That this House has considered e-petition 600966, relating to the Approved Mileage Allowance Payment rate.
It is a pleasure to serve under your chairmanship, Mr Sharma. The prayer of the petition reads:
“The HMRC mileage rate for reimbursing the use of private cars (e.g. for employees but also volunteers) has been fixed at 45p/mile (up to 10,000 miles) since 2011. The lack of any increase since then is a serious disincentive to volunteer drivers particularly as fuel has gone up again recently.
Since 2011, inflation has gone up by over 25%; fuel has increased by over 20% over the last 5 years. Volunteer car drivers who did so much during Covid, and still do, to get people to healthcare settings, e.g. hospitals, vaccination centres, and to deliver shopping and prescriptions, are not being compensated fairly for the use of their cars. Consequently charities are struggling to recruit new volunteer drivers. These drivers help free up hospital beds and keep people independent and in their own homes.”
I thank the hon. Gentleman for opening his speech so powerfully. Does he agree that the approved mileage allowance payment rate must increase because it has not increased since 2011, while motoring costs, including the cost of fuel and vehicle maintenance costs, have risen?
The hon. Lady has basically nicked the crux of my speech, but I thank her for making my point so succinctly.
The petition received over 41,500 signatures, including 25 from Carshalton and Wallington. On behalf of all parliamentarians, I should declare that MPs’ mileage rates, claimed through the Independent Parliamentary Standards Authority, are also calculated at 45p per mile, in line with the approach taken by His Majesty’s Revenue and Customs. However, I hasten to add that we are not debating MPs’ rates today.
I thank all those who signed the petition and have taken an interest in the debate, including the many volunteer and community groups that have been in touch. I also thank the petition creator, Rev. Nick Ralph, as well as representatives of the Good Neighbours Network, the Community Transport Association, Unison and the Association of Taxation Technicians, for meeting me to discuss the subject of the debate. As always, a massive thanks must go to the Petitions Committee team, who have worked incredibly hard to organise the meetings I just mentioned and to provide briefings in advance of the debate.
When I agreed to lead the debate, I did so with a focus on the charitable activity mentioned in the petition’s prayer, remembering the enormous volunteering effort that I witnessed and was part of during the pandemic, both locally and nationally. Our country has a proud history of volunteering. One route can even be traced back to the medieval age, when there was a strong link between religion and the aiding of the sick, needy and poor. Indeed, according to sources, over 500 voluntary hospitals were established in England in the 12th and 13th centuries alone. More recently, in this century, we London MPs think of the enormous army of volunteers who helped to spread joy and cheer throughout the Olympic park during the 2012 London Olympics and, as I have already noted, the hundreds of thousands of people who volunteered their time to help those in need during the covid pandemic. From taking part in befriending telephone calls to collecting and dropping off shopping or prescriptions, the effort was enormous. It made me incredibly proud of our country and, indeed, my own community.
The hon. Member is outlining powerfully the benefits of volunteering for the community, but he will also be aware of its benefits for individuals. Does he share my concern that, as the cost of motoring rises, we are excluding many people from the benefits of volunteering to both them and their community, and does he agree that all community transport networks should be consulted in any review of the mileage rate?
The mileage allowance payment rate currently allows volunteers to claim up to 45p a mile for the first 10,000 miles and 25p for each mile after that, yet the 45p rate has not been reviewed or increased since 2011. That affects not just charities but many employees of the variety of businesses that use the AMAP rate to regulate employees’ use of their private cars for business.
In their initial response to the petition, the Government stated that the rate
“is intended to create administrative simplicity by using an average, which reflects vehicle running costs including fuel, depreciation, servicing, insurance, and Vehicle Excise Duty.”
Indeed, I spoke to many stakeholders who agreed that the rate was probably the best approach for reimbursing volunteers and employees. It is easy to use and free from bureaucracy, and it minimises the burden of extra paperwork or the potential for inaccurate or incorrect payment.
The issue for the petition creator is not necessarily the system itself but the rate of the allowance. The “RAC Cost of Motoring Index 2011” concluded that that year was not an easy one for motorists; drivers had to contend with record fuel prices and a sharp increase in the cost of car insurance. Much of that remains true today—it is just a lot more expensive. All the costs associated with vehicle use have increased, but the disparity between today and when the AMAP was last adjusted is demonstrated most simply by the cost of fuel. The current average cost of petrol nationwide is 144.86p a litre, and diesel is at 145.54p. In 2011, the last time the rates were changed, petrol averaged 133.65p and diesel 138.94p.
Those averages do not reflect sporadic fluctuations over that time. One argument that has been made is that fuel costs were brought down by the temporary 12-month cut to duty on petrol and diesel of 5p a litre announced in last year’s spring statement, and the Government noted that in their response. Many people I spoke to in the run-up to the debate argued not just for a review of the rate but for regular reviews, which could take into account fluctuations and would make the system much nimbler, given the continuing uncertainty with respect to the costs of running a vehicle in general and of fuel specifically. Charities and employees could therefore properly fund and support those who currently find that the AMAP only partially covers the costs of running a vehicle, without fear of being penalised through the tax system for paying a more fitting rate.
It is a pleasure to listen to my hon. Friend, who is making incredibly important and sensible points. Does he share my hope that the Minister will listen very carefully to them? We have a very strong voluntary sector on the Isle of Wight. Mike Bulpitt, one of the lead volunteers on the Island and chief executive of a community action centre, contacted me because he is worried that a lot of our voluntary drivers will find it difficult to continue to volunteer due to the lack not only of an increase in the rate but of regular reviews. I say on his behalf that we thoroughly support what my hon. Friend is saying. Does he share my hope that the Minister is listening and feeling generous?
My hon. Friend is absolutely right. I know that the rate affects businesses and employees too, but the core principle is that volunteers, in particular, should not be penalised for their noble service and for giving up their free time to help others. It is clear that the rate is affecting the recruitment of volunteers to use their private vehicles at a time when those volunteers are so needed.
I thank the hon. Gentleman for being so gracious in giving way again. Volunteers must be appreciated, and ensuring that these allowances increase is one way to appreciate them, but does he agree that public sector workers—I was one in the past, and they did so much during the covid period and continue to do so—should also be given the allowances they are due, too?
