Select Committee on Northern Ireland Affairs Minutes of Evidence

Further Memorandum submitted by the Freight Transport Association

  Thank you for your letter of 18 March confirming that my letter of 12 March will be circulated to the Members of the Northern Ireland Affairs Committee. FTA will be pleased to give oral evidence to the Committee on this matter.

  However FTA would like to bring to the attention of the Committee another related matter which is also causing considerable concern in the road transport industry at the present time. I refer to the recent punitive increases in Vehicle Excise Duty (VED) imposed in the March Budget, e.g., the rate for a 40 tonne FIVE axle (2+3) vehicle was increased from £3,210 to £5,750 per year.

  This type of vehicle is widely used elsewhere in the EU and ROI particularly for long distance international haulage. Setting this high VED rate unfairly penalises the use of this type of vehicle for all UK operators and creates a substantial cost disadvantage compared to continental based operators many of whom enjoy VED rates that are a fraction of the UK levels, e.g., Netherlands £670, France £486, Portugal £308 per year.

  In the Irish Republic, the VED rate for this type of vehicle is £1,384, i.e., more than £4,000 less than the UK rate. For the Northern Ireland operator, this huge differential allied to higher fuel duty rates and the effects of illegal fuel sales means that competing with firms in the Republic is now totally out of the question. For some, it will mean closure because they can no longer run a viable business. Inevitably this situation will result in more Irish vehicles working in Northern Ireland, as well as more Continental vehicles in the UK as a whole, which clearly would be detrimental to the Province's road transport industry.

  In response to this serious situation, many operators have taken the unusual step of registering their vehicles in the Irish Republic to benefit from the lower VED and many more are in the process of doing so. While this practice may go some way to easing the financial burden on operators, it is by no means an ideal solution and it could ultimately result in operators moving their entire fleets and depots into the Republic.

  It is therefore the firm view of FTA that unless effective action is taken by Government to reverse the current trend of escalating transport costs which are crippling the local industry, the inevitable outcome will be that the Province will not have an efficient and profitable indigenous road transport industry and will become increasingly dependent on foreign operators.

  Such a situation would not be in the best economic interests of Northern Ireland and therefore FTA would urge that the Committee should also undertake an enquiry into this matter.

29 March 1999

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