A FAIR DEAL FOR THE MOTORIST

LORRY ROAD USER CHARGE (LRUC):

A NIGHTMARE FOR GOVERNMENT?

THERE MUST BE A GOOD REASON WHY THE GOVERNMENT

WANTS A CHARGE THAT WILL COST INDUSTRY BUT NOT ELIMINATE COMPETITIVE DISADVANTAGE

BACKGROUND

The Labour government proposed a lorry road user charge (LRUC) in 2002. Critics pointed out it was too complicated and would cost much more to administer than it raised, so it was dropped. The Conservatives were originally against reviving plans; in 2008, shadow transport minister Stephen Hammond noted “too many family-run businesses are falling by the wayside".

However, in 2010, Transport Secretary Philip Hammond committed to introducing a new charge for heavy goods vehicles, claiming all users would contribute towards our roads but that Britain’s hauliers would get a fairer deal. Making foreign hauliers pay for a ‘Brit Disc’ had been ruled out in Europe, and the government would not adopt a ‘red diesel’ type scheme for Britain’s hauliers as it would lose tax revenue.

Roads Minister Mike Penning told a FTA audience that ministers “passionately believed that you are taxed too much already. I'm not going to bring in a road charging scheme that costs you money.”.

"It's not going to be done as a spy in the cab: I want a simple system that compensates only those that are losing out to foreign competition.”

He added that he was looking at a simple charge targeting the operators most at risk from cheaper foreign competitors.

However Prof. Alan McKinnon of the Logistics Research Centre at Edinburgh's Heriot-Watt University calculated a gross take of £19-27m a year at most. He warned offering a reduction in VED would not adequately compensate UK hauliers, and said that some fuel duty rebate would be needed to meet assurances of ‘revenue neutrality’ for UK-based operators.

Having already identified high admin costs, he foresaw this being even more complicated and costly. “So why go to all this bother to raise tiny sums of money?".

Some estimate that 1 in 8 lorries in Britain is foreign, although Penning told Parliament (2011) that only 3.5% of the HGVs on British roads and 5.2% of those on our motorways are foreign.

This year the government launched a consultation on LRUC, which admitted several uncertainties, but claimed that 94% of Britain’s hauliers would be no worse off. Charging would start in 2014/15.

FTA Policy Director James Hookham felt it was only right that foreign lorries paid for their use of UK roads, but industry support would be entirely dependent on no additional costs for British hauliers.

A FTA press release noted that the LRUC was for vehicles over 12 tons only. It expressed concern that some British hauliers would pay more tax and the rates on foreign vehicles wouldn't remove their competitive advantage on fuel prices. Bizarrely, it noted that it was against EU rules to stop foreign vehicles at the border to charge them, although the DFT fell back on talk of inspections and ANPR enforcement.

The FTA was also concerned at the prospect of the EU increasing maximum LRUC rates, and levying charges based on emissions (the government had been reported as strongly lobbying the EU to raise the capped rate of approx £9 per day).

The RHA was also lukewarm on the proposals, and the British Vehicle Rental and Leasing Association (BVRLA) concerned that lax enforcement would lead to foreign hauliers not paying.

BVRLA has complained about a Whitehall farce, whereby the additional cost for its members alone could be nearly £4m per year. Put simply, the LRUC plus EU rules on minimum VED would mean extra costs for 6% of UK operators, and DFT’s envisaged grant system to get round this would break other EU rules for fleets with more than 50 eligible vehicles, so larger operators would be hit.

Could the government’s enthusiasm be that in setting up an England-wide tracking and taxing system, it laid the foundations for a wider-based and more lucrative road pricing system after 2015?

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