The hon. Lady is absolutely right, too; public sector workers, particularly those working in our national health service, are also impacted by the reduced rate. That only enhances the petitioners’ call for the rate to be increased and reviewed more regularly.
Our volunteers in particular, but also our public sector workers, have shown themselves to be true engines of growth and betterment. It is surely time that they feel properly supported in their endeavours, whether entrepreneurial or charitable. If we are to ensure a brighter future for our country, those who drive it must be paid a rate that reflects today’s world and not the world of more than a decade ago. I look forward to hearing from all hon. Members. I hope that the Government will listen to our calls and look to introduce an increased rate, as well as a system of more regular review so that we do not have to come back to the issue every 10 years or so and just hope that the Government fancy doing it one day.
It is a pleasure to serve under your chairmanship, Mr Sharma. I pay tribute to the hon. Member for Carshalton and Wallington (Elliot Colburn) not only for the eloquence with which he presented his argument, but for its very balanced nature. This issue unites the Chamber; there is almost a manifest injustice here. There is little that has not increased since 2011, and there has been a significant number of elections, never mind of changes in office. As he correctly pointed out, it is not simply the voluntary sector that is affected. Not only those employed by the council, but those who are self-employed—the traditional white-van man and those in other occupations—also need recompense for the mileage that they are required to do to carry out their trade, their services or whatever.
In a matter that I have been pursuing locally it has often been put forward that there can be local settlements, but, as the hon. Member correctly pointed out, the template tends to be HMRC’s and there are implications for taxation if that is not followed. Even when I have had negotiations and discussions with officials, it has been very difficult to get political sign-off, so it is one thing for officials to be persuaded. There are Members here who were at the meeting held by Unison along with the RAC Foundation. Although some might view Unison as having a vested interest, I do not think that that can be said about the RAC Foundation.
I, too, was at the Unison-organised meeting and I can say only positive things about its engagement with Members right across the House. Let me put on the record my thanks to Anna Birley from Unison for the report that she so ably prepared.
Absolutely. I am sitting with a copy of the report myself and the hon. Member is correct; there were people from a variety of parties at the meeting. The RAC Foundation was not there in a political capacity. I think Unison did the right thing to hold the meeting with the RAC Foundation. It gave the meeting ballast and legitimacy because the RAC, along with the AA, is a specialist in motoring matters and has come to the conclusion that 63p, together with some form of system, is what is necessary.
Locally, I face all the difficulties that the hon. Member for Carshalton and Wallington ably pointed out. East Lothian is not the biggest constituency—it is not the size of some of those in the highlands of Scotland—but it is still significant. It runs along the A1 for in excess of 60 miles, from Musselburgh all the way to the villages before the Scottish Borders. Although the principal town tends to be Haddington, with the community hospital hub and the council based there, people are unable to work without going into the other towns, which are equally jealous of their independence and seek to retain their own facilities, whether it is those on the coast such as Dunbar, where I live, and North Berwick, or inland at Tranent or elsewhere, never mind the small villages. Whether someone is doing voluntary work, working for the council or carrying out a trade, they cannot do their job without running up significant mileage.
We are not only talking about those working in fields such as care. There are people in senior positions and health visitors who are struggling financially because, as with others, they have seen their mortgage go up while they have to keep a roof above their head, yet it costs them to work because they are not recompensed for the daily mileage that they rack up. They need a car to carry out their work on behalf of their employer, and they have to pay additional costs to do that. That is why the issue has to be taken on board.
The hon. Member for Carshalton and Wallington correctly pointed out that we should not just seek to remedy the mileage allowance once and then have to look at it again; it could be worthwhile to make it index linked. As the hon. Member for Darlington (Peter Gibson) will be aware from the meeting I mentioned, we also have to bear in mind that when the allowance is paid by employers, it is meant to recompense workers not simply for the cost of fuel—the £1.45 that the hon. Member for Carshalton and Wallington mentioned resonates with what Asda is currently charging in Dunbar—but for the wear and tear on their cars and for insurance.
Hannah Bardell (Livingston) (SNP)
The hon. Gentleman is making a brilliant and eloquent speech. Many of my Livingston constituents signed the petition, but one of my constituents, who is a housing officer, was struggling to get by on the mileage allowance before the cost of living crisis. Does the hon. Gentleman share my concern that if staff, whether they are NHS staff or other public sector staff, cannot get by on the mileage rate that is being offered, they will go elsewhere? We are already struggling to keep people in those vital roles.
Absolutely. The issue was first raised with me by the chief executive of East Lothian Council, because it is struggling to retain staff, and staff are necessary.
I will finish there, Mr Sharma. It seems that we have buy-in from across the Chamber and, I think, in the community, as shown by Unison and the RAC Foundation. This is about remedying a wrong: 2011 was a long time ago politically, never mind in terms of costs, and on that basis I hope that the Minister can come around not simply to addressing the rate, but to ensuring that we do not have this issue recurring and that we sort out some annualised system.
It is a pleasure to serve with you in the Chair, Mr Sharma. I congratulate my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) for leading this e-petition debate. Petition 600966 calls for a review of the approved mileage allowance payment rate—the AMAP rate—which, as we have heard, has remained at the same level since 2012. The petitioners are supported in their campaign by the Community Transport Association and by my hon. Friend the Member for Harrow East (Bob Blackman), who has previously called for an urgent review to reflect the soaring cost of living increases.
When previous campaigns have been launched calling for a review of the AMAP rate, the Government have invariably responded by stating that the rate is not mandatory—that employers can set whatever level of mileage reimbursement they want. However, very few set a different rate, due to the tax liability implications for employers and volunteers. The rate is thus a standard to which the vast majority of businesses and charities adhere; it is regarded as best practice and avoids the complications of drivers having to pay income tax.
I acknowledge that the 5p per litre cut to petrol and diesel prices, announced in the 2022 spring statement and extended through to next year, has provided respite and support to drivers, but the current cost of living crisis has brought into clear focus the need for a review. If it is not carried out, I fear that there will be negative knock-on implications for services such as the NHS, social care and public transport, and that ultimately the Treasury will pick up the bill.
