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Finance (No. 2) Bill

If the hon. Lady studies the evidence on the impact of the graduated VED scheme, she will see that the VED scheme at the point of purchase has a relatively modest impact on consumer behaviour. The point is to incorporate into the system signals to the consumer at the point of purchase to consider the environmental impact and environmental performance of the models that they are considering buying. The system is also designed to provide signals to car manufacturers to encourage still greener engine design and performance. Clause 13 builds on the environmental signals already in place by reducing VED band A to zero. It reduces the VED for cars in band B by £35 a year and for cars in band C by £5 a year. It freezes VED for cars in bands D and E, and it increases VED for vehicles in band F by £25. To further strengthen the environmental signals, the clause also introduces a new band G, which increases VED for the most polluting cars. In the run-up to the Budget, we received representations from a number of organisations, including the RAC Foundation, which advanced the argument that now is the right time to widen the differentials between the least and the most polluting bands. Clause 13 does just that and it means that the differential between the lowest VED rate for petrol cars and the highest, which was £100, is now more than double that at £210. The Budget announcements will see VED frozen or reduced for 50 per cent. of cars, with around 3 million cars now paying VED at £100 or less. The clause 13 reforms build on the existing VED framework and support the drive for further falls in transport emissions for new cars in the future.