HGV Road User Levy Bill
(11 years, 10 months ago)
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Earl Attlee
My Lords, HGVs play a crucial role in our economy by supplying businesses and servicing customers. Of course, HGVs are only one part of our national and international logistic system. We also have transport by sea, rail and air.
I am sure that the House will agree that we are well served by all those who work in transport and logistics. We should be particularly grateful for their sterling efforts during the recent bad weather, driving their vehicles and operating their equipment in horrendous conditions, often at night or during unsocial hours.
Approximately 1.5 million trips are made by foreign-registered HGVs into the UK each year; they contribute towards the well-being of our economy and are part of our logistic system. However there has been an inequality for some time in that UK hauliers are often charged when they travel abroad through tolls and other charging schemes whereas foreign hauliers are able to use the UK road network for no charge. This is a situation which the Government wish to address through this Bill.
The HGV Road User Levy Bill is a money Bill which comes to this House unamended from its introduction in the Commons on 23 October 2012. It will enable the introduction of a new levy for all heavy goods vehicles that weigh more than 12 tonnes and that are being kept on or are using the UK road network. This new levy is aimed at recognising the cost of the damage that HGVs do to our roads and ensuring that they make a contribution towards this.
The Department for Transport undertook consultation on this subject in early 2012. The results indicated that stakeholders, especially those in the logistics sector, support the planned changes.
Subject to the legislation being passed, we plan to introduce the levy from April 2014, when it will apply to both UK and foreign-registered hauliers. The levy, which is being introduced alongside other measures including reductions in HGV vehicle excise duty, is set at a level that will mean that, overall, more than nine out of 10 vehicles in the UK fleet will pay no more than now, with almost all the rest facing a fairly small increase in charges of up to £79 per year. Introducing the levy for foreign vehicles and offsetting the charge for the vast majority of UK vehicles will help the competitiveness of UK businesses, while ensuring that we continue to enjoy the benefits of free trade with Europe.
I know that the noble Lord, Lord Berkeley, is interested in the subject of time versus distance-based charging. I do not want to pre-empt his speech and will address his concerns when I wind up.
As your Lordships will be aware, any form of road user charge is subject to the strict conditions set out in the Eurovignette directive. It specifies the maximum daily charge as being €11, likely to rise to €12 by 2014 to compensate for inflation, which will mean that it should equate with the £10 per day that we intend to charge the largest and heaviest foreign vehicles that use our roads.
To ensure that no additional administrative burden is placed on UK business by the introduction of the charge, UK hauliers will start to pay the levy in a single transaction with vehicle excise duty when it is renewed from April 2014, and will therefore be able to pay the charge either six-monthly or annually. For the annual rate, we have selected a fee of up to £1,000 for the heaviest vehicles as being a level where, subject to the restrictions already mentioned, the Chancellor will be able to offset the increase to UK hauliers through reductions in vehicle excise duty, which will be set out in the Finance Bill 2013,
For foreign operators, who do not pay VED, the levy will be payable through an online portal or over the telephone. Foreign operators will also have the option to select time periods varying between one day and one year, allowing them to pay the charge at the appropriate level for their trip.
As I said, in the case of the largest vehicles, the annual charge will be £1,000; for the smallest vehicles it will be proportionately less, at £85 for the year. However, most foreign vehicles that come into the UK are those in the heaviest two bands. For the largest, heaviest foreign vehicles, we consider the charge of £10 per day or £1,000 per year to be fair, proportionate and compliant with the relevant EU legislation. For the daily amount we are seeking to charge at the highest level permissible while remaining compliant with EU law.
I accept that for about 40 UK vehicles, the overall charge for hauliers will be much greater; it has proved to be impossible fully to offset the charges in those cases. However, I should make it clear that the increase is largely due to current VED rates being close to or below EU minimum levels, which restricts our ability to rebate fully to offset the charge, rather than the implementation of the charge itself.
Operators facing increased charges have the option to down-plate their vehicle, a simple paper-based exercise costing £27, which will fully offset the increase, although they may be more restricted in the loads that they are able to carry or the distribution of the load on the vehicle.
We estimate that the revenues gained by having foreign hauliers pay a charge are likely to be between £18.7 million and £23.2 million annually. Although I appreciate that that is not an enormous sum in the grand scheme of things, and I am sure that noble Lords would like it to be much higher, the charges have been set at the highest possible allowed by the Eurovignette directive, while allowing other measures—principally reductions in vehicle excise duty—that should ensure that more than 9 out of 10 vehicles in the UK will pay no more than now.
The way the scheme has been structured will ensure a fairer deal for UK-registered HGV operators, who should not have to bear an additional financial burden as a result of the levy’s introduction. While the revenues raised through the charge and the fines levied for non-payment will be paid directly into the Consolidated Fund and will therefore not be spent directly on transport projects, I would like to reassure the House that the Department for Transport will ensure that sufficient funds are directed to allow VOSA—the Vehicle Operator and Services Agency— to deliver effective enforcement of the scheme.
