Changes to company car tax 'could aid' air quality

The Government should amend vehicle taxation – including company car benefit-in-kind tax, capital allowances and vehicle excise duty – to hasten improvements in air quality, says London Mayor Boris Johnson and Transport for London (TfL).

TfL’s Transport Emission Roadmap – Cleaner Transport for a Cleaner London report calls for the Government to introduce a scrappage allowance of up to £2,000 to remove the most polluting diesel cars.

The 54-page report outlines a wide range of initiatives to further improve air quality in London and builds on a number of previously-introduced measures such as tightening the Low Emission Zone, introducing electric vehicle recharging points and promoting low emission buses and taxis.

However, while the world’s first Ultra Low Emission Zone (ULEZ) scheduled for central London in 2020 is at the heart of Johnson’s clean air plans, he said more has to be done if London is to meet European Union targets for NOx.

Concern at the ‘dieselisation’ of the UK car parc – to which massive growth in corporate use of diesel-engined company cars and vans has contributed – is behind many of the proposals outlined in the report.

In addition to implementing the ULEZ in central London, Johnson has outlined 10 air quality measures.

These include driving the uptake of low emission vehicles, transforming London’s public and commercial fleets, delivering zero emission taxi and private hire vehicle fleets, and developing low emission neighbourhoods, which would include introducing workplace parking charges, preferential parking for low emission vehicles and corporate travel plans.

The report suggests that 21% of CO2 emissions in London are from transport. However, it says that transport accounts for 63% of NOx and 52% of PM10 emissions.

Therefore, Johnson suggested that further initiatives need to be introduced to encourage a reduction in the total cost of ownership of alternatively-fuelled low emission vehicles.

Suggesting that Government could incentivise the switch by altering legislation and taxation, the report says: “Vehicle excise duty and company car tax incentives only consider CO2 emissions resulting in a shift towards diesel vehicles, which have slightly lower tailpipe CO2 emissions compared to petrol.

“This has caused large increases in emissions of particulate matter and NOx, and may not even have an overall greenhouse gas benefit when the effect of black carbon is taken into account.

“Bandings should be altered over a reasonable length of time, so that air pollutants are considered as well as CO2, and the full benefits of ultra low emission vehicles are fully recognised.

“The capital allowance deductions for vehicles should be treated similarly to encourage lower polluting vehicles in business usage.”

Johnson also wants public sector fleets in London, their suppliers and sub-contractors to lead by example and update their vehicles to meet ULEZ standards in 2020, which is likely to be that diesel vehicles must meet Euro 6 emission standards as they focus on a NOx reduction.

Highlighting that such a move would require “direct action and funding from national Government”, the report also suggests that TfL’s existing Fleet Operator Recognition Scheme could be further developed to reflect emission standards with the creation of a new vehicle badging scheme for private fleets to demonstrate compliance.

Schemes could include Metropolitan Police, London Fire Brigade and TfL’s support fleets being ULEZ compliant throughout Greater London.

The report also highlights that guidance could be considered to require all new transport-related contracts and sub-contracts to be ULEZ compliant.

It added: “Providing a relatively high-profile example to businesses on how ultra-low emission fleets can be run and promoting the uptake of vehicles through on-vehicle advertising could help encourage a wider shift towards ultra low emission vehicles.”

Linking a diesel scrappage scheme to the introduction of the ULEZ, Johnson says it was only fair that Government provides support to people who have bought diesel vehicles in good faith to switch to cleaner alternatives.

He added that it was “a brilliant opportunity”, which would also accelerate the uptake of Euro 6-compliant diesel models, to support the British car industry and promote the early uptake of ultra-low emission vehicles. 

Speaking at a Go Ultra Low-sponsored Fleet News roundtable held before the TfL report was published, Baroness Kramer, transport minister, said she couldn’t see any Government stepping away from CO2.

“There’s a very strong commitment on greenhouse gases,” she said. “On the other hand, air quality issues are really important and there is a heightened awareness and they have huge public resonance.

“People who think the green agenda is nuts will stop me in the street and ask ‘when are you getting the poison out of my air?’ because that’s somehow very real in a very direct way.

“However, I think the CO2 agenda remains; if anything, it will toughen up rather than ease off. I think NOx will come into play as well.”

Kramer said it was unlikely a government would take national action on NOx.

“CO2 is something you have to tackle at a national/international level whereas with NOx, as the impact can often be so localised, I think the initiatives will be much more driven by local government,” she said.

“I wouldn’t want to pretend that a new government coming in might not decide that it wanted to push harder on NOx but I think, for example, it is going to be more the Mayor of London, Greater Manchester authorities etc. deciding that they’ve got to do something about it within the context of their own community and government giving them the freedom to do it.”

Jonathan Mitchell, head of strategy at Office for Low Emission Vehicles, said: “Benefit-in-kind tax is likely to remain with a CO2 focus, but it’s absolutely right to point to air quality as an increasing issue of concern.

“However, taxation isn’t the only way to deal with these issues. There are all sorts of measures that Government currently employs and could potentially employ in the future to tackle that sort of issue.

“You could point to the Congestion Charge Zone, the Ultra Low Emission Zone as examples. There are a number of tools at the Government’s disposal, but air quality is not an issue that is going to go away.

“For fleets driving around in diesel vehicles, I suggest that you would disproportionately get the negative PR stick, not to mention the negative Government stick potentially as well. So it’s a very real issue.”