Many of my concerns revolve around community transport and the great work that is carried out in north-east Suffolk and south-east Norfolk by BACT, which provides community transport for people for whom other forms of public transport are not easily available. BACT has its own minibuses and wheelchair-accessible vehicles, but a significant proportion of its services are provided by its volunteer drivers using their own vehicles. The failure to review the AMAP rate is imperilling the crucial lifeline services provided by BACT and many other community transport providers.
It is a pleasure to speak with you in the Chair, Mr Sharma. I commend my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) for leading the debate and for an excellent speech. I am very happy to contribute to this important debate.
Although a relatively small number of my constituents— 38—signed the petition, the issue of mileage allowance payments looms large in my constituency and has been raised a number of times in correspondence and conversations with my constituents in Stoke-on-Trent South. Stoke-on-Trent is a hub for logistical industries and delivery operations of various kinds, and a larger than average proportion of the workforce works in health and personal care services. As we have just heard, social care is particularly affected by this issue, because people often drive their own vehicles to go to care for people in their homes. Stoke-on-Trent is a city that has no tube or tram network and a very limited local train network, and bus services have been in sorry decline for too long. I am glad to say that this Government have shown a real commitment to remedying that, but for those who have to travel beyond the usual commute for work, without a company car or other such vehicles, there is often no alternative to the use of private vehicles.
In 2011, it was recognised that the time had come for the main allowance to increase by 5p to 45p, because it had been held at 40p for nearly 10 years, since 2002. It has now been more than 10 years since that last uprating. At the very least, we need to look at the allowance again and undertake a review, as many colleagues have called for today. Of course, I accept that the last 10 years were somewhat different from the 10 years before them. In the decade up to 2011, fuel duties rose from 45.82p per litre to 58.95p per litre, but drivers incur a number of other costs, as many colleagues have said. In the decade after 2011, the fuel duty story was very different, thanks to this Conservative Government. Duty was cut to 57.95p per litre in March 2011 and then frozen for a decade until a cut of 5p per litre on 23 March last year—a cut we thankfully still enjoy today. I welcome the Government’s action. It benefits all motorists, and it is the simplest administrative measure available. Generally, I support the Lawson doctrine of lower tax rates funded by fewer tax breaks where possible, but there is clearly a need for a specific tax break, mileage allowance, to reflect the additional inflationary and other costs of using personal vehicles for work purposes. The system needs to be fit for purpose, and the rate needs to be appropriate to the current situation.
It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) on ably leading yet another Petitions Committee debate. Thirty-eight of my constituents in Darlington have signed the petition, but I know that it is an issue of great importance to many more. Mileage rates were first introduced to reflect the costs of using a vehicle for work and to make reimbursing them administratively straightforward. However, as we have heard, HMRC’s current rates have not changed since 2011, despite many increases in the cost of motoring, particularly the rapid increase in fuel prices that began in early 2022 as a result of Putin’s illegal war in Ukraine.
It is estimated that one in five frontline service workers are required to drive to do their job, often travelling significant distances to carry out their work. Moreover, research from the RAC Foundation shows that the vehicle of a public sector worker who drives for their job is typically older and driven further than the average. As that will result in a greater effect on the servicing and depreciation of their vehicle, it is clear that a significant number of those workers will be left out of pocket by the present mileage allowance payment rate.
I welcome that the mileage allowance of NHS workers under the agenda for change agreements are reviewed twice a year, taking into account changes in motoring costs, and I know that current NHS mileage approved payment rates were increased on 1 January 2023 to 59p per mile. That is above the HMRC approved amount. Although the approved mileage allowance payment rate is advisory, it is ultimately up to employers to choose what they reimburse. It is still hugely important to public sector workers, charities and many others in society that mileage rates are reviewed across the board regularly, and not just for those working in certain sectors.
It would be remiss of me to not mention that, compared with others in the region, many of my constituents face another issue when it comes to the cost of motoring. Fuel prices at forecourts are significantly higher at Morrisons, Asda and Sainsbury’s branches in Darlington than they are at the exact same supermarkets in Bishop Auckland, so I ask the Minister to look at what more can be done to ensure that my constituents get a fair deal. I appreciate that it is not the specific topic of this debate, but it highlights the postcode lottery of forecourt fuel competition in this country.
It is a pleasure to serve under your chairmanship, Mr Sharma. I thank the hon. Member for Carshalton and Wallington (Elliot Colburn) for introducing the petition, and other hon. Members for their contributions.
Since the start of this cost of living crisis, many of my constituents have been in contact with me to express their concerns about the need to raise the approved mileage allowance payment rate to help tackle the impact of rising fuel prices and maintenance costs. As the hon. Member for Darlington (Peter Gibson) mentioned, it is vital that we see reform and change.
As the hon. Member for Stoke-on-Trent South (Jack Brereton) highlighted, the AMAP has not changed in over a decade. In fact, when it was last updated in 2011 the rate was set at 45p. The petition suggests that this amount be raised to 60p to help tackle rising fuel costs and the impact of inflation. Since the rate was last revised in 2011 costs have drastically increased, leaving much of the financial burden on drivers. It is more expensive to run a personal vehicle now in comparison to 2011. Although fuel prices have decreased from their all-time high of nearly £2 a litre in July 2022, with prices now hovering around £1.43 a litre, they are still 16% higher than the price when the rate was set in 2011. The costs associated with the maintenance and insurance of a vehicle are also much higher; they rose by as much as 40% between 2011 and January 2023. Those costs will continue to rise, leaving workers and volunteers worse off.
The failure to raise mileage rates is particularly detrimental to those in the voluntary sector, as we have heard from Members across the House today. I was recently contacted by Getting Better Together Shotts, which is an organisation that aims to improve the education, health and wellbeing of those living across Shotts and the local area. One of the vital services that it provides to the local community is transporting people—predominantly older people—to NHS appointments.
It is a pleasure to serve under your chairship, Mr Sharma. I thank everybody who has spoken in today’s debate; I found all their insights informative, and they spoke passionately on behalf of individuals and their constituencies about subjects that are important to millions of people up and down the country. I am grateful to the hon. Member for Carshalton and Wallington (Elliot Colburn) for his contribution, which provided an overview of the issue.
