HGV Road User Levy Bill

Robert Flello 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.

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[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.

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[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.

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

I am pleased to make a declaration: I have no interests apart from looking after the interests of my constituents. Hon. Members have said that it is time to level the playing field for road haulage in the UK, but to use more thematically correct imagery, it is time to smooth out the anti-competitive bumps faced by UK haulage companies on the road to European markets.

The Bill will not deal with many anti-competitive burdens placed on the many road haulage companies in my constituency and many others. Grangemouth, which is in my constituency, and which is the only EU-recognised inter-modal transport hub in Scotland, and the many communities along the M9, M8 and M876 triangle with employment in road haulage suffer from damaging high taxation on road fuel. Competitor haulage companies from mainland Europe use that fuel price advantage to collect and deliver in the UK, even in Scotland. The Government must look at that seriously if we are really to level out those bumps.

I know hon. Members want to get on with the debate quickly and that they have discussed the Bill between one another many times, but my constituents probably do not know the Bill’s contents. They know that, currently, operators of UK-registered heavy goods vehicles pay charges or tolls in most European countries—as they tell me every time I meet them—but that foreign-registered HGVs do not pay to use the UK road network. The imbalance is unfair to UK HGV operators.

The Bill will seek to address that by introducing a levy for using UK road networks for all HGV vehicles weighing 12 tonnes and over. The requirement to pay the levy will apply to all categories of public road in the UK and to both UK and foreign-registered HGVs. The levy will range from £85 a year for the smallest HGV to £1,000 for the largest. The idea is to link the charge to the amount of damage caused on the roads by different types of HGVs.

The Bill states that UK-registered HGVs will pay the levy for the same period and in the same transaction that they pay vehicle excise duty, which means that they will pay annually. However, foreign-registered vehicles can pay the levy daily, weekly, monthly or annually, which strikes me as an imbalance, because road haulage companies do not have their vehicles on the road all the time. If paying only when they are on the roads is good enough for foreign vehicles, why should that not be so for UK vehicles?

The Bill states that there will be an associated reduction for UK-registered HGVs in the amount of vehicle excise duty that is payable. That is intended to mean that the vast majority of UK-based hauliers will pay no more than they pay currently. However, if 10 million vehicles use the road and pay the levy, and suddenly 15 million or 20 million start to use the roads, why should the 10 million not pay less than they paid previously? Is this just another way for the Government to make money for the Exchequer, and not a way to advantage current road users?

[Robert Flello]

The intention is that UK hauliers should not pay more, but one of my concerns is that there is no guarantee of that. Some of the numbers I have seen suggest that some UK hauliers will end up paying more. That hardly seems like smoothing out the bumps—quite the reverse.

[Michael Connarty]

I do not know whether my hon. Friend is looking over my shoulder from a distance, but I was about to express that exact concern. The Government have failed to devise a scheme that protects all UK-based hauliers, because EU rules mean that vehicle excise duty cannot be set low enough to compensate all Britain’s HGV users.

I have a number of other concerns, which I am sure will be addressed in Committee. The Bill states that no British road haulier will be worse off as a result of the reform, but I would like to see detailed figures on how much the Government expect to raise from the exercise and on how it will be disbursed. Could some of the money be disbursed to keep vehicle licence duty down for UK heavy goods vehicles? Clearly, the Government need to look at whether they can reduce vehicle excise duty in some way.

Why are UK hauliers set to pay the levy one year before non-UK hauliers?

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[Michael Connarty]

I congratulate the Opposition Front Bench on winning that battle before it has even begun. That was a cause for concern for the Opposition, so I am pleased if that has now been swept away by their good offices and oration. It was an issue only a few days ago.

Will the Minister look again at whether there is a way to enable UK-based drivers to have the same options for payment as non-UK-based drivers? I made this point earlier. Why should it be that those not based in the UK will pay weekly, monthly or daily, but UK owners will pay every day, whether they run a vehicle or not? That seems to be somewhat strange.

