Oral evidence: Vehicle type approval, HC 622Monday 25 April 2016
Oral evidence, 25 April 2016.
Witnesses
Paul Higgs, Interim Chief Executive, Vehicle Certification Agency, Mr Robert Goodwill MP, Minister for State, Department for Transport, and Ian Yarnold, Head of the International Vehicle Standards Division, Department for Transport, gave evidence.
Chair
Good afternoon, Minister, and good afternoon to your colleagues. Could you please tell us who you are and your positions for our records?
Mr Goodwill
I am Robert Goodwill, the Minister of State at the Department for Transport. I lead on matters European, which I think is why I am here today.
Paul Higgs
I am Paul Higgs, chief executive of the VCA.
Ian Yarnold
I am Ian Yarnold. I head the Department’s international vehicle standards division.
Chair
The European Commission has openly called for VW Group to compensate vehicle owners. We have not heard that from our Minister here, Mr Goodwill. Why is that?
Mr Goodwill
My primary objective in this matter has been to ensure that those vehicles are fixed. I know in your previous evidence session you talked at length about individual owners and how they may be compensated for the depreciation in the value of their car possibly, or the fact that they bought that car for environmental reasons. My objective is to make sure that those cars are made cleaner. Yes, the guy driving the Volkswagen in front of me on my bicycle is the person who bought the car, but I am the person breathing in the air; this is about cleaning up the atmosphere and ensuring that happens. The first point I would make is that we are the first member state to publish the detailed information on 37 vehicles. We have been working very closely with our opposite numbers in Germany. In fact, I spoke on three occasions last week to the German Secretary of State for Transport, Alexander Dobrindt. They published their results on Friday. Until that point we were really in the dark as to what was going on. What we have demonstrated is that Volkswagen were using a defeat device. The test cycle was repeated by us in the normal way and it showed the results that you would expect. We then did the motorway section—the extra-urban section first and then the urban section—and the vehicle did not recognise it on the test cycle and we got much higher levels of NOx emissions. The important thing is that we demonstrated that those Volkswagen Group cars were not in compliance and they were actually using what would be described as a defeat device. The other news is that the other vehicles we tested from the other manufacturers were not using a defeat device. There are other issues that we need to address in terms of the way that their engines are set up, but what we need to ensure now is that the owners of Volkswagen cars get that problem put right. In most cases, it is a software fix that will take about 15 minutes at the garage. In the case of the 1600 cc cars, it is a hardware change as well; they need to put an insert into the air inlet system, a fairly straightforward fix that will put it right. My objective is to ensure that those cars are put right and that they are operating at all times in the same way, not recognising that they are on the test site and therefore keeping their emission control systems on for the test but turning them off at other times.
Chair
Does that mean that you are not interested in the compensation issue?
Mr Goodwill
The issue of compensation is one that I know the Serious Fraud Office is looking at, as are the Competition and Markets Authority. What is brought forward will be a matter for them. As I said, my objective at the moment is to make sure the cars are fixed and then to move forward to ensure that all cars are producing the levels of emissions in practice, in real-world conditions, that they do in the lab. There are a number of other issues that we need to look at. In fact, I wrote today to the Commissioner, Mrs. Bieńkowska, to see how we can move forward in the way that some of the engine management systems are moderated at certain temperatures and therefore do not produce the sort of levels of emissions we would expect. Indeed, we would be very happy to take the Committee through the full results of our test, perhaps in a private session, so that you can fully understand all the information.
Chair
That could well be helpful. There are some other aspects that members want to ask you about, although we still do not have a clear answer to the question put to you.
Huw Merriman
As well as the individual private compensation, and indeed any sort of fix, my understanding is that the Road Vehicles (Approval) Regulations 2009 give the Secretary of State the power to issue an unlimited fine if there has been a breach of the VCA process. Given that you have just mentioned that VW was using a defeat device, does that mean that is an avenue that can now be opened up?
Mr Goodwill
Certainly we are looking at that. It is not something we have come to a view on. As I say, my priority at the moment is to ensure that the vehicles that are non-compliant are made compliant and therefore are performing in a better way. If you look at the results of our trials, you will see that, certainly with the Euro 6 vehicles, the Volkswagen vehicles are actually performing better than some of the other vehicles that are not fitted with a defeat device, under a clause that can be used to turn off some of the exhaust gas recirculation at low temperatures. That is something that we were not aware of before conducting those tests. Mr Yarnold has been central in doing that testing and ensuring that we are in a much better position now. Today, we are in a much better position than we were before last Thursday to understand exactly where we are and what the industry needs to do to improve its standards. Indeed, the Secretary of State has written to the managing directors of Volkswagen, Opel and Mercedes-Benz to ask if the fixes that they are looking at doing for the owners of those cars in Germany can be extended to owners of the same cars in the UK. We need to talk to our UK manufacturers as well to see what they can do to improve performance in real-world conditions.
Huw Merriman
The reason I mention that is that last year, when VW were before us, they seemed to talk about the fact that they had everything in hand and it was all just round the corner. We had them in again recently as part of this inquiry, and it turned out that they had not done anything wrong, there just seemed to be delay and they could not work out what was going on at all. If there are more teeth that can be inserted, perhaps it is the door to kick down, as it were.
Mr Goodwill
I absolutely agree with you that we need to make further progress. This is not a new issue for me. I was in the European Parliament for five years doing just this. In fact, on 27 July 1999 I was appointed shadow rapporteur on a report on CO2 emissions for vehicles and the information made available at point of sale, so this is not something new. We always knew that performance in real conditions in terms of CO2, and therefore fuel consumption, was not as good on the road as it was in the lab. I expected that there would be similar discrepancies between the NOx levels of emissions and the lab. What we found out was that those levels are far greater than anything we even imagined might be the case, with maybe eight, nine or even 12 times as much NOx being produced in real-world conditions as in the lab. That has been a big revelation and a big shock, which is why I have written to the Commissioner to see what we can do to further tighten up the system. We have an agreement on real-world testing. In your last evidence session you asked why we had not done anything sooner. The fact of the matter is that we did not have the equipment that could be fitted into a car boot sooner. If you look at the heavy goods vehicle sector, they are pretty much in compliance, because they have been able to carry the equipment on the back of the truck for a long time. They are up to 90% compliant with NOx emissions using the systems on those vehicles. We need to do the same with passenger cars, car derived vans and other smaller vehicles as we have done with the heavy trucks to ensure that they are in compliance. The technology is there; it is just a case of applying it.
Karl McCartney
You have just given some figures to my colleague in your answer about NOx. I asked a question of your colleagues very early on as witnesses and they could not give me an answer. You said that NOx was about eight, nine or perhaps 12 times as high. Can you give us values on the tests you have done for the differences between those vehicles when they are and are not using the defeat software?
Mr Goodwill
I should probably ask Mr Yarnold, who has been conducting our tests, to give you an answer.
Karl McCartney
I know these are going to be a revelation to us, but to know what the differences are would be very useful.
Mr Goodwill
We can let you have a copy of this document. It is in an easily understandable format, unlike the German results, which take a bit of trawling through. Even I could understand this.
Karl McCartney
Implying that even I could therefore understand it; thank you very much indeed, Minister.
