Clause 67 - Cars with low carbon dioxide emissions

Finance Bill – in a Public Bill Committee am 11:15 am ar 11 Mehefin 2013.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Ian Mearns Ian Mearns Llafur, Gateshead 11:15, 11 Mehefin 2013

I beg to move amendment 50, in clause 67, page 35, line 37, leave out subsection (2).

Photo of David Crausby David Crausby Llafur, Bolton North East

With this it will be convenient to discuss the following:

Amendment 54, in clause 67, page 36, line 15, at end add—

‘(9) The Chancellor of the Exchequer shall review the overall impact of the Government’s overall budgetary and policy decisions on support for the low emitting vehicles industry, and the sales of these vehicles, and place a copy of this review in the Library of the House of Commons within six months of Royal Assent.’.

Clause stand part.

Photo of Ian Mearns Ian Mearns Llafur, Gateshead

It is a pleasure to serve under your chairmanship once again, Mr Crausby. The amendment would remove subsection (2), which makes a change so that cars provided for leasing no longer qualify for the first-year allowance. It does that by repealing the override contained in section 46(5) of the Capital Allowances Act 2001. As the fourth report of the Transport Committee highlighted last September,

“The Government is committed to reducing carbon emissions to 80% below 1990 levels by 2050. Emissions from domestic transport comprise approximately a quarter of the UK’s total carbon dioxide emissions, with emissions from cars accounting for over half of this figure. The Government must therefore make significant efforts to decarbonise road transport if it is to meet its carbon reduction commitments under the Climate Change Act 2008. There are a number of approaches to decarbonising road transport. Plug-in vehicle technology is one of the more market-ready of these approaches.”

The north-east economy has an interest in electric vehicles, because Nissan is producing the model known as the Leaf, which has added a significant number of new jobs to the production lines. The Government hope to encourage consumer demand for plug-in vehicles by providing financial incentives for consumers to buy the cars and by providing funding for publicly available  vehicle charging infrastructure. Consumer demand has increased since the Government introduced the plug-in car grant, but we are hearing mixed messages from the Department for Transport about whether demand is lower than expected or progressing according to forecasts.

Initial public investment in charging infrastructure was designed to provide reassurance to potential plug-in vehicle owners that they would be able to charge their cars in public spaces if necessary. The DFT hopes that this will stimulate demand for plug-in vehicles. However, the national charge point registry was far from comprehensive and lacked even the location of the majority of charge points installed using public funds. That is of concern.

We are also concerned about the cost to the public or to companies buying fleets of electric vehicles, which represents a significant initial capital outlay. Undoubtedly there are savings down the line from fuel use, but we are concerned that getting rid of the first-year allowance for fleet vehicles will have a significant impact on the uptake of electric vehicles in the overall market.

The clause extends the 100% first-year allowance for expenditure incurred on cars with no CO2 emissions, which was due to expire on 31 March this year, and extends it for an additional two years to 31 March 2015. It also reduces the emissions thresholds that determine the rates of capital allowances available on cars. Given that subsection (2) will exclude UK firms leasing or renting such cars from claiming the previous 100% first-year allowance, there is concern in the industry about the potential market impact, given the relatively high initial capital outlay for the vehicles.

No doubt, as the technology advances the unit cost of the vehicles will reduce, but we are not at that stage yet. It is the comparative outlay for the vehicle against an internal combustion engine vehicle counterpart in the existing market that worries us. There is serious concern, given the critical role that UK leasing and rental firms have played in supporting the purchase take-up and use of low-emitting cars.

Consumer and business confidence is important in helping this new and potentially highly successful industry to grow in the UK. The industry is of particular significance to the north-east, because of the role of Nissan and its supply chain. I have said before in Committee that Nissan on its own employs about 6,500 people, but there are probably about another 25,000 jobs in the supply chain in the wider north-east region and the north of England.

Photo of John Pugh John Pugh Democratiaid Rhyddfrydol, Southport

The hon. Gentleman is making an interesting speech, but there is a complication when we talk of decarbonisation, because electricity is produced from carbon sources. People who argue for clean diesel would say that the overall impact of that would be less than that of an electric car, so the Government face a dilemma if they do not know the exact source of the electricity.

Photo of Ian Mearns Ian Mearns Llafur, Gateshead

The hon. Gentleman makes an interesting point. I think there are some fairly advanced-stage tests on the electric vehicles produced by Nissan showing that the carbon emissions from the electricity they use are significantly less than those produced over the same mileage by petrol or diesel engines. I think a test was  done on the fleet of vehicles used by Darlington council. I apologise if I get the figures wrong, but I think it was something like 9,000 miles for less than £100 of electricity. That is significant in terms of potential CO2

Clause 67 could have a detrimental impact on the UK’s low-carbon electric vehicle industry. Subsection (2) will exclude UK firms leasing or renting such cars from claiming the previously available 100% first-year allowance. That is a serious concern given the critical role that UK leasing and rental firms have played in supporting the purchase take-up and use of low-emitting electric vehicles.

We have been repeatedly told that the Government see themselves as the greenest ever, but what have we seen? Three years on, we see a Government that in 2012 presided over an increasing level of CO2

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

As my hon. Friend has outlined, clause 67 extends the 100% first-year allowance for expenditure incurred on low-CO2

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.