The legislation before the House today is not designed as a precursor to increased charges on businesses, or on wider road users. This charge has a very clear focused objective. I beg to move.
Lord Berkeley
My Lords, I am grateful to the Minister for that helpful introduction. It has filled a few holes in my knowledge of the Bill and is a good opportunity to discuss the policy surrounding this.
My first question is: why is this a money Bill? It seems to introduce changes to policy and to methods of collecting charges for road vehicles which probably merit greater scrutiny in your Lordships’ House. Of course, we cannot do that for a money Bill, so perhaps the Minister can explain exactly why it is a money Bill.
In that context, the Minister will know—because I mentioned it in a speech on Monday in Committee on the Growth and Infrastructure Bill—that I think that it would be much better if the Government came up with a consistent policy for tolling, charging, or whatever we like to call it, for vehicles using the Dartford tunnel, the new tunnels, congestion charging in London and other cities, and possibly eventually on the M6 toll road as well, for a start. All of those are effectively distance-based, unlike this one which is basically time-based. I expect that this is meant to avoid any policy intention to widen it to other vehicles; and of course, on that basis, it has to comply with the Eurovignette directive. I believe that the Commission has started to look at a wider charging solution for roads across the EU which is probably designed, as much as anything, to try to reduce the congestion on the most congested parts. However, I would be very pleased to hear the Minister’s explanation for why this is a money Bill.
The Minister explained that this was intended to increase the fairness between UK-registered and continental-registered vehicles, because when continental vehicles come here they do not pay the equivalent of a toll or VED, but when our vehicles go to the continent they have to pay tolls on some roads—most of which I think are distance-based. However, can he explain whether the locally registered trucks in any of the closer member states—on the roads which our own vehicles probably use the most—pay something equivalent to VED which visiting trucks from the UK and elsewhere would not pay? It would be a comfort to know that the balancing on which this Bill is based applies both ways. I am sure that there is an answer to that, but I do not know it.
In the case of non-UK heavy goods vehicles, Clause 4(2) places the liability for paying this levy on the holders of Community licences. I know that “Community licence” is defined in Clause 4(8), but can the Minister explain to the ordinary human being what that means? What is a Community licence? Is it one similar licence which every truck in the entire EU has, or does each member state have a different one? Whoever is going to enforce it will need to be familiar with 26 or so different types of licence if we are not careful. That will be quite difficult. I shall come back to that in a few minutes.
The Minister explained that UK-registered hauliers will be able to obtain their licences under this levy in the usual way, with the VED, on a 12-month or six-month basis. He said that a foreign haulier coming into Dover could buy a licence on the web or on the phone. Presumably there will be a kind of booth at Dover, or something, where you can pay for the licence at the time. If, as I believe, everybody will have to have a sticker with the licence on their windscreen, there is a question about how a haulier going backwards and forwards across Europe will manage to collect his post with the sticker in it. Or will there be a place where he can collect it every time he comes into the UK? Otherwise, it will be a bit of a mess, really.
This morning I got an interesting briefing from the Freight Transport Association, which raised the question of whether these stickers were necessary. That begs the question of how the Government intend for this new levy to be enforced. Window stickers are fine on cars, because traffic wardens go along and look at out-of-date licence stickers, and you then get a nasty message from the DVLA. However, traffic wardens are not going to be much use in enforcing this on trucks, because trucks do not usually park in the streets where traffic wardens operate, thank goodness.
Anyway, in Clause 10 we have a definition of who can stop a vehicle, and that person is called a “stopping officer”. I have never heard of a stopping officer before. Is it a police officer? Who is it? The definition says what his powers are, but how many of these stopping officers will we have in the country? If they are doing it already—which would be something I do not know about—in how many cases a year do they achieve this stopping? I am not convinced that there will be any enforcement at all of this new licence. If it is to be done by number-plate recognition, as the congestion charge is in London, can the Minister explain how that will work with 26 different number plates from 26 different member states plus a few from outside the EU? We get Turkish and other non-EU vehicles here as well. Is a system in place whereby all registered number plates from around Europe and beyond can be registered? And when they are indentified, what will happen to them?
I hope that the Minister can explain how this enforcement system will work. My suspicions are that it will hardly be done at all. UK vehicles will have to do it because they are paying with their VED, but who is going to do it for the foreign ones and where are they going to do it?
