PROCEEDINGS OF THE TRANSPORT SUB-COMMITTEE
RELATING TO THE REPORT
WEDNESDAY 12 JULY 2000
Members present:
Mrs Gwyneth Dunwoody, in the Chair
| Mr Andrew F Bennett |
Miss Anne McIntosh |
| Mr Brian Donohoe | Mr Bill O'Brien
|
| Mr James Gray | Mr Bill Olner
|
| Dr Stephen Ladyman |
Mr George Stevenson |
The Sub-committee deliberated.
Draft Report [The Road Haulage Industry], proposed
by the Chairman, brought up and read.
Ordered, That the draft Report be read
a second time, paragraph by paragraph.
Paragraphs 1 to 22 read and agreed to.
Paragraph 23 read, as follows:
23. Successive Governments have, over a number
of years, used fuel duty and VED to "promote fair and transparent
pricing through taxation". The primary mechanism by which
they have done so is through a commitment from 1993 to raising
fuel duties by at least 5 per cent in real terms each year, a
policy known as the fuel duty escalator. The objective of the
escalator was to ensure that "motorists should bear the full
costs of driving - not only wear and tear and congestion on the
roads, but the wider environmental costs", and also generally
to reduce the use of road transport. The present Government, elected
in 1997, decided to retain the escalator, and increased its rate
to 6 per cent per year from 1997, a rate continued in the Budgets
of 1998 and 1999. The 1998 Budget also increased the difference
in the price of ordinary and low-sulphur diesel to two pence per
litre, to encourage hauliers to switch to the 'cleaner' fuel.
Amendment proposed, in line 8, after the words
"and 1999" to insert the words "This means that
the diesel price in the United Kingdom today is 84 pence per litre,
which compares with 52 pence per litre in France, and 47 pence
per litre in Belgium. It costs approximately £636 (excluding
VAT) to fill up the average 1,000 litre tank on a lorry in the
United Kingdom, compared with £337 in Belgium.".-(Mr
Gray).
Question put, That the Amendment be made.
The Sub-committee divided.
| Ayes, 1 | Noes, 3
|
| Mr James Gray | Mr Andrew F Bennett
|
| Mr Brian Donohoe |
| Mr George Stevenson |
Paragraph agreed to.
Paragraph 24 read, as follows:
24. VED is levied on all vehicles, and has been
intended to meet some of the external costs imposed by road transport:
the revenue raised through VED has commonly been thought to contribute
to road and bridge maintenance. Rates of VED for lorries are in
any event higher than those for other vehicles to reflect the
greater damage they cause to the infrastructure. The Government
has also sought to use VED specifically to penalise hauliers who
use particularly damaging lorries, and thus to encourage them
to switch to other vehicle types. For example, the 1997 Budget
introduced a rebate of £500 on VED for lorries which meet
stringent emissions standards, and the 1999 Budget established
different rates of VED for vehicles of different weights and different
numbers of axles, to reflect the degrees to which each damages
the road surface. Therefore VED for 40 tonne, five-axle lorries,
which had only been allowed on the United Kingdom's roads from
1 January 1999, was set at £5,750. This was because they
cause more than 30 per cent more damage to the road than five-axle
vehicles operating at 38 tonnes, the previous maximum weight,
and the duty was set, the Government said, "strongly to discourage
their use at this weight". By contrast, VED for 41 tonne
6-axle lorries, which cause much less road damage, was set at
£2,500.
Amendment proposed, in line 15, after the words
"at £2,500" to insert the words "This compares
with, for example, VED in Belgium for a 40 tonne, 5-axle lorry
of £835.".-(Mr Gray).
Question put, That the Amendment be made.
The Sub-committee divided.
| Ayes, 1 | Noes, 3
|
| Mr James Gray | Mr Andrew F Bennett
|
| Mr Brian Donohoe |
| Mr George Stevenson |
Paragraph agreed to.
Paragraphs 25 to 49 read and agreed to.
Paragraph 50 read, as follows:
50. Hauliers are clearly aggrieved by policies
such as the fuel duty escalator and high rates of VED for certain
types of lorry, and are concerned about the impact they have had
on their businesses. We broadly support the principles which
have underpinned the Government's taxation policies towards the
road haulage industry, although such policies should be applied
in a sensible and pragmatic way. Transporting goods by road
does impose social and environmental costs which extend beyond
the immediate concerns of hauliers, and we believe that it is
appropriate for the Government to attempt to establish a sustainable
market, using fuel duty and VED to force hauliers to take those
costs into account, to alter their behaviour in terms of the amount
of use they make of their vehicles, to encourage them to use cleaner
fuels, more efficient engines, and less damaging axle-loads, and
to provide support for the rail freight industry.
Amendment proposed, in line 3, to leave out
from "businesses" to "Transporting" in line
5 and to insert the words "It is clear that even after recent
changes to VED, the Government's taxation policies on hauliers
risk severely damaging the United Kingdom's haulage industry.
The Government must further reduce VED and freeze fuel costs so
that the United Kingdom's industry may once again become competitive
with that of mainland Europe".-(Mr Gray).
Question put, That the Amendment be made.
The Sub-committee divided.
| Ayes, 1 | Noes, 3
|
| Mr James Gray | Mr Andrew F Bennett
|
| Mr Brian Donohoe |
| Mr George Stevenson |
Paragraph agreed to.
