A lesson from the Budget is that Conservative MPs are unlikely to support unpopular tax rises, and another should be that the Government cannot afford major new spending commitments (though it has quite a bit of leeway, with interest rates at current levels, when it comes to capital projects). The revolt against the Government’s NIC plans proved the first. That backing down blew a £145 million hole in Philip Hammond’s figures should prove the second.
The row over how to deal with diesel cars helps to demonstrate the point. The EU sets the standard for air pollution in member states; Britain remains one of them for another two years. The Government said that it meets it; green campaigners said that it didn’t; the latter took the former to court, and won. Ministers need a new plan by later this month. Some local authorities are already targeting diesel car drivers by hiking the cost of their parking permits, even though some older petrol vehicles are more polluting than some newer diesel ones.
Sadiq Khan plans to charge diesel car drivers £24 a day to drive in central London from 2019 – thus reminding everyone that Labour’s instinctive response to a problem is to reach for new taxes, regardless of whether Jeremy Corbyn leads the party or not. Those who have bought diesel vehicles will be angry enough anyway, if they are hit by these recent charges or will be by Khan’s new plan, but they will be doubly furious because – as James Frayne pointed out recently on this site – government encouraged them to switch to diesel in the first place. “First, they encourage us to switch. And now they want to charge us for it. What planet are these politicians on?” the headline on his article ran.
Tory backbenchers would thus be unlikely to wave through a rise in the registration tax for diesel cars in the autumn Budget. The Chancellor is exposed following the NICs shambles, and is unlikely to risk such a move anyway. Theresa May hinted yesterday at a compensation scheme for diesel vehicle owners, but a fully-fledged one would reportedly cost £3.5 billion – far more than the proposed NICs rise that MPs scragged. The Government could always try to play for time, since we have a date for Brexit. But while there is sometimes a solid case for departing from EU environmental norms – read Owen Paterson on the tale of the Commission and the three-crop rule – voters are unlikely to smile on any proposal that would leave post-Brexit Britain with lower standards than its neighbours.
The AA claims that Ministers could find a different way of tackling the pollution problem – doing more to allow diesel cars to run at a consistent speed, thus reducing emissions, by encouraging local authorities to use fewer “road humps, chicanes, pinch points and poorly managed traffic lights”. Charlie Elphicke, who chairs a cross-party parliamentary group on fuel, agrees – and says that “it’s wrong to demonise diesel drivers”, since diesel cars are responsible for only ten per cent of emissions.
Ministers may edge their way towards some cheaper compensation scheme, or look at some of the ideas that Elphicke and others are floating. But the moral of the story is the one that ConservativeHome drew in the wake of the Budget. Radical action on tax and spending is going to have to wait until 2020, and perhaps later if May is not returned at the head of the majority which the polls currently suggest.