HGV Road User Levy Bill (Ways and Means)

Jim Fitzpatrick Excerpts

Tuesday 23rd October 2012 Commons Chamber

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

It is good to see a number of Members in the Chamber for this debate, especially the distinguished Chair of the Transport Select Committee, my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who is in her place, as ever. I am grateful for the Minister’s brief introductory remarks.

We support the motion in principle. Given that it is relatively unusual to debate the Ways and Means motion, which paves the way for the Second Reading debate, I hope that my comments will be in order. I will make some brief introductory comments and then look at the measures in the draft Bill—I would be surprised if the Bill did not closely follow the draft Bill, but judging from the written ministerial statement, that will become clear later today.

The Eurovignette directive covers this legislation. I must confess that I was tempted to look up the dictionary definition of “vignette”. I was pleased to see that it was

“a small illustration…which fades into its background without a definite border”.

That is clearly not a definition of the United Kingdom and does not take us any further forward.

Both main parties have promised these measures for more than 20 years, however, so I commend the coalition for bringing this one forward. We will be dealing with it over the next few months. I read recently, on the subject of the coalition, that the Lib Dems introduce the nice legislation and the Conservatives introduce the nasty legislation. I am not sure whether that is reflected in the surviving Lib Dem Transport Minister opening the debate and his Conservative colleague concluding it. The Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond), might have something to say about who has been pushing this measure within the Department. None the less, it is good that it is here.

The unfairness felt by the UK road haulage industry is well documented, and it has long pressed for this measure in order to defend British industry, protect UK roads and create a level playing field with European competitors. As colleagues will know, road haulage covers 68% of all goods moved within the UK, is represented by 34,000 workplaces and employs more than 220,000 people. The Freight Transport Association and the Road Haulage Association both support the measures—the RHA strongly and the FTA broadly, as its support is a little more qualified.

I shall come shortly to the questions of hypothecation and whether the money raised will be used for transport spending, which I understood was the original intention of the directive; of the impact on the Government’s policy of moving freight from road to rail; and of the implication for short sea shipping and using that to move freight around the country. I will want to make reference to the Road Safety Foundation reports, including the annual report launched in the other place last week by the noble Lord Dubs, the organisation’s chairman. I will also want to raise questions about how this role will impact on The Times cycling safety campaign, of which I know the Government are very supportive, as well as about the Government’s policy for the introduction of longer and heavier lorries, and how that fits in with the plan. I shall also deal with whether or not this measure might act as a disincentive for road haulage firms to employ green measures or procure green or greener vehicles. I shall come back to these issues later. Even in the proposed measures facilitated by this Ways and Means motion and the Bill to follow, as read in the draft Bill, there are some anomalies, which I shall come to in due course.

Will the Minister clarify, if he can, some of the proposals in the draft Bill and in the written ministerial statement? For example, clause 3(2) of the draft Bill says that the Secretary of State can delegate exemptions for “specified roads”, but there is not much information without the actual Bill before us or in the Library. The Minister might wish to explain which exemptions the Secretary of State will make for which specific roads; if not, we will certainly raise the issue in Committee.

Clause 4 of the draft Bill says that the levy is suspended

“if a vehicle is stolen”

until such time as it is recovered. It is not quite clear whether the recovery is by the police or the owner, or whether, if a vehicle is damaged or unable to be used, it means that the levy will be suspended or re-instigated when the vehicle is recovered—or whether that is entirely fair. These are points of detail.

In respect of the rebates that are covered in clause 7, three matters are worth mentioning. Subsection (5) states:

“The Secretary of State may specify conditions with which a person must comply before making an application for a rebate.”

The implication is that the Secretary of State is going to preview all applications, which is obviously never going to be the case, as it would not be possible for the Secretary of State to do that. The clause mentions that an administrative fee will be levied, again saying that the Secretary of State will determine each case—and happily that is going to be the case—so will the Minister outline the thinking behind the administrative fee and how much it would be? Finally on clause 7, subsection (9) states:

“Matters specified under this section must be published in whatever way the Secretary of State thinks appropriate.”

That is very wide, so I am sure the Minister will have some information about what that means.

Clause 9 provides that money

“is to be paid into the Consolidated Fund.”