Returning to the question of how to police the Bill, I have serious concerns. How does the UK guarantee collection of the fines—a point I made to the Minister? He indicated that it would be the driver who would be responsible. The reality is that the driver will be changed the next time the vehicle is sent into the country. The driver could be changed again, again and again. We are talking about a massive permutation of drivers. I have been attached to the police scheme twice in this place and have spent time with the Serious Organised Crime Agency. One difficulty we have is that people come into the country with the deliberate intention of stealing. They are brought to court, bailed and then disappear—they never come back to the country. Someone else will turn up in that or a similar vehicle to steal once again.

Is the Minister trying to tell us that they will be able to catch the driver, and that the next time the vehicle comes into the country it will not have a different driver? It is all right when there is a family car, and either the Minister or the Minister’s wife could have been driving the car when they were fined, as happened in the case involving a former member of the coalition Government, but it is not the same with a heavy goods vehicle. The owner can change the driver every single day, so why is it not the owner of the vehicle who gets fined? The fine would not be able to be avoided then.

[Robert Flello]

Does that not come back to the point that if the owner of the vehicle lives in another country, then without the cross-border ability to pursue the owner of the vehicle, the money will be collected from nowhere?

[Michael Connarty]

My hon. Friend must have unbelievable eyesight, because I am just about to come on to that very point. It is clear that some Government Members argue that we should extract ourselves from arrangements such as the European arrest warrant. In reality, however, whether it is the vehicle owner or even the driver it may be that we have to extract the person, who is a criminal if they are breaking the law, from another country by using the European arrest warrant. If we withdraw from the European arrest warrant agreement, how will we pursue such people among the 500 million people who live in the EU?

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[Damian Collins (Folkestone and Hythe) (Con)]

Like hon. Members on both sides of the House, I congratulate the Government on introducing the Bill. In particular, I congratulate my hon. Friend the Member for Hemel Hempstead (Mike Penning) who, as roads Minister, met with me and listened to the complaints of my constituents regarding the previous charging scheme. My hon. Friend the Member for North West Leicestershire (Andrew Bridgen) made a good point about the Conservative policy group’s proposal in 2007, which set out a scheme similar to the one in the Bill, to introduce HGV road charging. It is a shame that that scheme was not looked at more seriously by the Government of the day, and that more progress was not made. This Government should be congratulated, because a view was expressed that it would not be possible, under EU law, to introduce a charging scheme, but the Bill demonstrates that it is possible.

Most hon. Members have made the point about fairness—fairness to the UK haulage industry and fairness to the UK taxpayer. It is not fair when large HGVs can fill up with cheap fuel in Europe—typically, in somewhere such as Luxembourg—and make an entire tour of the UK before returning home having made no direct financial contribution to the UK at all. They are not buying fuel, and they are not paying any other charges or tolls here. Typically, our lorry drivers have to do that when they visit the European continent, so it is fair that the measure is put in place to redress the balance.

The issue is of keen interest to my constituents. As the Member for Folkestone and Hythe—I am looking at the hon. Member for Strangford (Jim Shannon), who is in his place—I am probably the MP with the closest thing to a land border with the continent of Europe and the EU, as the channel tunnel is in my constituency. The idea of enforcing this measure and these charges across jurisdictions is particularly important, both here and for hauliers operating from outside the United Kingdom. My constituents feel particularly strongly because of our proximity to the port of Dover, and because of the presence of the channel tunnel. We see the costs of the road haulage system on our roads and infrastructure as well. It is a concern that financial compensation is not extracted from foreign hauliers for the road network that they use so freely.

[Robert Flello]

Does the hon. Gentleman agree that it is not just a matter of the wear and tear that overseas hauliers have on our road infrastructure, but that they also cost British hauliers money by congesting the roads? That means that our British hauliers are more inefficient when driving on our roads, because of the added congestion. That is costing our drivers more money in fuel.

[Damian Collins]

The hon. Gentleman’s point underlines how important it is to have a system that creates a level playing field of charging. One set of hauliers who are not paying UK vehicle excise duty get a free rein, while UK hauliers pay for the impact on the infrastructure that they use in common.

There are other issues that make this particularly important. I want to touch on an issue common in areas with ports that service the UK and the continent of Europe. In my constituency, when the port is closed, owing to bad weather or—typically with the Dover-Calais link—industrial action in the port of Calais, Operation Stack comes into action. This means that lorries are stack parked on the motorway, normally closing the coast-bound carriageway of the M20 at different stages. This is very expensive to enforce for Kent police and adds to wear and damage not only on the motorway network but on the roads surrounding it. It is not unusual to see lorries parked on minor roads and roundabouts and in lay-bys, often creating mess and causing damage.

