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Tackling air pollution from diesel cars through tax: options for the UK

Most of us will know someone killed by air pollution, but it would not be immediately obvious

By Duncan Weldon  

The “diesel-gate” scandal of last year, in which Volkswagen was revealed to be rigging emission tests, has focused public and policy maker attention on the issue of harmful emissions from diesel vehicles. Since the late 1980s, diesel cars and vans have made up an increasing proportion of new vehicles sold in Britain and across the European Union. In the UK they now represent almost four in ten cars on the road, compared to closer to one in 20 in the early 1990s.

The move to diesel, an area in which European car manufacturers have always had an advantage over their America and Japanese rivals, was strongly encouraged by policy makers through tax incentives and environmental regulations at both the national and the European level. There was a perception that, although diesel was known to have a bigger impact on air quality than petrol, it produced fewer carbon emissions and a switch to diesel would help slow climate change.

Since then three things have fundamentally changed. Advances in hybrid and electronic cars have produced a form of mass transport which avoids a trade-off between climate change and air quality, the emissions scandal has shown that this trade off may have always been worse than assumed, and there has been a growing recognition that increased NOX levels from diesel vehicles are creating what has been called a public health emergency. In the UK alone, air pollution is contributing to 40,000 to 52,000 premature deaths annually.

This is the background to a new policy report produced for Green Budget Europe (GBE), the campaigning organisation fighting to shift taxation away from labour and on to pollution both in Britain and in Europe. It was launched at a roundtable assembled by Prospect in collaboration with GBE.

[L-R] Prof Paul Etkins, Duncan Weldon Chair) and James Nix (GBE)

[L-R] Prof Paul Ekins, Duncan Weldon Chair) and James Nix (GBE)

James Nix, GBE’s Director, emphasised that the UK was looking to reform road tax rates in July 2017 and now was the time to pushing for more radical options. The report, authored by Paul Drummond and Professor Paul Ekins, both of University College London, outlines four options for policymakers. The aim is to introduce a national supplementary NOX tax on newly sold diesel vehicles. In economic terms, the idea is to “price in the externality.” We know that diesel vehicles cause higher air pollution leading to ill health, but the impact of that ill health and premature death is not captured in the pricing. Depending on the option chosen, the cost of purchasing the average new diesel car in the UK would rise by £1,100 to £1,700, a substantial sum that should start to affect consumer behaviour.

James Nix (GBE) and Andrea Lee (Client Earth)

One question, addressed early in the roundtable, was whether the report was right to focus on just new sales rather than the existing fleet. Indeed, Paul Ekins revealed that he had initially argued for new taxation to include diesel cars already on the road. However, as James Nix explained the eventual decision to focus on just new sales was reached for a number of reasons. Taxing new vehicles alone would still send a strong message to consumers and would also avoid the practical difficulty of having to test millions of cars for their emissions level. In terms of practical politics, it is also much easier to tax future consumers than those who may have been unaware of their vehicle’s environmental impact at the time that they bought it.

Air pollution campaigner Simon Birkett, the Director of Clean Air London, argued that the report did not go far enough. Drawing an analogy with the Clean Air Act of 1956 that banned coal, he called instead for diesel vehicles to be phased out in the coming years. Many of those present at the roundtable agreed that a complete ban had to be the long-term aim, but the route to that could be slow.

Prospect Air Pollution roundtable discussion with Green Budget Europe

Areeba Hamid of Greenpeace noted that some cities were already moving in that direction, especially in Scandinavia. Both Poppy Lyle from the Greater London Authority and Richard Dilks from business organisation London First noted that there was certainly a role for local governments to go further than national ones—especially in cities where air pollution is an increasing problem.

Ruth Calderwood from the City of London Corporation said that there needs to be more focus on working with vehicle manufacturers. There are gaps in the market—such as large family cars—where only diesel vehicles are widely available. Until new marques fill those gaps some people will be forced to rely on dirtier cars. This is a particular issue with commercial vehicles.

[L-R] Ruth Calderwood (City of London), Kathryn Parminter (House of Lords), Paul Drummond (UCL).

Baroness Parminter, Liberal Democrat Deputy Leader in the Lords, argued that the politics of diesel are changing. Air quality is something that voters could grasp much more quickly than climate change and policies aimed at improving air quality could gather widespread support. The issue, according to Professor Ekins, is that while air quality may be killing 50,000 people a year it is hard to identify the victims—most of us, he argued, know someone killed by air pollution but that cause would not be immediately obvious. Addressing that invisible public health crisis means looking again at European policymakers decision to favour diesel.


This roundtable discussion took place at Prospect’s offices in St James’s Park on Thursday, 30th June 2016. To find out more about our roundtable discussions, please email: events@prospect-magazine.co.uk

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