WEDNESDAY 29 MARCH 2000
_________
Members present:
Mrs Gwyneth Dunwoody, in the Chair
Mr Andrew F Bennett
Mr Brian H Donohoe
Mr Clifford Forsythe
Mr James Gray
Dr Stephen Ladyman
Miss Anne McIntosh
_________
EXAMINATION OF WITNESSES
LORD WHITTY, Parliamentary Under-Secretary of State, MS ANGELA MOSS,
Head of Road Haulage Division, and MR IAIN TODD, Head of Transport,
Environment and Taxation Division, Department of the Environment,
Transport and the Regions, examined.
Chairman
610. Good afternoon to you, my Lord. I apologise for keeping you.
We are Members of the Lower House; we have no discipline, you understand. Do
you want to make some opening remarks?
(Lord Whitty) Very briefly, madam Chairman. First of all can I
introduce Iain Todd who is the Head of our Transport, Environment and Taxation
Division, and Angela Moss, who is the Head of Road Haulage Division, who will
be helping me out on the more difficult questions, I trust.
611. I am very glad to hear that. Do you have anything that you
wish to say first?
(Lord Whitty) Just atmospherically, madam Chairman.
612. You are very good at that. Do carry on.
(Lord Whitty) It is probably the case that there is an impression that
the relationship between the road haulage industry and the government has been
through some choppy times. Although the industry did welcome our Transport
White Paper and the Sustainable Distribution document there have been some
fairly public disputes, particularly over issues of taxation. That is really
why we felt a year or so ago that we needed a closer relationship with the
industry and we set up the Road Haulage Forum to try and sort out some of the
differences between us, both in terms of information and facts and in terms
of policy. We have not entirely reached an accord but on the other hand we
have clarified a lot of those issues and the relationship is much better now.
I think you will have observed that following the Budget, for example, there
was a fair degree of appreciation from at least sections of the industry for
the change in relationship and I think it is important. Of course we cannot
give the industry everything they want. We have environmental concerns, we
have transport mode concerns, and we will continue hopefully now in the Road
Haulage Forum to debate those constructively whereas previously we have been
engaged in a certain degree of megaphone diplomacy up until about a year ago.
I hope that relationship will have improved and I hope that reflects through
the witnesses that you receive.
613. Thank you. That is helpful. For what reasons is the British
road haulage industry a world leader?
(Lord Whitty) In the sense that the top end of the industry in
particular has developed logistical systems which are certainly in advance of
most of Europe and probably most of America. That has meant that they have
to some extent dragged the rest of the industry with them in terms of the way
they have developed their own systems. Part of the pressure on that I would
say was that there are costs and regulation pressures on them to improve their
performance and that has had a significant effect certainly on the own account
industry and very substantially at the top end of the hire and reward industry
as well. That is not to say that there are not some pretty inefficient firms
at the bottom end of the industry as well as some very efficient ones. It is
an industry of different parts, as you will know, madam Chairman.
614. So whilst the government is undoubtedly committed to
maintaining the United Kingdom's position at the competitive edge, is it also
committed to making sure that that is in the person of and in the firms of
British hauliers?
(Lord Whitty) The interests of UK PLC, if I can use that rather trite
term, are that it must be important for the rest of the British economy that
their goods are distributed and delivered in the most efficient way. That
involves some degree of testing the British industry against competition as
with the rest of industry.
615. So you are not concerned if a proportion of our goods, either
internally or externally, are carried by foreign hauliers?
(Lord Whitty) I am concerned that we make profits out of road haulage
which are in this country, that there is employment in this country, and by
and large it is the British industry which can best meet the requirements of
the consignors within this country.
616. Is that why the government has decided to suspend the fuel
duty escalator?
(Lord Whitty) The fuel duty escalator as you know was devised by both
the last administration and us to contribute towards the meeting of our
climate change targets, both through improved fuel efficiency and through
greater efficiency of the use of vehicles on our roads. The increase in the
escalator which the Chancellor announced at the beginning of this government
has increased the price very substantially. However, that was against the
background of generally a reduction in the crude oil price. Last year we felt
that there was too much pressure on the industry by continued automatic
escalation at the previous level and the Chancellor therefore announced that
it would not be automatic thereafter and he would judge it Budget by Budget.
This last Budget of course we have seen a very substantial increase in crude
oil prices. If we had gone with the escalator that would have added about 3p
to pump prices, whereas actually the crude oil price increase has already
added 7p, and hence the Chancellor decided that there should be no increase
above inflation this time round.