Ian Yarnold
The simple answer to your question is no, I cannot give you the answer as between the vehicle with a defeat device in the laboratory and in the real world, because the focus of our investigation identified the operation of the cycle recognition strategy in the Skoda vehicle that was part of the VCA fleet. It was only part of our laboratory programme. The purpose of using it was to baseline our test to see whether we could identify the recognition strategy in that particular vehicle. Once we had determined that the suite of tests that we invented and used could identify it, we stopped testing that vehicle and moved on to the vehicles that were part of the main programme. We do not have the piece of information you requested.
Karl McCartney
So you do not even have an inkling about what the differences are going to be.
Ian Yarnold
No, I cannot tell you what it is. It is possible that we could run the vehicle again and find out, but I cannot tell you at the moment. The vehicle we tested was described in the report—
Karl McCartney
You can find out, but you just do not have the information.
Ian Yarnold
We might have to run the vehicle through that suite of tests. It is not something we have done yet. It is something we could do, subject to the Minister agreeing.
Karl McCartney
I think you can tell that I have got disappointment on my face. I was looking forward to getting that information.
Ian Yarnold
There is a lot of other information in the report.
Mr Goodwill
What we do have are 37 vehicles that we tested in real-world conditions showing the level of NOx emissions that they produce. The first point to make is that Euro 6 vehicles are much cleaner than Euro 5 vehicles, but we have also discovered that it is very much temperature dependent, and that, for reasons of protecting the engine, some of these systems, which operate at the higher temperatures, can be turned off at low temperatures. The lab test is always carried out at about 250 C, which means that it would not have been picked up in the lab, but having tested the vehicles on the road we picked it up. We have not tested enough vehicles at different temperatures to know exactly what is going on, but we know that if these systems have been turned off at low temperatures for reasonable reasons—to protect the engine, the manufacturers say—the level of NOx production can be as much as 12 or 13 times higher than it would have to be to pass a lab test.
Karl McCartney
But only for a small period and not for the whole duration of the test.
Mr Goodwill
No. For a long drive on the road we are getting those sorts of levels of emission being produced.
Karl McCartney
But say in the first 20 minutes, when the car or vehicle engine is warming up—
Mr Goodwill
No, they work better; at cold temperatures you produce less NOx, because NOx is produced by high combustion temperatures. The test in the lab is done on a car that has been allowed to equalise temperature, whereas the test we do on the road is on vehicles that are already warmed up. There is that difference, but it would not explain the high levels of NOx that we have seen them producing.
Ian Yarnold
The EGR system—exhaust gas recirculation system—has a temperature dependency. The temperature it senses is the ambient inlet temperature of the engine. It is not the combustion temperature; it is not the heat of the engine. The engine could be at normal temperature, but if the vehicle is drawing in, let us say, atmospheric air at 10, the EGR system will respond to that 10 rather than the temperature of the engine itself.
Chair
Could Skoda have passed the type approval test without the defeat device?
Ian Yarnold
I cannot answer that, because I have not seen the actual total emission.
Chair
Who would know? Mr Higgs, do you know?
Ian Yarnold
If we have that information we will be able to provide it to you, but I do not think we have it.
Chair
Can you provide that information to us?
Ian Yarnold
I will provide what we have, Chair, certainly.
Chair
But shouldn’t you know the answer to this?
Ian Yarnold
The purpose of the vehicle test was to see how the cycle was responding. We can show very clearly the difference between when the system was operating and not operating. As the Minister said—
Chair
I want the answer to the question; I do not want you to tell me about the process by which you come to the answer.
Ian Yarnold
Your question was should I have known, and I do not know because I do not have that information in front of me.
Chair
Mr Higgs, can you help us?
Paul Higgs
We would have to have removed the defeat device or calibration. We tend to talk about a device but it is actually a calibration. We would have to have removed that and then redone the test as normal to see if it still passed.
Chair
Would you be able to give us the answer to the question?
Paul Higgs
We would have to ask them to remove the defeat device without putting it right, and then retest it to see if it still passed.
Chair
At the moment, with the information you have now, you do not know the answer. Is that what you are saying? You are shaking your head. That does not go down on the record.
Paul Higgs
Sorry. The purpose would be that they have, as part of the fix, to meet the test without the defeat device. We would have to ask Skoda to supply a vehicle without the defeat device but not fix it, so that we can retest it to see how bad it would have been, or if it would have passed.
Chair
Are you going to do that? Is that in the plan?
Paul Higgs
It seems an odd thing to ask them, because the idea is that they are going to fix the actual device they had fitted by removing it and then recalibrating the engine.
Chair
Skoda vehicles were tested in the UK, weren’t they?
Paul Higgs
They were tested in Europe.
Chair
Were they tested in the UK? Who did the testing?
Paul Higgs
They were not tested in the UK. The test was carried out by our designated technical service.
Chair
Who tested them?
Paul Higgs
It would have been TÜV SÜD.
Chair
Where are they based?
Paul Higgs
They are based in Germany.
Chair
Was any testing carried out here?
Paul Higgs
No, not on the original approvals.
Chair
On any approvals?
Paul Higgs
Not on Skoda vehicles.
Stewart Malcolm McDonald
Minister, has Volkswagen done anything illegal?
Mr Goodwill
Their vehicles are certainly not compliant with the type approval and the lab test. It would be for a court to determine whether the word “illegal” should be used. Certainly a defeat device is not within the legislation. Other manufacturers have used systems in their vehicles to shut down some of the NOx mitigation equipment, which is within the rules. We are in the tax evasion and tax avoidance situation. Certainly Volkswagen has used an evasion system.
Stewart Malcolm McDonald
A scandal broke several months ago and the Minister responsible has not made an assessment as to whether or not the law has been broken.
Mr Goodwill
They are not in compliance with the regulation. As I say, it would be for a court to determine whether an offence had been committed, but certainly what Volkswagen has done is not within the framework of the legislation. What the other manufacturers are doing is within the framework of the legislation, because they are using the clause that says that, if you turn off the exhaust gas recirculation system to protect the engine, it is within the legislation. Higher temperatures in a combustion chamber produce NOx. Unlike sulphur, NOx is not in the fuel; it is in the atmosphere. High temperatures in a combustion chamber are efficient temperatures but also produce high levels of NOx. In order to reduce the amount of NOx produced, you can deplete the oxygen in the combustion chamber by injecting some exhaust gas. That exhaust gas means you then get a cooler burn and less NOx produced. The problem is that, at low temperatures, that gas will contain ice particles that could damage the engine; they could certainly damage the valves that control that system, and therefore manufacturers are legally using an engine management system that turns it off at lower temperatures. What we are not sure about is to what extent those temperatures may be higher than they need to be. It would certainly prolong engine life. Ice crystals going into the engine itself would be very damaging. I have written to the Commissioner asking her to look at this. I said: “It is crucial therefore that current regulatory measures are updated quickly to ensure there is complete transparency in how these systems operate and their effect on emissions in different conditions such as temperature. The real driving emissions testing is a valuable and significant contribution to reducing emissions, but we are sure that changes to the core regulations are needed to ensure the type approval system is completely robust.” That is what we picked up in our testing. We tested the same vehicle at a low temperature and at a more ambient temperature, and the emissions were much higher at the low temperature. In the majority of cases, those emissions were higher than the 0.8 or 1.8 levels for Euro 6 and Euro 5, so we have a lot of non-compliant vehicles out there using this loophole.
