HGV Road User Levy Bill (Ways and Means)

Andrew Bridgen Excerpts

Tuesday 23rd October 2012 Commons Chamber

[Andrew Bridgen (North West Leicestershire) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests, and point out that I have been a holder of a certificate of professional competence in road haulage operations for more than 20 years.

I welcome this proposal, as other Members have done. My constituency of North West Leicestershire is in the middle of the country, and is home to East Midlands airport, the second busiest cargo airport in the country, handling some 310,000 tonnes of flown cargo every year. More than a third of the private sector jobs in my constituency are in distribution, or are distribution-related, and as we have no railway station, road haulage is an extremely significant part of our local economy.

The UK road haulage industry is of huge importance to not just my constituency but the whole UK, with 2.6 million people employed in the logistics industry. As the shadow Minister mentioned, more than 65% of all freight is transported by road; last year, that amounted to some 1.5 billion tonnes. By comparison, just 11% is transported by rail. For those who are wondering where the other 24% went, that is transported by pipeline or coastal and inland waterway shipping. Almost all goods involve some element of road transport.

I have spoken to road hauliers regularly, both in my previous business career and in my present role representing them in Westminster. As has been said, the consensus on the issue of foreign-registered heavy goods vehicles can be summed up very simply in one phrase: hauliers simply want a level playing field.

As my hon. Friend the Member for Brigg and Goole (Andrew Percy), who is no longer in the Chamber, said, road hauliers in the UK are at a huge disadvantage compared with our European neighbours when it comes to diesel prices. It is estimated that on average road hauliers pay 25p more for a litre of road fuel. When UK lorries go abroad, there are literally dozens of toll roads in countries such as France, Italy and Spain, whereas in this country, apart from bridge crossings, which we have heard about, there is only the London congestion charge and the M6 toll, which can be avoided.

Clearly, charging foreign-registered hauliers would be a step in the right direction if we are to close the gap and address the advantage that they enjoy over UK-based hauliers. Because EU law dictates that the charge has to be applied to UK hauliers too, I welcome the UK Government’s proposal to reduce domestic vehicle excise duty to ensure that this is not just a stealth tax on haulage companies.

I welcome the proposal to make foreign-registered vehicles contribute to the upkeep of UK roads. I remind the House of the costs generated by foreign hauliers as a result of accidents, which have been mentioned. A report by the Accident Exchange estimates that accidents involving foreign lorries on UK motorways cost our economy approximately £57 million a year, which represents an increase of almost a third compared with the 2010 figures.

Foreign lorries are responsible for just over 3% of motorway accidents, which means that one in 31 motorway accidents, according to the report, are the fault of a foreign lorry driver. As the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) said, side-swipe crashes are the most common accident: drivers disappear into a left-hand-drive lorry’s blind spot, and are hit when it changes lanes. According to estimates, costs were not recovered from the at-fault foreign party in 28% of accidents last year because of factors such as invalid insurance policies, untraceable owners, drivers leaving false details, or just failing to pull over at all. I hope that the Minister will help us to address this issue.

There is no doubt that left-hand drive foreign-registered vehicles are far more likely to be involved in accidents on UK roads than their domestic competitors. The Vehicle and Operators Services Agency reports that foreign-registered vehicles are far more likely to be found on inspection to be in breach of rules on drivers’ hours and to have maintenance defects.

As has been said, the Freight Transport Association supports these measures, and welcomes the publication today of a parliamentary Bill to introduce a charge for foreign-registered vehicles that use UK roads. It says:

“Under the HGV Road User Levy Bill all heavy goods vehicles of 12 tonnes and over will be required to pay a levy before being able to travel on UK roads.”

It also says:

“FTA has supported the idea of a charge on foreign vehicles for many years as a way of addressing at least partly the competitive differences between British registered operators and foreign-registered vehicles.”

However, it imposes three important conditions on its support and, if the House will indulge me, I should like to go through them. First, the cost of the levy must be fully recompensed for UK operators by an equivalent reduction in vehicle excise duty. The FTA says:

“The Bill makes explicit that VED will be the means by which rebates will be made to make the overall scheme virtually cost-neutral for UK operators. The precise reductions in VED to bring this about will not be known until the Budget Statement in 2014 where they will be included as part of the Finance Bill.”

I hope that the Minister will give us more details on that. The FTA goes on to say:

“An analysis published by the Department in February of this year showed that about 6,500 vehicles fell into bands where VED rates were already too low to fully offset the cost of the levy before the applicable EU minimum rate was reached. Of these about half were 28 tonne 2+2 articulated vehicles.”

