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The true cost of the LEZ

23rd November 2006
Page 20
Page 20, 23rd November 2006 — The true cost of the LEZ
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Which of the following most accurately describes the problem?

TfL predicts that small hire-or-reward operators will be hardest hit by

the cost of complying with the London LEZ. Louise Cole reports.

Transport for London ( FfL) published its economic assessment of the impact that the I .ondon low-emission zone (LEZ) will have on the capital and on operators this week.The report focuses on the costs of compliance which at first and even second glance seem substantial.

The LEZ will heavily discourage any non-Euro-3 vehicle over 3.5 tonnes from entering the London region. Buses, coaches and some lighter vehicles will face a £100 'charge' per day to bring noncompliant vehicles into the zone and commercial vehicles over 12 tonnes will face a £200 bill. Fines for non-payment of the charge and the use of dirty vehicles in the zone are swingeing -1:1,000 for LGVs and £500 for lighter vehicles.

In 2008 all vehicles who wish to avoid these costs will have to be Euro-3 compliant; in 2010 the weight range will drop to include vehicles from 1.2 tonnes; from 2012 therequired standard will increase to Euro-4.

The report calculates the costs of this compliance at £300m£470m although a substantial proportion of this belongs to the bus and coach industry, which will find it easiest to pass these costs on to passengers.

The report estimates that 61% of the relevant vehicle pare will already comply with Euro-3 and that the remainder will choose to deal with the problem by: building the charge into their expected business expense; replacing their vehicles: or retrofitting particulate traps. These options are costed at £1.1(X)142(X)for LGVs andi1.6(10£1,900 per vehicle for light CVs. While the average impact of the extra costs will be just (1.7% of annual operating costs, this is still highly detrimental to the hire-orreward sector in which 3% profit margins are considered healthy.

Particularly hard hit will be small hire-or-reward operators the report suggests they will absorb 95% of the cost themselves, unlike the bigfleets which will pass it straight on to their customers. Equally.large fleets will more likely choose a higher initial investment to ensure compliance than small operators who will tend to take the cheapest route in the short term, but end up paying more in the long run .The report also concludes that smaller operators. often with only one or two depots. will have less ability to route around the LEZ.

The report makes the assumption that own-account operators will be able to pass their costs onto their client base, hut some organisations disagree. Robin Milton of the Horticultural ExhibitorsAssociation (see panel) says: "We're already suffering a downturn in trade and a shift in the way our market trades. This kind of extra cost is definitely not in the right direction."

The I .EZ. which is expected to cover every London borough inside the M25, will most severely affect the 4.6% of the UK LGV fleet that is based in London.as well as the 5.5% that operates from the surrounding counties. Given that smaller fleets will find the changes tougher.TfL is sanguine about the market shake-up the LEZ will precipitate,The report says: "Some smaller vehicle operators may find it hard to meet the costs needed to comply with the LEZ and may

choose to exit the London market... However we can assume that virtually all the vehicles exiting the London market would be replaced by compliant vehicles owned by other transport providers... 'There

may be a redistribution of work to businesses that are better placed to operate in London."• • Contact: LEZ helpline, 08457 224577: www.tfl.gov.uk/tflflowemission-zone/

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Locations: London

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