Stewart Malcolm McDonald
It is well known, Minister, that the German Government and the German Chancellor are feisty advocates of Volkswagen and of the German car industry more widely. You said in answer to a question you were asked earlier that you had spoken to the German Secretary of State for Transport three times. What did you discuss?
Mr Goodwill
It was more than three times, I think. We discussed how we would, first of all, co-ordinate the testing that is being carried on, on a sort of “If you show us yours, we’ll show you ours” basis. We were able, with a very limited number of people in the Department and in the German federal transport department, to look at the results we got. We were encouraged by the level of agreement.
Stewart Malcolm McDonald
Were you leaned on at any point?
Mr Goodwill
No, definitely not. They are as keen to find out what is going on as we are. Yes, the German motor manufacturing industry is very important to Germany, but the British manufacturing industry is important to this country, as are air quality and public health. We need to ensure that we can fix this problem and work with the industry to ensure that they can help. Obviously Volkswagen is a German company. They do not produce diesel cars in the UK; they produce petrol cars, of course. Indeed, if you buy a Ford Focus diesel, yes, it will be produced in their plant in Cologne, but it will have a British engine. There are a lot of British engines going into cars in Germany and vice versa, as we discovered when there were problems across the channel last summer when plants in both countries were at risk of closing because of that—
Stewart Malcolm McDonald
You said in answer to a question you were asked earlier that your primary objective was to get the vehicles fixed. While I do not think anyone in this room would not want you to pursue that objective, are you not just kicking the consumer issue into the long grass and passing the ball to the Serious Fraud Office and the Competition and Markets Authority? Having been in correspondence with both of them, I have to say that they both seem totally uninterested in getting to the bottom of this. At what point do you step in and say, “Bang heads together; get this sorted. I want to know if we can take these people to court and I want a judge to make a decision on this”? When are you going to do that?
Mr Goodwill
You should think carefully about who the injured parties in this matter are. To some extent, you could argue that people who bought a Volkswagen car in good faith are an injured party. It may be that their car has depreciated. It may be that they are very keen on having as green a car as possible. Of course, my concern primarily is for the injured parties who are the rest of us, breathing the air from those vehicles. That is why we need to get those cars fixed as much as possible.
Stewart Malcolm McDonald
It is also why you have to take Volkswagen to task though, isn’t it, so that this sort of thing does not happen again? At the minute, it seems that we are taking a very soft line in comparison with other countries around the world. When are you going to knock heads together?
Mr Goodwill
In terms of the United States, the problem that Volkswagen have is with their regulation.
Stewart Malcolm McDonald
We have just discussed all of that.
Mr Goodwill
For diesels and petrols, they are saying that their cars cannot comply in the United States; there is not a fix there to put them right.
Stewart Malcolm McDonald
How many conversations have you had with the Serious Fraud Office and the Competition and Markets Authority?
Mr Goodwill
I have not spoken to them—
Stewart Malcolm McDonald
You have spoken to the German Government but not to our own agencies here in the United Kingdom.
Mr Goodwill
I have spoken to the Dutch Government as well. I have tried to speak—
Stewart Malcolm McDonald
But not our own agencies here in the United Kingdom.
Mr Goodwill
I have tried to speak to the French Government but they are less forthcoming. There is a lot of testing going on around Europe, but, as I say, my primary aim is to get those cars fixed and then to move forward.
Stewart Malcolm McDonald
You have not spoken to the two agencies here in the United Kingdom that you claim have responsibility for investigating this to determine whether or not it should go to court.
Mr Goodwill
No, I have not, and I do not think it is my role to speak to them at this stage in the situation.
Stewart Malcolm McDonald
Has any Transport, DFT official or Minister had any discussions?
Mr Goodwill
Not that I am aware of. I have of course spoken to the Commission at length. Indeed, in April last year, before this situation became apparent, we were already working very hard to get these real-world testing systems in place. We have an agreement on that. The way to prevent this happening again is to ensure that we have a robust testing system in real-world conditions, which will not then allow the manufacturers to revise for the exam, in effect.
Stewart Malcolm McDonald
I agree.
Chair
Do you agree with the Commissioner that Volkswagen purchasers should be compensated here? You have spoken to the Commissioner about other things, but do you agree on that?
Mr Goodwill
I have not spoken to the Commissioner about compensation. I have spoken to the Commissioner about how we get real-world testing.
Chair
But do you agree with the Commissioner’s views on compensation?
Mr Goodwill
I think Mr Yarnold wants to comment.
Chair
I am asking you as Minister. Do you agree with the Commissioner’s views on the need for compensation?
Mr Goodwill
I think compensation is a matter for the courts. In my view, as I have said already, there are a number of injured parties. Arguably—it would be for the courts to decide—my concern is for the injured parties who are the people breathing in the atmosphere.
Chair
But is it exclusively for that? Do you not see your role as being in any way whatsoever involved with questions of compensation?
Mr Goodwill
As the Transport Minister involved with these regulations and rules and the work with the motor manufacturers, I do not see it as my role to take forward litigation against a number of manufacturers.
Chair
Or expressing a view on the subject.
Mr Goodwill
We have had a number of cases in this country where vehicles have been defective, sometimes in a way that was dangerous, and the manufacturers have had compulsory recalls to put those right. We now have a voluntary recall on Volkswagen Group cars and I believe it is important that we get those fixed as quickly as possible. Then we need to think how we can actually get to—
Chair
We accept that. I am just asking you this: are you saying that you do not see it as your role to make comments about compensation?
Mr Goodwill
Compensation would be a matter for the courts to decide.
Chair
But you do not think you should express any view about the desirability of compensation.
Mr Goodwill
I am not a lawyer so I am not able to comment in any detail, but you would have to demonstrate material loss before compensation could be claimed. That may be for a number of issues, including depreciation in the value of the car. It could be for the time that you do not have the car when it is going into the garage to be done. A lot of the debate is about brand management, and certainly Volkswagen Group are very keen to ensure that their brand continues to be one that people can trust. They are going to have a lot of work to do to get that trust back. Some of that may involve interaction with their customers.
Chair
That is the case, but there are other things. I’ll come back to that later.
Robert Flello
The DFT is being phenomenally complacent about this. It is a bit like saying we will have the Met Police stopping any HGV that comes into London and checking it over, but we will not enforce any penalties against them if they have done anything wrong. If you have enforcement and you have the rules, making sure that VW and others are complying with those rules, you then have to have the penalties. If the DFT is sitting there saying, “Well, we are more interested in getting it sorted out and fixed than in taking any sort of action,” that is frighteningly complacent, surely.
Mr Goodwill
I would not accept the criticism that we have been complacent. We are the first member state to publish detailed results of our testing programme. We have ensured that the problem that Volkswagen has been found guilty of is not widespread across the industry. It is only the Volkswagen Group that has been using defeat devices in that way. I believe that we acted quickly. Other member states who also have motor manufacturing have not embarked on this level of detailed testing overseen by a—
Robert Flello
The DFT has done some testing. We have heard about that ad nauseam almost. In terms of the powers that the Secretary of State for the Department has, in relation to the 2009 regulations, or in terms of talking to the Serious Fraud Office, why has the DFT singularly failed to take any of those options?
Mr Goodwill
The Serious Fraud Office is itself able to take action, as is the Competition and Markets Authority.
Robert Flello
But the DFT has not approached them to say, “Put down whatever you are looking at, at the moment; pick this up and have a look at it.” The DFT has just washed its hands of it; it is not interested.
