Memorandum by Brian Yeardley Continental
(RH 05)
1. BYCON
The writer has been employed in the Road Haulage
Industry for 34 years, primarily operating vehicles to and from
Western European countries. In 1975 he formed his own company.
Until July 1999 he operated 80 vehicles in the
UK and 20 in Luxembourg and employed 170 personnel. Since September
1999 the number of vehicles operated in the UK has been reduced
to 57 and the number of employees to 135.
I would like to submit evidence regarding the
following item:
(b) the impact of current and past rates
of vehicle excise duty and levels of duty on fuel.
Vehicle Excise Duty
There has always been a very substantial difference
in the annual charge to operate a vehicle on the road in the UK
compared to Europe.
France, Italy and Spain
Hauliers pay a much lower annual cost for road
tax. However, on major routes a road toll is paid. Crossing into
Italy a substantial tunnel toll is paid. The road toll can be
paid monthly and a discount is given for usage. These road tolls
are paid by all operators from member states. Thus a UK operator
in Europe pays substantially more VED than his European competitor
plus the same tolls.
French, Italian, Spanish and all other operators
entering the UK operate here freely. This is prejudicial to UK
operators operating to and from these countries.
The Benelux and Germany
Hauliers pay a much lower annual cost for road
tax and until 1997 all hauliers from other countries were allowed
to operate freely.
Since that time they have introduced a vignette
system whereby prior to crossing the border, any driver must purchase
a daily road tax to cover the number of days he intends to spend
in that country. All operators must pay this tax and any company
operating entirely within the countries can pay an annual fee
which is at a reduced cost per day.
Operators from these countries who enter the
UK operate here freely. This is prejudicial to UK operators operating
to and from these countries.
2. BYCON
Austria
Austrian hauliers pay a lower annual cost for road
tax. All European operators must pay a daily road tax prior to
entering Austria.
Eco Points
In the event that the operator is simply driving
through Austria, eg to eastern Italy, he is not allowed to do
so without a set of Eco Points. These are not required if unloading
in Austria.
These points are issued annually by the Austrian
Transport Authority to other Members States. The points are limited
in number and are then "rationed" to operators who require
them. There are a limited number and they become scarce as the
year end is due.
There is a dispute at this time between Brussels
and Austria as some Austrian authorities are demanding Eco Points
when vehicles are unloading in Austria and driving out of Austria
to load in another country, such as Italy.
Austrian operators entering the UK operate here
freely. They do not require Eco Points and the number of journeys
is unlimited with consignments from any country.
This is prejudicial to UK operators operating
to, from and transiting Austria. The Eco-point system should be
abolished immediately, it is costly to administer and is unfair.
Switzerland (Non EEC)
Swiss operators pay a lower annual road tax
cost. Switzerland is a main transit route to Italy from the UK
and Northern Europe. All operators entering Switzerland must pay
road tax at the border. In year 2000 the cost has doubled. At
the moment and in the past, vehicles only transited Switzerland
if their gross weight was 28,000 kilos or less. Vehicles delivering
in Switzerland heavier than 28,000 kilos must unload the difference
close to the border. The excess must be delivered using a second
vehicle.
3. BYCON
Switzerland has agreed to lift the ban on trucks
weighing over 28 tonnes sometime in the year 2000. However:
(1) a flat rate of Swiss Francs 180 must
be paid for the transit; and
(2) only 250,000 trucks will be able to transit
in 2000, apportioned by allocation using a permit system.
Between 2001 and 2004 the number of permits
will increase and so will the cost depending on vehicle age.
Swiss hauliers can enter the UK weighing 40,000
kilos. They are allowed to operate to and from the UK freely and
in unlimited numbers.
This is prejudicial to UK operators operating
to and from Switzerland.
Austria and Switzerland
In the event of a French transport or agricultural
dispute leading to road-blocks, it is very difficult to go to
and from Italy with heavy loads via Switzerland because of the
weight and it is very difficult via Austria due to the Eco-point
system as each limits the number of vehicles allowed.
Discussions should take place as a matter of
urgency to suspend these regulations when the French are blocking
their roads.
4. BYCON
SUMMARY of the impact of Vehicle Excise Duty
Exchequer Action:
The VED rate on a UK five-axle 40,000 kilos gross
vehicle operating within Europe is £5,750 per vehicle.
