Lorry road-user charge inches forward

The Government has revealed more details of its plan for a distance-based charge for lorries.1 Newer trucks which achieve more recent EU emissions standards will pay lower charges than older vehicles.

In the fuel protests of 2000, the road haulage lobby complained that it was facing unfair competition from foreign hauliers who were filling up with cheaper diesel before crossing the Channel.

Part of the Government's response was to start work on a lorry road-user charge. Crucially, the charge would be levied on all lorries over 3.5 tonnes using UK roads and would be offset by reductions in existing taxes.

The Government shunned the opportunity to use the charge to reduce CO2 emissions and incentivise fuel efficiency, by opting to reduce fuel duty for hauliers rather than vehicle excise duty (ENDS Report 340, pp 53-54 ). Nevertheless the proposals represent a radical change in transport policy which offer a test-bed for the Government's plans for more widespread road charging (ENDS Report 355, pp 39-40 ).

Initially the Government planned to introduce the lorry road-user charge in 2006. It later delayed the introduction until January 2008 to allow sufficient time to procure and test the relevant systems (ENDS Report 350, pp 28-30 ).

Its latest discussion paper, released in late January, sticks to this timetable - which is itself now looking ambitious.

Consultants to develop the technical systems will not be appointed until the end of 2005, and establishing the legal framework for the charge will also be time-consuming. The Government is "considering" including provision for the charge in the 2005 finance Bill, "subject to available legislative space". Secondary legislation is scheduled for 2006 - possibly followed by further primary legislation in subsequent finance Bills.

Lorry drivers will be required to register and have an on-board unit fitted in each lorry to measure the distance travelled. They will then benefit from a reduced rate of fuel duty - delivered by a rebate system.

The charge will be calculated according to lorries' emissions, weight, the number of axles on their tractor units, and whether they have trailers.

The Government intends to rate emissions according to the vehicle's Euro emissions standards. As these standards apply at different times for new and used vehicles, the paper proposes to use the date of first registration and asks if this is the best proxy.

Karen Dee of the Road Haulage Association said that the year of manufacture is "a relatively sensible proxy", although in a few cases vehicles complying with a certain Euro standard may have been sold before it came into force. The charge should be reduced for the owners of these vehicles and those who have fitted particle traps, she added.

To address congestion hotspots the charge could also be varied according to the type of road and the time of day. However, the Government "wishes to assess the likely impact" of such complex measures before introducing them.

This implies that differential charging could either apply from the outset or be introduced at a later date. The consultation asks what incentive would be needed to affect driving patterns.

Ms Dee said that any differential charge for motorways should also apply to strategic trunk roads. The RHA would be "broadly happy" with a reduced rate at night, but increased charges around the rush-hour period would not be fair if other vehicles did not have to pay, she argued.

Petrol-fuelled heavy goods vehicles provide another problem. The Government is considering exempting them from the charge due to the complexity of setting up a separate fuel duty repayment mechanism for only around 4,000 vehicles. The consultation asks whether this would prompt a switch from diesel to petrol vehicles.

Steve Hounsham of Transport 2000 welcomed the proposals as "a good step forward" which would make lorry taxation fairer and more related to local impacts on communities. But the environmental effect of the proposal will depend on the size of the reduction in fuel duty, and overall taxation for road haulage should increase to encourage a shift to rail and water-based transport, he stressed.

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