Mr Bennett
617. How much has that affected CO2 emissions?
(Lord Whitty) Of course it is a long term effect on CO2 emissions. What
it has done clearly in the haulage industry - this is leaving aside cars of
course to which it also applies - is that both indirectly through improved
technology and directly in terms of efficient distribution there has been a
10 per cent improvement of fuel efficiency and some improvement in efficient
distribution. The target of course is for the year 2010 and we reckon that
running the escalator from 1993 to 1999 has got us at least one million tonnes
of carbon less and possibly up to 2.5 million tonnes of carbon less.
Chairman
618. And you are now going to dissipate the advance? Is that it?
(Lord Whitty) No, that advance is in the pocket, and the pressure on the
industry, the fuel industry and the motor industry and the haulage industry,
is to improve their technology so that there will be further pressures
continuing through that period. We are expecting some continuing pressure on
fuel efficiency and the haulage industry to contribute further so that we
reach the top end of that range.
Mr Forsythe
619. Before the fuel duty escalator came in was any research done
as to what effect it would have on industry such as the road haulage industry?
(Lord Whitty) Since it was brought in in 1993 that is probably not a
question I can easily answer. If you are looking for pre-1993 research I
think I had better turn to my colleague, Mr Todd, who may be able to answer
that question.
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 on, 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 of
flagging out, although they do not always call it that, 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 a few small ones, 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 system which was
under-regularised 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.
640. Did you generate the 1997 figure in the same way?
(Mr Todd) No, it was done differently because as that time cabotage was
done through a permit system and so it was obtained in a different manner but
the basis of the calculation is exactly the same as was done previously.
641. You are saying that even though you did it differently the
questions were the same, the baseline was the same and it is statistically
robust; is that what you are saying?
(Mr Todd) We say so, yes, and our statisticians would agree.
642. Robust enough for us to have access to it?
(Lord Whitty) This is the document I just referred to.
643. The Euro-vignette.
(Lord Whitty) The Euro-vignette - presumably you mean a Brit-vignette.
Chairman: Whatever it is called.
Mr Donohoe
644. Euro-speak.
(Lord Whitty) It will be a Brit-disc on certain elements of the road.
Chairman
645. It is no worse than a Euro-vignette.
(Lord Whitty) An attempt was made to ensure that foreign vehicles made
a contribution more or less equivalent to the VED contribution which British
based vehicles would have to make. When we looked at this initially on the
Road Haulage Forum, I and others thought it was an attractive idea, however
there are restrictions on what you can do under European law because there are
vignettes across Europe and there is a maximum figure. The maximum figure is
œ760 a year. If you work that out that is nowhere near the top of the range
VED.
646. It would be something, would it not, my Lord?
(Lord Whitty) It would be something but it would not make the
differential between paying VED and---
647. Why not do what the French police do, pull the lorries off
the road and stick them at the back of some police station and leave them
there? This is an alternative form.
(Lord Whitty) I could not possibly condone that in this country.
648. It is what the French do.
(Lord Whitty) We are restricted on how much we can charge under the
Euro-vignette. Our estimate would suggest that the cost of administering that
would be more than the money that came in, on which the Treasury, no doubt,
would have views.
Miss McIntosh
649. The cost of commissioning would be less?
(Lord Whitty) The cost of collecting it would be at least as much as the
money we got in.
Chairman: We might want to pursue that sometime.
Mr Donohoe
650. What do you think the effect of the extent of driver fatigue
is within the industry?
(Lord Whitty) It is difficult to estimate precisely but it is certainly
the case that both the unions and the Health and Safety Executive are now
taking an interest in this field, and the Vehicle Inspectorate would suggest
that some of the accidents which are caused which involve HGVs are due to
driver fatigue. It is one of the reasons why we wish to maintain and enforce
driver hour regulations, both British and European.
651. Do you think it is right, in these circumstances, that the
drivers who drive during the week drive at the weekend, driving lorries for
the TA, for instance? Without there being any tachograph they can drive up
to thirteen hours additional without there being any involvement. Do you
think that is right? Do you think that should happen?
(Lord Whitty) I do not think that is wise. Whether one can control what
are basically voluntary activities outside the field work is an entirely
different matter.
652. Do you think that the hours of driving at present are too
high?
(Lord Whitty) I do not know that I would say on average they are too
high but there are certainly drivers on the road that have been driving for
too long.
Chairman
653. I think Mr Donohoe was referring to the restrictions.
(Lord Whitty) The restrictions. Broadly speaking we think that the
United Kingdom restrictions are probably roughly appropriate. Of course this
will be affected by the restrictions on total working time which will de facto
bring down the driving time.
