HGV Road User Levy Bill

Lord McLoughlin Excerpts

Tuesday 20th November 2012 Commons Chamber

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

I beg to move, That the Bill be now read a Second time.

As the House knows, the reason for this Bill is to enable the introduction of a new levy for all heavy goods vehicles weighing 12 tonnes and over that are kept or used on the UK road network. We plan to implement the levy from April 2014 for UK-registered hauliers. Subject to the completion of a procurement process, it will apply to foreign-registered hauliers from the same date.

We intend the levy to apply to all categories of public roads in the UK and to both UK and foreign-registered HGVs. Vehicles that cause wear and tear to our roads should make a payment that takes that into account. HGVs registered abroad are more likely to carry their weight on fewer axles than UK-registered vehicles, which means that foreign-registered vehicles cause more wear and tear to our roads. It is therefore more unjust that they do not make a contribution towards the maintenance of these roads. They leave the burden to fall entirely on the British taxpayer.

[Robert Flello (Stoke-on-Trent South) (Lab)]

What about foreign truck drivers who come over with large tanks full of fuel and who do not contribute to the ordinary wear and tear on our roads because they do not pay the fuel duty?

[Mr McLoughlin]

I take the hon. Gentleman’s point. Under this Bill, we will at least charge them something to use British roads—at the moment, they pay absolutely nothing. Although I am not saying that this is the entire answer, we are moving in the right direction.

Foreign hauliers using roads in the UK have long enjoyed an advantage over our own haulage industry in that they do not pay to use the UK’s road network, while our own hauliers pay to use roads through tolls and other charging schemes when they travel abroad in Europe. For many years all main parties have wanted to introduce a measure to correct that imbalance and I am delighted that this Government are actually doing it.

I am sure that the House recognises that HGVs play a crucial role in our economy by supplying businesses and servicing customers. More than two thirds of all goods moved within the UK travel by road and, in the main, on HGVs.

[Mr Gordon Marsden (Blackpool South) (Lab)]

The Secretary of State is right to pay tribute to the work done by HGVs in this country but, at a time when UK hauliers and other businesses that make deliveries are suffering economically, will he outline the rationale behind introducing the Bill now? What other things will the Government do to protect UK hauliers from additional costs?

[Mr McLoughlin]

The reason for introducing the Bill now is to try to level the playing field and to take action that the previous Government talked about but, I am afraid, never found the time to do anything about. I make no apologies for wanting to do this now. I wish it had been done sooner, but at least we are doing it at our first opportunity.

A key part of the movement of goods is provided by foreign hauliers and the Government recognise the important contributions they make to the economy. They make 1.5 million trips to the UK every each year, and we do not wish to discourage free trade with our partners in other countries. However, it is only right that we ensure that our own haulage industry has a fair chance to compete, and I hope that the Bill goes some way to achieving that. I met some hauliers when I announced the Bill and they said that it would lead to more jobs in this country.

As colleagues will be aware, any road user charge is subject to the strict conditions set out in the Eurovignette directive, which provides a framework for charging on roads and specifies the maximum daily charge as €11. That is likely to rise to €12 by 2014, which will mean that it should equate to the £10 a day that we intend to charge the largest vehicles that use our roads.

I also recognise that many trips made by foreign hauliers take longer than one day, so they will also be able to pay the levy for different periods, up to one year. In the case of the largest vehicles, this annual charge will be £1,000. Our estimate of the revenues that will be gained as a result of foreign hauliers paying a charge is between £19 million and £23 million a year. Although that is not enormous, it shows we are doing something that is clearly wanted. That is why the Bill is right. The Government are also committed to introducing other measures—principally vehicle excise duty reductions—that are not part of this Bill to ensure a fairer deal for HGV drivers.

I will now go through the Bill’s points of interest.

[Huw Irranca-Davies (Ogmore) (Lab)]

I have a question about something that I genuinely do not understand. The new levies will be welcome, but why will there be a delay, as I understand it—I may be wrong—between their imposition on UK hauliers, who will have to pay first, and on non-UK hauliers?

[Mr McLoughlin]

I very much hope that there will not be a delay. As I have said, I intend the levy to be introduced in April 2014, subject to certain procurement measures. Once it is introduced in this country, there will be a reduction of a similar amount in VED charges, so our lorry drivers should not pay anything extra. Foreign drivers will be charged from, I hope, April 2014. I hope that that addresses the hon. Gentleman’s question.

[Robert Flello]

The Secretary of State is being extremely generous with his time. Will he clarify why overseas hauliers are not required to pay for a year up front, but can pay on a daily, weekly or monthly basis? Is there a legislative reason why they cannot be asked to make an annual up-front payment, as with VED?

[Mr McLoughlin]

Overseas hauliers will pay in advance of coming to this country. However, asking somebody who is bringing a lorry over for a day to pay for a full year would be quite unfair. We are therefore allowing them to pay daily, weekly or yearly. Most HGV drivers who come to this country regularly will find it much more convenient and a lot cheaper to pay for the year than to pay for each individual day. I hope that that clears up the hon. Gentleman’s point.