When the Chancellor announced this increase
in 1998 the result was that:
The value of such trucks was destroyed at a
stroke as the market for such used vehicles almost disappeared.
We have found it necessary to re-appraise the residual values
of our vehicles as 90 per cent of our fleet are this type of vehicle.
We have reduced the value of each vehicle by
an extra depreciation of £8,000 to represent the current
market price.
This represents a reduction in the value of
our assets by approximately £450,000.
Almost 25 per cent of the value of the company.
Thus, there is this exceptional loss item in our year-end accounts
which will take years to recover.
5. BYCON
Comparison with other European States
Each of our vehicles completes an average of
150,000 kilometres annually. Thus the cost of VED is—3.83
pence per kilometre.
Comparable European Costs
| Spain | 0.20 ppk
| 1,915% lower than UK |
| Luxembourg | 0.23 ppk
| |
| France | 0.33 ppk
| |
| Italy | 0.35 ppk
| |
| Netherlands | 0.40 ppk
| |
| Belgium | 0.60 ppk
| |
| Germany | 1.33 ppk
| |
| Austria | 1.40 ppk
| 273% lower than UK |
*European road tax figures provided by the RHA
The cost of operating one of our trucks averaging 150,000
kilometres annually is 81.7 pence per kilometre.
Thus VED is: 4.69 per cent of the cost of operating a truck.
Please note that UK operators to and from Europe are very
unlikely to obtain a net profit in excess of 2.5 per cent (many
are showing deficits at this time).
It can be seen that the high rate of VED paid by UK operators
has a serious effect on the comparable ability to be as profitable
as our European competitors.
The United Kingdom is the only country in the EEC and Switzerland
where its domicile operators pay a tax for road usage and the
other European Union States operators pay absolutely nothing whilst
operating here.
This situation is clearly prejudicial to UK operators.
6. BYCON
The effects of UK vehicle excise duty cost to Brian Yeardley
Continental Ltd
Year Ending 30 July 1999.
Cost of road fund licence £371,666.
Cost of European road tolls £551,718.
Cost of Mont Blanc/Frejus tunnel £197,607.
The above figures for road and tunnel costs exclude VAT.
The reason for and the reclamation of the VAT I have dealt
with in fuel duty later in my evidence. There is a cost involved
in reclaiming the VAT.
The impact of the above on the UK haulage industry is to
make it less competitive and less profitable compared to the road
haulage industry in other European Union States.
7. BYCON
Levels of Duty on Fuel
Cabotage in the United Kingdom
I do not have sufficient recent experience to comment on the effect
of the levels of fuel duty and thus the increase in price in the
UK on the amount of Cabotage engaged in by other European Union
States operators. I am sure that our Trade Associations will give
evidence on this matter.
The effect on UK Operators in Europe
The cost of fuel in Europe is between :
100 per cent cheaper in Belgium, Luxembourg and Spain and
44 per cent cheaper in Italy.
In 1995 the cheapest states were: Spain, Luxembourg, Belgium
and the United Kingdom.
UK Operators operating in Europe purchase all their fuel
in Europe.
In our year end June 1999 our company spent £2.1155
million excluding VAT on fuel in Europe.
The Exchequer received no duty, nor VAT, from these fuel
purchases.
Buying fuel in Europe one could assume that UK operators
in Europe would thus enjoy the same fuel costs as their competitors
in other European states.
8. BYCON
However, there are costs incurred in refuelling abroad which
our competitors do not incur.
Allowing for these extra costs it is still much cheaper to
refuel in Europe as these extra costs are less than 10 per cent
of the price. These costs are:
Vat Payment
When UK Operators fuel in Europe they are invoiced for the
fuel plus VAT. No-one has been able to inform me why this is so.
I still do not know and believe that this customs or whatever
regulation should be abolished as it increases our costs.
When ICI or any other importer in the UK purchase chemicals
from a company in another European state then the importer is
invoiced VAT free. I fail to understand the difference between
that and ourselves purchasing fuel from a fuel station in another
member state. I commented on this in my evidence of Road Tolls
on Page 6 as the following refers to VAT on both fuel and tolls.