Originally, there was an expectation in the European directive that the money raised would be hypothecated, at least in some way, for transport purposes. The Minister will know that the Road Safety Foundation published its annual report last week. It clearly indicates that road engineering can have “an extraordinary effect”—those are the words it uses, which I cited to the Secretary of State at Transport questions last Thursday morning—in reducing deaths and serious injuries. Simple measures such as road markings, traffic lights and barriers to prevent vehicles from careering down off different roads are ways of saving lives. The hypothecation of the levy into road safety measures was very much anticipated, but it is not quite clear whether that is going to be the case under the Bill or whether the provisions saying that the money will go into the Consolidated Fund mean that it will go into the Treasury, so that the Department for Transport will have to bid for its share in due course.

On other safety issues, the Government have clearly indicated that they want to introduce longer and heavier lorries on Britain’s roads. There is a system through which longer and heavier vehicles will pay a greater levy, so that poses the questions of whether some of this money will go to pay for the upkeep of Britain’s roads and how this will impact on the safety campaign that the Government strongly support. I know that the Under-Secretary made a strong speech in support of road safety last week, and particularly cycle safety. His hon. Friend the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), who is no longer in his place, spoke at the “Love London, Go Dutch” cycling safety conference in Church House immediately after Transport questions last week. The Times campaign to which all parties have signed up says that we should spend more money on cycling safety. The question arises whether some of the money raised through this levy will go towards making cycling safer, particularly given that many more people are cycling today.

I would like to raise a question of principle about rail freight and short sea shipping. What are the Government’s policies on promoting rail freight and taking lorries off our roads whenever possible? What are the Government going to do to promote short sea shipping as an alternative to HGVs on our roads moving freight across the country as happens at the moment?

Clause 10 provides a power to stop by the Vehicle and Operator Services Agency. I went out with VOSA when I was the Minister with responsibility for road safety, so I know that it uses that power efficiently, effectively and diligently. I particularly remember being on the A13 when the inspector I was travelling with in his VOSA vehicle indicated that he was going to stop a particular vehicle and asked me whether I knew why he intended to stop it and take it into the inspection centre. As a good West Ham United supporter with one of my West Ham ties on, I said, “I think I know the reason. He’s got an Arsenal flag in the back of his cab.” The inspector looked at me and said, “No, Jim, that is not why we are stopping him.” I thought that was a fairly reasonable assumption; it certainly worked for me. VOSA is very effective at keeping our roads as safe as they are; the power to stop is a very important one. It is good to see it included in the draft Bill so that the levy that the Government intend to introduce can be enforced.

Clause 11 deals with the offence of

“using or keeping heavy goods vehicle if levy not paid”.

Subsection (3) states:

“A fine imposed under this section that would not otherwise be paid into the Consolidated Fund is to be paid into the Consolidated Fund.”

That reinforces my point about how the money raised is likely to be spent.

A written ministerial statement was published this morning by the Under-Secretary of State for Transport, the hon. Member for Wimbledon, which says:

“A private company will be contracted by the Department for Transport to administer the payment scheme for foreign-registered HGVs. The contractor will be required to maintain an electronic database of foreign-registered HGVs for which a levy has been paid.”

I wonder whether the Minister is in a position to clarify some of the details of the expected size of the organisation that he anticipates will be needed to do this task. How will the costs be calculated? Does he view the tendering arrangements as a bonus to the Treasury, or will it be cost-neutral? Have companies already indicated interest such a contract or do they already exist? Importantly, what technology might it be anticipated will be used for identifying foreign HGVs when they come into this country?

Let me conclude with six key questions. The background papers indicate that 98% of UK hauliers will see no more extra costs than around £50 a year, and that 94% will see a zero increase in their costs. Does the Minister have any information on the likely cost for the 2% for whom there is no information? At £1,000 per vehicle per annum, some haulage firms might be expected to pay a considerable amount of money. I hope the Minister can tell us whether any assessment has been carried out of the impact on the UK’s road haulage industry.

Secondly, the introduction is being phased between UK and non-UK vehicles. Is any loss of revenue to the Treasury expected as a result of the staging of the introduction of the levy, as and when it happens?

Thirdly, will the lower VED for UK vehicles act as a disincentive for haulage companies to procure greener or green vehicles, or it is anticipated that the size of such vehicles will mean that they would not be covered by the reduced VED? Has the Minister conducted an assessment for the industry in that regard?

Fourthly, will the Government’s decision last year to opt out of the European directive on cross-border enforcement of traffic offences impact on these new measures? I do not think we opposed that, but we were certainly worried about it at the time. Will not sharing that cross-border enforcement data make implementing, monitoring and enforcing the levy easier, harder or neither?