The petition we are here to discuss was signed by over 40,000 members of the public. It asks the Government to increase the HMRC mileage rate from 45p a mile to 60p a mile. Approved mileage allowance payments are used by employers to reimburse employees’ expenses for business mileage in their private vehicles. The Government set the rate. The AMAP rate aims to reflect running costs, including fuel, servicing and depreciation. Ministers have previously stated:
“Depreciation is estimated to constitute the most significant proportion of the AMAPs.”
The HMRC mileage rate is essential for millions across the country. For those working hard for their families, businesses and communities, it is a vital measure to ensure that they are not out of pocket for the extra miles that they do in their private vehicles. That has been reflected in Members’ contributions today.
As a country, we are proud of our volunteers, who spend their spare time helping others and saving lives. The mileage rate is a critical support system that provides not only reimbursement for those actions but an incentive for volunteers to do more where and when they can, no matter their financial status. As the hon. Member for Carshalton and Wallington highlighted, and my hon. Friend the Member for Lewisham East (Janet Daby) echoed, it is important to feel valued. However, we are all aware of the cost of living crisis that British people are facing, which comes after 13 years of Tory Government. It is clear that families are struggling through no fault of their own, but as a result of the policies of this Government. In the last year, Britain has been rocked by the worst cost of living crisis in a generation. It has been driven particularly by spiralling energy bills, which have fuelled inflation, thrown 3 million people in England into fuel poverty and forced businesses to close.
It is always a pleasure to see you in the Chair, Mr Sharma, and it is a great honour to serve under your chairmanship. This is an incredibly important subject, and I will do my best to address all the many points that have been made in some fantastic speeches. I congratulate my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) on introducing the debate on behalf of the Petitions Committee, and thank everybody who signed the petition.
The Government, right up to the Prime Minister and the Chancellor, are absolutely committed to supporting individuals and businesses with the rising cost of living. That includes motoring expenses. Let me respond to the various points by first setting out what AMAPs actually are, the rationale for their existence, and how they work. Then I will talk more broadly about how the Government are supporting people, because hon. Members have rightly asked about that on behalf of their constituents.
As we have heard in this very good debate, approved mileage allowance payments, or AMAPs, allow employees to receive tax-free reimbursement from their employer when using their own vehicle for business journeys. The rate for cars and vans is currently set at 45p per mile for the first 10,000 miles travelled annually and 25p thereafter. The AMAP and simplified expenses rates are designed as tax simplifications, as my hon. Friends have pointed out. They are intended to make it to easier for employers, employees and small businesses to record their mileage and calculate how much tax relief is due.
Simplification is at the heart of this. It is a key objective of the overall tax system, and the Government want the tax system that we oversee to be simple and fair, and to support growth wherever possible. The AMAP and simplified expenses rates are a long-standing tax simplification measure that helps us to achieve that simplification objective. Rather than having to work out a business or employment proportion of all their individual motoring costs, the rates allow taxpayers to make a simple calculation based on their business mileage to work out how much tax relief is due. The rates form the basis of a single calculation that can take the place of multiple calculations that would otherwise be required, which would be administratively taxing.
As the Minister mentioned, the allowance offers relief whereby individuals can claim money back. Do the Government have figures on how many people are using the relief? It would helpful to know that.
That is a very reasonable question. I do not have the figures to hand, but am happy to provide them if we are able to. I also point out that employees paid expenses above the AMAP rate may be taxed on the difference, depending on their personal circumstances—if they earn in excess of the personal allowance, for example.
As my hon. Friends the Members for Carshalton and Wallington and for Waveney (Peter Aldous), as well as several others across the Chamber, have outlined, volunteers are an important part of our communities and perform incredibly important services for all of us. It is right that they be highlighted and recognised in the debate today. The Government recognise the outstanding contribution that all volunteers and the charities that employ them make to our communities, including my community of Grantham and Stamford.
I should reassure hon. Members that, unlike employees, volunteers can receive payments in excess of the AMAP rate and do not have to pay tax if they can provide evidence that they have not made a profit. If they provide the receipts and evidence of their travel, they do not have to pay tax above the AMAP rate, unlike employees. That provides volunteers and voluntary organisations with additional flexibility, given how important they are. And they are important to the Government—that is why, for example, at the spring Budget the Chancellor set out an additional £100 million support package for charities and community organisations in England. That will be targeted at voluntary, community and social enterprise organisations at most risk at this difficult time. We will be setting out more about the eligibility criteria in due course, and hon. Members may wish to monitor that carefully.
That was an interesting point, and I just need to digest what the Minister was saying. I think he was saying that volunteer drivers can claim extra tax relief provided that they can show that they are not making a profit. Does he have any figures showing how many are actually doing that? I suggest that the system is so complicated that very few take it up. It would be far simpler to increase the rate.
The point I would make is that volunteer organisations do not need to use AMAPs; all that is required are receipts and evidence of journeys. Volunteer organisations can set literally any rate as long as that evidence is shown. The AMAP is a simplified rate and applies to employees of private organisations and businesses, for example.
I want to address the review period and the regularity of reviews, because they were mentioned by a number of colleagues. They make a fair point, but I would point out that by its very nature AMAP is a tax relief, as is mileage allowance relief. It is convention that they are reviewed at fiscal events, in line with most taxes we have, but it is also important for the work that we do with the Office for Budget Responsibility, so that it can score during the Budget process. That is why the reliefs are always reviewed. I assure hon. Members that there is a review at every fiscal event, and it is right that it is done at fiscal events and not in the middle of the fiscal events cycle.
A couple of Members mentioned self-employed individuals, so let me quickly address that issue. Self-employed individuals can choose to use simplified motoring expenses, which allows them to deduct a fixed rate per mile against their self-employed profits, and those rates mirror the AMAP rates. Self-employed individuals do not have to use the rates; they can instead choose to deduct capital allowances and actual costs. However, it is not possible to switch between the two options with the same car or van once a self-employed individual has chosen to use either the simplified mileage rate or the capital allowances and expenses. I hope that clarifies the position: they do have that choice.
