Roads Briefing - Summer 2011

Welcome to our Roads Briefing, in which we examine and comment on topical issues affecting the roads industry. In this edition we focus on developments in lorry road user charging, and prospects for funding new roads. Please do not hesitate to contact us if you would like to discuss any of the topics raised.

Lorry Road User Charging does it stack up now?

Twelve months ago, persistent campaigning by the UK haulage industry for charges to be imposed upon foreign hauliers using Britain's roads looked set to pay off. The Coalition's 2010 Programme for Government committed the Government to work towards a new system of lorry road user charging (LRUC) to 'ensure a fairer arrangement for UK hauliers'. Transport Secretary Philip Hammond went further, telling the Transport Select Committee that the aim was to introduce LRUC by April 2014.

UK hauliers might seem unlikely lobbyists for the introduction of a new HGV levy. However, whilst LRUC is used throughout Europe to ensure HGV operators pay for infrastructure damaged by their vehicles, supporters (including the Freight Transport Association and the Road Haulage Association) believe charging is required in the UK to deliver 'a level playing field' between UK and overseas hauliers.

The scheme was expected to raise £319 million annually, with a rebate being offered to UK operators.

UK fuel and vehicle excise duties are considered to place British lorry drivers at a competitive disadvantage to their European counterparts. They enjoy cheaper fuel and lower taxes. Further, many European countries impose blanket road tolls or levies ensuring maintenance costs are shared by all road users, irrespective of their origin.

The DfT's recent Survey of Foreign Road Goods Vehicles supports the view that HGVs from overseas use UK roads without proportionately contributing to their upkeep. During 2009, foreign vehicles clocked up 948 million kilometres on UK roads. The average trip for such vehicles involves a distance of 649 kilometres yet, through use of 'belly tanks' to store cheap continental fuel, only purchases of 10 litres of UK diesel.

LRUC can address this anomaly by imposing a levy on all hauliers operating on UK roads whilst offering UK drivers an appropriate rebate of UK fuel or vehicle excise duties, delivering a revenue neutral result. Such a scheme reflects the Coalition's stated objectives for LRUC. Hauliers welcomed the proposals to develop a LRUC regime, being led by Mike Penning MP, Parliamentary Under Secretary of State for Transport.

Of course, UK hauliers have been here before. The Labour Government introduced preliminary legislation for LRUC in 2002. At that time, a distancebased charging scheme was favoured. The scheme was expected to raise £319 million annually, with a rebate being offered to UK operators. However, concerns grew over the set up and operating costs involved. Ultimately, the Transport Select Committee, in studying the LRUC proposal, concluded that 'the sums may not stack up. The government should be wary of committing itself to implementation of a potentially very expensive and overly-sophisticated system'. Much to the anger and frustration of...