Finally, the Minister explained the revenue gain of £18.7 million to £23 million, which is probably worth having. It goes into the bottomless pit of the Treasury, but that is probably all right. Can he tell us the cost of administering this new scheme, both for UK-registered vehicles and foreign ones? In the debate on road-user charging I also said I believed that the cost of administering the road-user charging system in London—which is very good, and at the time it was introduced there was no better technology—is somewhere between 30% and 40% of the revenue gained. However, I think that the cost of some of the new electronic systems on the continent is about 5% of the revenue gained, which of course is much better. Therefore, what will be the cost of administering this scheme? Let us hope that it does not exceed the extra revenue expected.
With those few questions, I look forward to the Minister’s answers and to seeing this legislation implemented.
Lord Snape
My Lords, it is a pleasure to follow my noble friend Lord Berkeley on this topic. I well recall nearly 40 years ago when I was first elected to the other place and was told that the most effective political lobby in the United Kingdom was the farmers. I came to realise that in that conclusion they may well have been right. After all, I seem to remember that the farming lobby managed to blame the spread of foot and mouth some time ago basically on Ministers in the Labour Government rather than on their own practices.
Certainly, one lobby that runs the farming lobby very close in its effectiveness is the road haulage lobby. Most of us in your Lordships’ House are old enough to remember the immediate post-war period when heavy goods vehicles—I think this referred to those above seven tonnes, but it was a long time ago so I would not like to put my shirt on it—had to carry a 20 miles an hour plate and were restricted to that maximum speed. Given the number of heavy goods vehicles that appeared on our roads after World War 2—many of the drivers were demobbed from our Armed Forces—that issue was the first campaign that I remember the road hauliers lobby indulging in. It was very successful and it has indulged in many campaigns since, many of which have been successful.
Since the end of World War 2, we have seen heavy lorry weights increase dramatically. I think that the maximum now is 44 tonnes, although the Minister will correct me if I am wrong. It used to be about 12 tonnes, so the industry has done well there. The length of heavy goods vehicles also has increased fairly dramatically over that period. Each and every increase in weight and length has been accompanied by a cry from the road haulage industry that there would be fewer vehicles on the road because they are bigger, longer and heavier, and that once the motorways had been built they would not be much of a nuisance anyway.
This is not strictly speaking a matter for this debate, but I would be interested to know—perhaps the Minister will tell me, or write to me if he does not have the figures now—how many heavy goods vehicles above the 12 tonnes figure mentioned in the Bill are on our roads now compared to, say, a decade or two decades ago. Although it is not a matter for this Bill, it would be interesting to see not only how successful the road haulage lobby has been but how accurate it was in its predictions.
Another of the lobby’s major complaints was about the number of foreign lorries on our roads. Reverting back to my experience in the other place, I chaired for 15 years the West Midlands group of Labour MPs. It was one of my duties—whether it would be considered onerous or not I leave to noble Lords to work out for themselves—to attend meetings of the Sandwell chamber of commerce, which covered my former parliamentary constituency. The chamber of commerce may not have been dominated by the issue, but certainly a strong presence from the road haulage industry raised the same issue more and more often. It questioned the number of foreign heavy goods vehicles on British roads, and how they were filling up on cheap European derv and able to snatch the bread from the mouths of British hauliers by demanding not only the freedom to travel on our roads, which of course they had, but to take loads back to the continent, which rightly should have been the job of British hauliers.
I was a bit cynical and not inclined to believe that entirely, because every time I asked how many of these wicked foreign hauliers were behaving in this manner I did not get an answer. I found it difficult to believe, and I believe that I expressed the rather unpopular view at the chamber of commerce that I could not honestly believe that Mr Norbert Dentressangle, in his brightly covered lorries, was as guilty of undermining the British road haulage industry as the allegation made at the time suggested.
The Minister talks about 1.5 million trips, which I assume refers to round trips. Are we talking about 750,000 heavy goods vehicles that will be covered, at least in theory, by this measure? I should like to know just how many of these wicked foreign hauliers there are. They cannot use the excuse that they are driving around on cheap, continental derv anymore, because I understand it is just as expensive on the continent as it is in the United Kingdom these days.
The Minister went on to say that the maximum price we could charge foreign hauliers on a daily basis was €11. That will make a big dent in the deficit, whether or not the Prime Minister was accurate in his summing up of it. I cannot off the top of my head multiply 750,000 times €11, but while it is not an inconsiderable sum it will not make much of a dent in the road budget, let alone the deficit as a whole. Therefore, is this piece of legislation actually necessary, given the amount of money it is likely to raise?
The Minister did not use the phrase “a level playing field”, but he implied that this would balance the differences between British hauliers and their continental counterparts. However, €11 a day does not strike me as a particularly large penalty if one considers that for a heavy goods vehicle to travel 100 miles on a German autobahn, it would pay tolls of between €35 and €46. We throw open the whole road network of the United Kingdom for €11, but if you drive a heavy goods vehicle through Germany it costs €35 to €46.