Some hon. Members rightly talked about the cost of living situation in which we find ourselves. I want to directly address that now, because AMAPs are one part of our system to support employees across the country, but it is important to recognise the other measures that the Government are taking to support people at this very difficult time, and that is part of the review process when we look at AMAPs. I simply reiterate the point that many hon. Members have made today: in the spring Budget, the Chancellor announced continued support for both households and businesses by extending the temporary 5p fuel duty cut and cancelling the planned inflation rise for 2023-24. That represents a saving for all drivers across the country, amounting to £5 billion, which is about £100 per household.
I thank the Minister for his generosity in giving way, and his time. Given that over 40,000 people signed the petition and many have raised the issue, will the Treasury look into it? Will the Minister indicate whether work is already being done behind the scenes? Has the Treasury been lobbied directly on changing the mileage scheme, because I know Unison and other stakeholders have done some work on the matter? I would be keen to know if any meetings or engagement have taken place.
That is a fair question. I assure the hon. Lady that an extensive review is taking place, which takes into account a range of factors, but a big part of it is engagement. We have engaged extensively with various industries and unions, and we will continue to do that around the fiscal event cycle, as I have said. All taxes remain under review.
I have magically received an answer to the hon. Lady’s earlier question: between 1.8 million and 2.1 million people use their own vehicles for business travel, and 200,000 employees claim mileage allowance relief. That is 40% of all those entitled to it. I hope that answers her question.
I am coming to the end of my remarks, but I want to ensure that I address as many points raised as possible. My hon. Friend the Member for Waveney made points about the importance of NHS staff, and I want to put on record my thanks to all NHS workers who use their own cars. I entirely agree with the emphasis he put on the importance of those workers to our society. I stress that paying the AMAP rate is voluntary. It is up to the NHS as an employer to determine expense rates. Travel cost reimbursement is covered by NHS terms and conditions, jointly agreed between trade unions and the employer. As my hon. Friend the Member for Darlington (Peter Gibson) pointed out, as of January 2023, the NHS increased its rate above the AMAP rate to 59p for cars up to 3,500 miles, in recognition of the fact that a number of NHS workers travel a shorter distance.
As I said, the scheme is voluntary. Any organisation can apply a higher rate than the AMAP rate, and the NHS has chosen to do that. If my hon. Friend believes that other organisations should offer a higher rate, that is something he should take up with them.
I am grateful to the Minister for giving way again. Will he outline what tax consequences there would be if an organisation chose to take those higher rates?
If a rate is provided that is above the AMAP rate, national insurance and income tax would be applied to that difference, depending on the personal circumstances of the individual—for example, depending on the overall amount of income tax they pay, or whether they are over the personal allowance amount. Voluntary organisations, which my hon. Friend spoke about, can offer any rate they want, as I pointed out to my hon. Friends the Members for Waveney, and for Carshalton and Wallington. So long as evidence is shown for the journeys, organisations do not have to use the AMAP rates. I hope that clarifies things.
In conclusion, it is ultimately for employers to determine the expenses paid in respect of motoring costs that employees incur with their private vehicles. The Government set AMAP and simplified expenses rates with the aim of creating administrative simplicity. Those rates will necessarily be more appropriate for some motorists than others. However, the Government have taken decisive steps to support households with the costs of living, which I have extensively set out. The Government will continue to keep AMAP and simplified expenses rates under review, as they do all taxes and allowances.
I have listened very carefully to my hon. Friend and I thank him for his response, but would he not agree that, over the past decade, there has been a societal change in the way that community transport has become a vital component of our public transport system, and in the way that health and social care is delivered? Health and care workers often go to people’s homes now, rather than those people coming to hospitals. That in itself warrants a fundamental review of the system.
My hon. Friend was just in the nick of time, but he makes a valid point. I will answer that in two parts. On care providers, the rate paid is a matter for the employer. It is entirely up to them, in the light of changes to how care is provided, to offer a rate that they deem appropriate; as I say, the NHS has offered a higher rate for those travelling fewer than 3,500 miles.
My hon. Friend made a broader point about the importance of community organisations, and mentioned community transportation. Those organisations are a vital part of our communities, particularly in constituencies like mine, in rural parts of the country. That is why this Government have got behind voluntary and community organisations. As I say, we recently announced another £100 million of support to specifically target charities and community organisations. That support will remain, just as it has for many years.
I am grateful for all the contributions and interventions from my hon. Friends, and from colleagues from across the House. This is an important debate to have, and I am pleased to have addressed the issue on behalf of the Government.
I promise not to detain the House until 7 pm. I thank all hon Members for attending today’s debate and, again, the petitioners for bringing us here to discuss this important issue.
I just urge the Minister to take back to the Treasury, in advance of the autumn statement, the fact that a strong cross-party consensus has been demonstrated here, and that we would like an uprating of the AMAP. I think that we all agree, as do the petitioners I met, that the system is not the problem; the frequency with which it is uprated clearly is.
I take the Minister’s point that the rate is voluntary, but there are two quick points that I would make on that. First, on employers, of course they look to HMRC to set the standard. Many of them use the system, and not many would be tempted to incur a tax liability for going over that amount. Secondly, on volunteers, again, while I appreciate that one could go further, the need to provide evidence seems an unnecessary administrative burden. It would be much simpler to increase the base rate that voluntary organisations could offer, because of course the general principle is that no one should be out of pocket for using their personal car for work or volunteering.
Question put and agreed to.
Resolved,
That this House has considered e-petition 600966, relating to the Approved Mileage Allowance Payment rate.
Sitting adjourned.
Volunteering is an incredibly noble calling, endorsed by its long history of royal patronage. This year, the Royal Voluntary Service launched the Coronation Champion awards to recognise volunteers who have gone above and beyond for their charities, and volunteering was made an intrinsic part of Their Majesties’ coronation itself. Billed as a lasting legacy of that momentous occasion, the Big Help Out took place on the bank holiday Monday of the celebration, with hundreds of thousands of people taking part across the country.
The numbers speak for themselves. According to a survey in 2019-20, 64% of people had volunteered at least once in the past year, and just shy of 40% had volunteered in the past month. The following year, 62% of respondents stated that they had volunteered at least once in the past year, and the number reporting having volunteered in the past month rose to 41%.