The Bill states that HGVs weighing more than 12 tonnes will have to pay a duty of excise levied by the Secretary of State if they are used or kept on a public road within the United Kingdom. It will be known as the HGV road user levy. It will be charged to allow both UK-registered and foreign-registered vehicles to use our roads. The levy applies to all roads in the UK. However, clause 3 provides the power for the Secretary of State to exempt specific roads from the charge by way of statutory instrument, should the need arise.

Clause 4 sets out the liability for the levy. For HGVs registered in the UK, liability for paying the levy will lie with those in whose name the vehicle is registered and with the person keeping the vehicle. That applies the principle used for vehicle excise duty in section 1 of the Vehicle Excise and Registration Act 1994. That allows for the levy on UK-registered vehicles to be paid at the same time as vehicle excise duty. For non-UK-registered HGVs, the person who holds the Community licence for the vehicle and the person who keeps the vehicle are liable to pay the levy. For both UK-registered and non-UK-registered vehicles, when two or more people are liable to pay the levy, they are jointly and severally liable.

Clauses 5 and 6 set out the methods of payment for UK-registered and non-UK-registered vehicles. For UK-registered vehicles, the levy will be paid either yearly or half-yearly at the same time as vehicle excise duty. Where appropriate, rebates may be made for vehicles that are stolen or destroyed. The circumstances under which a rebate will be available and the method of calculating the value of a rebate, together with other conditions that must be met to make a claim, are covered in clause 7.

Some types of rigid vehicle weighing less than 12 tonnes will be exempt from the charge. The Bill also provides powers to allow the Secretary of State to make regulations that exempt some categories of HGV from the charge.

Collection and enforcement of the charge, and related elements, are covered in clauses 9 to 16.

[Huw Irranca-Davies]

Before the Secretary of State continues, will he clarify one point? Again, I am happy to be corrected. I believe that the Bill sets out that different and potentially higher levels may be charged for weekly or monthly payments for non-UK HGVs. I am not against that. However, will he give a cast-iron guarantee that it does not infringe any anti-discrimination trade provisions within the EU?

[Mr McLoughlin]

Yes, we have covered that. The hon. Gentleman is obviously going to take part in this debate and may well find himself on the Public Bill Committee in due course, so he will be able to cover that point in much more detail. I am glad that the Committee is tempting and am sure that the Opposition Whip has made a note of his details. [Interruption.] Was the hon. Gentleman making a request to be on the Committee? Perhaps he would like to share it with the House.

[Huw Irranca-Davies]

Regrettably, I have to inform the House that I am on another Committee.

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

rose—

[Mr McLoughlin]

I give way to the hon. Member for Poplar and Limehouse (Jim Fitzpatrick).

[Jim Fitzpatrick]

We are grateful to the Secretary of State for trying to recruit our members of the Committee. Much as I would love to see my hon. Friend the Member for Ogmore (Huw Irranca-Davies) on it, I think that the Secretary of State should leave it to us and the Whips.

[Mr McLoughlin]

I apologise to the Opposition. I was going back to my old territory, which I must not trespass on any longer. I am glad that we have managed to smoke out the hon. Member for Ogmore (Huw Irranca-Davies) as to his willingness and availability. I am sure that he gives distinguished service to the other Committee. I must check which it is after this debate.

The level of vehicle excise duty evasion among UK hauliers is extremely low at less than 1% of vehicles. I have no reason to anticipate that that will change once the levy is introduced. To reduce the administrative burden, the levy will be paid at the same time as VED. We have looked at ways to make the introduction of the levy cost-neutral for UK hauliers. To do that, we will reduce the level of VED to take account of the new charge. That reduction will mean that an estimated 94% of UK hauliers will pay no more than they do at the moment and that 98% will pay no more than an additional £50 a year. Clause 15 allows the Secretary of State to refuse to issue a tax disc when the appropriate levy has not been paid. That will lead to vehicles being unlicensed, which brings the associated penalties of immobilisation, removal and disposal.

For foreign-registered hauliers, a system will be procured to allow the levy to be paid online before the vehicle enters the country. The levy is based on the length of time, so visiting hauliers will have to select the period for which they will be using UK roads. The options will go from a single day to a year. Once a haulier has paid the right fee, the payment record will be entered automatically into a database, allowing enforcement agencies to check the status of any HGV using UK roads. Information relating to whether a vehicle has paid the levy will be made available publicly.

There is a risk of foreign hauliers evading the new charge. We will ensure that the Vehicle and Operator Services Agency, which will enforce the charge in England, Wales and Scotland, and the Driver and Vehicle Agency, which will enforce the charge in Northern Ireland, are properly equipped to do the job from the start.

[Huw Irranca-Davies]

May I take this opportunity to invite the Secretary of State to join me on the Groceries Code Adjudicator Public Bill Committee at his earliest convenience? Does he foresee any problems in enforcing this wonderful measure owing to the Government’s decision to opt out of the EU directive on cross-border enforcement?