As I indicated, the Minister said that this mighty measure before your Lordships today would raise the sum of £19 million to £23 million. He might recollect that a few days ago we had a debate about toll roads, and I pointed out that there was a toll road in the West Midlands that was not used much by heavy goods vehicles. I have noticed that Eddie Stobart vehicles do use it, but by and large those are the only heavy lorries that I have ever seen on the toll road. The heavy goods vehicle industry generally uses the M6 motorway, which passes through my former constituency on an elevated section. During my 27 years as the Member of Parliament for West Bromwich East, I calculated that the taxpayer had spent something like £800 million repairing just that one section of the M6 because of the damage done to it largely by heavy goods vehicles. On the department’s own figures, the heaviest heavy goods vehicles do as much damage to Britain’s road network as 30,000 private cars. This great sum of £19 million to £23 million, therefore, might repair one archway of the Ray Hall viaduct in the West Midlands, but it will not make much of a dent in the overall road budget.
I therefore have to say to the Minister, as the wartime sign said, “Is your journey really necessary?” as far as this piece of legislation is concerned. We heard from him that continental hauliers can pay on a day-to-day basis—not something that is open to British hauliers, who pay through VED on an annual basis—so why give them this particular benefit, which will be not shared by their British counterparts? I do not know whether, again, this is a matter for Europe, but why not insist that lorries used in the United Kingdom pay on an annual basis? Then they could come and go as they wished. Why allow them to pay on a one-day, two-day or weekly basis: a privilege denied to their British counterparts? Perhaps the Minister could explain.
Of course the penalties for non co-operation, under this legislation, can only be described as pathetic as well. Is a maximum fine of £200 really going to deter a heavy goods vehicle driver with, perhaps, £30,000 worth of valuable cargo? It is surely not serious that we impose a penalty that is so palpably inadequate. The Minister and the Government ought to look again. Even that penalty is based, as I understand it, on a vehicle limit and the number of axles. Who in this country of ours would be able to tell the vehicle limit or count the number of axles?
That leads me to the point raised by my noble friend Lord Berkeley about enforcement. Is the Minister seriously going to tell your Lordships’ House that there will be proper and adequate enforcement of this legislation? If he is, I do not believe him. Let me refer him to one of this morning’s newspapers. I am sure that the Daily Mail is the Minister’s favourite newspaper. From its optimistic front page to its unbiased sketch writing, I always think of it as a newspaper of value and repute. Today there is a story in the Daily Mail which I cut out as, reading it on the train, I thought: “The Minister will be interested in this one”. It is headed: “Toll of illegal foreign cars on UK roads”. I appreciate that it is not about foreign lorries, but I will come to those in a moment. The story says that:
“Only four out of an estimated 15,000 foreign cars driving illegally on British roads were caught last year. And not one of their drivers was prosecuted”,
the Department for Transport said yesterday. Given that record, it does not inspire me with confidence that our jails will be full of non fine-paying continental lorry drivers. What can the Minister tell us about the likelihood of enforcement under this legislation?
About 15 years ago, the then traffic commissioner for the West Midlands, Mr John Mervyn Pugh, invited me to join him on what he described hopefully as a purge of overloaded vehicles on the M6 motorway, particularly foreign ones. My noble friend asked about an enforcement officer. I presume that that enforcement officer must be from the police, because we were accompanied by three or four police cars. Between Birmingham and Stafford, the police directed heavy goods vehicles off the motorway so that they could be checked.
Lord Berkeley
Clause 10 refers not to an enforcement officer but to a “stopping officer”. Perhaps my noble friend would like to comment on that.
Lord Snape
Whether stopping or enforcing, my only response is that I guess he would have to be in police uniform. Perhaps I might take your Lordships back 15 years to the enforcement on the M6. I still have the paperwork, which I kept. Out of 14 vehicles that were stopped, only three of which were foreign, six were overloaded. In two of them, the driver had exceeded the permitted number of hours. A couple were borderline, while one was taken off the road immediately because of its lack of roadworthiness. Only 14 vehicles were stopped because, within about 40 minutes, there were no heavy goods vehicles heading north on the M6. This is before the days of mobile phones; it was presumably in the days of CB radio, or whatever it was called.
The problems in enforcing legislation such as this are enormous. The fact is that we do not enforce the existing heavy goods vehicles regulations at the moment. How can we, when the traffic commissioner’s total staff 15 years ago was four to cover the whole of the West Midlands and Wales? Given the Government’s clampdown on the Civil Service, I do not suppose that there are 44 of them these days. I suspect that if those four positions are still in situ, that is about it. Are these the people who are going to enforce this particular legislation? I honestly very much doubt that.