That potted history of the relationship between our country, its people and volunteering featured so heavily in my introduction because it helps to set the scene for the petition and makes clear its importance. Many in our communities depend on volunteers, but it is important that those volunteers, whatever they may be doing, feel valued and appreciated. That is important not just for retaining volunteers but for recruiting new ones. Yet from the conversations that I have had with affected stakeholders, the current HMRC AMAP rate is proving to be a real sticking point for many charities in retaining their volunteers, particularly longer-serving ones.
The AMAP is only one way suggested to employers and charities to reimburse drivers. Some may argue that they could choose to pay more to reflect the increased cost of running a vehicle, but if a higher allowance is paid, an income tax and national insurance charge is placed on the difference. That is precisely why the petition was set up—to try to scrap the charge for those wanting to pay an allowance that better reflects the reality of driving a vehicle in 2023.
Can the Minister tell us how much revenue is collected through overpayment of the AMAP rate and how that would be impacted if the rate were raised to, say, 60p as outlined in the petition? It could be argued that with a more rigorous, up-to-date support system with regular reviews, our businesses and charities would be able to ensure that those using their vehicles for work or for volunteering are valued, and they would find it easier to retain them. The Government have worked to stabilise fuel costs by cutting fuel duty in the light of the knock-on effects of the invasion of Ukraine, among other factors. I believe that that stabilising work should filter down to our volunteers and workers through a regularly reviewed and increased AMAP rate.
The arguments in favour of the petition’s aims seem incredibly plausible, especially since, as I have noted—I am sure we will hear this a lot during the debate—the rate has not been adjusted since 2011. I hardly need to list the ways in which our world, our lives and the cost of things have changed over the last 12 years. Instead, in drawing my remarks to a conclusion, I will again draw Members’ attention to the workers and volunteers who have strived to get this country moving and growing over the last decade.
One of the most significant things that I learned from the RAC Foundation was that fuel costs had increased at the lowest rate; insurance, as I recall, had increased at the highest rate, but other things had increased too. Not only do people have to pay for their petrol or diesel, but they have to pay the car costs that are necessary for their work and that their employer expects them to pay, because otherwise they cannot do their job. That is certainly true in my area, but it is the same in others, whether they are urban or rural. That is why the mileage allowance should be increased.
There is, as I say, political buy-in from across the Chamber. There is a recognition, not just from trade unions but from motoring organisations, that the rate is long past its sell-by date. It is clear from what others have said that this is not simply about people struggling to do their work, but about getting people into the labour market—a statement is being made elsewhere in this building on that very subject. People must be recompensed for their work and not pay out of their own pocket to do their job.
I shall briefly set out what I believe is a compelling case for a review. First of all, it should be pointed out that the cost of motoring has increased significantly since 2011-12. The petition, as we have heard, highlights that inflation has increased overall prices by over 25% since 2011, and that of fuel by over 20% over the past five years. Since 2011, vehicle maintenance costs have risen by 38% and, as we have heard, the RAC Foundation’s cost of transport index has increased by 41%.
The third sector—that is, the voluntary sector—plays a vital role in local communities. We would not have gotten through covid without volunteers, and we need them even more now to get through the cost of living crisis. Many of those working for charities and organisations like BACT use their own cars, and it is only right that they are fairly recompensed for doing so. Currently they are not, and that disincentivises volunteers to offer their services. Community transport operators like BACT increasingly report challenges with driver recruitment and retention.
In many areas, including Suffolk and Norfolk, community transport operators have become a vital part of the public transport system. They are, in effect, the Heineken of the system—they go where commercial operators and the local transport authority either cannot or will not go—and heavy reliance has been placed on them to provide their services. Without their drivers, a system that I sense already operates on the brink would collapse altogether and many vulnerable people would be left isolated. Community transport operators like BACT provide a vital service to the NHS, driving people to hospital, GP surgeries, vaccination centres and dentists. The latter can be quite a trek, even assuming that an NHS dentist can be found. They also provide non-emergency transport to hospitals, and if they are not around to do that, that will be another cost that the NHS has to bear at a time when it can ill afford to do so.
A product of covid has been a dramatic increase in social isolation and loneliness. During the lockdowns, many vulnerable people were left marooned in their own homes, and it was almost always local volunteers who rallied round to ensure they were not alone and not forgotten. Post lockdown, many people have only tentatively come out of their homes, and for some their only lifeline to the outside world is provided by the volunteers who drive them for their weekly shop, without whom life would be very lonely.
It is important to acknowledge that the service provided by community transport operators like BACT is vital in rural areas, where for many people there is no alternative means of public transport. If the volunteer drivers throw in the towel because they are not being properly recompensed, another group of people will be left stranded, unable to access services that most of us take for granted.
Finally, I come to social care. The Government rightly recognise the importance and the need for an integrated and improved health and social care system that keeps people independent in their own homes. That will need a whole army of dedicated social care workers on the road, invariably in their own vehicles, to visit and support their clients. Unfortunately, they are not well paid, and the last thing they need is a mileage allowance that does not cover the cost of keeping an old vehicle roadworthy. Skimping and saving on the AMAP rate will result in recruitment becoming even more difficult in this vital sector.
The case for a fair, urgent and transparent review of the rate is compelling. I look forward to my hon. Friend the Minister’s reply, but I urge him to take the message back to my right hon. Friend the Chancellor of the Exchequer that he should instigate the review straightaway, with a view to announcing the outcome in the spring Budget.
The Government say that they want to minimise administrative burdens, so the system needs to be simple and predictable. I wonder whether the employer’s discretion in using the AMAP rate really makes the system that predictable for the driver. There is huge variation in how the rate is applied, and many use a rate that is far less generous than the standard rate. Unfortunately, I have heard of a number of employers that are not even applying the 45p rate, never mind a higher one, and some workers are having to suffer much lower rates.
Many who do larger amounts of mileage, such as those who work in delivery or a trade that requires them to travel around the country, have been hit by the 10,000 mile advisory annual limit, after which the rate drops from 45p to 25p. I have spoken with a number of constituents in Stoke-on-Trent South who undertake trades that require them to travel up and down the country to work and deliver services. They often travel many more than 10,000 miles in a year, and they have to put up with a much lower rate after they have gone over the 10,000-mile limit.
