Supplementary Memorandum by the Department
of the Environment, Transport and the Regions (IT 175)
INTEGRATED TRANSPORT WHITE PAPER
At the meeting of the Select Committee on Wednesday
18 November, Mr Donohoe asked at question 320 about the impact
which increased fuel duty could have on the "flagging out"
of freight haulage vehicles. Mr MacDonald of DETR undertook that
someone from the Department would write on this matter, and I
am pleased to do so.
I might begin by explaining that the strategy
of increasing fuel duty by 6 per cent a year above inflation is
one of the most cost effective ways the Government has of reducing
carbon dioxide emissions from road transport, which is one of
the main causes of climate change. Higher fuel taxes encourage
all motorists to reduce their fuel consumption through the purchase
of more fuel efficient vehicles, adoption of greener driving styles,
or less vehicle use.
Furthermore, although the British road haulage
industry is already one of the most efficient in the world, there
is still considerable scope for many British hauliers to reduce
their fuel consumption, through improved driver training, minimising
empty running, and better logistics management. A recent survey
by the Freight Transport Association indicated that, on a like-for-like
basis, the best haulage fleets were almost twice as fuel-efficient
as the worst.
Of course, we recognise that diesel prices,
as a result of the fuel duty strategy, are significantly higher
in the UK compared to continental Europe. However, there is little
evidence of foreign hauliers undercutting domestic hauliers for
domestic business: cabotage accounted for less than a tenth of
one per cent of domestic business when it was abolished in July.
Turning to the specific question asked by Mr
Donohoe, the Department is well aware that some hauliers are considering
registering their vehicles overseas. They will no doubt consider
the total costs of doing so, which can be significant; they should
not concentrate solely on differences in fuel duty. Indeed this
tends to be of little relevance to the question of flagging out,
VED rates would be more important. But hauliers would also want
to consider differences in social and capital taxes, which are
generally lower in the UK.
The Department is also monitoring the extent
of cabotage in the UK; any substantial increase could add pressure
on UK hauliers to register overseas. But as indicated earlier,
that is not the case at present.
11 December 1998