The Minister says that there will be a reduction in vehicle excise duty for UK-based hauliers. I have to ask why. I have a copy here of the report of the Armitage inquiry, Lorries, People and the Environment, from December 1980. Your Lordships will be relieved to know that I have no intention of reading that fairly bulky document, but as I would summarise it it pointed out that the number of heavy goods vehicles on Britain’s roads in those days was possibly more than the road network could cope with. If we have moved on from 1980 to 2013, I repeat the question: how many heavy goods vehicles are there on our roads these days, compared with then?
I hope the Minister does not think that I have been too rude about this legislation but it is palpably inadequate and will not be enforced. I do not think that unenforceable legislation—given the present lack of enforcement, that is the only way this can be described—is at all sensible. It is not actually necessary because, despite the propaganda from the British road haulage industry, I do not see this as the great problem that it outlines. If it is, let the continentals pay exactly the same price as British hauliers pay to drive across Europe. If a Bill is necessary, I am afraid that this is not it.
Lord Wigley
My Lords, I will intervene very briefly and take up the last point emphasised by the noble Lord, Lord Snape, that there should be a level playing field and the same system of charges should apply. I do not object to the approach that the Government are undertaking, although the amount of money to be collected is miniscule in the context of the needs and indeed, I suspect, the damage that is inflicted on roads and the cost of adapting roads to handle the ever larger vehicles that seem to be coming over.
The point that I want to put to the Minister—he may or may not be in a position to reply—is that of course the highway system is devolved. We in Wales have a very substantial cost arising from the two main east-west roads, the M4 in the south and the A55 in the north, which carry a very large volume of traffic to and from the Irish Republic via Holyhead and the ports of Pembrokeshire. This means that a disproportionate cost lands on the budget of the National Assembly, and that is over and above the cost of adapting the small roads, bridges and all the rest to be able to deal with some of the very large vehicles coming from the continent.
Is the money just going into the Treasury as another source of funding that is not in any way related to expenditure on roads? If it is meant in some way to meet the additional costs arising from such transport, what mechanism is there to allow even a small proportion of this to go through to the budget of the National Assembly? On a 5% basis we would expect about £1 million, which is hardly going to fill the potholes that are caused by these vehicles. As a matter of principle, this is something that should be taken on board. Certainly, if this is a first step, I hope that there will be further steps to genuinely provide a level playing field.
Lord Davies of Oldham
My Lords, Her Majesty’s Opposition welcome the Bill, and regard a great deal of it as eminently workable. It will improve the situation and remedy a grievance that we have recognised for many years, as far as our road haulage industry is concerned. That does not mean that we do not have some criticisms of the Bill. I had a few carefully listed, but half of them have been made by my noble friend Lord Berkeley in his excellent speech, and the other half by the noble Lord, Lord Snape, in his similarly excellent contribution.
There was just one point that the noble Lords did not talk about, which was to do with a strategy for roads that might involve road charging. There is a provision in the Bill which clearly anticipates that the devolved Administrations must have some opportunity if they wish to do this, and the noble Lord, Lord Wigley, of course has presented the Minister with that question.
My speech is therefore greatly reduced, because on the whole I am very much in favour of the Bill and somewhat less pessimistic than my noble friend Lord Snape about the issue of enforcement. I am sure that the Minister is going to establish that technology has moved on with concepts like automatic number plate recognition, which allows vehicles to be identified with great readiness and pulled over and stopped effectively by VOSA, which of course is responsible for implementing this part of the administration.
Lord Snape
I apologise for interrupting my noble friend. There is a question that I should have put to the Minister, but perhaps he could do so equally well. Supposing a lorry driver is stopped for not having a proper piece of paper saying that he has paid £200. What happens then? Is he to be detained at the port of exit? Are we going to reinvoke the European arrest warrant if he heads home? Perhaps my noble friend could question the Minister about that.
Lord Davies of Oldham
My Lords, the driver is responsible for the vehicle and its legitimacy, so he will be stopped all right, and the vehicle will not be released until the necessary charge has been paid. I doubt if the driver will have £5,000—which is the maximum fine—in his back pocket, so the charge will go to his office in the country from which he has come, and that office will have to pay. I agree entirely that it is hard luck on the driver, if that is the sentiment my noble friend is putting forward—but the people who own the lorry have to comply with the law, and I understand that it will be enforced. We would all expect it to be enforced and modern technology will ensure that it is.
I have had sympathy with the road haulage industry and with British motorists for a very long period—from the first time I went to France and found that French autoroutes could charge heavily while we provided free roads for any French motorists who deigned to come to Britain. That always seemed a little unfair. The situation for road haulage is much more serious. After all, the industry shifts 68% of our goods and employs 220,000 workers. Many of them are skilled, because driving in modern conditions on all roads, both European and British, requires skill and concentration. We should recognise the importance of the industry. The issue became more acute when, as the House will recall, additional fuel tanks were placed on heavy vehicles so that not only did they not pay for the roads but they did not buy any fuel in Britain, because continental fuel was cheaper. The sense of obvious unfairness—the feeling that something needs to be done—has been with us for some time.