My fifth question is more general. Is the introduction of the HGV levy charging scheme likely to lead to the wider use of road charging schemes? Is this just a taster of Government policy for the future?

Finally, UK companies involved in haulage on European routes will be charged for a six-month or annual purchase of VED, which will incorporate the levy. European hauliers coming into the UK will be charged by the day, by the month or however else, so if UK companies have vehicles on the continent that are being charged to use European roads will they be able to apply for a rebate when those vehicles are not using UK roads? If the principle that one should be charged for using the roads is adopted, which I am sure it will be, it seems unfair that UK hauliers should be charged for using UK roads when they are using European roads and being charged over there.

In conclusion, we intend to support the motion and certainly hope to be able to support the Bill on Second Reading. We will want to examine some of the issues I have raised today in Committee. I do not expect the Minister to be able to respond to every point I have raised today, as this is obviously an unusual way of doing business. I was advised by the appropriate authorities, however, that I could raise issues that I would be likely to raise on Second Reading. Having done so, I do not anticipate raising them again on Second Reading and, given that you have not stopped me making any of my remarks, Madam Deputy Speaker, I must assume that I have been totally in order. I look forward to the Minister’s response in due course.

--- Later in debate ---

[Huw Irranca-Davies]

My hon. Friend is absolutely right. I think that I can understand the Government’s opposition; they do not want to put undue burdens on the haulage industry, which, now as always, is suffering stress. I suggest that the Government should not have a closed mind on the subject, but should be open to the idea that, working with the industry, we could roll the technology out over time—and not a long period of time, either. Hauliers frequently renew their fleets; as fleets are renewed, we can roll the technology out. What we are talking about is eliminating blind spots. In London, one sees cyclists in the established blue cycle lanes; someone driving a lorry cannot see the fact that as they turn left, they veer right across that blue lane. Unfortunately, as my hon. Friend says, occasionally they injure a cyclist badly, or even cause a fatality. The technology is there, and there are not massive costs. I think that we could roll it out as fleets renew.

[Jim Fitzpatrick]

My hon. Friend is making a powerful speech. To reinforce his point, some companies have done sterling work in advancing the technology that he mentions. I know that the Minister is familiar with Cemex; after one of its drivers was involved in a fatality, it pioneered technology that it uses in the warning and alarm systems in its cement vehicles. It is doing everything that it can to prevent a recurrence of such an incident. Some in the industry are working hard to achieve aims that the whole House would support.

[Huw Irranca-Davies]

I thank my right hon. Friend for that.

[Jim Fitzpatrick]

I should just correct my hon. Friend: I am not right hon. The Transport Committee Chair kindly promoted me. The Minister may want to put a word in for me, but I am not right hon.

[Huw Irranca-Davies]

As a full-time politician, I am more than happy to over-inflate anybody’s ego at any moment, but I will certainly put a word in for my hon. Friend, right as he was in his point. Rolling out improvements through fleet modernisation would create jobs in the UK relating to the manufacture and installation of those technologies. It is a win-win.

That is not my main point. My main point is that I welcome the Bill, but the Minister could do more, by tweaking and refining it, to make sure that there are not people who lose out while others gain from a level playing field; in so doing, he could take the opportunity to think bike.

--- Later in debate ---

[Stephen Hammond]

Yet again, the hon. Gentleman tempts me down a line that is grounded in speculation rather than anything else.

[Jim Fitzpatrick]

rose—

[Stephen Hammond]

I hope in a moment to respond to the hon. Gentlemen’s detailed remarks, and to those of the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), and I will invite them to intervene on me again if I do not do so.

--- Later in debate ---

[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.

[Jim Fitzpatrick]

I apologise for interrupting the Minister’s remarks. He has referred to two of my questions, one of which concerned the impact on HGV hauliers who are not covered and who will be paying extra, and the point that he has just made also reflects a question that I asked. I do not want to intervene on him repeatedly, so will he confirm that, as he said, he will answer my questions later?

[Stephen Hammond]

indicated assent.

[Jim Fitzpatrick]

I am very grateful to the Minister for that clarification.

[Stephen Hammond]

We believe that the database developed as a result of collecting charges from foreign-registered hauliers will help us to understand their patterns of road use better and will contribute to our efforts to improve the safety and compliance of all commercial vehicles travelling on the UK’s roads.