Ian Yarnold
Mr McDonald asked this earlier. When you asked your question you used the word “officials” among who was contacted. The Department’s lawyers and my experts, the engineers, have provided information to the CMA, so we have had conversations with them, but obviously it is for them to decide how they take the issue forward.
Stewart Malcolm McDonald
Was that a ministerial instruction? It does not sound to me as though it was.
Ian Yarnold
Everything we do is under the guidance of Ministers.
Chair
We heard from the previous panel that the Department needed to make more information available to assist a possible action against Volkswagen. Would the Department be willing to put whatever information was required in the public realm to enable that to take place?
Mr Goodwill
We published our information on Thursday. The detailed tabular information will be made available in due course, but we have made it available in such a way that members of the public and politicians in Committees like this can easily understand what has been happening. We are in a much better position now to know what has been going on than we were a week ago.
Chair
When is due course? You said you would be making things available in due course.
Mr Goodwill
As I say, we are providing information to the CMA.
Ian Yarnold
In terms of making the information available, this would be the underpinning information for the test report. We expect to do that probably during May. I cannot give you a precise date because of all the various publication processes. There is no intention to hold any of the information back.
Chair
We just want an idea of the timescales.
Mr Goodwill
Until last Thursday we were not aware whether this defeat device type of strategy was being used across the industry. We have now isolated it to Volkswagen Group, but we have identified that there are other mechanisms being used that are temperature dependent, which means that a number of vehicles on the roads are not performing anything like as well as we expected they would or should perform. We expected some discrepancy between the lab, which is very artificial, and the road, but it is far worse than that. I am very disappointed indeed that these vehicles are not performing as they should, and I am determined to make sure that they carry out the fixes as quickly as possible. The Secretary of State has written to some of the major manufacturers about this to see if they can look at how those vehicles can be modified. They are not breaking any rules, but they need to bring them up to scratch. We will move forward with our real-world testing, coming in next year for new models and in 2019 for all vehicles, which will ensure that we are testing cars in the sorts of situations, environments and driving conditions where consumers would use those cars. There will be no further opportunities for use of the artificial test to skew the figures.
Robert Flello
Minister, consumers listening to this will be incredibly confused as to what the situation is. On the one hand VW are saying that, yes, they have used defeat software but they would still have passed the tests. The DFT is saying that it has not actually checked to see if that is true or not, but has just taken their word that they would have passed anyway because real-world testing shows something else. A consumer is thinking, “Hang on, is this car compliant or not? Would it meet the emissions test or not?” They think that perhaps these VW cars have passed the emissions test, yet now some of them are having to have something inserted in the airflow as a fix. That suggests that they cannot have been fine to start with, because if you were a manufacturer you would simply say, “They passed the test anyway and that’s the end of it.” What is going on? How can consumers have any sort of confidence?
Mr Goodwill
You talk about passing the emissions test. It is passing the test cycle in the lab, which is an entirely synthesised situation.
Robert Flello
Indeed, but to pass that some of the cars have to have something in the airflow.
Mr Goodwill
Obviously all the vehicles on the road have had to pass that test. The problem is how they are performing in real-world driving conditions and why that is not as good as we expect.
Robert Flello
The problem is whether, if they had got rid of the defeat software, those cars would pass the test. It sounds like they would not.
Mr Goodwill
You would assume, yes, that they would pass the test.
Robert Flello
Then why are you requiring VW not only to remove the software but to put some sort of sensor or device in the airflow?
Mr Goodwill
The vehicles passed the test because they recognised they were being tested. If the test cycle is the same, it would make no difference at all whether it was a vehicle that had been modified. There may be a slightly different fuel consumption on them.
Robert Flello
You can see why the consumer would be very confused.
Chair
Could you give us an answer as briefly as possible, please, because we want to move on to other questions?
Ian Yarnold
I will try, Chair. My understanding is that VW in its evidence to this Committee questioned the legality of it. I think it said that it believes its system is legal.
Robert Flello
Is legal?
Ian Yarnold
The device; it is compliant. That is the issue about whether it complies or not. Your point is that, if it complies in terms of the emissions values when the device operates, why are we bothering to recall all those vehicles? On the basis that VW has voluntarily said it is going to do all this, my assumption is—
Robert Flello
But the Minister has told the Committee he is putting all his energies into making sure—
Ian Yarnold
I am just trying to answer your question, which is that the vehicle does not comply when it does not have the device operating. You asked me earlier, Chair, whether I had that information, and I do not.
Chair
You are saying that is the answer. I am going to move on now.
Robert Flello
VW has obviously misled us.
Iain Stewart
Minister, you have said on a number of occasions that your priority is to get the Volkswagen vehicles fixed. What assessment have you made of Volkswagen’s programme, which commenced a couple of months ago, for calling the cars in to be fixed? Are they on schedule?
Mr Goodwill
They have not fixed any cars yet, I am disappointed to announce. They will need to have their fix approved by us before they do it, to ensure that it fixes the problem. They have already contacted the owners of the cars to let them know that they will be called in. As I say, it will be a fairly straightforward job to re-programme the software. The challenge for us is to ensure that people take their cars in. The cars are still perfectly operable. People will not notice when they drive them around that they are not performing as they should in terms of NOx emissions. We are looking at ways of encouraging people to bring them in. One of them may be using the opportunity of the MOT test, which of course does not happen until a vehicle is three years old, to give them a reminder at that point. We do not have legislation in place to fail a test if the fix has not been done, but we can use that opportunity to put an advisory on their MOT certificate saying, “This vehicle has not yet had its fix.” Of course, a lot of the vehicles will be done in due course as they go to the dealer for service. They will have the fix done while they are there. Generally with other recalls we have had a high level of uptake, but we need to make sure that the people who do not see it as a priority can be encouraged to do that. If other ways become apparent that we can also help that to happen, we would be happy to look at those.
Iain Stewart
There is no compulsion to have this fix done.
Mr Goodwill
There is no compulsion. It is not a safety-related recall. There is no compulsion and there is no legislation in place for us to compel people to do this, but, as I said, the evidence from previous recalls has been that there were high levels of uptake. We are looking at ways of getting the reluctant few, who may not comply, to do that, possibly through using the opportunity of the first MOT to remind them. If they are taking their cars into their main dealer’s garage, they will do it as part of the service anyway.
Iain Stewart
You say there is a very high take-up. Roughly what percentage will have this done, do you think?
Mr Goodwill
We normally get 80% take-up on other types of recall, but we want to ensure that as many as possible of these vehicles are done.
Iain Stewart
Potentially up to a fifth of the vehicles affected will never be fixed.
Mr Goodwill
Yes. If we have records of which vehicles have been fixed and which have not, we could use change of ownership as an opportunity to write to the new owners and say, “By the way, your car has not been done yet, so please get it done.” We are looking at that. It may be that somebody is planning to sell their car anyway, so they do not see it as a priority, but I suspect that the new owner would want to get the car fixed. I am confident that people will. I have spoken to a number of Volkswagen and Skoda owners, who have been very keen to get those cars sorted out as quickly as possible.
Mark Menzies
Throughout this, Minister, has Volkswagen furnished you, the Department and your officials with all the information you have requested?
Mr Goodwill
Yes.
Mark Menzies
Now that we have established that NOx emissions are 12 times higher—
Mr Goodwill
In some cases.