We will take advantage of the Eurovignette to make progress on this. When some critics of the European Community say that nothing good comes out of Europe, I commend the concept of the vignette—what a wonderful, attractive word to describe a piece of necessary legislation, particularly as it is derived from its original meaning of a small illustration with no defined borders. That looks entirely appropriate for the European directive on which this legislation is based. It will bring considerable benefits, but I expect the Minister to respond to the points made by my noble friends and the noble Lord, Lord Wigley. I am certain that he will make every effort to emphasise the necessary compliance procedures for these requirements, because the idea that people would flout these charges and get away with it after we have put the legislation in place would appal us all.
One issue that the Road Haulage Association always complains about, which did not come up, is cabotage—the deployment of these lorries to be used for transfers of goods within the country, at the comparative advantage indicated by lower fuel costs. This Bill does nothing significant about that. Perhaps the Minister will comment on it.
I am also most interested in the revenues that will be derived from the successful implementation of this measure. Both my noble friends emphasised the fact that these lorries cost a great deal in terms of the maintenance of our roads. I am sure that all noble Lords have travelled on our motorways and have noticed that on many roads the middle and outside lanes have reasonably good surfaces while there are almost two trenches on the inside lane where the heavy goods vehicles progress. Of course, the majority of those are British trucks, but it shows the cost to the roads system that heavy goods vehicles incur—in particular because Europe has been very much to the fore in increasing the size and weight of lorries over the years. My noble friend Lord Snape indicated that the 44-tonner was, after all, brought in on the basis of European initiatives.
What is going to happen to this revenue? The noble Lord, Lord Berkeley, had his worries about where it was going and asked why this was a money Bill. It is a money Bill because the enforcement of the charges is a form of taxation. This money is not hypothecated to anything to do with road usage or necessity, but goes happily into the Consolidated Fund. We all know what the Consolidated Fund means in terms of priorities. What it certainly means is that we can guarantee that none of this revenue relates to road expenditure. My noble friends emphasised the costs to the road system.
There is another dimension that I want to bring up: road safety. The Road Safety Foundation has made it quite emphatically clear that the actual design of roads, which costs money to do well, is an important contribution to road safety. One particular group of road users who have been vulnerable to lorries in recent years are cyclists. The difference between the road structure in Amsterdam and the road structure in London is so evidently a crucial reason why Amsterdam cyclists feel safe and London cyclists often ride in terror—with just cause. We have had a number of serious accidents and fatalities where cyclists have been hit by lorry drivers who had no idea the cyclist was present.
Safety issues can be improved now because there is the possibility of fitting out lorries with sensors and mirrors that eliminate blind spots, but they cost money. We would need some enforcement. At present, the price of doing nothing is a risk to cyclists in all our cities and the price is becoming greater each year.
I cannot hope to direct the proceeds of this Bill towards safety because, as I say, there is no chance of hypothecation. However, I hope that the Minister will recognise that that which assists the development of road haulage and, in one respect, brings some sense of fairness between the British road haulage system and continental trucks coming into Britain should also be attended by some concern about road safety.
The Minister has quite a lot on his plate to answer, in the challenges that have been presented in the speeches from the Back Benches. I merely endorse the questions that have been asked, because they are exceedingly pertinent. I hope that the Minister’s answer is sufficiently strong for the Opposition to remain confident that this measure is an advantageous one for the country.
Earl Attlee
My Lords, as I stated in my opening speech, this legislation will help to deliver a fairer deal for UK hauliers and go some way to correcting an inequality which has existed for too long. For this reason, I believe the Bill should be welcomed. Turning to the aims of the Bill, we consider our plan to charge £10 per day, or £1,000 per year, for the largest vehicles, to be fair, proportionate and compliant with the relevant EU legislation. One of the challenges in dealing with this problem is that anything we do must be compliant with EU legislation. We must treat UK and foreign hauliers in the same way.
The noble Lord, Lord Snape, asked about the implementation costs. The total set-up costs are estimated at between £3 million and £6.7 million, which will be spread over the years before the scheme goes live for foreign hauliers. Thereafter, we estimate the annual cost to be £3 million to £4.8 million. These estimates are at a relatively early stage and will be developed further.
The noble Lord, Lord Berkeley, asked whether there will be a vignette and whether there will be booths at Dover. There will be no vignette sticker, or booths at Dover or at any other port. The levy will be paid for by a website or telephone transaction, which will feed into a database that will be available publicly and to VOSA officials. Enforcement of the levy will be carried out primarily by VOSA officers, on a targeted basis, using the payment database to show which vehicles are in the country and which have—or have not—paid, alongside VOSA’s normal stopping process for enforcement.
