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Charging into trouble?

3rd March 2011, Page 17
3rd March 2011
Page 17
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Page 17, 3rd March 2011 — Charging into trouble?
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Which of the following most accurately describes the problem?

The government says its lorry road user charge may not generate much revenue and it is still uncertain how UK hauliers will be reimbursed

Words: Chris Tindall

PLANS TO CHARGE foreign hauliers for using UK roads have suffered a blow after the government admitted to CM that it has failed to win the support needed to raise the maximum daily charge allowed under EU rules.

It means that the scheme most likely to be introduced within three years will raise only a fraction of the money originally hoped for and may not even generate any revenue at all to contribute to the upkeep of the roads.

Questions also remain over whether or not the proposed lorry road user charge (LRUC) will leave UK operators out of pocket: the Department for Transport (DfT) can only say it wants to ensure the scheme is “broadly revenue neutral” .

The government has lobbied strongly for an amendment to the EU’s Eurovignette Directive, which allows member states to charge hauliers up to a maximum of €11 (around £9) per day.

This in itself suggests that its preference for a UK charging regime is very similar to the vignette schemes adopted by several other European countries.

Unsupported

However, a DfT spokesman says: “The government was seeking an increase in the maximum daily charge allowed under the EU’s Eurovignette Directive, but this did not have the support needed from other European governments. However, the maximum daily charge will continue to increase by inlation.” The most recent government igures show that in 2009, 1.46 million foreign HGV drivers entered the UK and stayed for an average of 45 hours.

If these drivers had been subject to a £9-per-day vignette charge, then this would have generated around £26m.

This igure does not account for the cost of administering the system, something the DfT has anticipated. The spokesman tells CM: “We are still considering details of how the scheme will work and, until further decisions have been made, it is impossible to say how much it will cost or what, if any, revenue it will raise. However, the objective of the charge is not to raise revenue and the government is looking at ways of compensating UK hauliers for the charge, so they are no worse off.” This statement appears to differ from earlier announcements, particularly under the previous government, that any LRUC would force foreign hauliers to contribute towards the upkeep of UK roads, and it also seems to suggest a change in strategy: its objective now is just to take money off hauliers as they enter this country in order to make it more competitive for their UK counterparts.

The two main industry trade associations say they want an LRUC, but unsurprisingly they will not give their full backing to the government’s scheme until they see the details.

The Road Haulage Association (RHA) says CM’s £26m igure is “not a million miles away” from what the government probably estimates, and it cautions against believing any system will solve the industry’s woes.

“It’s not the brilliant panacea that we are all looking for,” warns RHA policy director Jack Semple. “A point that we have always maintained is that it doesn’t go a huge way to closing or making up for the diesel duty gap, but we have also always maintained that if it can be imposed without creating additional costs, then something is better than nothing.”

Additional costs

The worry is that the system chosen to be introduced may well create additional costs.

The problem stems from the fact that under EU rules, UK hauliers must be charged in the same way as foreign operators and they cannot receive a fuel duty rebate.

Instead, the economic secretary to the Treasury is attempting to come up with a plan that will compensate UK hauliers in some other way.

The obvious route would be to lower VED, but this is not quite as simple as it sounds. If a UK haulier running 15tonne trucks spends more than £200 on vignette charges then he will be out of pocket, because his VED rate per truck is only £200.

The DfT says the current thinking is that charges would be based on the size of HGV as well as on the amount of time it spends in the country, which could address the problem.

“I don’t see it as an insurmountable obstacle, but we need to look at the things the Treasury is coming up with,” says Semple. The Freight Transport Association (FTA) also accepts that an LRUC scheme will create a revenue stream “in the tens of millions rather than the hundreds of millions” .

It broadly supports the government’s plans, but like the RHA, FTA chief economist Simon Chapman says it is reserving its judgement until the iner details emerge.

“It’s got to make business sense and if the introduction of a UK vignette creates a level of bureaucracy and cost to UK operators that’s out of kilter with the overall beneit of the scheme, the industry reserves the right to walk away from it,” he says.

For Jim Dodd, chairman of Dodd’s Group in Sittingbourne, Kent, anything that helps UK businesses to compete on a level playing ield is crucial, regardless of whether or not the scheme raises money.

But he says a charging scheme may solve only one of several problems that operators deal with every day, the other main one being foreign operators louting compliance regulations.

He blames VOSA cuts for making his job more dificult as it allows continental hauliers to enter the country with poorly maintained vehicles while he spends thousands of pounds a month keeping his leet legal and on the roads.

But Dodd has concerns that the government’s LRUC might end up causing more problems for transport companies like his: “We have to do something to get a level playing ield, whatever it is. If we don’t, then the amount of British operators going out of business will just increase.” ■


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