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Letter – Vehicle Excise Duty consultation

1. Outline

This is a letter from Lord Deben, Chairman of the Committee on Climate Change to the Chancellor, Rt Hon Rishi Sunak MP about the vehicle excise duty consultation. The CCC see’s these changes as a vital step forward in tackling greenhouse gas emissions from surface transport, now the biggest single sectoral source in the UK.

2. Key recommendations

In summary our recommendations are:

  • We welcome the proposal to vary rates of VED with every gCO2 to avoid the cliff-edges in the present system. However, we recommend that the Government set significantly larger differentials between the cleanest and most polluting vehicles.
  • Change is urgently needed, emissions from surface transport must fall rapidly to meet the UK’s legally-binding fourth and fifth carbon budgets; they must reduce to close to zero by 2050 to meet the UK’s Net Zero target.
  • The reform of VED has an important role in the transition to Net Zero, while maintaining revenues for the Exchequer. The changes in VED should:
    • Provide strong incentives to manufacturers to continue to improve efficiency and to consumers to buy vehicles with lower emissions
    • Align other policy instruments to ensure a coherent framework for the rapid transition to ULEVs.
    • Support lower emitting vehicles after first year VED.