U der-funded, under skilled, under pressure
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Hauliers are still way short of achieving their target of a 26p/lit cut in fuel duty, but the government seems confident it has fended off further protests. In an exclusive interview for CM, Guy Sheppard talks to Transport Minister Lord Macdonald about how last week's pre-Budget statement is likely to affect the industry.
Listening and learning feature prominently in Lord Macdonald's defence of the preBudget statement, but he is totally uncompromising about demands for further cuts in fuel duty.
He describes the 26p/lit reduction demanded by protesters as "unrealistic" and "irresponsible", saying it would have cost the Treasury .F.11.8bn because motorists would have creamed off so much of the benefit.
He is also dismissive of the essential user rebate option, claiming it could not work without heavy leakage in all directions".
Instead, he says the existing package will be worth the equivalent of 8p/lit off diesel when reductions in VED and fuel duty and other measures are taken into account: it was a very good deal for an industry that was under pressure.
Hard choices
"Government is about choices and hard choices and what we made clear was we did what we can?
As the minister with special responsibility For road transport, Macdonald has chaired the Road Haulage Forum for the past 15 months. His input was crucial in determining the gov ernment's response to the 60day deadline set by leaders of September's fuel protest_
Having talked extensively to hauliers both before and after Gordon Brown made the preBudget statement last week, he believes the response will be generally positive once the details sink in: Some 1265m is being paid in rebates on the lorry VED; that is money that will be a cheque in the post in the next few months...and on the bottom line for this financial year?
Hard contracts
Macdonald claims that if more money had been ploughed into cutting fuel duty the benefits to the industry would have been diluted, particularly for smaller hauliers.
We have been told by the industry that if you take it [tax cuts] on fuel, it is so easily taken out on contracts. What we were trying to do was listen to hauliers and use some of that package and embed it into the business."
He argues that lowering VED boosts profits more effectively than cuts in fuel duty because it is less transparent to powerful customers and therefore harder for them to use as an argument for clamping down on rates. Macdonald accuses major manufacturers and retailers of using their consolidated bargaining power to drive down rates: "When they turn the screws, it has a disproportionate impact on the weakest link and that is the haulier."
Cashflow and profitability are not the only problems that are being addressed, he says. "We have an industry that, at the bottom end, is under pressure; it is probably under-financed and perhaps the business and IT skills are a bit basic."
Under pressure
He feels that existing training structures are under-funded and under-used; getting an HGV licence is too difficult; and the image of the industry is unattractive. These are all issues which a ring-fenced fund of 1100m available from April is designed to address. Although Brown emphasised how it would be used to +` scrap older, more polluting lorries, Macdonald denies that this is simply an attempt to reduce over-capacity within the industry: "We have not put any preconditions down at the moment. We have to consult with the industry to see what would be best for the industry.
"We also have to look at what is possible within the framework of the European Community. If there is over capacity in some areas of the industry, let's take a look."
VED reform will cut the number of classes from 100 to just seven. This is designed to reduce red tape and better reflect the environmental and track costs of each vehicle.
Macdonald says VED for the cleanest vehicles will match the lowest rates in Europe. The results of consultation about these changes will be announced in the next Budget The introduction of a Brit Disc, similar in concept to the French vignette, is designed to ensure that foreign hauliers contribute to the cost of UK roads; Macdonald says it will probably be restricted to vehicles with at least five axles.
Under discussion
Although the cost of a Brit Disc will be near the European maximum of around 1750, VED will be reduced again to compensate UK hauliers.
Like much of the pm-Budget statement, the introduction of the Brit Disc will be the subject of consultation.
With the government fac ing continuing criticism for being out of touch, this is hardly surprising—but it means that hauliers may have to wait years for many of the proposed changes to take effect.