Policy Exchange - Raise road tax on new diesel cars to improve air quality, says Policy Exchange
Think tank says Treasury could generate £500million a year to fund a new diesel car scrappage scheme
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 £500million a year of additional revenue, the equivalent of increasing fuel duty by 1 pence per litre.
The think tank 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.
The think tank 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. Car manufacturers have systematically failed to control NOx emissions from diesel cars and vans, with recent evidence showing that diesel cars sold until 2014 perform no better on average than diesel cars sold in the 1990s (in terms of real-world NOx emissions). The latest diesel cars show some improvement but still exceed emissions standards by around 4 times on average.
Policy Exchange argues that Government needs to take more robust action at National and city level to clean up air pollution, particularly from road transport. But the think tank also makes it clear 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. Recent evidence shows that petrol cars now match diesel cars in terms of CO2 emissions, but cause substantially less local air pollution.
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 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.”
Nearly 25% of all school children in London and 44% of the Capital’s workforce are exposed to levels of air pollution that exceed legal and healthy limits. Up in the Air analyses data from over 100 air quality monitoring sites across London. It shows the most polluted parts of the capital currently have levels of Nitrogen Dioxide (NO2) nearly four times the legal limit, with 12.5% of London's total area exceeding the legal limit for NO2, and that deprived areas are more likely to be affected.
Latest News from
IEA expert comments on “likely government intervention” in carbon trading system18/05/2021 12:35:00
Professor Philip Booth, Senior Academic Fellow at free market think tank the Institute of Economic Affairs, commented, following warnings that the new UK carbon trading system could lead to “government intervention”
IEA - “Not out of the woods yet”: IEA expert responds to latest ONS employment data18/05/2021 11:35:00
Professor Len Shackleton, Editorial and Research Felllow at free market think tank the Institute of Economic Affairs, responded to today’s employment data from the Office for National Statistics (ONS)
The King's Fund responds to the Health and Social Care Committee’s report into the government’s proposals for the reform of health and social care18/05/2021 10:35:00
Richard Murray, Chief Executive of The King’s Fund, responded to the Health and Social Care Committee’s report into the government’s proposals for the reform of health and social care
Privatisation of Channel 4 is long overdue, says IEA expert18/05/2021 09:35:00
Professor Philip Booth, Senior Academic Fellow at free market think tank the Institute of Economic Affairs, responded to Culture Secretary Oliver Dowden MP’s suggestion that Channel 4 could be privatised in less than three years
Reward farmers who help fight climate and nature crisis, urges IPPR think tank13/05/2021 14:35:00
Now the UK has left the EU’s agricultural schemes, the government should seize the opportunity to transform farming to protect the environment and secure the livelihoods of farmers, according to a new IPPR report.
IEA - Nanny statists have “exploited” this pandemic, says new research13/05/2021 13:35:00
Governments are increasingly adopting higher sin taxes and more prohibitions, finds the 2021 Nanny State Index
IFS - Elective hospital admissions dropped by a third last year, while outpatient appointments and non-COVID emergency admissions each fell by a fifth13/05/2021 12:35:00
New analysis by the Institute for Fiscal Studies, Harvard University and Imperial College London shows there were 2.9 million fewer planned admissions, 1.2 million fewer non-COVID-19 emergency inpatient admissions and 17.1 million fewer outpatient appointments between March and December 2020 compared with the same period in 2019.
Policy needs to adjust following encouraging GDP data, says IEA expert13/05/2021 11:35:00
Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, commented on the latest GDP and trade data from the Office for National Statistics
Queen's speech: IPPR reaction to ‘policy gulf’ on environment, planning, health and care agenda13/05/2021 10:35:00
Think tank welcomes some targets and commitments, but says bold action and clear policy must follow