Memorandum by the Freight
Transport Association (IT 121)
INTEGRATED TRANSPORT WHITE PAPER
FTA welcomes the Committee's inquiry into the
Transport White Paper. This is the first formal statement of national
transport policy for nearly 20 years and comes at a vital time
for industry as its competitive position is being eroded by global
events outside its control. Transport policy is an area where
Government action can make a real difference to reducing the overheads
and inefficiencies that industry has to bear.
The Freight Transport Association
The Freight Transport Association represents
the transport interests of 12,000 British businesses, ranging
from small family firms to multi-national, blue-chip companies.
All members have a common interest in the efficient movement of
goods regardless of mode. FTA members operate over 200,000 heavy
goods vehicles, about half the total number of lorries on the
road, and are responsible for more than 90 per cent of the freight
carried on Britain's railways. FTA also represents the interests
of exporters using deep-sea container shipping and air cargo services.
FTA welcomes the White Paper as a much needed
strategic vision and statement of Government priorities. However,
we do not agree with all of its proposals and reasoning and we
do not believe that its policy initiatives can make the required
difference to congestion levels and predicted traffic growth forecasts
in the short term.
Most of White Paper's proposals are likely to
take effect in the long term, especially those requiring primary
legislation. In the meantime traffic levels on the country's road
and rail networks will continue to increase with consequent delays
and inefficiencies to freight movements. This will increase the
costs of distribution and transport for British industry and weaken
its competitiveness at a time of increasingly difficult trading
FTA has identified over 140 separate actions
in the White Paper that would affect the transport of freight.
We recognise that this is a high level document and that the detail
of specific initiatives will be the subject of separate consultations
and supplementary statements. Nevertheless, many of these proposals
raise immediate concerns and questions regarding their effectiveness
in tackling traffic congestion and environmental problems and
their effects on industry's supply chains.
The Government restated in the White Paper its
intention to continue real increases in fuel duty to help its
carbon dioxide reduction targets (paragraph 4.121). The message
to goods vehicles operators is clear, that the tax burden is going
to increase with the intention of lowering emissions by a combination
of more efficient utilisation and better technology.
In essence, the Government has not thought this
approach through. The scale and frequency of the increases are
so great that no operator can possibly make sufficient improvements
in fuel efficiency to keep pace with the rising cost of fuel,
which is the second biggest cost item in running a commercial
goods vehicle. The means of improving efficiency inevitably involve
investment, in equipment, new vehicles or driver training. The
fuel duty escalator is removing much of the cash available in
firms which could otherwise be invested in to invest in such measures.
For example a typical small business (turnover
about £0.75 million) operating 10 38-tonne goods vehicles
would have been spending about £207,000 a year on fuel up
until the date of the last Budget announcements in March of this
year. Following the Budget and its further escalation of fuel
duty the fuel bill for this company would have risen to about
£226,000 a year, an increase of £19,000. This additional
tax is on top of the existing levels of tax raised from each vehicle
that currently stands at £22,000 a year. This sum needs to
be found within the current budgets of the business with immediate
effect, since fuel duty increases are normally applied within
a few hours of the Chancellor's Budget statement. This is in contrast
to other business taxes, which are levied on profits, are assessed
periodically and levied annually with notice given to pay.
The sums involved should be contrasted with
the cost of various environmental improvement measures:
Equip a third of the fleet with a
catalytic converter/particulate trap
Cost: 3 vehicles @ £5,000 per
converter = £15,000
Train each driver in defensive driving
with refresher course
Cost: 10 x 1 day course at six monthly
intervals @ £80/day = £1,600
Inspect and test each vehicle for
exhaust gas emissions and related performance items, three times
Cost: 10 x thrice yearly inspections
@ £225/vehicle = £2,250
The fuel duty escalator is an unfair, ineffective
and highly aggressive form of taxation. The Select Committee should
challenge the Government to justify the effectiveness of this
policy to achieve its environmental objectives given the demonstrable
damage that is being caused to businesses and the negligible effect
on traffic levels and carbon dioxide emissions.
Review of Vehicle Excise Duty
A promised review of the basis for setting rates
of vehicle excise duty (VED) is already underway (paragraph 4.126),
with the stated intention of ensuring that heavy goods vehicles
cover their environmental costs. Whilst industry accepts the need
for its vehicles to contribute their fair share to the upkeep
and maintenance of the road network, there is no justification
in singling out lorries for this arbitrary and highly theoretical
tax treatment. Similar costs are not borne by any other mode of
transport or in any other sector of business. The imposition of
these costs would be a further tax burden on industry and would
be unlikely to result in improved environmental performance.
