Tuesday 16 July 2019

Hauliers enjoy fuel duty and VED freeze in autumn Budget

Among the more eye-catching announcements in chancellor Philip Hammond’s Budget last month was a pledge that all revenue from vehicle excise duty (VED) in England will be ringfenced for roads spending for the first time since 1937.

The £28.8 billion National Roads Fund will include £25.3 billion for the strategic road network comprising motorways, trunk and A-roads, which is said to be the largest ever investment of its kind.

It will also help fund various local road projects, while local councils will receive a £420 million pothole-fixing budget and a further £150 million to improve local traffic junctions.

While VED will be increased in line with the Retail Prices Index (RPI) for vans, cars and motorcycles from April 2019, the Treasury has also announced that it will freeze VED on HGVs for 2019-20 “to support the haulage sector” – in addition to freezing fuel duty for the ninth successive year.

The government also laid out plans to publish responses from a consultation on VED reform for vans, including proposals to introduce environmental incentives from 2021.

Christopher Snelling, head of UK policy at the Freight Transport Association (FTA), called the pothole repair fund “a drop in the ocean” given that work costing in excess of £8 billion was required to rectify “years of underinvestment”.

“ The damage caused by potholes to the UK’s logistics fleet is adding unnecessary cost to the operation of vehicles tasked with keeping Britain trading, and FTA is concerned that the funding released by the chancellor today will mean that operators will continue to incur these unreasonable costs at a time of extreme trading pressure,” said Snelling.

“More could and should have been done to help the logistics sector at such a critical time in the nation’s trading history. It is a lost opportunity.

However, he added: “The freeze on the HGV VED for 2019-20 is to be welcomed, and FTA is particularly pleased to hear that the government is set to maintain the difference between alternative and main road fuel duty rates until 2032.

“This will support the decarbonisation of the UK transport sector and give operators confidence to invest in alternatively fuelled vehicles.”

The decision to maintain the two separate fuel duty rates will be subject to review in 2024.

Meanwhile, the Road Haulage Association (RHA) welcomed the extension of the fuel duty freeze.

Chief executive Richard Burnett said: “As a founding member and funder of campaigning group FairFuelUK, I am pleased that our close collaboration has once again paid off.”

The RHA cited analysis it co-commissioned with FairFuelUK from the Centre for Economic and Business Research (CEBR), which it says “clearly demonstrates that a further duty freeze may actually help the Treasury save money” due to the significant sums it will put back into the economy.

The association added that the news would: “come as a relief to thousands of UK haulage operators working to incredibly tight margins.”

“However, it’s still a case of ‘good, but no cigar,” Richard Burnett continued. “While a freeze is welcome, what we really need is a fuel duty cut.”

The RHA said it was calling for an “essential users’ rebate for lorries and other essential vehicles such as ambulances”, to bring British fuel duty in line with that of Germany, where it is 15 pence per litre cheaper.

Howard Cox, founder of the FairFuelUK Campaign, added: “Sadly and true to form, despite the continuing and welcome hold in fuel duty, this government still does not get it when it comes to our motoring nation.

“No necessary cut in duty to stimulate the economy, utter silence on those greedy unchecked oil companies continuing to fleece hard pressed motorists at will, and no incentives to move to practical low emissions solutions to improve our air quality.

“And if Brexit collapses is there the spectre of crippling tax hikes at the pumps to come. A hollow Budget, from an out-of-touch chancellor who’s clueless to what to do with UK roads, public transport and our freedom of mobility.

“We are not here to declare war on the Treasury, but to many of us it feels like the Treasury, along with the Department for Environment, are waging war on drivers, bikers and anyone who uses a van or lorry.”

Elsewhere, freight forwarder Europa Worldwide Group welcomed the Treasury’s reduction of the contribution towards apprenticeship training for small and medium-sized enterprises, from 10 per cent down to 5 per cent – as well as a recommitment to create three million new apprenticeships.

Dan Cook, operations director at Europa Worldwide Group, said: “It’s one of Europa’s ambitions to recruit enthusiastic people who are keen to learn and start progressing up the career ladder from as early as 18 years old.

“Employing young people is key to our structure and we are passionate about recruiting driven individuals who can be trained and guided to become future leaders of the business.”

However, he added: “While the autumn Budget brings a massive boost to road issues, such as improving road infrastructure and maintaining the freeze on fuel duty, the skills shortage, particularly in relation to drivers, hasn’t been specifically addressed and this is something we’d like to see.”

Zero emissions technology provider Dearman argued that the Budget was a missed opportunity to scale back government subsidies for red diesel, meanwhile, of the kind that is used by hauliers in diesel-powered transport refrigeration units (TRUs).

The company said a possible announcement on future red diesel use had been expected, not least due to a consultation the government ran earlier this year examining whether red diesel’s lower cost was undermining alternative, cleaner technologies.

Dearman CEO Scott Mac Meekin said: “We are naturally disappointed not to see the chancellor make an announcement on scaling back red diesel, particularly for transport refrigeration… Clean technologies will continue to be undercut as long as the price of diesel is artificially lowered.”

Lower image, DVSA Crown copyright

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