Examination of Witnesses (Questions 620
- 639)
WEDNESDAY 29 MARCH 2000
LORD WHITTY,
MS ANGELA
MOSS, AND
MR IAIN
TODD
620. Perhaps I could add to it before he answers.
What research has been done since that came in?
(Mr Todd) The Department has produced estimates of
the impact of the escalator in terms of how much carbon it will
save the country. The range of estimates has produced, as the
Minister has said, between one and two and a half million tonnes
of carbon. It is in fact a very difficult subject to look at evidence
of behavioural change to prove that saving, because of course
a number of separate policies are happening simultaneously. In
terms of the hard evidence you are asking about, I am afraid I
will just have to go back to the estimates that were made which
are based on elasticities of people's behaviour when various price
changes happen. That is the basis of those estimates.
621. During the estimates being carried out
did you take them in the United Kingdom as a whole or did you
take them in the various parts of the United Kingdom? It mentions
that the south of England would have a greater effect upon it,
being close to the Channel and so forth, and in Northern Ireland
it would have a greater effect because of the land frontier. Was
any account taken of that?
(Mr Todd) The estimates I refer to were done on a
national basis and as far as I know there was not a regional approach
taken. What I can say is that in the work in the last 12 months
in the Competitiveness Working Group we have looked more closely
at the different effects on different parts of the country. That
is a feature. As you say, the south east is more exposed to competition
from mainland Europe haulage and, as you say, there are particular
issues that arise in Scotland and Northern Ireland, so we have
done some work in that area.
Chairman
622. So what conclusions did you reach in relation
to, for example, Northern Ireland?
(Mr Todd) We have not reached any particular conclusions
at this time. The work is continuing. We have been concentrating
on informing the Budget that occurred last week.
623. You must have come to some conclusion in
order to help the Chancellor.
(Lord Whitty) Part of the conclusion is clear, that
in a sense, irrespective of whether it was being effective in
terms of reducing fuel consumption and therefore contributing
to the carbon targets, there was a serious competitiveness problem
in relation to Northern Ireland in particular and something of
a competitiveness problem, although somewhat less than generally
alleged, for the United Kingdom as a whole. As regards competition
with the Republic of Ireland, clearly the totality of taxation
there on operating costs did lead to a serious competitive disadvantage
for Northern Ireland based hauliers and that has been reflected
in at least a short term substantial flagging out into the Republic.
The figures that Iain Todd has referred to in relation to competitiveness
in the south east of England for the industry as a whole with
our nearest neighbours on the continent however do not give such
a clear picture at all. Indeed, we would say that, taking total
operating costs, including taxation, with Belgium and the Netherlands,
we are very much on a par. There was probably a slight advantage
in relation to France but not enormous. These all depend on a
lot of assumptions and they are different from vehicle to vehicle
and type of operation to type of operation. We are still in discussion
with the FTA and the RHA on these very issues, but that is our
general impression.
Miss McIntosh
624. It would be remiss not to recognise the
reduction of the vehicle excise duty in the Budget, but we have
just heard some really quite damning evidence about the number
of vehicles that are either flagged out or registered in, for
example, another EU country over the last two years in particular.
I am wondering if the Minister would accept that, and also if
he would accept by his own admission the fact that crude oil prices
went up by 7p before the Chancellor came to consider his Budget.
Would it not have been a greater help and assistance to UK PLC
in general and our road hauliers in particular not to have any
increase in fuel duty at all for this one year?
(Lord Whitty) I do not think it is reasonable. The
fuel duty of course is a part, and a very significant part, of
our general taxation system. It would have been a very odd decision
not to have kept pace with general inflation in that regard. Indeed,
it does help on the pressure on efficiency in the industry to
keep at least some escalation of the figure. In relation to flagging
out, the indication that we have is that the biggest problem is
in Northern Ireland, where about 5,000 lorries have been flagged
out from the north to the Republic. It is causing great problems,
it is causing problems for the Irish Republic's own administrative
system and, as I understand it, they have tried to reverse that
and already 600 or 700 lorries have been effectively de-flagged
out, if that is the expression. In relation to the rest of the
continental side, our estimate is also about a total of 5,000
which have now been flagged out for a variety of reasons and in
total terms that is not a big impact on the total number of lorries
on the road and some degree of specialisation is expected. It
is also true to say that the comparative competitive advantage
which the hauliers expected from flagging out has by and large
not materialised. There are serious misunderstandings as to what
the implications of flagging out are if you then bring the lorry
back in to operate on domestic haulage within Britain because
you cannot avoid the VED in those circumstances and therefore
some of the propaganda that has gone around the industry has been
misleading to those people it was supposed to help.
