AT THE HEART OF THE ROAD TRANSPORT INDUSTRY.

Call our Sales Team on 0208 912 2120

Stow burner?

18th November 2010
Page 33
Page 34
Page 35
Page 36
Page 37
Page 33, 18th November 2010 — Stow burner?
Close
Noticed an error?
If you've noticed an error in this article please click here to report it so we can fix it.

Which of the following most accurately describes the problem?

The Burns Freight Taxes Inquiry Report was published five years ago this month. What impact has it had on the industry's relationship with the government?

Words: Geoff Dossetter

A TAXING ISSUE

Lorry road-user charging is back in the news. At the Conservative Party Conference last month (CM 7 October), transport minister Mike Penning told a meeting of truck operators: "The Prime Minister, the Chancellor, the Secretary of State, and myself, passionately believe that you are taxed too much already. I'm not going to bring in a road charging scheme that costs you money."

What? Did he really say that? Was he serious?

The industry can be forgiven for scepticism and wondering whether it is hearing things. For those involved over so long a period in the endless campaign for a fairer system of road transport taxation, an actual reduction in the enormous sums of fuel duty paid by the industry, and a level playing field with foreign competitors, this came as a bit of a shock. Will he really deliver?

Five years ago this very month, the industry itself published the report of the Burns Inquiry — an admirable attempt to put before the then labour government a description of the competitive and commercial disadvantages suffered by the industry as a consequence of the constant increases in duty resulting in UK truck operators paying more than double the European average.

Throughout the 1990s, successive governments jacked up fuel duty, citing 'environmental protection' and a desire to use the tax as a weapon to reduce traffic and car usage. But, later it was clear that it was really all about money.

From 1997 onwards, the industry was engaged in a continuous campaign for separate treatment and a reduction in the tax burden for UK logistics. A constant, but one-way, 'dialogue' between the trade associations and the government failed to score, and the industry's practical proposals for workable schemes to decouple CV taxation from the private car system were ignored. Meanwhile, the number of foreign vehicles enjoying a tax-free ride in the UK on cheaper European fuel continued to increase enormously.

A changed attitude came in 2000 when, despite the long history of the dispute, the government was shocked by the fuel crisis, and the seeming sympathy and recognition by the general public of the industry's difficulties.

Fuel duty was reduced, and in 2002 came the announcement that a lorry road-user charge (LRUC) was to be introduced, a scheme to create a specific means of taxing CVs. It was not then clear whether this would be based on distance, time of day, class of road, or whatever. But the good news was that it would cover all vehicles—domestic and foreign visitors alike.

Decoupling welcomed

Due to a basic distrust of government and its ability to impose stealth taxes, the proposals were not widely popular, but the industry warmed to the idea of the LRUC on the grounds that, despite all of its potential problems, it would deliver two key benefits: it would impose a tax on the increasing numbers of foreign vehicles operating in the UK, and it would, at last, create a reduced fuel duty regime for trucks, decoupled from cars.

The government created a special unit to work up the plans and hundreds of civil servants were drafted in to work on the project. The LRUC was under way.

Only it wasn't. Out of the blue, in July 2005, the Department for Transport (DfT) and the Treasury suddenly announced that the LRUC was to be aban

cloned and that trucks would be integrated into a national road pricing scheme for all vehicles, probably not before 2020. At one fell swoop, the industry was pitched back to the situation that had generated the demonstrations and fuel depot blockades of 2000.

The personal frustration and disappointment of the then Freight Transport Association (FTA) chief executive Richard Turner was enormous Turner says: "After working so closely with the DET and the Treasury over five years, the scheme being dropped so suddenly was a big blow."

But Turner was determined not to let things go. "We needed a new means of uniting the industry and to produce urgent evidence demonstrating the reality of the sector's problems. And we needed a chairman who was knowledgeable, experienced. independent and respected by all sides of the industry:' Turner moved quickly and, on the basis that the industry would 'try again', within a fortnight, the Burns Freight Taxes Inquiry Report had been jointly commissioned by the FTA and the Road Haulage Association (RHA). under the chairmanship of Robbie Burns, the founding chief executive of Exel and a road transport industry stalwart.

The inquiry team was asked to take an independent and impartial view of the operating conditions affecting the 1;1( road transport industry and to gather factual evidence to demonstrate to the government the size of the fuel tax and foreign vehicle problem. And it was asked to present its report in time for submission towards the Pre-Budget Statement in November of that year: a mighty . challenge.

Burns and his team hit the road. In less than four months, 1,500 people attended a series of open meetings, 500 phone interviews were carried out, 750 organisations responded to an industry-wide questionnaire, 75 case studies were reported, and a website generated more than 3.000 responses.

Burns says: "We needed to combine the urgency of the brief required to meet the Pre-Budger Statement deadline with the need to create credibility and consensus within the industry. Gaining maximum input from frontline operators was essential, but time-demanding. Substantial research to update the true facts with ETA and RHA support was also key. In this way, establishing a single industry platform on which to build further was probably the main achievement of the Burns hiquiry. Our intensive push helped to leverage a full industry team effort that the government would have been too politically embarrassed to ignore."

