The Government announced its legally binding commitment to net zero in June last year and the first fiscal policies are beginning to trickle through to try to create behavioural change in the British public. However, the recently announced proposal on road tax on motorhomes and campervans is unlikely to move the dial to any extent, if at all, from an environmental or tax revenue perspective. Nonetheless, the impact on the motorhome manufacturing industry is expected to be hugely detrimental.
Jeremy Clarkson has never made any attempt to hide his dislike of caravans, and it seems Javid and senior Treasury officials may have been watching Top Gear while formulating their latest tax policy. The Government’s proposal to class motorhomes and campervans as cars will result in an increase in road tax for these vehicles of more than 700 per cent. If potential buyers of motorhomes abandon their plans, the repercussions for the motorhome manufacturing industry are predicted to be 'disastrous', to quote Labour MP for Hull East, the main hub of motorhome manufacturing industry. Sales are expected to be significantly lower in the next 12 months due to the new road tax.
Whilst the effect on the local industry is clearly articulated, the environmental impact is less well understood. The Government has said it is 'convinced about the need to incentivise the reduction in our transport emissions'. However, there is a lack of clarity about the predicted reduction of the CO2 emissions. Looking at existing research, a study by the World Wide Fund for Nature estimated that if the Germans had one million electric vehicles, the country would reduce its CO2 emissions by only 0.1 per cent.
Is penalising the motorhome industry through a hike in road tax really the golden bullet to meet the UK’s net zero target?
The policy is borne of a desire to encourage lower emissions and an attempt to incentivise the reduction of transport emissions. However, as petrol, diesel and hybrid vehicles face a new sales ban from 2035, the Treasury must also plan a replacement for fuel duty. Approximately 4.5 per cent of the total revenue receipts in 2018/19 relate to fuel duties (excluding the VAT) and the large majority of this £28bn will drop away if the decrease in petrol and diesel cars becomes a reality.
Electric vehicles (EVs) are the direction of travel. However, of the 97 million new cars purchased worldwide each year, only 2 million are EVs. Nonetheless, the entire (and vast) R&D spend of the car manufacturers is dedicated to EVs. Would incentivising new EVs not be better than having to fund unemployment in the North East?
There is a ripple effect. We know the impact on the motorhome manufacturing industry. But what about the knock-on effect on jobs in the industry and indirectly to the suppliers? Then there is the impact on tourism with fewer families using motorhomes in the UK and perhaps increasing their carbon footprint with flights abroad?
The 700 per cent increase in road tax is clearly more of a disincentive to buy a motorhome than a useful tax revenue-raiser and this policy appears to have been conceived in isolation and with no thought for any repercussions.
With the Budget on 11 March, campaigners and MPs are now urging the Government to reverse the change and place motorhomes and campervans in the same category as vans.