625. That answers my question as far as it goes
concerning flagging out but I did also address the issue of registration
in other EU countries. Could the Minister also address that and
also has he formed a view on the Euro-vignette, whether he would
like to see that introduced in this country in some way towards
covering the cost of using EU lorries on our roads?
(Lord Whitty) On the first point, on registration,
and Angela and Iain will correct me if I am wrong, we have not
received evidence of any significant full registration outside—I
am sorry: flagging out is registration of the lorry. I thought
you meant registration of the company.
626. I understood from evidence that was given
that registration of a vehicle can take place in, for example,
an EU country.
(Lord Whitty) Yes, but that is flagging out. If we
are talking about registration of a lorry, that is the same as
flagging out. We are not aware of the registration of whole companies,
which was threatened at one point.
Chairman
627. What happens if somebody is already doing
trans-European trade, who would previously have had the depot
dealing with that on the British side of the Channel and then
decides it is better value to shift it to say France or Belgium?
Have you any instances of large numbers?
(Lord Whitty) Not large numbers.
(Mrs Moss) There have been small numbers, we are not
aware of large ones.
628. What numbers are we talking about?
(Mrs Moss) Thirty or so.
629. Thirty or so?
(Mrs Moss) Yes.
630. You do not have evidence that there are
particular instances where firms have moved the bulk of their
business from the United Kingdom to Belgium.
(Mrs Moss) All the evidence we have on this is anecdotal.
We have no evidence of major changes.
Miss McIntosh: Could I ask the question again
about the Euro-vignette?
Chairman
631. We will come back to that. Do you have
evidence of the reverse? Do you have figures, not anecdotal evidence,
about the amount of inward-traffic that is now being handled by
foreign firms?
(Lord Whitty) We have some evidence of the extent
of cabotage. There is a document we have commissioned under the
Road Haulage Forum, which has just been completed, which we will
let your secretary have. In terms of strict cabotage, the allegation
there were big incursions into the cabotage field by overseas
operators is clearly not proven. It was more than not proven it
was proved not to be true.
632. Not true.
(Lord Whitty) Not true on strict cabotage. The figure
I think is still 0.06 per cent.
633. Is that up or down on the previous year?
(Lord Whitty) It is marginally up on the regulated
system before it was liberalised, very, very marginally. This
is an infinitely small part of the total trade, there is therefore
no evidence of foreign hauliers significantly coming over here
and taking domestic trade. There is, of course, evidence that
there are more foreign vehicles on our roads. In terms of international
trade it is clear that the total number of vehicles passing through
our ports which are foreign registered has grown from 48 per cent
to 60 per cent.
634. We are then told they are not just responsible
for inward-traffic but they are increasingly taking contract work
within the United Kingdom.
(Lord Whitty) We have no evidence of that. The evidence
we have looked at suggests that this is minimal in terms of intra-United
Kingdom trade. It may be that some of that increase of traffic
is back-loading and taking it on the international circuit, that
we cannot tell from the statistics and information that we have.
Mr Gray: They must be or otherwise they would
not be here. A lot of them go back empty.
Chairman
635. If we can ask the questions, Mr Gray, and
wait for the answer.
(Lord Whitty) The fact of the matter is that with
the strength of sterling there are more goods being imported to
this country than was the case prior to that, therefore you expect
more people to be importing anyway. Clearly it is an advantage
to them if they can also back-load and take goods back out again.
Even with the change of manufactured trade you would expect some
increase. It is a significant increase I would accept.
Chairman: We were going to ask you about the
Euro-vignette.
Miss McIntosh: Without the Euro-vignette I would
be very interested to know how they constituted those figures?
Apart from checking the weight of the vehicles and checking the
tachographs I would be very interested to know on what basis they
come to this conclusion?
Chairman
636. How did you do it or is it, again, an estimate?
(Mr Todd) When we started our work in the Competitiveness
Working Group we saw this as a significant gap in our knowledge
and so we commissioned a survey by a professional survey company
to interview foreign lorry drivers as they leave the Dover area
through the Channel tunnel and through the ferries.
637. All of them?
(Mr Todd) We interviewed over 1,000 drivers in January
of this year.
Miss McIntosh
638. What about Felixstowe?
(Mr Todd) We chose the route through which most of
the United Kingdom international travel passes. I should say,
we are very grateful for the help of the FTA and the RHA in drawing
up the questionnaire and planning the work, so we are convinced
that the work is sound and robust.
Chairman
639. Now we have had the commercial, what were
the results?
(Mr Todd) We found that the domestic cabotage figure
was very similar to what we had back in 1997, before the restrictions
on cabotage were lifted, 0.06 per cent of the volume of domestic
goods carried are carried by international vehicles while they
are in this country.
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