OPEN LETTER: 1
Page 19
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An open letter to Chancellor Gordon Brown: I his letter was delivered by hand using the RHA's Tax Tanker as transportation. Our purpose is to highlight the very real damage being done to the UK hire-and-reward haulage sector by the record level of fuel prices, a direct consequence of the government's taxation policy.
This is not a uniquely British problem. The attached open letter from other European haulage associations to Mr Jean-Claude Gayssot, president in office of the European Council of Transportation Ministers, demonstrates widespread concern. The irony of this is that RHA members would love to pay French and Spanish duty on diesel as it is now, rather than the UK's penal rates!
The enormous public interest in fuel prices in general should not obscure the appalling problem facing road hauliers in particular. By any interpretation excessive rates of duty coupled with record prices for oil (which in turn has generated windfall income for the Treasury thanks to VAT) has strained the viability of thousands of haulage businesses.
While it is appreciated that VAT is recoverable, the need to finance these high fuel prices before receiving payment remains a vital concern.
Despite the protests of EU hauliers they still enjoy substantial advantages in operating costs which, thanks to the ending of cabotage, enables them to gain business at the expense of British concerns. While it is true that overall the UK tax regime has certain benefits (lower corporation tax—although you have to make a profit first before paying it!), an industry which historically looks for cost savings of 0.1p per mile cannot but seek parity with the competition if it is to survive.
The whole road haulage industry is united in seeking an essential user rebate for diesel used by genuine 0-licence Operators. Trade minister Helen Liddell MP confirmed in the Commons recently that sales of diesel in Northern Ireland had all but collapsed thanks to lower duty south of the border. This is losing the Treasury enormous sums and can only get worse.
An essential user rebate could play a vital part in redressing the balance by encouraging hauliers to buy within the UK.
The news that transport is to receive a much-needed boost in expenditure is extremely welcome, but for many hauliers the benefit will come too late.
Better railways and improved roads are all very well, but if the fundamental cost of putting a truck on the road is too high then ultimately society generally will suffer. The facts are that the government set fuel taxes incorporating the escalator when oil was priced at a much lower level.
Indeed, Donald Dewar MP told the Scottish Grand Committee on Monday 1 February 1999: "The oil price is likely to stay at about $10 to $12 a barrel at least in the foreseeable future. Therefore we are worlds removed from the oil prices and production levels of the mid-1980s."
He spoke then as a leading member of the cabinet and presumably espoused the then current thinking.
It is gratifying that the government now accepts the rise in price and has publicly abandoned the fuel duty escalator, but in reality it has done no such thing; further increases might not occur of such a magnitude, but the full force of the existing escalator built up over several years remains in place. Motorists might in theory have a choice whether to use the car; hauliers transporting essential goods do not.
Please reflect on this. The Tax Tanker, which will tour the UK, highlights the enormous variance in tax on fuel within the EU. How can you defend the UK price of diesel (ex-VAT) that is 58% more than in France, 69% more than in Germany and 92% more than in Spain?
As Chancellor you have rightly urged UK businesses to be more productive, more competitive in order to compete. With foreign hauliers brim full of cheap diesel how can Britain's hauliers take up this challenge? French and Dutch hauliers benefit from a fuel rebate, so why cannot UK operators?
The House of Commons' sub-committee on transport has just reported on road haulage costs. They did not accept the principal argument addressed by their witnesses, including this association, that fuel prices and VED are too high and should fall, Their remedy was for hauliers to seek rate increases and that the small rises in the end-price of goods that results is a price that we should all be willing to pay.
Such a conclusion is incredible. Every sector of UK commerce is seeking a reduction in transport costs. The threat, actual as well as real, of foreign competition makes this recommendation wholly unrealistic and we invite any member of the sub-committee to visit with any of our members a typical customer and demand a higher rate.
Tax has to be paid, we know, but the skill is to seek a fair balance. Given the arrival of European competition with the benefit of lower operating costs we submit that the tax scales are tipped substantially against UK hauliers.
The RHA will continue therefore to campaign for ajust regime. We look to government to respond.
Roger King, Chief executive, Road Haulage Association