I note that the startups.co.uk website warns budding entrepreneurs and contractors:
“Whether you can claim, and how much, depends on an assortment of factors that can require a lot of admin to calculate.”
Notwithstanding that, I think that most colleagues would agree that the current mileage system has not been as pressing an issue historically. The petitions and letters campaign has appeared quite recently, because the feeling that the allowance rate is insufficient is now acute, particularly because of the post-pandemic inflationary pressures, which have been massively increased by Putin’s illegal invasion of Ukraine.
Even in the face of the freeze and cut in fuel duty, this issue continues to be a major challenge. To afford a more generous allowance, it has been suggested that the system be changed so that only certain sectors qualify for a higher rate. We have been talking about the social care and healthcare sectors, and a number of colleagues have mentioned the voluntary sector, wherein many people who voluntarily take parcels and things do so using their personal vehicles. It is potentially important to have a higher rate for individuals who are volunteering, and for organisations that are currently struggling to recruit volunteers because the rate remains at 45p, as it has for so long. The Government could certainly apply sectoral codes, as they do with other reliefs, such as the energy bill relief scheme, but deciding who is left out can lead to challenging outcomes, as I have found with the energy and trade intensive industries scheme, where some sectors have fallen through the cracks.
I do not underestimate how challenging the fiscal situation is. Over 10 years ago, the cost of increasing the allowance by just 5p was around £35 million per annum. That is quite a significant cost, but as the Treasury prepares for the autumn statement—now just weeks away—and the spring Budget, it needs to look at how the rates might be modernised to help with the cost of living pressures that many of our constituents are feeling, given that the rate has been frozen for so long. I hope that the Government and the Minister will consider the issue, and look into the potential for a review. I look forward to the Government’s response in due course.
Unfortunately, my hon. Friend the Member for Rutland and Melton (Alicia Kearns) was unable to attend today’s debate. However, she has asked me to raise her concerns on her behalf. Her constituency is made up of 187 villages, with a number of elderly residents relying on incredible carers who get to them by car. We face a similar issue at Herriot hospice in Harrogate, of which I am a trustee. I know all too well about the impact of mileage rates on those who take part in rural community hospice care. An increase from 45p to 60p per mile would be of significant benefit to people such as carers, and I know that my hon. Friend also supports an increase in mileage rates.
I appreciate the efforts that the Government have taken to support motorists with increased costs. At the spring statement this year, the Government announced a temporary, 12-month cut to fuel duty of 5p per litre. Furthermore, to continue supporting motorists, they are extending the 5p fuel duty cut, which is worth £100 a year to the average driver. Ultimately, the Government have to balance support for individuals with the responsible management of public finances, which fund our essential public services, but it is clear to me, and should be clear to the Minister, that mileage rates need to be looked at very closely. I urge him to do all he can to ensure that we see this vital increase and that public sector workers who drive for work are not left out of pocket merely for doing their job. The Minister should be mindful that the HMRC mileage rate is used as a benchmark for many charities, voluntary groups and small businesses. Although it is up to such organisations to set their own rate, they take a lead from HMRC.
Public sector workers, charities, volunteers and small businesses need to see a change in the rates. I trust that the Minister can see that this has cross-party support, and reform would be welcomed by people in every constituency. Please, let us level up these mileage rates.
Volunteers can cover thousands of miles in their vehicles, transporting people to get the treatment they require. They provide a vital service in support of the NHS and local authorities. The covid-19 pandemic highlighted how integral they are to our society. It is only correct that those who volunteer are fairly compensated for the use of their cars, and I echo the calls of the Scottish Council for Voluntary Organisations and Volunteer Scotland that the rates should be raised to give better compensation to those who give back to society.
My friend, the hon. Member for East Lothian (Kenny MacAskill), said that his constituency is not geographically the largest. My constituency of Airdrie and Shotts is the same; it is not particularly large when compared to the constituencies of some of my Scottish colleagues, but it still encompasses some rural areas. It is obvious that those who live in rural areas are more dependent on vehicles to undertake their work. Some constituents have said to me that they have a sense that they are subsidising their employer through using their cars. Those in typically low-wage professions often travel the most for work. Some professionals, such as care professionals, drive many thousands of miles each year as part of their employment. Failing to adequately compensate those professionals leaves many of them out of pocket, especially during a cost of living crisis.
The problem is particularly acute for highland communities. As my colleagues from those constituencies can attest, people there often have to drive many tens of thousands of miles per year. That means that those working in some of our most rural constituencies in Scotland are racking up larger mileage and being left out of pocket.
The hon. Member for Waveney (Peter Aldous) made a crucial point when he drew on the impact of the cost of living crisis. I would gently go one step further, and argue that the impact of failing to raise mileage rates speaks to a larger issue of the mismanagement of the economy by this Government. There is a failure to recognise the impact of their actions on constituents across the four nations. Volatility in fuel prices now seems to be a regular feature of our lives. The announcement today that fuel prices are 6p per litre higher than they should be due to weaker competition between supermarkets is only the latest example of that. The lack of action from the UK Government has allowed supermarkets to artificially increase prices, and that expense rise completely offsets the 5p fuel allowance introduced last year.
Workers and volunteers are relying on mileage rates. They are faced with not only the impact of volatile fuel prices but the Government’s inability to get a handle on inflation, with the UK having the worst rate in the G7. Despite the Prime Minister’s promise to halve inflation, the UK looks set to miss its target. Alongside that, household disposable income continues to fall. This year, it is estimated to decrease by 3.2%, which is on top of a 3.1% fall in the prior year.
By failing to raise mileage rates at the last Budget, the UK Government left employees and volunteers financially worse off. I hope that the Minister will lay out what steps the UK Government are taking to raise mileage rates and address the concerns of those who have signed the petition. We clearly have buy-in from across the Chamber, so let’s get this done.
