Tuesday 22 January 2019

Parliament debates fairness of HGV road user levy

The Labour Party’s shadow treasury team has queried whether road transport operators are paying their fair share for the damage inflicted by their vehicles on the UK’s roads – suggesting that changes to the way the government’s HGV road user levy is calculated could be used to redress the balance.

The comments came during a public bill committee on the government’s Finance (No. 3) Bill, whose effects will include lowering the HGV road user levy rates by 10 per cent for Euro 6 emissions-compliant vehicles from February, but raising them by 20 per cent for those at Euro 5 standard and below.

The HGV road user levy, which was introduced in 2014, applies to all lorries of 12 tonnes or more operating on UK roads. The exact figures payable depend on vehicle weight and number of axles, but the current maximum annual rate per vehicle is £1,000. From February 2019, this will fall to £900 for Euro 6 vehicles, and rise to £1,200 for non-Euro 6 trucks.

Both the Freight Transport Association (FTA) and Road Haulage Association (RHA) have already warned of the financial impact of the changes for fleet operators, particularly small businesses.

But at the public bill committee, Clive Lewis, Labour’s treasury spokesperson, said the party believed there was “an urgent need for a financial assessment of the measure”.

“We believe the analysis should focus on the costs and benefits of remaining on a time-based charging system rather than one based on distance,” he said.

“While it is to be expected that the reforms… will lead to improvements in fuel efficiency and reductions in pollution from HGVs on Britain’s roads, we believe that those reforms are incomplete and unsatisfactory because the HGV levy will continue to be charged according to time spent on UK road networks.

“It is widely acknowledged that the existing time-based charging system is inefficient and not cost-effective. As it stands, the current daily charge bears no direct relationship to the amount of use of the network and therefore the system does not incentivise efficient use of the network.

“To improve economic efficiencies, there should be a direct relationship between taxes per mile travelled and the marginal cost that a distance-based charging system can provide.

“The Department for Transport’s (DfT) recent review offered the opportunity to move to distance-based charging in the UK, which would be the single most effective change that would achieve all the government’s stated objectives of improving efficiency, reducing exposure to collisions and reducing air pollution and CO2 emissions.

“Replacing time-based lorry charging with a distance-based system could relate charges paid to the real impact that HGVs have on other road users, the road network and society at large.

“Of course, it could also reward those HGV operators who have the least such impacts, as the [reform] intends to do in relation to emission standards.”

Mr Lewis cited a report by the Metropolitan Transport Research Unit, which said that: “a very significant amount of the real marginal costs imposed by the largest HGVs is not being met.”

He added: “When considering the overall revenue effect of differing levels of road user levy for different categories of heavy goods vehicles, we believe it is important to factor in the huge disparity between the costs of wear and tear on road surfaces caused by HGVs and those caused by cars and lighter vehicles.

“The Campaign for Better Transport estimates that the standard 44-tonne HGV does 100,000 times more damage to road surfaces than a Ford Focus…

“Campaign for Better Transport research suggests that HGVs are paying for only 11 per cent of their UK road infrastructure costs, predicting a shortfall of about £6 billion.”

He asked the government to “produce a fresh assessment of the cost shortfall that the new HGV road user levy rates will leave for other road users and taxpayers in general to pick up,” adding: “The statistics give a clue as to where in part the responsibility lies for so many potholes on our roads.”

Said Mr Lewis: “No one wants to see HGV businesses go out of business, but everyone in committee would agree that it is right for people to pay the appropriate level of tax for the damage that they cause to our road infrastructure.

“If they are to be subsidised, that subsidy ought to be transparent, so that we can appreciate and make a proper assessment of the value that HGV companies contribute to our economy, while taking into account the externalities that they create as well, because there are impacts on other tax areas where the government would need to spend…

“if HGVs are damaging the roads to that extent and having such an impact in terms of road traffic accidents, that calls into question whether they are paying excise duty appropriately, and whether that excise duty is a genuine reflection of the cost that those HGVs are exacting on society and on our road systems.”

Mr Lewis also called on the government to conduct an analysis of how the changes would impact on carbon dioxide emissions from HGVs; undertake an impact assessment of trucks on overall road congestion and traffic; and clarify whether any assessment had been made of the road safety impact of different types of HGV when considering the relative levels of taxation.

Responding for the government, the exchequer secretary Robert Jenrick pointed out that hauliers pay a range of other taxes in addition to the HGV road user levy, including on vehicle excise duty (VED) and fuel.

“Taken as a package, hauliers pay a considerable amount of tax,” he said.

“British hauliers as an industry are highly taxed, going by European and international comparisons. The reforms mean that some hauliers will pay more.

“The VED system is based on both weight and axles, so to some extent it reflects wear and tear on the roads, although I appreciate the point made… that HGVs make a significant impact on the roads.”

Mr Jenrick added that the VED system would significantly boost the level fo investment that the country makes in roads “at every level”.

“£28.8 billion is the spending envelope for roads investment announced by the Chancellor in the Budget, and £25 billion of it will be spent on strategic roads in the road investment strategy that will be announced later next year.

“That will be about 170 per cent of the first road investment strategy, so there is almost double the amount of investment going into roads to tackle congestion and improve strategic roads in all parts of the country.”

Responding to Mr Lewis’s points about HGVs and road safety, he added: “I will write to him on that and find out what information I can about DfT’s work, because it is important that we take note and see what can be done to improve road safety, particularly as the number of vehicles going down smaller roads and country lanes as a result of online shopping is becoming more important.

“Through the Road to Zero strategy and other initiatives, DfT is paying attention to how we can improve the last mile of delivery to tackle air quality and reduce the number of vehicles on our roads.”

He highlighted the benefits of introducing a lower rate of HGV levy for Euro 6 vehicles.

“The change will incentivise hauliers to move to cleaner, less-polluting vehicles. It is only right that everyone plays their part in protecting our natural environment so that we leave a cleaner, greener Britain for our children.

“HGVs currently account for approximately 20 per cent of harmful nitrogen oxide emissions from road transport but only five per cent of total miles travelled, so they will play an important part in tackling the problem.

“The changes made… will reduce HGV levy rates by 10 per cent for vehicles that meet the latest emission standards, reflecting the fact that they generate 80 per cent less NOx emissions than the older HGVs.

“[We will] also increase rates by 20 per cent for HGVs that do not meet those standards. Many hauliers will pay less as more companies move to cleaner lorries  – we have introduced it to improve air quality and not to raise revenue.”

1 comment

  1. Ben Twilly says:

    These idiots need to realise that hauliers provide an essential service without which this country would grind to a halt in two days. We’re not driving around for amusement or entertainment.

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