Reclaiming of this VAT
To reclaim VAT from other European States is very difficult,
time consuming and repayment is extremely slow. It is normal for
UK operators to use specialist agents to reclaim this VAT. These
agents vary the cost per country depending on the difficulty of
reclaiming. There is also a company administration cost. The cheapest
cost we have is 6.5 per cent of the refund.
There is a cost of Bank interest. Banks do not recognise
these VAT refunds as debtors so they cannot be used as collateral.
The refunds take a very long time to recover.
The quickest VAT repayment country is France but from the
time of purchase to the time of receipt of the VAT repayment there
is a period of 10 TO 15 MONTHS.
Reclaiming VAT from Italy can take SIX YEARS FROM THE TIME
OF PURCHASE. Thus, a UK Operator who sensibly purchases fuel in
Europe has to pay an extra cost on the fuel because of the inability
to reclaim the VAT as quickly as hauliers from other European
states. These hauliers purchase much less fuel from other states
due to their location.
9. BYCON
It should be stated that European fuel is substantially cheaper
than UK fuel even if the VAT content is included in the European
price and excluded from the UK price.
At the present time our company is owed in excess of £200,000
from European Governments for VAT repayments for fuel and toll
purchases.
Bunkering/Agency Costs
UK Operators purchasing fuel in Europe have to pay a "bunkering"
fee to obtain this fuel compared to their European haulier who
has fuel delivered to his depot.
This difference in cost is between 3 and 5 per cent of the
fuel cost and increases our overall cost by 0.6 per cent as fuel
is responsible for between 15 and 18 per cent of total costs.
Fuel Duty Rebates
Some European Union states allow their hauliers to claim
a fuel duty rebate. The rebate is presently available in Holland
and France. In November 1999 Italy reduced the price of diesel
by one pence per litre (approximately 2 per cent).
I list the comparative cost of fuel to our company at 08.30
on 25 January 2000
Please note that we have included the above extra costs incurred
due to Bunkering and VAT reclamation. The invoice price is approximately
1.5 pence per litre less than these figures.
European diesel prices including on-cost. 25 January 2000—cheapest
first:
| Country | Price in pence per litre
| |
| Luxembourg | 34.0
| (95% cheaper than UK) |
| Belgium | 34.7
| |
| Spain | 34.9
| |
| Austria | 39.8
| |
| France | 41.0
| |
| Germany | 41.1
| |
| Netherlands | 42.3
| |
| Italy | 46.2
| (43.5% cheaper than UK) |
| United Kingdom | 66.3
| |
10. BYCON
Fuel is one of the major costs in a haulage operation. It
can be between—
(a) 17 per cent and (b) 28 per cent of operating costs dependent
on other operations within an organisation.
If UK Operators could obtain fuel in the UK at the same cost
per litre as in Italy, 46.2ppl (the most expensive in Europe)
they would reduce the above operating costs from (a) 17 per cent
to 12.7 per cent and from (b) 28 per cent to 22.85 per cent.
The impact of the levels of duty on fuel to the UK Road Haulage
Industry in comparison with other European Union Road Hauliers
is to make it less competitive and less profitable.
It would be in our company's best interest to reduce the
number of vehicles we operate and the drivers we employ and to
subcontract our transport to other European hauliers who are cheaper,
and in our opinion less regulated in order to enable us to continue
trading and increase profitability.
We would prefer that the Government review their policies
on vehicle excise duty and fuel duty very quickly.
We concur with the RHA March 1998 Budget Submission with
regard to an essential-user rebate and the introduction of a United
Kingdom vignette.
I have given evidence on the areas that my company specialises
in and can compare with hauliers from other European Union States.
I leave other items of the Enquiry to our Trade Associations.
Minister of Transport
I feel that the present government and previous governments
have failed to show leadership and serious interest to the Transport
Industry including the public's use of motor vehicles as well
as the goods and passenger industry.
Proof of such lack of seriousness is evident in the constant
changing of the Minister for Transport by both political parties.
The United Kingdom desperately requires that this position should
be held by a person who will keep the job for a lengthy period
of time. There could then be some continuity and stability of
planning and regulating.
I would suggest that a Transport Supremo should be sought
who would be able to stay in the job for at least five years.
The person should have some experience of all parts of the Transport
Industry and the Public's requirements.
The Appointee should be a non-political person and given
a long-term opportunity to understand and remedy the problems
of the Industry.
Brian Yeardley
February 2000
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