Gordon Brown refuses to apologise over road tax fiasco

By James Kirkup, Political Correspondent
Last Updated: 1:01pm BST 10/07/2008

Gordon Brown has rejected demands to apologise to MPs amid accusations from the Conservatives that he misled Parliament over Treasury moves to increase road tax for millions of motorists.

The Treasury admitted on Wednesday that more than 9 million motorists will be hit with significant rises in Vehicle Excise Duty (VED) as part of a "green tax" package that will come into effect next year.

The higher tax rates will raise an extra £430 million for the Treasury next year and £700 million the year after
Many drivers will see their tax rise by more than £200 a year as a result of the plans.The Treasury figures showed that in 2010/11 when the full tax measures are in place, 43 per cent of motorists will be worse off and 18 per cent will gain from lower tax rates.Last month in the House of Commons, the Prime Minister told David Cameron, the Tory leader, that if he looked at the VED plan, "he will see that the majority of drivers will benefit from it." The Tories say that means Mr Brown misled MPs.
In the Commons today, the Tory leader challenged the Prime Minister on his comment.
"Why doesn't he scrap his retrospective VED tax hike for next year. Will he at least admit that when he told me that a majority of drivers would benefit, he was wrong?" Mr Cameron asked.
"Will he now correct himself and apologise to the House for getting it wrong?"
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Mr Brown initially ignored Mr Cameron's demand, but was later forced to reply by another question.
He said: "I have spoken to this House on this matter on a number of occasions. Our policy is fair to those people who have the least polluting cars."
He also pointed out that during the June exchange, Mr Cameron had accepted that Mr Brown had meant to say that the majority of drivers would gain or be no worse off.
Government insiders now fear that the scale of the tax rises due next year could reignite a dangerous Labour rebellion over road tax.
Alistair Darling, the Chancellor, last week averted a Commons revolt by promising angry Labour MPs that he will look again at the reforms in the autumn.
However, some ministers now fear the rebellion could resume and believe Mr Darling must publicly ditch the scheme before the autumn.
"These figures demonstrate why this is a policy that has to change," said Martin Salter, a Labour MP.
"It is right and proper to provide incentives for green choices in motoring. But the whole scheme needs restructuring to allow people a much longer time frame in order to switch to low emissions vehicles."
Currently, vehicles registered between March 2001 and March 2006 cost a maximum of £210 for a year's road tax.
But from April 2010, that rate will rise to £455 for the most polluting cars - a £245 rise.
Cars such as Jaguars, Range Rovers and even some people carriers emitting more than 255g of CO2 per kilometre will pay up to £440. Other cars with smaller engines will face a £100 rise.
The plans - against which The Daily Telegraph has campaigned - are especially controversial because they are effectively back-dated, applying to cars that are already on the road.
Sheila Rainger of the RAC said: "It is shocking that the Treasury has taken so long to acknowledge the full impact of these budget changes. Nine million motorists will be worse off under the new scheme. Drivers of very modest cars will be hit by increases, which, added to soaring fuel prices, will plunge family budgets into the red.
"Far from being a green tax, this scheme will take £1.2 billion off the motorist and put it in the Treasury's coffers."
Treasury figures slipped out in a parliamentary answer show that of the 21.9 million cars that will be on British roads by 2010/11, 43 per cent - or 9.4 million - will pay higher VED in real terms than they do now.
Another 39 per cent - 8.4 million - will be left no better off. Just 18 per cent - 4.1 million - will actually benefit.
Of the 9.4 million who will be worse off, 1.18 million motorists will be dragged into the highest two tax bands, where the annual cost is upwards of £400.
The higher tax rates will raise an extra £430 million for the Treasury next year and £700 million the year after.