Future of diesel looks bleak as Government considers new ‘tax treatment’

Chancellor of the Exchequer Philip Hammond has said that the Government is exploring a new ‘tax treatment’ for diesel cars.

The statement is the strongest indication yet that the Government will introduce a new diesel tax, with changes likely to be announced at the Autumn Budget on 5 December 2017. 

Fuel duty on petrol and diesel has been frozen for seven years - at 57.9p-per-litre – but the Government’s stance on a new ‘tax treatment’ has sparked fears that diesels will face a new tax before the end of the year.

“The Chancellor has fired a warning shot to diesel drivers,” said RAC chief engineer David Bizley. “This uncertainty is bound to be of concern to private and business motorists alike, who will be wanting urgent clarity on just what the Government plan to do.”

It’s unclear what the ‘tax treatment’ would represent, but a new diesel scrappage scheme and/or an increase in diesel fuel duty are two ideas that have been speculated.

Diesel car buyers are already facing higher VED, with the new road tax system set to add hundreds of pounds to the running costs of Britain’s most-popular diesels. However, with diesel emissions linked to 9500 annual deaths in London each year, the Government is facing increasing calls to do more to improve air quality in Britain's cities and encourage drivers to buy cleaner vehicles.

At this stage, it’s unclear what the ‘tax treatment’ would represent, but a new diesel scrappage scheme and/or an increase in diesel fuel duty are two ideas that have been speculated in recent weeks.

The UK’s automotive industry body, the Society of Motor Manufacturers and Traders (SMMT), has warned against the anti-diesel agenda because of the negative implications that it could have on reducing CO2 emissions, but healthcare professionals argue that the move away from diesel is the only answer.

Mike Hawes, SMMT Chief Executive, said: “The automotive industry has some of the most challenging CO2 reduction targets...for this positive trend to continue, modern low emission diesels and AFVs such as plug-ins, hydrogen and hybrids must be encouraged with long term incentives.”

Dr Penny Woods of the British Lung Foundation said: “It’s a tragedy that on the 60th anniversary of the Clean Air Act, we continue see pollution limits broken in many parts of the capital, urgent action is needed to clean up London’s air.

“Air pollution contributes to 9500 early deaths in London every year. It worsens existing lung conditions, increases the risk of getting lung cancer and impairs child lung development.”