One reason my constituents have pressed for these measures is that there should be some means of extracting payment through a charging scheme and—I hope—through the measures in the Bill to create a register of hauliers licensed to use our roads, which will be published on the internet. That way we will know who these lorries are owned by and where they are coming from, and it might make it easier to enforce other charges, not just the charge for taking out the vignette to use the UK motorway network. I would like more action taken to follow up lorries that cause damage on the roadsides, that litter and that might be associated with other accidents or problems caused while they are here. Creating this database and register of foreign hauliers using our roads will be a good first step towards taking such action.

I do not share all the concerns raised by the hon. Member for Linlithgow and East Falkirk (Michael Connarty). The important thing is that there is a system of fining, and that the fines are enforced. Hauliers that come here frequently and are fined frequently will soon realise that they would be better off taking out the vignette in the first place. If action has to be taken against the lorry driver while they are in the country, and if their progress is delayed, it will often have considerable financial consequences for the hauliers, which operate on a tight schedule while completing their tours. They will not want to be delayed. If lorries are clamped or taken off the roads while the driver waits for someone to pay the fine, that, too, will have financial consequences for the haulier. The important thing, then, is that the charging scheme is in place, that it is enforced equally and that foreign hauliers are made to pay the charge for using the road or receive a financial penalty for not doing so, either directly or indirectly, through the lorries being clamped or taken off the road.

I mentioned earlier the cost of Operation Stack. I am sure that all colleagues will have a view of what the Government could do with the money raised from this charging scheme. Earlier in the debate, the Secretary of State estimated that it would be between £19 million and £23 million a year. I hope that the Government will be mindful of some of the pinch-points in the motorway network, particularly where the cost from the haulage industry—the impact on the roads and the infrastructure —is particularly great. That can be seen in Kent with Operation Stack, especially in the winter months, when the effects are extremely acute. Let us consider whether some of the funds raised could be given, on a discretionary basis, to alleviate some of the damage and problems caused by the haulage operating on some of these major pinch-points, particularly the one running through Kent in my constituency.

I congratulate and thank the Government for bringing forward a Bill that introduces the level playing field that we want and introduces fairness not only for the UK haulage industry but for the UK taxpayer.

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[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

As my right hon. Friend Secretary of State for Transport said in his opening speech, the intent of the Bill is absolutely clear. It will help to deliver a fairer deal for UK hauliers, going some way to correct an inequality that has existed for too long.

On 23 October this year, we held an extensive Ways and Means debate, and I was urged to make a contribution that owed more to quantity than quality. Today, I have been urged to make my speech one of quality rather than quantity, and I will obey that stricture. I should like to thank the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) for the points he raised today and during the Ways and Means debate. He rightly said that the Bill was to be welcomed. I tried in the previous debate to answer some of his questions, and I shall try again to deal with points that he has raised, along with those raised by the hon. Members for Stoke-on-Trent South (Robert Flello), for Ogmore (Huw Irranca-Davies) and for Liverpool, Riverside (Mrs Ellman).

Vehicle excise duty rates will be published in the draft Finance Bill towards the end of 2013, so they will be known well before the start of the levy. There has been a great deal of discussion about enforcement today, and about whether opting out of cross-border enforcement arrangements would hamper enforcement. Let me make it clear that the cross-border enforcement directive is only about data exchange. As we said in the Ways and Means debate, and as my right hon. Friend said earlier today, there is therefore no question of enforcement being hindered by our not being involved in the directive. Outstanding fines and penalties can be pursued even if they are not in the directive.

Questions were raised about who is paying the fine. My right hon. Friend the Secretary of State was exactly right: it is the driver, but the registered vehicle keeper is jointly liable, so VOSA—the Vehicle and Operator Services Agency—or the Driver and Vehicle Agency can act against both, including by impounding vehicles and by taking drivers and operators to court. Drivers without a satisfactory UK address will be required to pay a financial penalty deposit on the spot by a VOSA enforcement officer. This enforcement strategy is designed to overcome the problem, raised by several Opposition Members, of foreign drivers fleeing back to their own country and out of UK jurisdiction. The question of enforcement has been well dealt with, and there is always the option of a prosecution in the magistrates court for the offence, as set out in clause 11.

