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Think-tank calls for 3% diesel surcharge to be increased and capital allowances to be removed

Published in partnership with King’s College London, the report says that the capital is “facing an air pollution crisis” and sets out 10 policy recommendations tackling road transport and gas combustion, including at UK and European level.

In particular the report says that “the UK needs to revisit its position on diesel to reflect the greater damage it causes in terms of air pollution, and to rebalance objectives concerning CO2 reduction and improving air quality”.

It adds: “At high level, this requires Government to recognise that the promotion of diesels through fiscal incentives has had and continues to have a detrimental effect on air quality, and that the trend towards diesels needs to be reversed if air quality objectives are to be achieved. This will require two main types of policy interventions: firstly to influence new purchasing behaviour to promote alternatives to diesel vehicles, and secondly to accelerate the replacement of the existing stock of diesel vehicles. However, it is important that the shift away from diesel does not unduly penalise existing diesel owners who bought their vehicles in good faith based on their lower CO2 emissions.”

The report also says: “Shifting away from diesels to a mix of petrol, hybrid, electric and LPG vehicles can significantly reduce local pollutants whilst having no adverse impact on CO2 emissions. In order to achieve this, the financial incentives that promoted the uptake of diesels in the first place need to be removed and reversed. Changes to Vehicle Excise Duty, Company Car Tax and Capital Allowances are required to reflect the higher NOx emissions associated with diesels.”

For the diesel surcharge, the report says that although the Government’s current position is that the diesel surcharge will be removed from 2021-22 “given that diesels are likely to continue to have higher NOx emissions than petrol cars, there is a rationale to maintain the surcharge even beyond this date”.

The report also calls into question current capital allowance schemes, revised in the recent Budget, saying that “the scheme does not currently reflect other emissions such as NOx and PM, and does not distinguish between diesel, petrol or alternatively fuelled vehicles. The scheme could be amended to either remove or reduce the tax breaks available for diesel vehicles purchased by companies, in order to reflect their relatively high NOx and PM emissions.”

And it says that first-year VED rates should be reformed, as previously outlined by Policy Exchange: “A diesel surcharge could be introduced for all new diesel cars purchased, to reflect the higher levels of local pollution they cause relative to petrol cars over their lifetime.”

The 10-point plan also includes a suggested measure to create a diesel scrappage scheme, which could be paid for out of the increased VED rates.

At a London level, it calls for tighter emissions levels on diesel cars to be introduced in the Ultra Low Emission Zone by 2025 and for buses, coaches and HGVs in the Low Emission Zone by 2023 latest; TfL to upgrade all buses to Euro 6 standard in Central London by 2020 and across the whole of London by 2023 at the latest; and the age limit to be reduced for taxis from 15 years to 10 years by 2025, upgrading all taxis to a minimum of Euro 6.

The report also calls for more action on electric vehicles and car clubs, and says: “Transport for London needs to work with the London Boroughs to drive the rollout of a competitive pan-London network of charging points and car clubs.”

At European level, the report says a key priority must be to tighten and enforce European diesel emissions standards and adds: “We recommend that the European Commission makes further changes to deliver the original Euro 6 diesel car standards in full by 2021, removing unnecessary margin of error.”

Richard Howard, head of environment and energy at Policy Exchange, said: “Londoners are becoming increasingly concerned about poor air quality. The time has come for action not words. The next Mayor of London needs to deliver an ambitious set of policies to clean up London’s air.”

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day.