Foreign heavy vehicles mainly travel on a strategic road network and therefore ordinary traffic wardens do not have a role in this. If they detect a vehicle without a vignette by chance, they can do something about it but, being realistic, a traffic warden will not be dealing with this problem. Using ANPR technology at both fixed and mobile sites, VOSA will be able to identify and stop vehicles that have not paid and hold them until a penalty deposit of £200 is paid. That is a penalty deposit and not an on-the-spot fine.
Lord Higgins
If the website shows that a particular vehicle has not paid the levy, will it be charged before it leaves this country, on the way out?
Earl Attlee
My Lords, if VOSA detects that a vehicle has not paid the levy, I suspect the vehicle will not be going very far—perhaps to the next service station—until it has paid it, which can be done electronically.
Lord Snape
The minimum penalty is £200. Is the driver supposed to pay that on the spot? If he does not have any British cash or that amount of money, under what powers will the vehicle be detained and where?
Earl Attlee
My Lords, that will be done under the powers that were wisely introduced by the previous Administration, who also set the level. I agree that it is at quite a low level and made that very point from the Opposition Benches—I cannot remember whether it was the Front Benches or the Back Benches—at the time we introduced the necessary powers. The key thing is that we will be able to stop the vehicle. That is extremely inconvenient to the operator, and I will have more to say on that point.
The noble Lord, Lord Berkeley, asked me what a stopping officer is. Stopping officers already exist. They are appointed under the powers in the Road Traffic Act 1988, as amended, and are able to stop vehicles in relation to enforcement of vehicle roadworthiness and driver’s hours. Stopping officers are VOSA enforcement officers.
Lord Berkeley
I have a question before the Minister leaves that subject. There is presumably a database with every vehicle’s number plate on it. Are stopping officers lurking in every motorway service station or do they pick these things up from cameras above motorways? How are they going to find these lorries that have not paid even before they direct them into somewhere safe to deal with them? If I was a foreign lorry driver and did not want to pay, I would keep off trunk roads and go on the side roads, like many people do in France if they do not want to pay the motorway tolls.
Earl Attlee
My Lords, I plan to address most of the points made by the noble Lord later on. To answer his point about leaving the strategic road network and going on to minor roads: an operator would have difficulties with that because the vehicle would be much less productive, while he would be trying to avoid only a £10 per day charge. I suggest that the extra cost of lowering your average speed by using local roads would simply not be worth it. For cases that go to court, the offence is a level 5, which can incur a fine of up to £5,000.
However, the real deterrent for operators is the inconvenience of being stopped, as well as another inconvenience that I will come to in a moment. VOSA already carries out risk-based stops for a number of different offences, including weight, vehicle defects, and driver hours, among others, and the levy enforcement will simply be added to this regime. I also suggest that when VOSA detects a vehicle that has not paid the levy, that is exactly the same as if the driver had put a big sign on the lorry which says “Stop me, because I’m a problem vehicle”.
I am aware that the British Vehicle Rental and Leasing Association has identified an area for a small potential cost burden to operators, which has been introduced due to the way that the levy is rebated, when compared to how VED is currently and will continue to be rebated. It may be helpful for me to say a few words on this. Currently when a vehicle is delicensed—typically, when it is sold—the previous owner can claim back the outstanding whole months of VED, with the rebate calculation done in twelfths. From the introduction of the levy in April 2014, UK operators will still be able to reclaim VED on the same basis, but the levy can be reclaimed only in tenths. To comply with EU law, and to maximise revenue from monthly charges, the annual rate is set at 10 times the monthly rate. This means that in effect it is discounted when compared with the costs of 12 monthly levy charges.
The decision to offer rebates on the basis of tenths is to prevent foreign hauliers paying for a year, using the vehicle for a month or less on the UK’s roads, and then reclaiming 11 months. The value of the loss incurred by the operator is entirely dependent on when the rebate is claimed.
The legislation before the House is not designed as a precursor to increased charges on businesses or on road users in general. This charge has a very clear, focused objective, and its introduction is entirely separate from the reviews on future road policy which the Department for Transport is currently undertaking.
I will now deal with a few other points. The noble Lord, Lord Berkeley, asked why it is a money Bill, and the noble Lord, Lord Davies of Oldham, very kindly helped me. The Bill only concerns money, and is certified as such by the Speaker of the House of Commons; it is not a matter for the Government.
On the wider points made by the noble Lord, Lord Berkeley, on the methods of tolling, following our debate during the passage of the Growth and Infrastructure Bill I offered a meeting at ministerial level with the noble Lord; I hope that that meeting, which is in hand, will be with me. I have mentioned detection. I was asked about VED in other countries. All EU countries have VED for HGVs, or a local equivalent circulation tax. VED or equivalent is required in the Eurovignette directive, and minimum rates are set. Our new VED rates comply with the minimum rate.