Mr Donohoe
654. What are they by comparison to what they are on the
continent?
(Lord Whitty) I have no figures to indicate that our drivers drive more.
655. Are they higher or lower than say France, Germany or Belgium?
(Mrs Moss) Certainly there are fewer hours driven in France because of
the restrictions there on the total working week. I do not think we have any
evidence to suggest higher, lower or significantly different in any other way
in any other country.
656. Has anybody done anything in terms of a study that suggests
that the French driver of the HGV is by far safer as a driver than the United
Kingdom one?
(Lord Whitty) No. Only the road traffic statistics would suggest that.
The French road safety record, including for HGVs, is worse than ours. I do
not think that necessarily proves a causal link at all in either direction but
there are no statistics that would suggest that.
657. What would be your opinion of incentives being paid to
drivers, bonuses?
(Lord Whitty) We wondered about this because we had seen this is a
concern of the Committee. Because we do not have records of the precise
payment systems or collective agreements on all companies the overall figure
is that of pay only, less than four per cent of the income of the road haulage
industry is in terms of bonuses. I personally think some bonus schemes might
well be counterproductive if they force drivers to speed or drive over their
hours in order to receive financial reward. I have no particular evidence
that particular bonus schemes have achieved that. You can see how they could
be detrimental.
Mr Gray
658. Two matters. First of all, the Road Haulage Forum, is that in
final form at the moment?
(Lord Whitty) We have another meeting coming up the week after next.
It has proved a very useful and frank working shop. We have reached a lot of
accommodation and we have done some very useful work, which Iain Todd was
referring to in part, both on taxation costs, enforcement and we are now
looking at some of the other regulations, including working time. I think it
has been a very useful initiative. That does not mean we have reached total
agreement.
659. When did it last meet?
(Lord Whitty) February.
660. Was one of the subjects discussed the introduction of the 44
tonne limit?
(Lord Whitty) It was not discussed at the last meeting, it has been
touched upon and there have been further developments since then.
661. That is my second point, really, why is it that the
Commission for Integrated Transport is still thinking about it? Why is it that
the Commission for Integrated Transport said, "Do not do anything until we
produce our report", and you have nonetheless gone ahead and announced that
it will be allowed from 1st January 2001?
(Lord Whitty) Let us be clear about the status of CfIT. CfIT is an
advisory Committee to the Secretary of State, it is not part of Government,
it does not determine Government policy. It is healthy, we have a slightly
arm's length relationship with them which by implication means they
occasionally have slightly different views from us. On the substance of the
matter the CfIT study shows pretty clearly there is actually an environmental
and transport advantage for the 44 tonners full stop. They think that that
should also be accompanied by various other measures, much of which we agree
with in principle and in relation to enforcement. For example, we are now
going to bring forward the impounding provisions which were in the Private
Members Bill last time and will now be in the Transport Bill for us. We are
already engaged in constructive discussions with the SRA, the Strategic Rail
Authority. They suggested that we should wait until those discussions were
complete but we felt we have to make a decision now for introduction probably
next year of the new 44 tonne regime.
Chairman
662. Have you announced it or not, I am not clear?
(Lord Whitty) We have announced the principle. The date was a
provisional target date.
Mr Gray
663. What happens if CfIT comes out and says they think it is a
very bad idea?
(Lord Whitty) CfIT have not come out and said it is a very bad idea.
664. They have not done the report at all yet, have they?
(Lord Whitty) They have done a report which says, "We should do this
subject to the outcome of the inquiry."
665. Surely they produced an interim report but the final report
has not yet been published. Perhaps you have seen it but it has not been
published.
(Lord Whitty) You can call it an interim report but it has dealt with
the substance of the matter.
666. In the interim report it says, "The Government must not come
to a decision on this matter until such time as we publish our final report."
(Lord Whitty) Because they want to wait for the final decision of the
SRA.
667. The final report is not out yet, is it?
(Mrs Moss) No.
668. My question was, supposing in the final report they say, "We
think it is a very bad idea", what happens then?
(Lord Whitty) We are in disagreement with CfIT. We do not agree on
every issue and we should not agree on every issue. They are there to advise
and advance arguments, we would take it very seriously. The final report
covers only the SRA side, it does the cover the side they have already dealt
with, which is the economics and the environmental impact of the 44 tonners
themselves.
