'Narrow-minded' approach lays more pressure on diesel
09 June 2016
Author: Debbie Wood
The whole-life cost case for diesel fuel could again be in question following transport secretary Patrick McLoughlin's comments that it had been "a mistake" to incentive the fuel during the Labour Government's tenure in power.
The UK is under increasing pressure to meet stringent 2025 air pollution targets and McLoughlin said that diesel taxation is something that needs to be looked at sooner rather than later.
"It's something that we've got to address," said the minister in an interview with the Evening Standard last week. "We are addressing it through the Government's air quality strategy, and by putting money into public transport." He also expressed that the chancellor will be looking at the issue "in due course".
In 2001, the Labour Government cut diesel fuel duty by 3p as it was considered a greener choice over petrol because of the lower CO2 emissions diesel cars produce, but later tests have revealed what is described as alarming levels of nitrogen-oxide being emitted in real-world driving conditions.
Rupert Pontin, director of valuations at Glass's, believes there are better ways to incentivise fleets into cleaner vehicles and that pricing up the cost of running a diesel car is a narrow-minded approach.
"A greater level of thought is needed before any taxes are increased.
There are other things that can be done to encourage uptake of greener vehicles," he told BusinessCar. "Just putting the price of diesel up is quite narrow-minded really and doesn't reflect how much cleaner the latest diesel engines are."
Any taxation or punitive moves by Government are likely to come in when George Osbourne, the chancellor of the Exchequer, makes his Autumn Statement near the end of the year.
The British Vehicle Rental and Leasing Association, although supportive of measures to improve air quality, urged the Government to give fleets sufficient time to prepare for any changes.
"Any increases in company car tax or vehicle excise duty for diesel vehicles would have a huge impact on businesses and individuals," said Jay Parmar, BVRLA director of policy and membership. "Fleets need time to prepare for any tax changes, as they make vehicle decisions based on Government announcements. Many businesses and drivers have already committed themselves to three-year contracts."
He also said that sensible incentives that resulted in cleaner, greener motoring, while maintaining a fair and simple tax system, would be supported.
Despite the indication that there could be a rise, Pontin believes diesel will still remain a popular choice for fleets for many years to come.
"Diesel still has a place in fleets," he said. "It's not going to fade away just yet. I don't think companies will be too concerned - until there is a viable alternative then diesel is here to stay."
Despite all of the recent negative press, the latest Society of Motor Manufacturers and Traders' registration figures show that demand for diesel cars is still growing, with a 5% rise in total new car sales in May.
Pressure to improve air quality is behind the assault on diesel fuel, with London joined by other cities in failing to meet EU air quality targets. The new London mayor, Sadiq Khan, has already announced plans to clean up air quality in the capital, some of which could be introduced before 2020.
Among the biggest changes are plans to extend the Ultra-Low Emission Zone to the North and South Circular roads and the introduction of an extra penalty on top of the congestion charge for the most polluting vehicles entering central London.