HMT7

9 March 1999

REFORM OF VEHICLE EXCISE DUTY TO PROTECT THE ENVIRONMENT

A package of measures reforming Vehicle Excise Duty (VED), so that it
gives better environmental signals, was announced today by the
Chancellor Gordon Brown.

He announced that for cars:

-   a reduced VED rate of #100 for cars with engines up to 1,100 cc
    will be introduced from 1 June 1999, rewarding drivers who use
    smaller and cleaner vehicles;

-   the VED rate for all private and light goods vehicles will be
    increased by #5 to #155 from 10 March 1999;

-   the VED rate for new cars will be determined primarily by their
    carbon dioxide emission rate, from Autumn 2000.

For lorries the Chancellor announced:

-   several measures to help the UK haulage industry and to
    encourage cleaner vehicles:

      - a freeze in most lorry VED rates for the second year running;

      - a doubling to #1,000 of the maximum VED discount for low
        emission lorries and buses;

      - a simplification of the plating procedures, a long-standing
        haulage industry request;

      - fuel duty incentives for cleaner fuels;

      - a 55% reduction in the VED rate for some vehicles engaged in
        combined road-rail transport;

-   higher rates of VED for recently-introduced classes of lorry, to
    discourage strongly the use of vehicles with heavier, 11.5-tonne,
    axle weights.

NOTES FOR EDITORS

Car VED

1.  Following the consultation on the reform of VED, the Chancellor 
    today announced a reduced rate of VED of #100 for cars with 
    engines up to 1,100cc from 1 June.

2.  Information leaflets about the introduction of graduated VED
    will be available from 12 March from

    Driver and Vehicle Licensing Agency 
    Customer Enquiries (Vehicles)
    Swansea SA99 1BL

    Phone: 01792-772134, fax 01792-782793 (between 08:15am and
    04:30pm)

    Email: enquiry.dvla@gtnet.gov.uk

    and at motor vehicle licence-issuing post offices. To find your
    nearest such post office contact the customer services department
    (number in your Phone Book under Post Office Counters).

3.  New cars registered from Autumn 2000 will be subject to a VED
    system based principally upon their rate of carbon dioxide
    emission, to encourage the take-up of more fuel-efficient
    vehicles. Details will be announced later.

4.  VED rates for cars, taxis and light goods vehicles will be
    increased to #155 per annum, for licences taken out after today.
    (See attached tables for full details).

5.  Later in 1999, the Driver and Vehicle Licensing Agency will
    run a pilot scheme on looking at options for allowing VED
    re-licencing using the telephone or Internet.

6.  The revenue cost of the #100 reduced rate will be #85m in
    1999-00, relative to indexation. In Budget 2000, VED rates will
    be set to secure a revenue neutral system in 2000-01 and 2001-02.

7.  Copies of the summary report on the consultation can be
    obtained from:

    The Public Enquiry Unit, 
    Room 89/2, 
    HM Treasury, 
    Parliament Street 
    London SW1P 3AG

Lorry VED

8.  VED rates for lorries are currently under review, to ensure
    that rates better reflect the environmental impact of different
    lorry types.

9.  In the meantime, VED rates for the new classes of heavy
    lorries first allowed on UK roads on 1 January 1999 will be
    increased for licences taken out after 9 March. The new rates are
    set out in the table attached. Any vehicle already operating at a
    new weight must now be 'up-plated' and re-licensed at the new VED
    rates by April 17.

10. In addition, a range of measures will help the UK haulage
    industry:

    a.  Most lorry VED has been frozen for the second year running;

    b.  The VED reduction for lorries and buses meeting low emission
        standards has been increased to a maximum of #1,000 from 
        today (see attached table). The incentives will continue to 
        apply to commercially operated lorries and buses with cleaner
        engines;

    c.  Details of fuel duty incentives for cleaner fuels (notably
        ultra-low sulphur diesel and road fuel gases) are set out in
        press notice C&E 11;

    d.  The plating procedures have been changed today to remove the
        requirement for a vehicle to be modified physically before 
        being allowed to "down-plate" (reduce its maximum permitted 
        laden weight) to qualify for a lower rate of VED;

    e.  To further encourage combined transport operations, i.e. 
        those where freight is transported by road and rail, the VED 
        rate for all vehicles engaged in this work have been set at 
        #1,280, a decrease of over #1,500 for some vehicles.


HM TREASURY PRESS OFFICE 
Press Enquiries to: 0171 270 5238 
Non-media enquiries to: 0171 270 4558

If you have access to the Internet you can find this news release at
http://www.hm-treasury.gov.uk. Other Treasury material can also be
found at this address.

# = pounds sterling