669. What effect will the 44 tonners have on rail freight?
(Lord Whitty) We believe that there is relatively little impact on rail
freight and the constraints on rail freight are not the introduction of larger
lorries, they are their ability to acquire new traffic and they have done very
well in acquiring new traffic and we hope that the rail freight industries
continue to acquire new freight traffic.
670. Are you aware of the Report produced by McKinsey for
Railtrack which indicates it may well reduce rail freight by up to 3 per cent?
Are you aware of the Report?
(Lord Whitty) I am aware of the Report.
671. When did you become aware of that Report?
(Lord Whitty) Me personally or the Department?
672. The Department.
(Lord Whitty) I believe the Department became aware of it a few weeks
ago.
(Mrs Moss) I believe the Department became aware of it in February but
did not see it until it was published in early March.
673. That explains why you did not give that to the Commission for
Integrated Transport in considering their---
(Mrs Moss) CfIT were well aware of its existence. It was mentioned in
one of the papers going to CfIT and it was discussed by CfIT and they
concluded that it was not material.
674. It is quite a significant accusation that if McKinsey, a very
well respected firm of consultants, come to the conclusion that it may well
have a detrimental effect on rail freight to the tune of three per cent -the
DETR is aware of it but did not discuss it with CfIT - but now you decide to
go ahead with the decision despite the fact that CfIT specifically, when the
committee you set up said, "Please do not come to the conclusion until we
produce our final report." You have gone straight ahead and said, "Let us do
it on 1st January 2001", ignoring CfIT, ignoring Mc Kinsey, ignoring
therefore, presumably, Railtrack. Why have you done that?
(Lord Whitty) We have not ignored all of that. We have said that the
case for the 44 tonners from an environmental point of view stands up on its
own. We do not necessarily accept the figures, and Railtrack do not
necessarily accept the figures that McKinsey put to them. However, the
question of the impact on the rail freight does not invalidate the
environmental assessment and the economic assessment of the 44 tonners as
such.
675. It is a bit worrying, so far rail freight is down as a result
of the decision.
(Lord Whitty) Rail freight will not go down as a result of this
decision. The growth in rail freight has been substantial and the inhibitions
on its further growth are there irrespective of the 44 tonners. That is
effectively what McKinsey also referred to in relation to the constraints on,
if you like, the track and the infrastructure which Railtrack are having to
address.
Chairman
676. Where did you announce this decision, my Lord?
(Lord Whitty) I think formally speaking we said it in the Budget - is
that correct?
(Mrs Moss) It was mentioned in the Budget and in the Budget supporting
documents and in press notice that Lord McDonald issued.
677. The press notice certainly, but where was it announced to
House of Commons? This is a matter of some material importance both to the
road industry and to the rail industry, where was it announced to the House
of Commons?
(Mrs Moss) I believe the Chancellor mentioned it.
Chairman: The Chancellor mentioned it.
Mr Gray: In his speech.
Chairman
678. There was no attempt to put down a written question although
a press notice was issued from the Department.
(Lord Whitty) Our understanding was that it was to be announced by the
Chancellor in the course of the Budget debate and we provided a background
press notice.
Mr Bennett: He forgot to do it.
Chairman
679. We cannot find it in Hansard. The House of Commons like to
be officially told things that are not put out in press notices.
(Lord Whitty) In part I accept that, our understanding was that it was
going to be announced in the Budget debate. I think it was referred to by the
Chancellor.
680. So briefly that nobody noticed it. Before Lord McDonald made
a press statement, did you announce to the House of Commons the amount of
money that he intended to use as his transport budget?
(Lord Whitty) It was announced at the same time as we provided a written
answer last Friday.
Mr Gray
681. Last Friday, the budget was Tuesday.
(Lord Whitty) The Budget on Tuesday allocated 280 million to transport.
Chairman
682. When did Lord McDonald make his statement, on Thursday?
(Lord Whitty) On Friday.
683. On Friday? It seemed to get a lot of publicity on Thursday.
(Lord Whitty) Not in the detail it was announced on Friday, to be fair.
It got some publicity on Friday morning but not in the detail that it was
announced on Friday.
Chairman: Perhaps you could take a little message from this Committee
that it might be rather nice in future if these announcements were made
through the House of Commons and not just briefly in some passing mention
which it might attach in due course.
Dr Ladyman: I have a recollection of seeing it in the Red Book
following the Budget but I may be wrong about that.
Chairman: It may be there was some mention in the Red Book. We are
told that the Chancellor was to announce it.
Dr Ladyman: Well---
Chairman: I do not think you need worry about his Lordship, he is a big
boy he can look after himself. The Chancellor is an even bigger boy.