The noble Lord, Lord Berkeley, raised a very important point about whether we should implement a levy on a distance or a time basis. I will say a few words about this important point. The HGV levy is a time-based charge which is both simple and inexpensive to operate. It allows more than nine out of 10 UK operators to be fully compensated through VED reductions. A distance-based scheme has been considered and has some benefits, in that hauliers who use the road network the most would pay the most. That seems, at face value, to be inherently fair. However, in reality it would cost hauliers more and it would not be possible to introduce offsetting measures for UK hauliers, which would mean that they would pay more than they do now. In many cases foreign hauliers would pay less than they would under a time-based scheme.
The introduction of a distance-based scheme has also been discounted as it would be very complex and costly to operate, and would potentially involve the use of a mechanism such as a fuel duty rebate, which is illegal under European law. This has already been tested in Germany. We also believe that the revenues gained from foreign hauliers would not cover the costs of operating this scheme. The Department for Transport looked at options for distance-based charging in 2010 and concluded that in order to fund it the scheme would have to be structured to be revenue-raising, and would therefore have a negative impact on UK hauliers, who would pay most of the charges.
Another difficulty is how to capture the distance-based data. That could be done with a tachograph, but the problem is that the tachograph and the records would have to be inspected by enforcement officers. In addition, the tachograph is in essence a safety device to ensure that drivers do not drive for too long. If we insert an economic effect into it, we would increase the chances that the drivers or the operator would interfere with the operation of the tachograph.
Lord Berkeley
I am grateful to the noble Lord. I will not go back over tolling, as we will have a meeting on that, and I am grateful to him. This is a tit-for-tat issue. He very kindly said that other member states also have a VED for domestic-registered trucks; for example, in France. Is there not a risk that those member states might play tit-for-tat and say, “Well, British hauliers going into France will be able to use the roads, with or without the tollings, but they won’t have paid the VED in France, so they’re getting an advantage”? Are we not in danger of getting a tit-for-tat situation across member states?
Earl Attlee
My Lords, the situation is, as I said in my opening remarks, that our operators often have to pay motorway tolls that no one pays in the UK, and because of the Eurovignette directive, whatever a foreign country did in terms of a vignette they would be limited to the prevailing limits of what you can charge. It could not, therefore, cost our operators more than €11 a day. At the moment our operators pay tolls to use the European road infrastructure.
The chosen time-based scheme, coupled with reductions to VED, is a simple, effective and targeted way of ensuring that UK hauliers pay no more than they do now. VED cuts are a time-based method of offsetting the charge, which means that they fit well with a time-based system. In addition, we need to remember that, in terms of administration, this scheme will have a negligible burden on UK operators.
I always enjoy listening to the noble Lord, Lord Snape. He asked many questions, and I will answer as many as I can. I have probably answered quite a few already, and of course, I will write to him on some of them. He asked me what type of penalties there will be. As I believe I have said, drivers will be charged £200 at the roadside. Fines can be enforced electronically, and they can be invited to pay by credit or debit cards. The noble Lord, Lord Davies, made the point that with modern systems of doing business it is easy to collect the charges.
The noble Lord, Lord Snape, also asked if, under the directive we have to offer periods that are appropriate for the trip being made. If we offer only six-month or annual levies to foreign drivers we will contravene the European directive. He asked about the number of foreign vehicles and I can tell him that 3.6% of miles driven by HGVs in the UK are by foreign vehicles. For HGVs of 12 tonnes and over, the percentage is higher. The noble Lord, Lord Wigley, asked about revenue in VED. All levies or fines go into the Consolidated Fund, as we discussed. There are no plans for hypothecation, as the noble Lord suggests, but we will ensure that VOSA, as the primary enforcement agency, will have sufficient resources to enforce the scheme.
I am grateful for the helpful interventions from the noble Lord, Lord Davies, and for his support for the Bill. He asked me about cabotage. The Bill does not change the rules on cabotage but it does do a little to level the economic playing field. It is a difficult problem to deal with. I am delighted that the Bill has been so positively received. It has been long called for by industry and others from across the political spectrum, and I am delighted to be taking it through the House.
Lord Snape
Before the Minister delights or otherwise in taking it through the House, can he just answer the specific question that I put to him? How many vehicles are we talking about? I know that there are 1.5 million journeys and 3% or 4%, or whatever, of total vehicle miles, but how many heavy goods vehicles will be covered by this legislation?
Earl Attlee
My Lords, I cannot immediately answer that at the Dispatch Box. What really matters is how many vehicles are coming in; how many journeys are made. In my opening remarks, I said that there were 1.5 million journeys.