Road to ruin

Proposals to introduce road charging on foreign trucks in Britain will have serious cost implications for the Irish road haulage industry and
Irish business. John Loughran looks at the controversial new charge, which will come into force in 2006.

In November 2001 the British Treasury issued a consultation document "Modernising the Taxation of the Haulage Industry" which identified and sought views on two options for a lorry road-user charge.

The consultation document suggested a time-based scheme, which would give each non-UK lorry concerned the entitlement to use UK roads covered by the scheme, for a specified time that could vary from a day to a year. This proposal also suggested the charge might vary according to the weight and axle structure of the vehicle.

The document also suggested a distance-based scheme which could be based on microwave technology or remote sensing technology, such as a Global Positioning System using satellite technology. These technologies would allow for charges to be varied by time and place.

In the 2002 Budget Chancellor Gordon Brown announced his intention to introduce a distance based scheme. "Hauliers from overseas should pay their fare share towards the cost of using our roads. I propose to go ahead with a road user charge for lorries that is distance based with offsetting tax cuts for the UK haulage industry."

In the wake of the Budget the Government confirmed that all roads in the UK will be included in the scheme. It revealed that two different rates, one for motorways and one for other roads will be introduced.

Charges will vary according to axle configurations, vehicle weight and emissions. The British Government is also reserving the right to set different rates for different times of the day.

UK Chancellor Gordon Brown

The scheme will be based on GPS technology, but there will also be a paper / internet based scheme for infrequent users. Ultimately the scheme will apply to all vehicles over 3.5 tonnes although it will be limited to large HGVs initially.

For many years the Road Haulage Association in Britain has claimed that it members were at a cost disadvantage over European hauliers because of the high rates of excise duty levied on fuel in the UK.
More recently the RHA argued that hauliers in Britain were also losing out on the domestic market, because non UK hauliers weren't contributing to the upkeep of the roads network in the form of road tax.

Earlier this year, members of the RHA, the UK Treasury and Customs and Excise officials went on a fact finding mission to Cologne to review arrangements for the introduction of a distance-based lorry road-user charge, which will be introduced on November 1 (see article on this issue).
The delegation was given a detailed explanation on how the new system in Germany will work. The demonstration was carried out in the cab of a truck on the Autobahn. The delegation also heard details on the enforcement procedures that have been put in place.

It now seems likely that the British scheme will be closely modelled on its German counterpart, which is using state-of-the-art GPS technology. In the Germany the "black box “technology is being supplied free-of-charge to German hauliers, who will have to bear just the cost of installation.

However, it seems likely that non-German hauliers will be hit with a "double whammy" - having to purchase the "black box" technology and pay for its installation. The British Government will undoubtedly follow suit in this regard, especially for non-UK hauliers.

The Lorry Road-User Charging scheme spells bad news for the Irish haulage industry and the Irish business community in general. From 2006 onwards hauliers will have to pay for the privilege of using the UK roads network as a gateway to mainland Europe. Hauliers will also have to pay to deliver and collect goods in the UK.

The introduction of the new road charge is still three years away, which gives Irish hauliers a little breathing space and time to consider a measured response. The Irish Road Haulage Association has raised its objections to the proposed introduction of new road tolls in France and the German road-user charge. It will no doubt be vociferous in its condemnation of this charge.

The employers' body IBEC is already flying the Irish flag in relation to this issue. IBEC's transport director Reg McCabe said the charges, likely to be set at 15 cent per kilometre, would add approximately 15 per cent to transport operators' costs.

He said haulage operators would also have to bear the cost of installing the sophisticated "black box" tracking devices to monitor distances covered.
McCabe claims the system will impose "intolerable" regulatory and administrative costs on companies trading with Britain or accessing continental markets through Britain.

He said the proposals are anti-trade and anti-business and the introduction of toll roads would be a better way of reducing congestion at a much lower cost to industry.

IBEC has now called on the Irish Government to raise the matter with Britain through the Inter-Governmental Conference.
Watch this space for future developments.