May I point out to the Minister that in nearly all cases the additional cost could be reduced to less than £10 if vehicles are down-plated into the next VED rate band? I hope that he will bear that in mind and that we will have some answers on that issue.

The FTA’s second condition is that the cost and administrative burden of paying the levy must be no greater than those involved in acquiring a normal VED licence. I am pleased that the levy will be administered for UK operators by the DVLA. The Bill makes it clear that the levy will be paid in a single transaction and for the same time period as VED, with levy rates being calculated automatically. The “single transaction” approach means that there will be virtually no additional costs for the domestic haulage industry.

The FTA’s third condition is that there must be meaningful and financially significant penalties for operators who evade the charge. The Bill sets out a detailed enforcement strategy for non-payment of the levy and for mis-payment at the wrong rate. Because each payment will be vehicle-specific, the Bill commits the DVLA to using automatic number plate recognition technology to target vehicles present in the country for which no levy has been paid. There will be on-the-spot fines and a fine of up to £5,000 upon conviction in court. I should like to ask the Minister how non-UK-registered vehicles that have left the country and have not paid the levy will be pursued.

A few issues need to be resolved, so I shall put some questions to the Minister. How will charging work in Northern Ireland across the land border with the Republic of Ireland? How will holders of reduced pollution certificates be compensated through replacement grants? Detailed arrangements have been announced for tow-bar combinations and their inclusion in the scheme. As I have said, we need to look at operators who are using the types of vehicle where there will be a higher net charge, particularly the operators of 28-tonne 2+2 artics. The FTA said:

“Overall, we are pleased with the Government’s plans to address this long-standing disparity between UK and foreign vehicle costs. Our main concerns seem to have been met and we will investigate further outstanding issues with members”.

In conclusion, the Bill is good for the road haulage industry, which is hugely important to my constituency and to the whole country. It is essential that we have a profitable, vibrant and safe road haulage industry for the country now and for our long-term economy.

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[Andrew Bridgen]

rose—

[Stephen Hammond]

I will give way one last time before I make some progress.

[Andrew Bridgen]

I have a question that I did not ask during my brief speech. How often does the Minister envisage the road user levy will be reviewed by the Treasury? Will he consider calling it a Brit disc, which would be a nice patriotic name?

[Stephen Hammond]

I think that my hon. Friend will find that the levy will reflect some fluctuations in the exchange rate, but the level of VED is a matter for the Treasury and it is usually set annually. As to the change of name, we would like to get the Bill on the statute book with this name first before considering anything else.

We will ensure that hard-working hauliers do not face an additional administrative burden, so the levy will be part of one payment when they renew their vehicle excise duty. To ensure that all the benefits of the levy are felt as soon as possible by carriers, the Government intend to bring forward the implementation date for foreign hauliers by almost a year to April 2014. Due to the time needed to change systems for UK hauliers’ payments and to hold a robust procurement of the provision of the payment facility to foreign-registered hauliers, it is not possible to bring the overall levy introduction date any further forward than April 2014.

I should make it clear that this legislation is not designed as a precursor to increased charges on business. The charge has a clear, focused objective. The introduction of the levy is entirely separate from any other reviews that my Department might be undertaking. Whatever the outcome of those reviews, we will ensure that HGVs are not charged twice for using the UK road network.

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[Stephen Hammond]

Sorry. My hon. Friend the Member for Milton Keynes South—an important distinction—made an important point about modal shift and the encouragement of rail freight, and I combine that with the contribution from my hon. Friend the Member for Suffolk Coastal (Dr Coffey), who is no longer in her place. She made a point about the A14 being a key artery, and I will be delighted to meet her over the next couple of days to discuss that matter. She also made the point about a modal shift now that improvements have been made to the rail system out of Felixstowe. That is absolutely right, and I am convinced that the Bill does nothing to impair modal shift, but will enhance it.

[Andrew Bridgen]

One important question has not been asked in this debate, and if the Minister knows the answer, perhaps he will share it with the House. What is the estimate for the amount of money that will be raised from foreign hauliers by the introduction of the road user levy?

[Stephen Hammond]

That is an important question, and my hon. Friend is right to say that it has not been raised so far. The Department estimates that somewhere between £18.7 million and £23.1 million will be raised at current prices, but I am sure that as the years go by, that sum will increase.

I believe I have comprehensively reviewed my colleagues’ contributions—