Industry is further frustrated that having waited
until almost the last moment for the Government to make up its
mind on the vehicle weights issue, it still has no clear indication
when the related tax decisions will be made. This preventing urgently
needed decisions on vehicle acquisition and future contractual
Vehicle excise duty already sends effective
price signals to vehicle operators about the impact of their vehicles
on the road. The White Paper confirms the Government's intention
to tax vehicles with particularly road-wearing configurations
at a high rate. An urgent action for the Government is to specify
the new rates of vehicle excise duty that will be applicable for
the new weights of vehicles permitted from 1 January 1999. A simpler
system of changing the taxable weight of vehicles to allow these
signals to be more easily responded to should also be introduced.
VED should be used as a fiscal price signal
to guide the selection of less road wearing vehicles and to differentiate
between vehicles with lower emissions levels. The Committee should
test the justification for arbitrary increases to cover other
Motorway tolling and urban congestion charging
The Government's proposals on these issues are
vague and subject to further consultation. Both require primary
legislation to be enacted. The pricing of road space for goods
vehicles, especially in congested areas, needs to balance the
value of the space occupied by the vehicle and the importance
to the national and local economy of efficient goods distribution.
There is a strong economic case that goods
vehicles should pay less for road space than other categories
of vehicles, given the essential nature of their business. The
Committee should test the Government's recognition of these arguments.
Workplace parking levy
The purpose of these vaguely defined proposals
appears to be to create a locally levied charge on businesses
to discourage commuting to work by car and provide funding for
local transport plans. Primary legislation is required and consultation
is promised before implementation. However, all discussion of
this proposal has so far failed to recognise that many businesses,
especially in the transport and distribution sector, work unsocial
hours and require staff to travel at times when public transport
is not running. Furthermore, because of the nature of their business,
these sites are often situated in locations that are not well
served by public transport.
The Committee should test the Government's
appreciation of these aspects of its proposals. We note press
speculation that the House of Commons will be exempt from such
a tax because of the unsocial hours worked by members. We expect
similar considerations to apply to the rest of industry.
Hypothecation of funds
Nearly all of the proposals in the White Paper
require the expenditure of new money at national or local level.
The public's acceptance of new taxes and charges will depend largely
on the efficiency with which those funds are re-invested in the
transport infrastructure and systems. Industry, too, is willing
to pay a fair price for improved transport conditions. The Government's
commitment to its new policies will be measured by the extent
to which transport is allowed to self-fund its own remedies or
whether it must continue as a cash cow for other public services.
Securing satisfactory hypothecation of any new funds will be essential
in establishing the trust of the public and industry in these
The Committee should test the arrangements
that are in place between DETR and the Treasury to hypothecate
any new funds raised from transport.
The Government's decision not to raise maximum
lorry weights to 44 tonnes for general operations was a bitter
blow to industry. The move would have delivered immediate reductions
in journey frequency and numbers of vehicles required, especially
in the petroleum, drinks, steel and bulk sectors. The reason given
was because of an adverse impact on rail freight. However, the
scale and nature of this impact has never been disclosed.
Increasing the payload of vehicles within
existing dimensions allows vehicles to be more efficiently used,
resulting in fewer journeys. This is an undeniable efficiency
gain that the Government again refused to let industry benefit
from. The Committee should establish the precise grounds for the
Government's decision so as to inform future debate of this issue.
Impounding and vehicle notification
The White Paper confirms the intention to bring
forward legislation for the detention of illegally impounded vehicles.
The proposals were the subject of a full consultation earlier
this year and included the introduction of a modern system for
the notification of new vehicle acquisitions to Traffic Area Offices.
This would enable vehicle records to be computerised and kept
up to date. FTA sees this as an essential pre-requisite for the
introduction of impounding powers. Proceeding without this change
will fail to close the loophole which many illegal operators exploit
so as to remain undetected.
The Committee should establish the Government's
intentions over the introduction of impounding powers and the
new vehicle notification system. The Committee should obtain assurances
that the full package of proposals will be implemented.
"Quality Freight Partnerships"
We welcome the Government's recognition of the
value of partnership groups in addressing local transport issues.
The White Paper cites FTA's joint initiative with the Local Government
Association, entitled "Delivering the Goods", in which
goods vehicle delivery issues were studied in four major cities,
Aberdeen, Birmingham, Chester and Southampton (paragraph 3.170).
FTA and LGA believe that this formula can be successfully applied
in other locations and are extending the work to 10 other local
authorities this year.