Mark Menzies
In some cases 12 times higher than Volkswagen themselves were putting out there in terms of official data—
Mr Goodwill
That 12 times higher refers to a number of things. It has to be said, if you look at our data, that Volkswagen Group are not the worst offenders in terms of NOx emissions. Although what they are doing is not within the rules, in some of the legal engine management systems, including the exhaust gas recirculation being turned down at low temperatures, Volkswagen are not the worst offenders in relation to a number of the vehicles that have been tested, when you look at the raw data. We only had a small number; we tested 47 vehicles at different temperatures. We were not aware at the beginning that temperature would have such a dramatic effect. Now we are in a position to carry forward additional testing to try to refine things a bit further.
Mark Menzies
That is interesting. We may return to some of those other people in a second, Minister. We have now established that we are looking at NOx emissions 12 times higher than in the official data in some cases.
Mr Goodwill
Than the standard. They have had to meet the standard in the lab.
Mark Menzies
What impact do you believe this has had on public health?
Mr Goodwill
I think it has had a bad effect on public health. We need to reduce the levels of a number of pollutants, including NOx. Over the last 20 or 30 years, we have seen dramatic reductions in NOx emissions, probably 70% reductions. We were slightly perturbed as to why this was not coming down quicker. You may be aware that there are a number of areas of particular interest in air quality not far from one of our major airports. We were wondering why the air quality had not improved more. We put it down to the fact that people were not buying new cars because of the recession. We put it down to driving behaviour and a number of other issues. We are now in a good position to know that it is because a number of diesel vehicles are not complying with the sort of levels we had expected. Therefore, it is very important that we use the new testing regime on the road, and any new regulation that we can bring forward, to ensure better levels of compliance to bear down on air quality. Overall, there is a very good story to tell. Sulphur emissions have come down by 95%. Particulates are down dramatically. There is no lead in petrol any more. I do not think people out there should think that the air is dirtier than it ever was, because in most cases it is dramatically cleaner, but in the case of NOx the improvement has not been as good as we forecast. We now know the reason why: vehicles in the real world are not performing anything like as well as they do in the lab. We expected them to be slightly less effective in the real world, but the factors of non-compliance that we have seen are very high. They are complying with the regulations, but the levels of emissions in the field are much greater.
Mark Menzies
That is right, and they do not comply because there has been a deliberate attempt by Volkswagen to deceive you, the Department for Transport, this Committee and the people of this country. There has been a deliberate attempt to deceive.
Mr Goodwill
Yes.
Mark Menzies
They have fitted defeat devices.
Mr Goodwill
Yes.
Mark Menzies
When the representative from Volkswagen UK came before this Committee the first time, he was led very much by PR people, so we had all the mea culpa and how sorry he was. The second time it was led by lawyers and it was, “We have done nothing wrong.” Yet we know that they have done something wrong. We know they set out to deceive. We also are at a point where the Serious Fraud Office is looking at them and the Competition and Markets Authority is looking at them. We see compensation being offered across the globe, but we somehow think it is acceptable to sit back and allow a company that deceives this Committee and the people of this country to continue to get away with their deception. We know that under the 2009 Act the Government have the ability to prosecute. Can I follow up from where Mr Merriman left off and ask: do you not think that Her Majesty’s Government have a duty to stand up for the people of this country and actually bring a prosecution? Let’s test it in the courts; let Volkswagen stand before a court in this land and justify what they have done to the people of this country.
Mr Goodwill
There are a number of legal avenues open to the Government through the Competition and Markets Authority, the Serious Fraud Office and the legislation that you mentioned. Certainly all these are under consideration.
Mark Menzies
Minister, it has to be more than under consideration. The people of this country will not accept a situation where they look across the globe and see Volkswagen being held to account, when they know that there are powers open to Her Majesty’s Government to bring Volkswagen in this country to account and we let them get away scot-free. It looks as though we do not take it seriously, and we do not value the people of Britain, or it is all too much trouble. I know you are an absolutely outstanding Minister. You work incredibly hard. Can I put one more thing on your “to do” list, and that is to make sure that Volkswagen are held to account? It cannot be acceptable that a representative from Volkswagen can come before this Committee and on both occasions completely change their whole view as to what Volkswagen has done. We are not interested in a puff piece. We are interested in action. Minister, I call on you to ensure that action is exactly what happens.
Chair
You have given us the impression, Minister, when other members asked a similar question, that you do not see it as your role to become involved in this. Do we have a wrong impression?
Mr Goodwill
The detailed data that we now have only became available on Thursday. We only saw the detailed German data on Friday. It is now Monday. In terms of legal processes, we need a little bit more time to see what is happening on the data. There would need to be proof of an intent to defraud in order to bring action forward. Certainly my officials who are doing this work, both in the VCA and within the Department, are very keen to provide whatever information might be needed to bring action.
Chair
Does this mean that the work is ongoing and you are not ruling out becoming involved in encouraging an action to compensate consumers who have been, at least, misled?
Mr Goodwill
As I say, in my view the injured parties in this are the people in this country who breathe air. I am on my bicycle—
Chair
Mr Menzies’s question was how you see your role as Minister in relation to this.
Mr Goodwill
To make sure that the information we have gathered is available to those who would look at the legal context and see what action can be taken.
Chair
You would make all necessary information available.
Mr Goodwill
It may also be that the Commission themselves, who are the guardians of the treaties and who are charged with making sure that EU legislation is complied with, will wish to take action, because these cars are being sold not just in the UK or Germany but across the European Union.
Chair
The Commissioner has already called for compensation. Do you agree with that statement?
Mr Goodwill
If the Commission has called for that, it is important that it looks at what sort of compensation might be payable.
Chair
But you have more powers as Minister than the Commissioner does in this regard.
Mr Goodwill
I am not legally qualified. However, in order to get compensation in a court of law you need to demonstrate material loss. It may be that, because the value of these vehicles has depreciated more than otherwise, there is a material loss. It may be that the inconvenience of having to take your car to the garage and losing the use of it for a day is a loss, although if you are provided with a courtesy vehicle it may not be such a loss. In order to get compensation, one has to demonstrate loss. That might be something that the individual user of a car takes legal advice on.
Chair
That is correct, Minister, but the question is how you see your role as Minister in relation to assisting people who may wish to pursue such a claim. Have you said that you will make all relevant information available?
Mr Goodwill
Yes. We are publishing all the information we have, which people may use.
Chair
That is a start.
Mr Goodwill
It may also be in some cases that the vehicles operating without the NOx mitigation systems operating are getting better fuel consumption than they would with the systems operating. In that case, people may actually be better off in pure monetary terms because they get more miles to the gallon than they would otherwise. That is something else that would be very interesting to investigate. By and large, certainly when you talk to the heavy goods vehicle manufacturers about the systems they have—particularly the selective catalytic reduction systems—there is a hit on fuel consumption. Indeed, when those systems first came in, a number of truck operators were getting their vehicles re-chipped to turn off the system so that they could get better fuel consumption. In terms of the loss, it may well be that a number of those vehicles have been operating without their exhaust systems and catalytic systems working and are getting better fuel consumption and therefore they have not had a loss. In fact, they might be slightly in pocket in terms of fuel consumption.
Chair
But the question is how you see your role as Minister in assisting a potential compensation claim.