[Mr McLoughlin]

I am grateful to the hon. Gentleman for sharing with us which Committee he is sitting on. The Committee on this Bill will really miss his attention to detail. I have no reason to believe that there will be any of the problems that he mentions. I have assured myself that what we are doing is wholly within the law and within EU competition rules.

For non-UK hauliers, there will be no physical sign of the levy having been paid. I believe that paper discs or similar signs would impose a needless burden and open the door to fraud. One of the main methods that we will use to detect vehicles that have not paid the charge is by linking our automatic number plate recognition cameras to the payment database. The use of that technology will enable quicker checks to be made on all HGVs. The power to install such equipment where it does not exist is being introduced in the Bill by amending the Highways Act 1980, the Roads (Scotland) Act 1984 and the Roads (Northern Ireland) Order 1993 in clause 16.

[Robert Flello]

What will be the situation if an overseas haulier, either deliberately or by omission, does not purchase a sufficient amount of time? What will happen to the load that a vehicle is carrying if it is seized by one of the agencies?

[Mr McLoughlin]

Drivers will know that they have to pay the levy before they come into the country. If they fail to pay, the measures available to the enforcement agencies will be used. I make no apology for that. If they think that they will be here for three days, they should pay for three days.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Will the Secretary of State give way?

[Mr McLoughlin]

Very briefly.

[Michael Connarty]

Who will be fined? Will it be the driver or the owner of the vehicle? If it is a hired vehicle, who will suffer the fine?

[Mr McLoughlin]

The driver is responsible for ensuring that the vehicle that he is driving is covered. He is in charge of the vehicle.

The penalty is currently set at £200 and would also be paid in situations where the levy had been underpaid—if someone had declared a lower vehicle weight limit, for example, or the wrong number of axles. Clause 13 inserts the offence in schedule 3 of the Road Traffic Offenders Act 1988, which lists the offences for which fixed penalties can be given.

Where there is frequent non-compliance by a specific vehicle or haulage company, clause 11 will allow for the imposition of a fine up to category 5 on the standard scale—currently £5,000—when someone is convicted of failing to pay the levy. I hope that those measures, coupled with active enforcement, will be seen as a suitable deterrent. Collected fine revenues will be paid into the Consolidated Fund; there was a lot of debate on that when we discussed the Ways and Means resolution.

I am sure the House will agree that by creating fair competition for the UK haulage industry, the Bill will help finally to put right a wrong. I commend the Bill to the House. It is well overdue and should have been introduced some time ago.

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

It is good to see the Secretary of State in his place for this Second Reading debate, and my hon. Friend the Member for Nottingham South (Lilian Greenwood) and I are delighted to see all three Conservative Ministers from the Department for Transport here this afternoon. By leaving a Liberal Democrat Minister in charge of the shop, the coalition Government have made a statement of their trust and confidence—or perhaps he has been given the afternoon off.

[Mr McLoughlin]

I think the hon. Gentleman will find that the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), is responding to a debate in Westminster Hall.

[Jim Fitzpatrick]

I am sure he would be under suspicion—no, I beg your pardon—I am sure he will be watched wherever he goes, because of the excellent job that he does as the senior and longest-serving Minister in the Department for Transport, having survived from 2010. I welcome his new colleagues to their places.

The Secretary of State took something like 18 minutes to move the Second Reading, which is par for the course. According to Hansard from 23 October 2012, column 861, the Under-Secretary, the hon. Member for Lewes, took a minute to move the Ways and Means motion—it actually felt like a lot less than a minute, but he was just procedurally introducing that debate.

The Secretary of State graciously said that both main parties have wanted to introduce this legislation, and I am sure he is aware that in my speech on the Ways and Means motion, I commended the coalition Government for finding a way to introduce this welcome measure.

I do not want to detain the House too long, because I spoke for 18 minutes during the debate on the Ways and Means motion—that was my Second Reading speech and is contained in columns 861 to 865 of Hansard from 23 October 2012, should anybody wish to look at it. We covered a lot during that debate, including road exemptions that the Secretary of State is implementing in clause 3(2). We covered hypothecation at length, and I am sure we will return to that in Committee. We spent a bit of time on road safety—particularly cycle safety—and whether the money raised from the scheme could be devoted to that. We also raised the Secretary of State’s discretion in clause 7(9), and asked questions about short sea shipping and moving freight from road to rail—we will continue to ask about that. We asked questions about the contract for running the scheme, the technology involved, and who is making the arrangements. Cross-border enforcement, which my hon. Friend the Member for Ogmore (Huw Irranca-Davies) raised a moment ago, was also part of the discussion.

A number of issues were raised during that debate. The Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond) answered most of those points, although some were left without a response on the basis that they were detailed matters. I am sure we will look at those in Committee. In principle, however, the Opposition support this measure. We will want to look at the detail when the Bill goes to Committee, but we welcome its arrival in the House this afternoon.