Local Transport Plans
The role of efficient freight transport in the
economic life of urban communities should not be overlooked. Traffic
management schemes need to recognise the need for access by goods
vehicles to retail and business premises. The paradox that night-time
curfews and pedestrianisation schemes force deliveries to be made
during the peak hours of congestion must be addressed. The "Delivering
the Goods" work has already identified good practices that
could be adopted elsewhere.
The Committee should establish Government
recognition of the link between efficient goods deliveries and
the economic vitality of town centres. This should be included
in planning guidance on the development of local transport plans.
Rail Freight Targets
Industry is keen to maximise the use of the
railway system for freight movement. Deteriorating reliability
in the roads network and congestion in urban areas means that
rail freight is already playing a more prominent role in industry's
distribution planning than in the past. The growth targets aspired
to by English, Welsh and Scottish Railway Ltd are therefore realistic
assuming typical rates of growth in economic output.
However, new business needs to be won on its
own merits and it would be unfair and unreasonable for rail freight
operators to rely on an artificial escalation of road freight
costs as the means by which growth in rail freight traffic will
The Committee should seek to better understand
the areas of business where rail freight operators expect traffic
growth to be gained so that the planning decisions taken at national,
regional and local level can be fully informed. The ambition to
"transfer more freight from road to rail" needs to be
translated into a formal strategic plan. Any assumed rates of
increase in road freight costs in order to achieve these targets
should be established.
Strategic Rail Authority
We await further details of the powers and the
role of the proposed Strategic Rail Authority. For the Authority
to be successful it is essential that rail freight customers be
represented on it, so that their needs are influential in its
decision making process.
The Committee should establish the Government's
intentions in this regard and ensure that its constitution properly
reflects the needs and views of customers
Loading Gauge Enhancement
FTA welcomes the endorsement of the plans to
increase the loading gauge on a route from Glasgow to the Channel
Tunnel, as promoted by the Piggyback Consortium. The funding for
this project now urgently needs to be allocated, including Government
grant aid but uncertainty over the size and nature of the future
high-gauge market is delaying progress.
The Committee should seek Government leadership
in this project given its strategic importance to national transport
Transport corridor and route studies
The English Trunk Roads Review deferred decisions
on 31 road schemes pending further study by Regional Planning
Conferences. These studies will examine whether transport demand
along the affected corridor and routes can be met by means other
than the construction of a new road. However, most of these schemes
have been so extensively reviewed in the past that there is little
prospect of realistic alternatives being developed that will relieve
congestion to the extent necessary to avoid the need for the road.
The Committee should establish the terms of
reference for these studies and ensure that they address the expressed
transport preferences of the communities and businesses affected.
The Highways Agency's prime objective has been
changed to that of making best use of existing roads rather than
the construction of new ones. FTA welcomes the Government's commitment
to the maintenance of the existing network. One of the methods
for optimising road capacity identified in the White Paper is
giving priority to essential vehicles, including goods vehicles.
This may range from the shared use of bus lanes in towns to the
designation of particular lanes on congested motorways. FTA welcomes
this innovative use of scarce road capacity and is working with
the Highways Agency to implement practical solutions at sites
where this would be most beneficial.
De-trunking of the Trunk Road Network
Considerable doubt surrounds the proposal to
de-trunk part of the road network and hand back responsibility
for maintenance and upkeep to local authorities. FTA's concerns
include the lack of new money to cover this significant additional
burden on local authorities; the risk of different lengths of
the same road being maintained to different standards; the gradual
break-up of the primary route network; and the introduction of
inappropriate traffic management measures on routes intended for
heavy through traffic.
The Committee should establish the precise
plans of these proposals and obtain assurances that the technique
of de-trunking will not be used as a means of reducing the primary
route network intended for lorry traffic.
Commission for Integrated Transport
The terms of reference for this new body are
still vague but it will be necessary for freight interests to
be properly represented and for the customer's view to be heard
clearly if it is to play a useful role in shaping future policy.
The Committee should test the Government's
plans for the Commission and establish further detail of its role
Supply chain performance
We still await the daughter document to the
White Paper covering freight transport issues in more detail.
However, the White Paper itself recognised the contribution that
efficient supply chain management plays in contributing to industry's
competitiveness. Up to half a company's worth may be held within
its supply chains and small changes in price, reliability or scheduling
can produce disproportionate benefits or costs.
It is by the effect on industry's supply chains
that the effectiveness of the Government's transport policies
in promoting competitiveness and sustainability will be judged.
21 September 1998