Public and Commercial Services Union

Vehicle Excise Duty (VED) is a valuable green tax. Unfortunately the agency tasked with its collection, DVLA, is having difficulties collecting it.

Using the latest road side survey DfT statisticians have estimated that 5% of VED that should be collected is not.

This is not surprising given that DVLA has cut the number of staff tasked with enforcing the tax and have re-organised this enforcement effort in a particularly poor way.

Vehicle underclass or hard evaders
 

At section 3.17, page 45 of the DfT's 2007 annual report it states:

Efficiency gains resulting from a reduction in VED evasion are informed by the results of an annual roadside survey. As the results of the 2006 roadside survey were not published until January 2007, it was not possible to include gains in this area in the December 2006 return to OGC. However, the survey results indicated a significant increase in evasion and it is therefore not possible to record any efficiency gains in this area at this stage. The figures for lost revenue are very sensitive to small changes in the underlying data. Statisticians are reviewing the scope for quality improvements for future years. In addition, the relationship between the annual roadside survey results and the actual level of VED revenue collected over the year is to be reviewed.

DfT is being coy.

DVLA's 2006/07 report recounts that:

"the Annual Roadside Survey undertaken in June 2006 reported in January 2007 that VED evasion had increased to 5%, equating to a loss to the Treasury of £217m (£70m more than the 2004 baseline)".

Correlation between criminal activity and hard evaders
 

DVLA have identified a group of drivers called the vehicle underclass or hard evaders (HEs).

In the 2005/06 DVLA Annual Report and Accounts the agency said:

"There is a correlation between criminal activity and vehicles, one aspect of which is VED evasion. About three-quarters of persistently untaxed vehicles are thought to be used by people involved in some other criminal activity. The extent and nature of the agency's anti-evasion work includes coordinated work with partners and seeks to serve each others' interests, rather than purely the VED financial impact. Hence the agency's targets include reduction of the "vehicle underclass", a term which refers to vehicle users who persistently do not comply with their obligations".

Making the problem disappear
 

DfT has little or zero prospect of achieving its evasion target of 2.5 per cent by December 2007, or the related Gershon efficiency target to generate an additional £70 million annual revenue through reduction in evasion by 31 March 2008.

Given this it is the union's fear that DfT will in fact drop targets and retreat from properly tackling HEs.

In DVLA's 2006/07 annual report, page 101, section 8, it states:

"The target of halving the vehicle underclass of evaders (unlicensed vehicles often associated with crime-related activities) is unlikely to be found to have been met by the January date, when the final review has been completed. No new Ministerial target has been set for 2007 - 08 as the Agency does not have sufficient scope to influence the vehicle underclass. Discussions have started with the Home Office on how enforcement activity can be more effectively targeted at the vehicle underclass."

Unlike DVLA we do believe that DfT as a whole can "influence the vehicle underclass". Indeed it is our that over the years DVLA has eased off chasing "hard evaders".

Enforcement cut
 

Via Freedom Of Information requests we have been given copies of minutes of the meetings of the VED Collection and Enforcement Governance Board.  This is the DfT/Treasury body that over views VED collection and policy.

Some while back the Driver and Vehicle Operation (DVO) group (when it existed) agreed that there would be a single enforcement budget for the agencies in that organisation. This centralisation of funds has had an impact on VED collection.

The 6th December 2006 minutes of the Governance Board state at para 4:

"XX introduced his paper which outlined the impact of possible cuts of £10m or £20m to the enforcement budget. It was stressed that the information in this paper was based on previous experience from DVLAs (sic) various enforcement regimes. In most cases there were no hard numbers linking a change in funding with a direct change in evasion. The estimates in the paper also did not account for induced relicensing" (The emphasis is ours - as elsewhere in quotes from minutes of the Governance Board).

(the Civil Service convention when supplying minutes under the FOI act is to blank out names of civil servants; in this case XX is used).

In the 9th March 2007 minutes, under the heading 2007/08 VED Enforcement Budget, is found:

"The discussion continued about enforcement budget costs, XX said that the 2007/08 VED enforcement budget had been cut, one of these cuts was reduced advertising spend. XX asked why had advertising been cut and not other areas, had any work been done to assess the impact of a £2m cut in the advertising budget. XX explained that the 2005 campaign had led to a reduction in evasion, however it had been decided that this cut would be the 'least worst' option as effects of advertising were had to quantify. The Single Enforcement Budget package that Ministers signed off had included the reduction in the VED enforcement budget being delivered by curtailing advertising and reducing resources on traditional enforcement. XX outlined the statistical analysis approach. The results of the 2006 roadside survey would have an impact on future decisions".

Then under para 2 of the 15 June 07 minutes we find:

"XX gave a brief summary of 2006/07 performance. He said that it had been a good year; and DVLA had spent £1.5m less than the budget agreed by the Governance Board at the start of the year. The savings were due to the decision to reduce the number of cases processed through the civil courts from 18,000 to 9,000 per month."

Given the above we are worried that this financial year DfT will regulate the number of cases processed through the civil courts, as they did last FY, to stay within budget. In other words whether you are prosecuted will not necessary depend on your alleged guilt but rather on the state of the budget at the time.

Targeting the law abiding
 

The above is not some arcane argument over tax collection but is a real public issue.

On the 4th February 2008 the Sunday Times ran an article headed:

Largely law-abiding drivers are being penalised for minor speeding offences while a growing motoring underclass gets away scot free.

The article continued:

Britain's roads have become a domain of the haves and the have-nots. The haves, made up mainly of law-abiding motorists, boast a record number of speeding points and people facing disqualification.

The have-nots represent a growing "motoring underclass" numbering more than 2m that avoids speeding fines and penalty points (as well as parking fines, bus lane fines and congestion charges) by failing to register vehicles and pay vehicle excise duty.

We belive that ministers must have targets for reducing the numbers of HEs and that proper resouces be provided to hit those targets.

If this is not done then the feeling, prevalent amonst many motorists and the right wing media, that the law/DfT comes down on them but not those breaking the law, will be stengthend.

The DfT Trade Union Side (the umbrella organisation for unions within DfT) wrote in a letter to the DVO director general early this year:

Many "un-named" cases (in the context of this submission "un-named" = "hard evaders") can be cracked but this requires systematic persistence in going from one contact to another until the responsible person is tracked down.

This means adequate staffing and whole hearted commitment from DfT to tackle the problem.

That analysis still stands.