Mr Goodwill
My role is to provide all the information we have. We are going to continue with further testing. I have asked my officials to look at the German data to see if we can format it in a more easily understandable way. I am very pleased that the report we have produced is very easy to understand and makes clear what has been going on. Some of the other data I have seen—
Chair
What further testing?
Mr Goodwill
We have further budgets to test further cars. We have spent about £1 million so far, which is more than we expected. We have had to retest some vehicles, and we intend to carry on with that, with a similar additional amount of money.
Chair
You are going to continue testing.
Mr Goodwill
We are going to continue testing. We were completely in the dark, as I say, until this came out, mainly because the equipment was not available to stick in the boot of a car driving on the road as it was with trucks.
Chair
But you are doing more testing and you will make the information available.
Mr Goodwill
We are doing more testing.
Ian Yarnold
The programme will be a market surveillance programme. We will be looking not just at vehicles from the market but new vehicles before they come in. We will also be looking at components. We will be implementing a broader programme.
Chair
You are expanding the testing that the Department already does.
Ian Yarnold
We are taking a slightly broader approach. We are not necessarily going to carry on doing exactly what we have done in this programme. We will be looking at a broader range of issues, but continuing a market surveillance programme.
Mr Goodwill
There is a whole area of durability testing. When vehicles come off the production line they are brand-new and everything works. How will those vehicles continue to perform on the roads of our country when they have done 30,000 miles, 60,000 miles or 100,000 miles? The current regulations ensure that the vehicles will continue for about 100,000 miles.
Chair
There will be some further questions on that specific point.
Graham Stringer
What estimates have you made of the number of people who have died because these defeat devices were put in?
Mr Goodwill
I have seen figures with regard to the total number of people whose lives have been shortened by poor air quality. It would be difficult to come to any figure that you could scientifically be sure about as to the number of additional deaths, but there is no doubt—
Graham Stringer
Have you taken statistical advice on that?
Mr Goodwill
I have not taken statistical advice, no.
Graham Stringer
So you do not know, Minister.
Mr Goodwill
What I can say is that because air quality—
Graham Stringer
No; answer that question. I am asking if you have taken statistical advice. You are a farmer and not a statistician, so you actually do not know the answer to that question.
Mr Goodwill
We got information last Thursday that indicated that a number of vehicles are not performing as well in practice.
Graham Stringer
That is not the question. I said the number of people who have died because these defeat devices were there. I would think that, if you were serious about representing the people who have had to breathe this filthy air, you would want to find out that figure, to take some kind of legal action. You are telling us that you have not even taken statistical advice to try to find out if you could ascertain that figure. Is that correct?
Mr Goodwill
What we can say with a degree of certainty—
Graham Stringer
Is that correct?
Mr Goodwill
It is correct that we have made no calculation of the—
Graham Stringer
But you have not even tried to make the calculation. You have not asked for those figures.
Mr Goodwill
We were only in a position last Thursday to understand exactly what the level of emissions was from those cars. We know the ambient levels of NOx in the atmosphere. We know there are a number of areas in the country where we have hotspots for high levels of pollution, particularly in the—
Graham Stringer
That is not relevant to the question.
Mr Goodwill
The calculations have been done with a degree of certainty as to what the effects on human health are in areas where we have high levels of NOx—
Graham Stringer
That was not the question I was asking, and I suspect you know it, Minister.
Mr Goodwill
The figures that I have seen published are in connection with the levels of NOx pollution we have here at the moment. We can say with a degree of certainty that, if the cars had been cleaner, that figure would have been lower. There is no doubt about that.
Graham Stringer
That is not an answer to the question I was asking. The Secretary of State, when he came to this Committee previously, said, “Let me just say that I think they have behaved in an appalling way. These devices were made illegal in 1998. It is fairly unbelievable to think that a company of the size and reputation of VW have been doing something like this and finding ways around regulations. I think they are going to suffer very substantial damage as a result, and they deserve to, quite honestly.” What has changed since the Secretary of State made that statement?
Mr Goodwill
Nothing has changed in terms of what the Secretary of State said. What we—
Graham Stringer
You are following a ministerial line. You have said that you are not prepared to say that what Volkswagen has done is illegal or not. You have said it a number of times to both Mr Menzies and Mr McDonald. The Secretary of State was unambiguous that what they have done is illegal. What has changed in the departmental policy?
Mr Goodwill
Nothing has changed at all.
Graham Stringer
You accept that these devices are illegal.
Mr Goodwill
They are outside the regulations and therefore by definition—
Graham Stringer
That is not what the Secretary of State said.
Mr Goodwill
He said they are illegal.
Graham Stringer
They were made illegal in 1998.
Mr Goodwill
Yes. They are not in compliance with that particular regulation, so by inference you could use the word “illegal”, but it would be for the courts, I think, to determine whether or not that was an illegal use of a defeat device. We have demonstrated through our testing that these defeat devices have been used by Volkswagen. It was very simple to demonstrate. We just did the test the other way round and the vehicles behaved in a completely different way.
Chair
But going back to Mr Stringer’s question, are you saying that being outside the regulation does not make something illegal?
Mr Goodwill
As I say, it would be for a court to determine whether they viewed that as being illegal or not.
Chair
What is the standing of a regulation in terms of—
Mr Goodwill
Our view is that they are breaking the regulations, but those of us who have experience of protracted court cases will know that lots of arguments are deployed by lawyers, so to tell you whether that is illegal it would need to come before the courts, and it may well be the European Commission that takes that action. It is their regulation they have been breaking.
Graham Stringer
It seems to me—I would like you to comment on this point—that you are more concerned with protecting the reputation of Volkswagen into the future than you are about punishing Volkswagen that has poisoned the people of this country.
Mr Goodwill
My primary consideration is to make sure that these cars, many of which are out there on the roads of our country and may well continue to be there for a number of years, are fixed. Volkswagen has made it clear that there is a fix available. Indeed, we have demonstrated through our testing that the cars can perform very well when the system is turned on. When the defeat device turns the system off, they do not perform as well. Our priority is to ensure that these vehicles get fixed as quickly as possible so that the emissions they are producing are no longer produced, and indeed, moving forward, that new vehicles, when they are type approved, go through a test that is more relevant to normal driving conditions. Therefore, these arguments about defeat devices could not be deployed, because the vehicles will not be able to recognise that they are on test. We need to move forward further to ensure that some of the other systems that are being turned off for reasons of engine protection can be fully operable. It may well be in many cases that some of the manufacturers will need to use new technology, such as the systems used on heavy trucks; they use AdBlue, where ammonia is used as a reagent to reduce the gases, the oxalate and nitrogen, to enable them to be cleaner. This will be a good initiative for the industry to take, to deploy new technology in their vehicles to make them cleaner still. Instead of trying to pass the test, which is an artificial test, they will need to perform on real roads.
Graham Stringer
Can you tell me why you did not answer the question as to whether or not you were protecting the reputation of Volkswagen as opposed to punishing Volkswagen for poisoning the people of this country?
Mr Goodwill
I have no remit for any of the motor manufacturers in Germany or in the UK. My remit is to ensure that we get clean cars on our roads, which means we get better health for our people. Indeed, it may well be, as we have seen in other situations, that bringing forward the tightest regulation means that the manufacturers who have the highest levels of research and development and can produce to those regulations are the successful manufacturers. It is a great opportunity for British business to get ahead of the curve and make sure that their cars are in the absolute forefront of clean vehicle technology.