Paragraph 51 read and agreed to.
Paragraph 52 read, as follows:
52. The profitability and viability of road
haulage companies are undermined by the long-standing problem
of very low haulage rates. There appear to be three reasons why
those rates are kept so low: entry to the industry is too easy,
companies face competition from hauliers based in other European
countries, and some companies within the industry routinely ignore
regulations followed by others in order to gain an advantage,
a point we return to below. We believe that hauliers should be
able to raise their rates to pass on their true costs to their
customers, and ultimately to the consumer. We therefore recommend
that the financial conditions which must be met before hauliers
are granted an O-licence be increased substantially to ensure
that new entrants to the industry are not financially unviable
companies able consistently to undercut existing operators. It
is important nonetheless that barriers to entry to the industry
should not unduly deter smaller operators in favour of larger
companies. The road haulage industry must remain a fully open
and competitive one.
Amendment proposed, in line 7, to leave out
from "that the" to "It is" in line 10 and
to insert the words "Government might consider the financial
conditions which must be met before hauliers are granted an O-licence
with a view to ensuring that new entrants to the industry are
not financially unviable companies able consistently to undercut
existing operators".-(Mr Gray).
Question put, That the Amendment be made.
The Sub-committee divided.
| Ayes, 1 | Noes, 3
|
| Mr James Gray | Mr Andrew F Bennett
|
| Mr Brian Donohoe |
| Mr George Stevenson |
Paragraph agreed to.
Paragraph 53 read, as follows:
53. The industry's primary concern is that high
rates of fuel duty and VED have made it uncompetitive relative
to European hauliers which are now allowed to undertake cabotage
within the United Kingdom. Although we did not receive compelling
evidence that haulage companies based in the United Kingdom have
already lost significant business to foreign competitors, we acknowledge
that the threat to domestic hauliers is real. However, as we have
said, we broadly support the principle which lies behind the Government's
policies in respect of fuel duty and VED, although we believe
that it should be pragmatic in their application. We do not
therefore support measures such as the Essential User Rebate,
the designation of 'commercial diesel', or treating fuel as a
tax-deductible expense for hauliers, or an across-the-board reduction
in VED, which are designed to relieve the tax burden on haulage
companies. It is our contention that the Government is broadly
right to seek to ensure that the road haulage industry meets all
of its social and environmental costs, and to attempt to alter
the behaviour of haulage companies, through its taxation policies.
It should not abandon such policies simply because the Governments
of other European Union member states have not followed its example,
although it should respond flexibly to changes in circumstances
such as rapidly rising oil prices.
Amendment proposed, in line 5, to leave out
from "real" to "We do not" in line 7.-(Mr
James Gray).
Question put, That the Amendment be made.
The Sub-committee divided.
| Ayes, 1 | Noes, 3
|
| Mr James Gray | Mr Andrew F Bennett
|
| Mr Brian Donohoe |
| Mr George Stevenson |
Another Amendment proposed, in line 7, to leave
out the word "not", and after the word "therefore"
to insert the word "strongly".-(Mr Gray).
Question put, That the Amendment be made.
The Sub-committee divided.
| Ayes, 1 | Noes, 3
|
| Mr James Gray | Mr Andrew F Bennett
|
| Mr Brian Donohoe |
| Mr George Stevenson |
Another Amendment proposed, in line 10, to leave
out from "companies" to the end of the paragraph.-(Mr
James Gray).
The Sub-committee divided.
| Ayes, 1 | Noes, 3
|
| Mr James Gray | Mr Andrew F Bennett
|
| Mr Brian Donohoe |
| Mr George Stevenson |
Paragraph agreed to.
Paragraphs 54 to 108 read and agreed to.
Paragraph 109 read, as follows:
109. We have not accepted the principal argument
advanced by our witnesses from the road haulage industry, that
fuel prices and VED are too high, and should fall. We believe
that in the past haulage rates have been unrealistically low,
and have not reflected the true costs imposed by the road haulage
industry on our society. The real increases in fuel duties, although
imposed too rigidly in the face of rising oil prices, have gone
some way to creating a sustainable market in road freight transport.
If our objective is a safe and clean road haulage industry, which
contributes less to pollution and congestion, and which employs
well-trained drivers, and a sustainable transport market in which
rail freight is able to compete fairly with road haulage, then
haulage rates must rise to reflect the true costs of freight transport.
The small rise in the end-price of goods (only one or two per
cent of the total price) that results is a price that we should
all be willing to pay.
Amendment proposed, in line 1, leave out the
words "have not accepted", and insert the words "are
wholeheartedly sympathetic with", and leave out from "fall"
in line 2 to the end of the paragraph.-(Mr Gray)
Question put, That the Amendment be made.
The Sub-committee divided.
| Ayes, 1 | Noes, 3
|
| Mr James Gray | Mr Andrew F Bennett
|
| Mr Brian Donohoe |
| Mr George Stevenson |
Paragraph agreed to.
Paragraph 110 read and agreed to.
Resolved, That the Report be the Fourth
Report of the Sub-committee to the Committee.
Ordered, That the Chairman do make the
Report to the Committee.
[Adjourned
till Wednesday 19 July at a quarter to Four o'clock.
|
