Wednesday 13 December 2017

Autumn Budget 2017: transport industry reaction

Road transport trade groups and industry suppliers have responded to a range of government measures affecting the sector, which were unveiled in the Treasury’s autumn Budget last week.

Key announcements include confirmation from the chancellor Philip Hammond that the long-standing government policy of freezing fuel duty each year will remain in place, despite renewed calls from the transport industry for cuts to the levy.

“I will once again cancel the fuel duty rise for both petrol and diesel that is scheduled for April,” said Mr Hammond in his Budget statement of 22 November.

“Since 2010, we will have saved… the average van driver over £2,100, compared to Labour’s escalator plans.

“Fuel duty has now been frozen for the longest period in 40 years, at a total cost to the Exchequer of £46 billion since 2010.”

The Freight Transport Association (FTA) said the freeze would be welcomed by an industry already battling inflation at a five-year high – but lamented the “real lack of ambition by the chancellor” as a result of the “missed opportunity” that it said a reduction in fuel duty would have afforded.

“The cost of moving goods around the country and overseas determines the cost of doing business in Britain and the price of goods in our shops,” said Christopher Snelling, head of national policy at FTA, which has been campaigning for a 3p per litre cut in fuel duty.

“At a time when British business is under extreme pressure to prove its credentials and reinforce existing trading relationships, Mr Hammond has missed an opportunity to cut these costs, and make the UK a more competitive place to do business.

“Fuel duty increases would have been the wrong tool to use to address air quality. As logistics operators currently have no practical alternative to diesel it would have produced no change in behaviour, just adding cost to those businesses who are facing the burden of the planned clean air zones.”

FTA cited research it had carried out showing that the price of diesel accounts for nearly a third of the operating costs for an average 44 tonne truck.

“Just one penny increase in the cost of a litre can add £470 a year to the cost of running one of vehicle,” said the association.

“Many FTA members run fleets of hundreds or even thousands of vehicles and the resultant cost of a duty rise can have a significant effect on operating margins and future solvency.”

This was particularly significant within the context of recent data from the Insolvency Service, the association added, which showed that the number of freight firms filing for insolvency between April and June this year was almost double the same period last year, having reached its highest level in five years.

“In the three months up to 30 June 2016, 32 UK road freight companies declared insolvency,” said FTA.

“A year later, the figure had reached 59… The sharp increase illustrates the impact of rising fuel prices and a weakening economic outlook on the logistics industry.”

The Road Haulage Association (RHA) added that it was “extremely disappointed” at the failure to reduce fuel duty.

Chief executive Richard Burnett said: “At a time of Brexit uncertainty, the chancellor had the golden opportunity to make the production and distribution of UK goods more competitive.

“Fuel duty makes the UK less competitive – we have the highest fuel duty in Europe – nearly 50 per cent higher than the European average. And despite the seven-year freeze, at 57.95 pence per litre, fuel duty remains grossly excessive. It has a negative effect on everything we buy and makes all UK made goods more expensive to transport.

“We implore the Chancellor to amend his budget and introduce a fuel duty rebate scheme for essential users of fuel – a system already adopted by eight EU member states, including our nearest neighbours – the Republic of Ireland, Belgium and France.

“An Essential User Rebate of 10 pence per litre would enable our hauliers to gain advantage over their European counterparts and would considerably lessen the fiscal drain on our emergency services which are also in a financial stranglehold as a result of the high price of diesel.”

Mr Hammond additionally announced a £220 million to support local air quality plans – the spending of which will now be subject to a consultation, open until 5 January 2018.

Carlos Vicente, international business manager at emissions reduction equipment provider Eminox, said: “With 28 local authorities across England (in addition to London) drawing up plans to solve local pollution problems, vehicles are an obvious target for improvement measures.

“There are already schemes in place to fund bus retrofit, so this is an opportunity for owners of other vehicles to have their say and possibly get a share of funding for retrofit.

“This includes pollution-reducing and/or fuel saving technologies potentially reducing the amount of NO2 emitted, such as the Eminox SCRT, which has already been approved as one of five suppliers for the £86.1 million Transport for London project to retrofit 5,000 buses.

“Retrofit has been highlighted as an option in this consultation as it is the most cost-effective way to be able to get older heavy-duty vehicles to the latest low emission standards without having to replace the vehicle, which just won’t be viable for many businesses.”

John Watkins, executive chairman of telematics specialist Trakm8, added: “We warmly welcome the creation of a £220 million Clean Air Fund to improve air quality in our cities. This will create more opportunities for freight-sharing and fleet scheduling technologies.

“Along with the increased funding for charge points, this will incentivise fleets to invest in electric LCVs for urban deliveries.”

Other Budget measures likely to be of interest to fleet operators included a pledge to freeze vehicle excise duty for HGVs, as well as the road user levy rates, from 1 April 2018.

In addition the Treasury announced plans to launch a call for evidence on amending the existing road user levy this autumn, in which government would: “work with industry to update the levy so that it rewards hauliers that plan their routes efficiently, to encourage the efficient use of roads and improve air quality.”

The chancellor also used the Budget to pledge further backing for autonomous vehicles, including through reduced regulatory burdens.

“There is perhaps no technology as symbolic of the revolution gathering pace around us as driverless vehicles,” he said.

“I know Jeremy Clarkson doesn’t like them. But there are many other good reasons to pursue this technology. So today we step up our support for it.”

He added: “Our future vehicles will be driverless, but they’ll be electric first. And that’s a change that needs to come as soon as possible.

“So we’ll establish a new £400m charging infrastructure fund, invest an extra £100 million in Plug-In-Car Grant, and £40 million in charging R&D.”

Richard Cuerden, academy director at the transport research organisation TRL, welcomed the continued investment and commitment on autonomous vehicles and electrification.

“Autonomous and electric vehicles will form the backbone of future mobility in the UK and, if integrated successfully, will prevent thousands of road casualties and significantly reduce air pollution and congestion,” he said.

“Much research and development is required before fully-driverless vehicles become commonplace on our roads, but the measures announced today will help bring this vision a significant step closer and position the UK alongside other leading nations who are at the forefront of the electric and autonomous vehicle revolution.

“With the support of the UK government and the development of innovative test beds, such as the Smart Mobility Living Lab: London, we are confident that we will be helping vehicle manufacturers and mobility service providers to test fully-driverless cars and vehicles on British roads in 2019, with commercial products being available by 2021.

“The first vehicles may be limited to certain roads and environments, such as motorways or pre-determined routes within cities, but the rate of progress could surprise many in the industry.”

Meanwhile, clean air technology provider Dearman said that the Treasury had missed a “vital opportunity” to help detoxify Britain’s air by closing what it called a £126 million tax loophole around red diesel, which was subject to a consultation earlier in the year but had not been mentioned in the November Budget.

“The loophole benefits an estimated 26,000 cold delivery trucks that have two engines – the main engine propelling the truck, and a second engine keeping the back compartment cold,” the firm said.

“While main engines are subject to increasingly tough Euro emission standards, weaker regulation for second engines means they can emit almost thirty times as much dangerous pollution as main engines.

“A tax loophole means second engines are also allowed to use Treasury-subsidised diesel on public roads. Known as red diesel, this has historically been used only by agricultural and non-road vehicles…

“The failure to end cheap diesel for cold delivery trucks means the UK is one of only four EU countries allowing this specific use of red diesel – alongside France, Spain and Belgium.”

Dearman says that the UK’s 84,000 cold delivery vehicles – including the 26,000 with two engines – are estimated to cause as much pollution as 3.8 million Euro 6 diesel cars.

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