Great New Future For Lpg
Powered Vehicles
The Government has put in place a medium-term
strategy for supporting lpg as a road fuel. Whilst the duty differential
between lpg and petrol or diesel is to reduce, for the next three
years it is only by a maximum of one penny per litre per year,
and it means that lpg at the pumps will continue to cost around
half the price of the other fuels.
Tom Fidell, director general of the LPGA,
said: “This announcement is a clear recognition by the
Government that lpg vehicles are the cleanest available on the
roads today. The industry is delighted by this news on behalf
of the 100,000 motorists who will be financially rewarded for
doing the best for the environment.
"Lpg suppliers, vehicle manufacturers and converters will be able to respond
to customers’ requirements, which are the basis for making sound investments
to further develop this market.
"We had a telephone call from the Treasury
advising us of the good news of a reduction in the duty differential
with petrol of 1p per litre, which was of course exactly in line
with what we asked for. The Treasury advised that the LPGA had
put forward a strong and factual case supporting our requests,
both in writing and during our meetings with the Minister and
his officials, and it was on the basis of these meetings and
submissions that they have agreed to give us exactly what we
asked for.
This success follows on from our meeting with
the Treasury three years ago when we put forward a robust case
for a 40% reduction in duty, and at that time also the Treasury
gave us exactly what we asked for."
To give confidence to those considering buying
a new vehicle with an lpg option or having their new or existing
vehicle converted, the Government has made a rolling three year
commitment to fix the duty on lpg relative to that on petrol
and diesel, so that every year the level of duty for the following
three years will be known.
John Healey MP, Economic Secretary to the Treasury, said: “The Government
recognise that industry has invested considerable sums in the lpg industry
in the form of new product ranges and refuelling infrastructure and this has
been matched by our own investment. We have committed support to the sector
in the form of grants for vehicle conversion, company car tax reliefs and reduced
rates of vehicle excise duty. The duty incentive alone cost the Exchequer £75
million in terms of duty forgone in 2002-03.
"However, we have always made it clear
that this generous level of support was there to enable the necessary
infrastructure to be developed. This is now in place, and the
UK is now home to lpg manufacturing expertise and over 1,000
refuelling sites, and the industry should be set for further
expansion."
The Chancellor announced in his Budget that
fuel duty would remain the same until September. At that time,
the duty on the new sulphur free petrol and diesel being introduced
will go up by 1.4p per litre, existing low sulphur fuels duty
will go up by 1.9p per litre, and duty on lpg will go up by 2.4p
per litre.
In each of the years 2005/6 and 2006/7, the
duty on lpg will go up by 1p more than that on sulphur free petrol
and diesel. In the 2005 Budget, the Chancellor will announce
what the duty differential will be for 2007/8. This enables private
individuals and fleets to plan with confidence.
This also means that, for the foreseeable
future, lpg fuel costs are comparable with even the latest diesels,
but lpg drivers can benefit from smoother and quieter running
with lower emissions and no diesel odour. The higher mileage
motorist now has a real alternative to diesel.
Other Budget Reactions
A spokesman for Volvo said it is pleased that
this year's Budget showed a long-term commitment to alternative
fuels, with lpg prices rising marginally.
The Volvo Bi-Fuel range, which is offered
in both lpg and cng guise has been available for three years
now. It has experienced an increasing level of interest from
customers over the last couple of years and it remains committed
to offering alternative fuel vehicles in the UK market.
A spokesman for the British Vehicle Rental & Leasing
Association said: “Throughout a long period the Chancellor
undermined fleet decision maker confidence in what is still a
very immature market by refusing to confirm the future level
of lpg fuel duty. Talk of increases to rates commensurate with
petrol or diesel merely exacerbated a difficult decision.
"The news may help to restore some
of the dissipated confidence, but what is needed is a long term
stability if businesses are to invest the substantial sums required.
However, the fact that there was no news of an increase in funding
for the PowerShift programme does not augur well for this sector."
Phillip Sellwood, chief executive of the Energy
Saving Trust, said: “Lpg is a transport fuel with a strong
future and this decision demonstrates the Government’s
commitment to the cleaner fuel and vehicle technology market.
We are very pleased that the Government has chosen to continue
to support lpg."
National Autogas managing director, Andrew
Sanders, said: “There has been a good deal of uncertainty
in the industry since the Chancellor announced that there would
be changes in December 2003. But at last we know what those changes
are going to be, and we can now get on with the task of converting
vehicles so that everyone – the owners and drivers, and
those of us breathing the air – can benefit."
Matthew Carrington, chief executive of the
Retail Motor Industry Federation (RMI) said: “The duty
increase on lpg could be the beginning of the end for the fuel
in the UK. This anti-green measure is a backward step environmentally.
It could be a death-blow for the fledgling lpg market, and could
destroy public confidence in the viability of all alternative
fuels."
The Society of Motor Manufacturers & Traders
(SMMT) has urged a watching brief over the effects of reducing
the tax differential by 1p per litre until 2007.
Vauxhall Motors is delighted that the Chancellor’s
announcement on lpg duty has finally brought to an end the damaging
uncertainty in the marketplace, and is extremely pleased that
the Government is keen to enter into constructive consultation
on encouraging the take up of more high quality lpg vehicles
through the company car tax system.
David Crundwell, manager of business affairs
at Vauxhall, said: “That really is good news. While he
is closing some of the gap, at the current rate, it will take
35 years to actually close it."
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2004 News
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