or rebates against the high purchase cost of these hybrids as there is limited practical heavy commercial fuel alternatives or infrastructure refuelling on the market.

  • grimreaper - 13/06/2016 09:48

    Isn't the point of these expensive Diesel Particulate Filters and Adblue based SCR systems supposed to address the emissions issue?. If not, why are we paying silly money in order to maintain them?.

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