Questions have been raised about what would happen if the load was seized and how much of it could be seized. The Bill makes it fairly clear that the whole load is seized. I will consider the point of my hon. Friend the Member for Sherwood (Mr Spencer) about a lorry that might be carrying bees, locusts or whatever else, and about what needs to be done at that stage. Let us none the less be clear: the Bill contains the power to seize the load.

As I said in the Ways and Means debate, the Welsh Government were seeking a legislative consent motion at that stage. Since then, after further discussions with departmental officials, they decided that they did not need to do this. Scotland and Northern Ireland had already said that. Let us be clear that the HGV levy is a tax, so it is a reserved matter, but we have no intention of limiting the power of any of the devolved Administrations to introduce charging if they so wish at some future date, and the Bill allows for geographic coverage of the HGV road user levy to be amended by order to allow this, if necessary.

The hon. Member for Strangford (Jim Shannon) asked about Northern Ireland. As I said in the Ways and Means debate, Ireland already has road charges in the form of tolls. The new UK charge applying in Northern Ireland is about the same as existing Irish tolls, so this would be relevant to a round trip from Belfast to Dublin and back again. It would be difficult to exempt Northern Ireland, because the Government are introducing this by means of reducing VED. If the hon. Gentleman wishes, I am sure we can explore the issue further in Committee.

To return to the main aims of the Bill and the key point about the level of charge, we consider our plan to charge large vehicles £10 a day or £1,000 a year to be fair, proportionate and compliant with relevant EU legislation. For the daily amount, we are seeking to charge the highest level permissible while remaining compliant with EU law.

[Robert Flello]

Does the Minister agree that it might be worth the Department going away and looking again to see if there are perhaps more creative ways of raising that amount? As Government Members themselves have said, a driver from the UK going across the channel and perhaps using an Autobahn or paying a toll in Germany might end up paying a great deal more than £10 a day.

[Stephen Hammond]

I will look at that again, but I can tell the hon. Gentleman that we have already looked at it in some detail. The clear requirement is to ensure that the Bill remains compliant with EU regulations and law about the vignette; at that level of charge, it does.

Several hon. Members, including the hon. Member for Stoke-on-Trent South, asked how many UK hauliers would not be better off. I can tell him that 94% of UK hauliers will pay no more than they pay now, and 98% will pay no more than £50. There are effectively two classes of vehicle for which there may be small problems. First, there are the conventional HGVs—either articulated or rigid vehicles without a trailer. For them—a relatively small number of vehicles, perhaps 6,000 out of the 260,000 in the UK fleet—the maximum calculated loss is £79. Then there are a small number—about 7,000 of them on the road—of rigid vehicles with a trailer. Of those we estimate—the Department has done some analysis—that fewer than 50 will face potentially more than £300 extra in costs. There is, however, a relatively simple remedy for them—re-plating. I am sure that that can be explored further in Committee.

The Bill is not designed as a precursor to increased charges for businesses or road users more widely, as some have speculated. As my right hon. Friend the Secretary of State said earlier, our intention is clear: it is to introduce legislation that will level the playing field in order to help UK hauliers.

I am delighted that the Bill has been received so positively today, because I think that it presents an opportunity to correct an injustice that has persisted for far too long; I am delighted with the support that we have had from Members in all parts of the House; and I am delighted that the Bill is to be given a Second Reading today.

Question put and agreed to.

Bill accordingly read a Second time.

HGV Road User Levy Bill (programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the HGV Road User Levy Bill:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 13 December 2012.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on Consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Mr McLoughlin.)

Question agreed to.

Civil Aviation Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Civil Aviation Bill for the purpose of supplementing the Order of 30 January 2012 in the last Session of Parliament (Civil Aviation Bill (Programme)), as varied by the Order of 25 April 2012 in that Session (Civil Aviation Bill (Programme) (No. 2)):

Consideration of Lords Amendments

1. Proceedings on Consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion two hours after their commencement at today’s sitting.

Subsequent stages

2. Any further Message from the Lords may be considered forthwith without any Question being put.

3. The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Mr Simon Burns.)

Question agreed to.