REFORM OF VEHICLE EXCISE DUTY TO PROTECT THE ENVIRONMENT

A package of measures reforming Vehicle Excise Duty (VED), so that it
gives better environmental signals, was announced today by the
Chancellor Gordon Brown.

He announced that for cars:

-   a reduced VED rate of #100 for cars with engines up to 1,100 cc
    will be introduced from 1 June 1999, rewarding drivers who use
    smaller and cleaner vehicles;

- the VED rate for all private and light goods vehicles will be
increased by #5 to #155 from 10 March 1999;

- the VED rate for new cars will be determined primarily by their
carbon dioxide emission rate, from Autumn 2000.

For lorries the Chancellor announced:

- several measures to help the UK haulage industry and to
encourage cleaner vehicles:

- a freeze in most lorry VED rates for the second year running;

- a doubling to #1,000 of the maximum VED discount for low
emission lorries and buses;

- a simplification of the plating procedures, a long-standing
haulage industry request;

- fuel duty incentives for cleaner fuels;

- a 55% reduction in the VED rate for some vehicles engaged in
combined road-rail transport;

-   higher rates of VED for recently-introduced classes of lorry, to
    discourage strongly the use of vehicles with heavier, 11.5-tonne,
    axle weights.

NOTES FOR EDITORS

Car VED

1. Following the consultation on the reform of VED, the Chancellor
today announced a reduced rate of VED of #100 for cars with
engines up to 1,100cc from 1 June.

2. Information leaflets about the introduction of graduated VED
will be available from 12 March from

    Driver and Vehicle Licensing Agency
    Customer Enquiries (Vehicles)
    Swansea SA99 1BL

Phone: 01792-772134, fax 01792-782793 (between 08:15am and
04:30pm)

Email: enquiry.dvla@gtnet.gov.uk

    and at motor vehicle licence-issuing post offices. To find your
    nearest such post office contact the customer services department
    (number in your Phone Book under Post Office Counters).

3. New cars registered from Autumn 2000 will be subject to a VED
    system based principally upon their rate of carbon dioxide
    emission, to encourage the take-up of more fuel-efficient
    vehicles. Details will be announced later.

4. VED rates for cars, taxis and light goods vehicles will be
increased to #155 per annum, for licences taken out after today.
(See attached tables for full details).

5. Later in 1999, the Driver and Vehicle Licensing Agency will
run a pilot scheme on looking at options for allowing VED
re-licencing using the telephone or Internet.

6. The revenue cost of the #100 reduced rate will be #85m in
1999-00, relative to indexation. In Budget 2000, VED rates will
be set to secure a revenue neutral system in 2000-01 and 2001-02.

7. Copies of the summary report on the consultation can be
obtained from:

    The Public Enquiry Unit,
    Room 89/2,
    HM Treasury,
    Parliament Street
    London SW1P 3AG

Lorry VED

8. VED rates for lorries are currently under review, to ensure
that rates better reflect the environmental impact of different
lorry types.

9. In the meantime, VED rates for the new classes of heavy
    lorries first allowed on UK roads on 1 January 1999 will be
    increased for licences taken out after 9 March. The new rates are
    set out in the table attached. Any vehicle already operating at a
    new weight must now be 'up-plated' and re-licensed at the new VED
    rates by April 17.

10. In addition, a range of measures will help the UK haulage
industry:

a. Most lorry VED has been frozen for the second year running;

    b. The VED reduction for lorries and buses meeting low emission
        standards has been increased to a maximum of #1,000 from
        today (see attached table). The incentives will continue to
        apply to commercially operated lorries and buses with cleaner
        engines;

    c. Details of fuel duty incentives for cleaner fuels (notably
        ultra-low sulphur diesel and road fuel gases) are set out in
        press notice C&E 11;

    d. The plating procedures have been changed today to remove the
        requirement for a vehicle to be modified physically before
        being allowed to "down-plate" (reduce its maximum permitted
        laden weight) to qualify for a lower rate of VED;

    e. To further encourage combined transport operations, i.e.
        those where freight is transported by road and rail, the VED
        rate for all vehicles engaged in this work have been set at
        #1,280, a decrease of over #1,500 for some vehicles.

HM TREASURY PRESS OFFICE
Press Enquiries to: 0171 270 5238
Non-media enquiries to: 0171 270 4558

If you have access to the Internet you can find this news release at
http://www.hm-treasury.gov.uk. Other Treasury material can also be
found at this address.

# = pounds sterling