The VW scandal shows the Department for Transport is just as feckless as HMRC in standing up to corporate interests
Following last year's shock revelations that Volkswagen was using defeat device software to switch engines to a cleaner mode when they were being tested, authorities in the US, Germany and South Korea started legal proceedings against Volkswagen that could cost the company billions of pounds in fines.
But as these governments step in to help consumers secure compensation, the UK Government has been sat on its hands. Following a week dominated by 'sweetheart' tax deals with tech companies like Google, the Department for Transport has proven to be as feckless as HMRC when it comes to standing up against corporate interests.
Quite simply, the UK government have allowed VW to wriggle around the rules.
Late last year, UK Government officials said if a motor manufacturer has been shown to deploy defeat devices then that is illegal. Yet Secretary of State for Transport, Patrick McLoughlin has not so far used his powers to impose fines on VW, and there is no indication that investigations against VW by the Competition and Markets Authority or Serious Fraud Office will be opened.
The longer Government inaction continues, the more people will query bodies like the Vehicle Certification Agency: an Executive Agency of the Department for Transport that made over £80 million from the auto industry for type approval in the last decade, including the £13 million in 2014/15 alone.
It’s not actually in the VCA’s interests to catch out the car-makers: their business model is to attract manufacturers to test their cars with them and generate as much income as possible, meaning that manufacturers are known to shop around Europe for the best deal possible - It’s a clear conflict of interest.
This financial interest has allowed the manufacturers leverage over a government agency that is supposed to protect the public interest. This same agency was unable to detect one of the biggest scandals the car industry has ever seen, and has gone on to affect over one million consumers in the UK alone – and the government’s lack of appetite to take on a major corporation means VW will walk away with no more than a red face.
And what of Volkswagen’s part in this scandal?
Paul Willis, VW's UK managing director, first told the Commons' Transport Select Committee he was sorry for VW’s chicanery and he would do everything he could to regain the trust of consumers. VW is now challenging the definition of a defeat device on this side of the Atlantic in order to avoid any liability on the company’s part. Meaning that US consumers will get $1000 worth of compensation and European consumers will get nothing.
Well what a difference a few weeks makes. Before Christmas, Mr Willis appeared before my committee – having been briefed by his press team - giving us the mea culpa. Fast forward to February and contrition has been replaced by legalistic evasion. As I said in front of the Transport Select Committee last week, they are reduced to dancing on the head of legal jargon as to whether or not it was a defeat device, or whether it does or does not break European laws - and our government has done nothing but call them naughty.
Volkswagen have perverted environmental regulations, they’ve treated European customers with disdain, and treated regulation as a charade. The slap on the wrist they've received from the government is risible.
The Transport Secretary now needs to up his game. New EU proposals to overhaul regulations are a welcome development, but they need to be beefed up. Astonishingly, they have not even altered the legal definition of a defeat device to make it more robust.
The UK Government must save the car industry from itself. Corporate greed and neutered regulations under the weight of excessive corporate lobbying will hamper this industry just in the same way it did to our banking sector. The industry provides too many jobs, and is too valuable to our exchequer, to pass up the opportunity to have the robust regulation that the public would expect – that is the least that we owe them.