RAC response to 2015 Summer Budget: changes to Vehicle Excise Duty (VED)

RAC chief engineer David Bizley said: “Today’s budget announcement on Vehicle Excise Duty marks a return to the days when road tax was collected and used to fund improvements in the road network. As new cars become more efficient, VED was always destined to bring in less and less money for the Treasury. For the first time, motorists will be able to see for themselves how the money they pay benefits the road network that they use – although it is a pity that we will have to wait five years for the Roads Fund to take effect.

“The devil, of course, will be in the detail but this new transparency has to be a good thing; indeed the RAC has previously called for ring-fencing of funds in this way. The changes to VED will guarantee a minimum level of spending on the roads and this, combined with the Road investment Strategy, suggest that that the critical role that road transport plays both in our economy and in motorists’ everyday lives has finally been given the attention it deserves.

“A big question mark remains however over how the new changes will affect people’s inclination to buy low carbon dioxide emitting, fuel efficient vehicles. For the first year of ownership of a new vehicle, incentives will still exist to select low emitting vehicles but thereafter, a flat rate will apply to most vehicles. We hope the new regime doesn’t undermine the major progress that we are making in reducing carbon dioxide emissions.”