This country needs a Government who can get a grip and show some leadership. We need a Government who focus on the things that really matter and provide hope and optimism about the future. The reality is that the mileage rates have not changed in over a decade—to be exact, the approved mileage rate for cars, which is set by the Treasury, has not changed since 2011-12. It stands at 45p for the first 10,000 miles and 25p for every additional mile in a tax year. As Members have already mentioned, the cost of petrol and oil rose by 45% last year. In addition, overall motoring costs, including petrol, oil and vehicle maintenance, have soared since 2011. Fuel prices have settled somewhat since last year, but this country is still burdened by a high rate of inflation—8.7%. That is higher than in European nations and America, and proves that the Government have left our economy exposed. With higher interest rates, we are now facing a Tory mortgage bombshell for millions of people across the country. The Government are failing across the spectrum. Labour wants to make the changes that will help to fix that. I am talking about energy security, creating good jobs across the country, and making, doing and selling more in Britain.
With the increases in motoring costs and the overall cost of living crisis, it is reasonable to ask the Minister what impact the current mileage rate is having on the living standards of those affected. I also want to share a survey that was conducted by Unison last year and whose findings have been echoed by a number of hon. Members. It highlights how staff in our NHS and the healthcare industry are deeply reliant on their own vehicles to do their jobs. As we all know, that means that if they are not reimbursed, our healthcare workers are out of pocket for the life-saving work they do day by day. Unison’s findings are based on 550 staff. They show that the vast majority—91%—of those who drive a car at work use their own vehicle. More than two in five—44%—of them travel more than 4,000 miles a year for work, including some who clock up more than 10,000 miles. An overwhelming number—95%—of staff who drive for work are required to do so as part of their contract. More than a fifth—24%—say that they are unable to use public transport to do their jobs, either because none is available or because it does not run at suitable times, and about one in six—18%—say that they need to carry heavy or dangerous equipment when they drive for work.
We all know and have heard personal stories from those in our constituencies who are struggling to put food on the table, pay their bills and keep their children warm over weekends and over the winter. Workers and volunteers across the country work long and hard hours, and they deserve a Government who listen and make fair and practical decisions in response. I therefore urge the Government to get around the table and listen on the issues affecting millions of drivers across the country. I would be grateful if the Minister could confirm whether that is taking place or whether the Government will be carrying out that work in due course.
That brings up another important issue—transport infrastructure across our country. I know personally how tough it is for families and communities who struggle without the necessary transport infrastructure to get to work. In my constituency, we have a large community in Thamesmead who have no station, which makes them one of the only communities in Greater London left off the public transport map. On a positive note, I was pleased to see Transport for London submit a proposal for a docklands light railway extension to Thamesmead. However, we know that this is not an isolated problem but one seen across the country, and that other places have seen a decline in the transportation system. I think that that is one reason why so many people have signed this petition: it shows that our local communities severely lack the real transport infrastructure that they need and deserve.
Labour has committed to giving our communities control over their own destiny by unlocking the pride, potential and purpose of our towns and cities and putting power directly in the hands of people, whether that is in England, Wales, Scotland or Northern Ireland. We feel that the UK is the most centralised country in Europe and the most geographically unequal large country in the developed world. That is no coincidence. Too much power is hoarded in Westminster, and that is holding our country back. The Government need to listen to communities that rely on cars because there is no adequate public transportation, and explain the level of support they are providing.
I thank everyone who signed the petition. As other Members mentioned, those who did so do not want to earn more money or to be greedy; they just seek a fairer system for all.
I have some questions for the Minister about the issues that I have raised. First, does he expect there to be any change in the mileage rates in the near future? Can he confirm what thresholds he and the Treasury are looking at when deciding how to set the mileage rates? He has said that the economic outlook is one factor that they consider when assessing mileage rates. Given that things are really difficult for people at the moment, has the continuing failure to get bills down had an impact on the Government’s decision on mileage rates this year?
I thank the Minister for responding to the debate, but I echo that what is needed is for him to get around the table with working families and those representing all those affected, and provide full answers to their questions and a full explanation on this critical issue. The Government are facing this issue and many more because of an inability to deal with their failure to manage our economy over the last 13 years. We need urgent action to address the significant issues that many people face. Labour has a serious plan to get the economy growing. I urge him to reassure worried constituents who may be watching the debate, having signed the petition, that the Government are listening and will take action on this issue.
Because the single rates are much simpler than an alternative calculation of actual expenses, there will always be a trade-off between accuracy and simplicity for motorists who use the rates. The rate may reflect the actual costs of motoring better for some than others—we completely accept that. In some cases, it may provide slightly more relief than the actual costs would; in others, it might provide slightly less. That will depend on factors such as fuel efficiency, the car’s size, driving conditions and the level of associated costs such as insurance. Tax simplification is an ongoing priority for the Government and, frankly, AMAPs helps us achieve that.
Ultimately, however, as several colleagues have pointed out, the AMAP rate is not mandatory. Employee and employer expenses are a matter for individual employers and voluntary organisations to determine. It is up to employers to determine the remuneration and expenses for their employees.
My hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) rightly raised the issue of employees who receive less than the AMAP rate from their employer. Those people can claim mileage allowance relief on the difference, as HMRC provides. That reduces the tax that they can pay, and I urge my hon. Friend’s constituents to look into that in more detail.
In addition, at the spring Budget we went further by extending energy support, because we know that inflation has been a real problem for many households across the country. We kept the energy price guarantee at £2,500 for three months from April, saving households an additional £160 and bringing total Government support for energy bills to £1,500 for a typical household since October 2022.
Alongside that, we have gone even further and helped to support households by ending the premium paid by over 4 million households using prepayment meters across the United Kingdom. We have also introduced 30 hours of free childcare per week for working parents with children aged nine months to three years in England, alongside a substantial uplift in the hourly rate paid to providers and market reforms. That is in addition to the benefits uprating and support for vulnerable households across this country that we announced at the autumn statement, which included new cost of living payments for this year and next, helping more than 8 million UK households on eligible means-tested benefits, 8 million pensioner households and 6 million people across the country on disability benefits.
Taken together, we have provided £94 billion-worth of support to help households with higher bills, or an average of £3,300 per household, across 2022-23 and 2023-24. That is one of the largest packages of support in Europe, but as the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) pointed out, high inflation is the greatest immediate economic challenge that we face. That is why the Prime Minister has set it out as one of his top priorities, and it is why we in the Treasury have set out a clear plan to reduce inflation.