Chair
Doesn’t the Department have the power to bring a case if it wanted to?
Ian Yarnold
As Mr Merriman said earlier, the Road Vehicles (Approval) Regulations 2009 set out the requirements and penalties in certain circumstances, as you described.
Graham Stringer
I have to say, just before I ask my final question, that the very expensive lawyers who were sat behind the witnesses from Volkswagen will be popping very expensive bottles of champagne tonight after this performance, Minister. A final question I would like to ask is this. Isn’t part of the problem, beyond defeat devices, of why there is now so much NOx in our atmosphere the priority that was given, under a Labour Government as it happens, to focus on carbon dioxide and not NOx? Would it not have been better to focus on NOx emissions, which are much more poisonous gases, whereas carbon dioxide is plant food?
Mr Goodwill
I think the champagne order at Volkswagen Group was probably cancelled some time ago; they are in a very bad place in a number of countries around the world.
Graham Stringer
But not in this country, Minister—they’re laughing.
Mr Goodwill
The fact that our research, which we published on Thursday, demonstrated that only Volkswagen Group was using a defeat device of this kind is no cause for any celebration by Volkswagen. They are not in compliance with the regulation. They were the only company that we found to be using this type of defeat system, and therefore in my view they are in a very bad place.
Mark Menzies
So prosecute them.
Robert Flello
But they are not being held accountable, are they?
Chair
One at a time.
Mr Goodwill
As I say, we have had four days since we have seen the results.
Graham Stringer
Can you answer the last question, please?
Mr Goodwill
Mr Stringer, you are absolutely right: we set very tough CO2 targets in terms of reducing greenhouse gases and combating global warming. Indeed, as you say, one of the strategies to combat this was the switch to diesel. It was as a result of the 2001 pre-election budget when low-sulphur diesel was reduced by 3p a litre and there was a tremendous incentive to get more people to use diesel cars. Indeed your own colleague, the Member for Brent North, Barry Gardiner, said there was “no question that the decision we took was the wrong decision.” Let us not forget that, in parallel with the increasing use of diesel vehicles, at European level we introduced tougher and tougher standards on NOx emissions; Euro 5 was 1.8 mg per kilometre and Euro 6 was 0.8 mg per kilometre. If those tough levels had been complied with, we would have seen reductions in NOx at the same time as we saw reductions in CO2. The surprise was, looking at ambient levels of NOx in our cities, why it has not come down quicker. We now know the reason. While the cars were performing on the test in the lab, they were not performing on the roads for a number of reasons, including the reason that Volkswagen is now charged with. We need to ensure that with real-world testing, which we have agreed and which will be coming in next year, we will not be in that situation any more. When the vehicles are tested, they will be tested in the same sort of situation as in normal use. The industry must respond to that. It is a challenge to them. They must respond to it, otherwise they will not be able to sell diesel vehicles.
Chair
How much is the Department spending on emissions testing?
Mr Goodwill
We spent £1 million on this particular programme. As I say, we have another £1 million in the pipeline for further such testing. A lot of the testing that is carried out in terms of type approval is financed by the industry through VCA.
Chair
What percentage is financed by the industry?
Mr Goodwill
The industry finances the type approval testing. We deliberately took the decision not to involve the industry in this. We did not ask them to provide vehicles. We selected them from some Government fleets. We ensured that they were not part of the testing process, because we wanted to make absolutely sure that they could not bring influence to bear on the choice of the vehicles.
Chair
Don’t you think that there is too close a connection between the vehicle industry and testing?
Mr Goodwill
I have been hearing some criticisms of the VCA in terms of its being too close to the industry because the industry is paying for the testing. Indeed Mr Higgs might want to say a word after this. I have to say that I think you are barking up the wrong tree. I think that would be to underestimate the professionalism of VCA and its opposite numbers in other countries that also carry out testing. When you take your own car for the MOT, you pay the garage to do the test. Nobody is suggesting that the garage will pass your car when it should have failed because you paid them. Nobody is suggesting that, when you pay to take your A-levels, the examination board will pass you because you have paid for the test. It is absolutely right that we expect the industry to pay for the testing of its vehicles. It is also absolutely right that we have the independence of the VCA to make sure that those tests are done properly.
Chair
But isn’t it the case that the VCA is in fact conducting testing as well as assessing the results of it? It is looking at certification but it is also testing. We are told that there is some kind of wall between the two, but surely it is much too close: two things in one agency.
Paul Higgs
I would suggest that as a type approval authority we are obliged to issue a valid type approval certificate when presented with evidence that a vehicle, system or component has met the regulatory standard. In the VCA’s case, as with one other authority in Europe, we actually conduct and manage the testing as well. I do not see that that is necessarily a conflict of interest, or too close to industry.
Chair
Not necessarily, but it could be seen as a conflict, couldn’t it?
Paul Higgs
In a scenario where a third party presents us with evidence to suggest that a vehicle has passed a test but we have not had any kind of direct viewing of that vehicle, I do not know how that is going to prove the case.
Huw Merriman
Following on from that, the perception could be that doing the test and also marking it is every student’s dream. You have to have very strict firewalls in place, particularly because the amount of money that the VCA gets from the industry has increased. What firewalls do you have to make sure that no conflicts can occur?
Paul Higgs
In VCA, the testing is undertaken by qualified type approval engineers. They undertake the managing and the witnessing of the tests. They use test reports that are designed and developed with the TSG team within the VCA, who are separate. The team that actually checks and monitors the test reports that come in is separate from the test engineers. They ultimately issue the approvals based on the information presented—evidence presented that a vehicle has passed and met the regulatory requirements. The other consideration is that VCA are not “No pass, no fee.” You get charged whether the test is passed or otherwise. We are a not-for-profit organisation; we are part of the Department for Transport. We are subject to third-party reviews from external sources.
Huw Merriman
But given the heightened sense of anxiety that this issue has caused for the market, do you not believe, notwithstanding the firewalls are in place, that perception is more important than reality and you should be focusing on one part and not the other?
Paul Higgs
I do not see that, no.
Chair
It is true, isn’t it, that you are competing against other vehicle certification approval authorities. You are in a competitive situation trying to attract more business from manufacturers. Surely that gives you at least an incentive to be favourable to manufacturers.
Paul Higgs
We do not necessarily compete like that. As the approval authority—
Chair
But you are, aren’t you? You say “not necessarily” but you are; you are in that situation.
Paul Higgs
Manufacturers are free to go to any type approval authority in Europe.
Chair
That is exactly the point I am putting to you. You want to attract their business, so aren’t they likely to seek out the most favourable authorities for them?
Paul Higgs
I do not see that that would be the case; otherwise we would have all the business.
Chair
It might not work out quite like that, but you are in a competitive situation.
Paul Higgs
We are regarded within the industry as being quite robust, generally speaking.
Chair
But you can see why these question marks are over the current situation, can’t you?
Paul Higgs
In which case, would you look at the German model or the Dutch VCA model?
Chair
That is for another question: what else might substitute for what there is now, or what changes might be made. I am saying to you, and I think really you are confirming it, that there is a potential conflict of interest, isn’t there?
Paul Higgs
No, I do not see that.
Chair
You are testing and you want to attract manufacturers to give you their business. You are then certifying what is right.