Joining forces Burns adds: "On reflection, the exercise was a marvellous uniting force for the industry, bringing together not only the F1A and the RHA and their members, but also the many other trade organisations we consulted."

In November 2005. on time and on behalf of the whole road transport industry. Burns delivered 10 widely agreed recommendations designed to generate justice for the industry, fairer taxation, and a way to deal with foreign competition problems.

See the panel below and over the page to see what progress has been made. So, should the Burns Report be regarded as a victory for the sector or just another bit of industry lobbying?

The government's immediate response to the Burns Report was to set up the Haulage and Freight Industry Taskforce to work directly through Gordon Brown's Treasury to investigate the issues further. Burns says that these regular Treasury meetings demonstrated the real power base within government: -To change anything of significance, the industry trade bodies must maintain singular ongoing Treasury contact whenever possible, as well as working through the DfT."

Five years later. Burns says that his report probably did help to force the government to take notice of the fuel duty issue and the ability of foreign vehicles to unfairly operate below the standards imposed by VOSA. -The energy and noise created by the inquiry, along with the substantial research work supported by the FTA and RHA as professional trade associations, was a good scene-setter. It dignified the industry's voice as much as any road demonstration could have done. It gave government — particularly the Treasury — a better understanding of the way in which the industry works. Of course, well never know whether fuel duty might have otherwise increased at a faster rate. But it also helped VOSA to increase spending and direct investment towards more effective deterrents against illegal foreign operators."

FTA director of policy James Hookham was heavily involved in the construction of the Burns Report and remains in constant dialogue with the DfT and the Treasury on fuel duty and road taxation issues. He is convinced that the report constituted a fundamental landmark in the history of the road transport sector and that its messages were, and continue to be, influential.

Hookham says:1 have no doubt that [the] Burns Report constituted a major unifying force throughout the industry and that we are a great deal stronger as a consequence. As well as laying to rest sonic myths, like the suggestion that every UK lorry operator was affected by foreign competition. and dismissing some of the wilder ideas to solve our problems, the report provided a definitive data set and opened the government's eyes to the economics of the haulage industry -It united the FTA and RHA around a set of common messages that both organisations still use jointly and in their own work with the government. While direct action attracts headlines, it is facts and evidence that win arguments."

Changes on the way

Hookham adds: "The result is that we now have a new style LRUC on the way, which will, at last, make a charge on foreign vehicles operating in the UK and will bring their costs closer to those of the domestic fleet. We also have an enforcement regime that is getting to grips with the poor standards of some of our foreign visitors. Our new minister, being an ex-fireman, is also asking tough questions about allowing supplementary tanks on foreign vehicles carrying up to 1,500 litres of fuel. "The Burns Report contributed to a real containment in fuel duty levels. Despite the reintroduction of the fuel duty escalator, and the recent increases, it remains a fact that if fuel duty had tracked inflation since 2000, then we would now be paying almost 6p/litre more than we actually are, I know that because the Treasury keeps reminding me.As a consequence of the Burns Report, they now display extreme caution in implementing duty increases and have not put up duty rates as fast as they would have liked.

'1 believe that the whole road transport sector has much to thank Robbie and his colleagues for. In another five years' time, we will look back on the report as a turning point in relations between the industry and the government, and the way in which it is regulated and taxed.

By conducting a cool and forensic analysis of the real facts, by producing practical, credible and rational remedies, and by resisting the temptation to go over the top, the authors of the Burns Report were able to paint the real picture of the problems generated by high fuel duty and foreign competition. In doing so, they contributed to keeping the pressure on the government and getting them to understand the consequences of continuing to charge the highest fuel taxes in Europe."

Enforcement positives

Kate Gibbs, head of communications at the RHA, says: "Much better progress has been made on road safety and enforcement in respect of foreign vehicles post-Burns. The expansion of VOSA's budget for checking trucks on international journeys has benefited both road safety and fair competition. The compliance playing field is still unlevel. but much less than it was.

"The budget for VOSA's High Risk Traffic Initiative runs out in spring 2011 and the RHA has been lobbying hard for it to be maintained on a continuing basis, so that no part of the enforcement effort, either of UK or foreign operators, is significantly diluted."

Listening to industry

Cool reflection really does reveal that positive progress has been made. As October's Comprehensive Spending Review demonstrated, the government is, at last, listening to advice from the transport industry.

Progress on the Burns Report's recommendations has not have been as swift as the industry wanted — it has been a slow burner. Nevertheless, progress has been real. The report has not been superseded and remains the most comprehensive analysis available of the UK haulage scene. It constitutes essential reading for ministers, officials and anyone else taking up the road haulage brief. • • To read the Burns Report in full (courtesy of the FTA), go to: http://bit.ly/burnsreport

ABOUT THE AUTHOR Geoff Dossetter was director of external affairs at the FTA for 22 of the 30 years up to September 2008. He was actively involved in the FTA's campaign for a reduction in fuel duty throughout the 1990s and was a member of the FTA team that worked on the Burns Report in November 2005.


comments powered by Disqus