Finally, I should like to return to and, I hope, clarify some of the questions asked by hon. Members. The hon. Member for Poplar and Limehouse opened his remarks with a welcome for these measures, and I am pleased that he did so. His speech was the sort of speech that we expect from him; it was intelligent and inquisitive. He asked a whole range of questions about the draft Bill.

First, the hon. Gentleman asked about clause 3(2)(a). The clause allows us to consider the future exemption of roads. For example, Wales might want to introduce charging or we might agree with Northern Ireland that certain roads that cross the border should be exempted. On the administrative fee, I hope that my earlier remarks gave him confidence.

The hon. Gentleman asked about clause 9 and the rebate. The Bill allows us to set the administrative conditions that will pertain for rebates. For UK vehicles, charged rebates will be allowed on the same basis as those for vehicle and excise duty. An administrative fee, if introduced at all, will only be set at a level to cover the administrative cost.

The answer to the hon. Gentleman’s question about hypothecation and the money being paid into the consolidated fund is twofold. First, normal taxation rules apply and, secondly, the directive states:

“Member States shall determine the use of revenues generated by this Directive.”

I also point out to the hon. Gentleman that this Government’s spending review committed £30 billion for roads, rail and infrastructure. I should also like to highlight the other transport settlements and, indeed, the good news that we gave to local pinch-point schemes only 10 days ago.

[Jim Fitzpatrick]

I am sorry to interrupt the Minister again, but does that mean that the consolidated funds will not be hypothecated for transport issues, as has been requested by a number of his hon. Friends? Will the Department have to make a bid to the Treasury to get some of that money back?

[Stephen Hammond]

I have said that the normal rules will apply and that the directive allows the UK Government to spend the money in the way that they consider appropriate. The money will go into the consolidated fund. The Department for Transport has enjoyed robust discussions with the Treasury and got an excellent settlement for the infrastructure of this country. I have no doubt that we will continue to have robust discussions in the future and I am sure that we will continue to receive a good settlement for transport.

The hon. Gentleman asked about the number of hauliers paying more per year. The analysis so far shows, as he has pointed out, that 98% of hauliers would pay no more than £50 a year and that 94% would pay nothing at all. My understanding—I am sure that we will explore this and I may be able to inform the hon. Gentleman later of the latest numbers—is that the maximum loss for conventional HGVs that are either articulated or rigid and do not have a trailer would be £79 a year, based on current exchange rates. Unfortunately, however, our analysis of 7,000 rigid vehicles that tow a trailer has found that 40 vehicles would probably suffer a penalty of some £300, but that is only 40 out of 7,000, which is a significantly small part of the overall haulage fleet of the United Kingdom.

The hon. Gentleman also asked about the rebate that might be applicable to UK hauliers using foreign roads. As is the case with vehicle and excise duty, it is not possible to get such a refund, so the charge would be cheaper than any daily charge. UK hauliers are unlikely to benefit from such a refund.

The hon. Gentleman then asked some general questions, some of which I tackled earlier. On the staging of the levy, he will have heard me say that we have brought the date forward so that there will be a simultaneous introduction in April 2014. He will have also heard me set out the conditions for paying VED at the same time as the levy, so they will net each other out.

My Department does not believe that the opt-out from the European directive on traffic law enforcement will have any implications. We have a robust strategy of enforcement. Vehicles must pay before using a road in the UK and we can stop any that do not and immobilise them until a fine is paid. Again, I am sure that we will explore that matter in Committee.

The hon. Gentleman made some closing remarks about the environment. There is no change to the incentives for greener vehicles. We are committed to considering charging based on polluting carbon vehicles in the future, but for the moment the charging that will be put in place is practical and enforceable. I believe that there will be no disincentives for the green lobby.

I listened carefully to my hon. Friend the Member for Brigg and Goole (Andrew Percy). I thank him for his welcome. He echoed the remark from my hon. Friend the Member for High Peak (Andrew Bingham) about the complex way in which we are doing this, because of the EU rules. However, I am sure that he, like me, is delighted that we are doing it anyway and will raise a cheer for that.

The Chair of the Transport Committee raised a number of points. We will tackle cabotage and the safety issues that she raised on Second Reading and in Committee. However, I say to her directly that we will ensure that the Vehicle and Operator Services Agency has all the necessary resources to ensure that its enforcement procedures are workable. We believe that the measures will ensure that the collection procedures are completely workable.