Paul Higgs
We are not after their business. They come to the VCA because normally within Europe it usually comes down to a question of logistics. Manufacturers in the UK will tend to use the type approval authority and/or technical services in the UK. The type approval activity and the witnessing that we do tend to be fairly short pieces of activity within the overall vehicle homologation cycle. If, for example, we operated out of Japan, we could fly engineers out to do the small pieces of test management and witnessing of tests, but we would spend more time in the air than actually checking the vehicles. Hence if we are local, we can manage it that much easier. We can support UK manufacturers in the UK readily, because we are based in the UK.
Chair
The European Commission thinks there is a problem, doesn’t it? That is why it is proposing changes.
Paul Higgs
We have seen some of the proposals that have been put in place, but they have not actually put in place much detail around what those proposals are going to look like.
Chair
Do you think they are right to be looking at this area?
Paul Higgs
I think we would be very open to looking at a more robust process, more challenge and more audit critique, yes.
Mr Goodwill
It is important to recognise that it is only the UK and the Netherlands that have a Government agency that oversees these tests. In other parts of Europe it is more commercial. Looking at our results in terms of the temperature dependency of some of these cars, we need to be very careful that people don’t just take their cars to Spain to get tested in the summer. We need to look at how we can ensure that the temperature variations we have seen do not result in people playing the system and going to a country where it is hot to test their cars. We are just becoming aware that this is something where we need to work with the Commission, to ensure that vehicles are tested in a place that is robust. I am confident in the professionalism and integrity of the VCA in carrying out this testing. I think we have one of the best regimes in the European Union.
Mark Menzies
Clearly, from listening to the Minister, and from previous discussions, I know he has ensured that the Department has done a lot of work to investigate the level of Volkswagen’s deception. How much money has that cost the UK taxpayer in terms of all these reports, investigations, testing and so on? Ballpark, how much?
Mr Goodwill
We have spent about £1 million on the most recent level of testing. We are looking at just a bit more than £1 million to go.
Ian Yarnold
The work that comprised this report is just on £1 million for all the testing and the independent validation. The work you just described is the market surveillance programme for the coming year.
Mark Menzies
The total cost of this to the taxpayers of the UK will be roughly £2 million.
Ian Yarnold
I could not say.
Mr Goodwill
Ballpark, yes.
Mark Menzies
Ballpark, £2 million. Well, I have good news for you, Minister. When Mr Willis first came before us I asked about this: if there was any loss to UK taxpayers as a result of the actions of Volkswagen, would Volkswagen UK compensate UK taxpayers? It is on the record. It was an unequivocal yes. Can I suggest that the UK Government approach Volkswagen UK and ask them to write a cheque for £2 million? Anything other than a yes, people out there will not understand. An offer has been made by Volkswagen. A commitment has been made to ensure that UK taxpayers are not out of pocket. We have to get that money back off them, because that is £2 million we cannot spend on nurses, doctors and schools.
Mr Goodwill
Four of the 37 cars we tested were Volkswagen Group cars. The remainder were cars from other manufacturers, so I can exactly understand the point you make. I have heard what you said and I will look forward to a cheque arriving from Volkswagen for at least the proportion of the testing that was their cars, but maybe they would like to contribute a bit more.
Mark Menzies
I am sure the media organisations out there, Minister, will be ensuring that Volkswagen is held to account on this and pays the UK taxpayer. This is one that is not going to go away. If Volkswagen are nice people, they could start tonight by compensating UK taxpayers and getting that cheque in the post.
Mr Goodwill
I have been very disappointed by the way that Volkswagen has communicated with people. I remember at your first Committee hearing they sent somebody who didn’t know much. I understand more about vehicle management technology and exhaust systems than the guy they sent. They have not been prepared to be up front. We have now, through the testing we have done, shown what is going on. Now is the time for them to be much more proactive, ensure that we understand exactly what has been going on and fix the problem. I know members of the Committee are very keen that the Government, car owners or people in general are compensated, but my primary objective, as I have said more than once, is to get this problem fixed. It is not only Volkswagen cars but, looking into the future, the other cars that are using other engine management systems to not perform as well on the roads of our country as they do in the lab.
Mark Menzies
To be really clear, and so that we are in absolutely no doubt, you as a Minister and the Department for Transport will take up Mr Willis’s very generous offer when he first came before us, and ensure that the UK taxpayer is not out a tuppenny-ha’penny and that this is going to be pursued.
Mr Goodwill
I will send him a transcript of this conversation and see what his reaction is.
Mark Menzies
I am sure that media organisations in the UK will make what they will of Mr Willis’s first offer.
Mr Goodwill
In terms of the financing of this testing programme, at the onset, for the reasons we have just described with the VCA, I made it absolutely clear that the testing should be taxpayer funded because we did not want any suggestion that the industry was involved in this. We took the vehicles at random without them knowing which they were. They had no chance to prepare them. It would have been very easy to say to the manufacturer, “Provide us with a car please, and we’ll test it.” That could have resulted in criticism that they had doctored the car.
Chair
Minister, if you consider that to be so important, and it is very important, why did the Department end the in-service surveillance programme in 2011? That was stopped, wasn’t it? That was when the Department itself did a check on manufacturers to make sure that there was a consistent standard. Why did you suddenly stop funding it?
Mr Goodwill
We have discussed that, and the reasons are that basically we were not finding out anything that surprised us.
Ian Yarnold
When we did that, we redirected the funding to new areas. The experience we had of the testing we had done from around 2006 showed that it yielded very few problems with the vehicles we were testing, because they were being tested in laboratory conditions.
Chair
Instead of doing different testing, you stopped testing.
Ian Yarnold
No. We redirected the resources to different areas of the surveillance programme. We moved to look at catalytic converters, motorcycles, and so on.
Chair
But at that stage, if you found that the testing was not producing the desired results, why didn’t you look for the possibility of deception?
Ian Yarnold
We did not have the instrumentation that is available now for us to be able to do it.
Chair
But at that stage why didn’t you think a little deeper about what might be wrong? If you were testing and it was not producing the right results, why didn’t you wonder whether there was something untoward going on?
Ian Yarnold
You are concluding that the testing we did didn’t produce the right results.
Chair
Well, that is what you have just told us.
Ian Yarnold
No. What I said was—
Chair
You told us that was why you stopped it.
Ian Yarnold
What I said was that the results did not show that there were any problems in the marketplace, or very few. I think there were one or two vehicles over quite a considerable number of tests that we completed. Therefore, the decision was taken to redirect the resources, the same amount of money, to different areas of the vehicle technology area.
Chair
But you did not discover any deception, or any problems or disparities between the lab testing and performance on the road.
Mr Goodwill
At that time, the market surveillance testing was done in the lab because the equipment was not available in a compact enough form to go into a car boot. All the testing was carried out in the lab, unlike, as I said, in heavy trucks where you could stick it on the back of a truck and they were tested. That is why we have seen very high levels of compliance. It is only since the advent of equipment that will fit in a car boot that we have been able to test vehicles on the road, which is why this problem with Volkswagen came to light. At the time that programme was discontinued we had no option to test vehicles in any other way. The level of compliance in terms of vehicles being selected at random and tested was very good. We were confident that the vehicles were performing in the lab as well as they had been when they were initially type approved.
Stewart Malcolm McDonald
Mr Higgs, the VCA’s time as tester and regulator has to be up, surely. It would be madness to continue in the way that it does at the minute, don’t you think?
Paul Higgs
No, I disagree.