The French Scheme
56. The French scheme provides for a rebate of duty
paid, within certain limits, in respect of purchases of fuel for
vehicles over a certain size. In that respect, it has similarities
to the Road Haulage Association's proposal. Customs maintained
that this would not offend any state aid principle because it
was not of regional benefit:[119]
the benefits would be available to all hauliers, not just French
hauliers, while operating in France.[120]
The scheme required a derogation under Article 8(4) of Directive
92/81: the Government did not oppose the French request, agreeing
that it was a matter for subsidiarity and it was approved earlier
this year. Customs and Excise has no information yet on how foreign
lorries are treated under this scheme.[121]
57. Both the Economic Secretary and Lord Dubs raised
doubts as to whether the French scheme, or something similar could
be applied to Northern Ireland. The Economic Secretary said:[122]
"The difficulty is that
if we try and cut the level of duty for any group of people we
then find ourselves immediately up against the state aid and faced
with the need for a derogation ...."
She also emphasised the centrality of the consideration
as to whether a measure might be held by the Commission to constitute
an illegal state aid,[123]
and Lord Dubs commented:[124]
".... the French scheme
is not regional, it covers the whole of France and I think there
would be some difficulty in principle in applying that sort of
scheme to Northern Ireland."
58. In short, none of the general measures put
forward commended themselves to Government, although we welcome
Lord Dubs' undertaking to look again, without prejudice, at the
Dutch scheme.[125]
However, we hold out little hope that such a scheme will be introduced
in Northern Ireland, not least because the Commission has now
decided that the financial support given to majority of retailers
under the Dutch scheme is incompatible with Community law and
should be repaid.[126]
Road hauliers
59. Although the primary thrust of our enquiry related
to the impact on fuel retailers, we also received evidence about
the impact on road hauliers. The Road Haulage Association told
us that hauliers typically operate on a margin of 3% turnover,
and that fuel costs can represent anything from 25 to 40% of total
operating costs.[127]
Access to cheaper fuels therefore had a marked competitive impact
on hauliers, and had been exacerbated by the March 1999 Budget
increases in fuel duty and also, for the heaviest lorries, Vehicle
Excise Duty rates for heavy lorries,[128]
which in both cases widened the differentials with the equivalent
Republic of Ireland duties.
60. Concern was expressed to us that these large
duty differentials might encourage hauliers to transfer some or
all of their operations to the Republic of Ireland and then take
advantage of the freedom to operate throughout the European Union
to carry on their Northern Ireland business much as at present.[129]
As Mr Armstrong, of the Freight Transport Association, put it,[130]
many larger operators in Northern Ireland who already have depots
in the Republic of Ireland "are actively considering or actively
engaging in "flagging out" activity[131]
or, at the very least, transferring the bulk of the fleet to operate
in the Republic [of Ireland] and perhaps maintaining only a smaller
proportion of the total fleet in [Northern Ireland]."
61. In the light of this evidence, we sought further
written evidence from the Department of the Environment for Northern
Ireland, and questioned Lord Dubs as to the extent of the problem.
He doubted[132]
if this was a serious problem, as companies would need to take
an overall view of the advantages and disadvantages of moving,
and that Vehicle Excise Duty had increased only for the largest
vehicles, which constituted only 120 vehicles out of the 20,000
vehicles in Northern Ireland.
59 Certain commercial vehicles may also be carrying
small supplementary tanks of gas oil, for example, to power refrigerated
units. Back
60 Appendix
11, p. 92. Back
61 Q17. Back
62 Ev.
p. 11. Back
63 Q37.
Back
64 Q192. Back
65 Ev.
p. 50. Back
66 Q191. Back
67 Q191. Back
68 Ev.
p. 1; Q40. Back
69 Ev.
p. 25-6, 30-1. Back
70 Q102. Back
71 Q112. Back
72 Q113. Back
73 Ev.
p. 26. Back
74 Q80. Back
75 Q81. Back
76 Q100-1. Back
77 Q86,
115. Back
78 Q116. Back
79 Q82. Back
80 Q81. Back
81 The
new Deputy Collector was appointed on 1 March 1999. Back
82 Q80.
See also Q261, 264. Back
83 Q249. Back
84 Ev.
p. 31. Back
85 Q99.
See also Q102. Back
86 Q93-4.
See also Appendix 15, p.97. Back
87 Ev.
p. 30, 32 and Q247. Back
88 Q81,
160. Back
89 Q249. Back
90 Q251,
262. Back
91 Q263. Back
92 Q261. Back
93 Q122-6. Back
94 Ev.
p. 12. Back
95 Appendix
2, p. 80. Back
96 Appendix
3, p. 81. Back
97 Q265-6
and Appendix 17, p.99. Back
98 Appendix
3, p. 81. See also Appendix 1, p. 79. Back
99 Appendix
3, p. 81. Back
100 Q49,
51-2 and 70. See also Q296. Back
101 Q253.
The Rt Hon Adam Ingram MP met representatives of the Petrol Retailers'
Association on 7 June 1999. Back
102 See,
e.g., Appendix 2, p. 80. Back
103 Q147-8. Back
104 Appendix
15, p. 97. Back
105 Q84. Back
106 Q81. Back
107 Appendix
4, p. 85. Back
108 Appendix
12, p. 93. Back
109 The
de minimis rule on state aids sets a limit per enterprise. Back
110 Q246. Back
111 Q274. Back
112 Q240,
245, 276. Back
113 Q274.
See also Appendix 4, p. 85. Back
114 Q273.
We also received evidence that at least one Great Britain- based
operator is ferrying vehicles to Dublin for refuelling (Q195). Back
115 Q273. Back
116 Q274. Back
117 'Fair
Play on Fuel'. Back
118 Q279. Back
119 Appendix
4, p. 85. Back
120 Appendix
4, p. 85. Back
121 Appendix
15, p.97. Back
122 Q279. Back
123 Q310. Back
124 Q309. Back
125 Q286. Back
126 See
Commission Press Notice IP/99/529. Commissioner Van Miert stated
"This decision shows that State aid in general and the de
minimis rule in particular is not a suitable instrument for
compensating border companies for differences in taxes between
two countries." Back
127 Q182,
207. Back
128 Q207,
211. Back
129 Q231-3. Back
130 Q206. Back
131 "Flagging
out" is the term used to describe the relocation of a road
haulage business from one country to another, or the establishment
of a subsidiary in another country, to take advantage of perceived
lower operating costs there. Back
132 Q292-3.
See also Appendix 14, p. 95. Back