Dr Ladyman
684. Given that you made the point about the vehicles being more
environmentally friendly, whether they are or are not there are certainly
improvements that can be made in vehicles to make them better engines, et
cetera. Can you just tell me, what do you plan to do to encourage the
industry to shift those types of vehicles? The previous witnesses suggested
that far more effective than the stick would be the carrot and that capital
allowance to allow them to change their vehicles would be a more appropriate
way forward.
(Lord Whitty) The structure of the VED that we have introduced in the
Budget does in itself encourage a move to a more environmentally friendly
lorry, engine forms and fuels. Our whole taxation policy on ultra low diesel
also helps that, in a sense they are carrots against the broader strike of
taxation. In addition, we have set the targets and we played a very positive
part in the European regulations relating to this in terms of the development
of Euro II, III and IV. I think it would be fair to say that the British
Government have taken a leading position in relation to that and the British
manufacturing industry and the haulage industry has taken a lead from that.
It is not just a question of sticks. We use the sticks constructively and the
carrots are there too.
685. Have you looked at capital tax allowance write-offs to
encourage environmentally friendly vehicles to be purchased?
(Lord Whitty) This would have to fit into a broader approach to capital
allowance, which would be a matter for the Chancellor rather than for me.
Could I just say, in your earlier point Mr Todd referred to the Red Book and
there is a specific reference in the Red Book, however that does not obviate
your point.
Chairman
686. The message is still the same.
(Lord Whitty) I take your point.
Chairman: Good.
Dr Ladyman
687. Can we just carry on on the subject of costs and
environmental concerns? Would you agree with the evidence that we have been
given that the taxes the road haulage industry pays only account for 70 per
cent of the total costs that it imposes in terms of roads, environmental
issues, social factors, et cetera.
(Lord Whitty) The most recent study that we have commissioned on the
costs side would suggest it is not as low as 70 per cent but it varies very
much on some fairly heroic assumptions about the costs of pollution and
environmental damage and also on the type of vehicle and the mix of vehicles
you are talking about. What is clear is the usual contention from the Road
Haulage Forum and the industry and from motorists that the tax they pay does
not go back into improving the transport system. That is the wrong argument
and you need to look at the total external and social cost of road traffic
transport. In that context the tax take is very close to the total
environmental damage. There will be some vehicles where the tax take is as
low as 70 per cent, possibly even lower, but on average it would be nearer one
hundred per cent. Those figures are based on not entirely robust assumptions
and other people can make slightly different calculations but they are of that
order. I do not know whether you want to add to that?
(Mr Todd) The Minister refers to some work we have carried out in the
last twelve months by consultants and this Report will be published very
shortly and it will be open to public scrutiny very soon.
Chairman: You ought to put down some questions on the amount of money
you are spending on consultancy - I am just being cruel.
Dr Ladyman
688. While we are on the subject of figures that require some
robust calculation, can I just bring you back to your estimate of the amount
of carbon that was going to be saved as a result of the road fuel duty
escalator, which is 1.2 million tonnes of carbon? Admittedly the road fuel
escalator bites on all forms of road use, rather than just road haulage, but
I recollect asking some Parliamentary questions last year, unfortunately I
have not brought them with me, and I asked questions about the amount of fuel
that was being used each year over the last ten years, the types of vehicle
that were being bought and the average fuel consumption and the one thing that
you could pick up from those figures was there was absolutely no correlation
whatsoever between the trend growth of car use and the level of taxation on
car use. The only hypothesis that one could support with the figures as they
stood was not that the road fuel duty escalator works and encourages people
to drive less or road haulage to use different vehicles, it was that people
have a certain amount of money they are prepared to spend on transport and
they drive up to that limit of their money. If that is true, how are you
going to justify your 1.2 million tonne estimate?
(Mr Todd) I think that refers back to point I made earlier about the
difficulty in proving the evidence. There are all kinds of societal changes
taking place. People travel more now than ever they did, so, the figures you
refer to, traffic is increasing, travelling is increasing. We do have to make
an estimate of how much carbon would have been saved through these measures,
but it is an estimate, it is based on some information we have about how
people's behaviour changes in the face of fuel prices. That is one change in
amongst a number of other societal changes that are going on simultaneously.
689. Given we accept now that this is just a wish figure, this
saving? Would it not be worth looking at the possibility of giving some sort
of refund to the road haulage industry for the duty they are paying linked to
measures for them to change to much more efficient vehicles? That would deal
with the social problem of the road fuel escalator as well as the
environmental problem.
(Lord Whitty) This proposition has been put to us by the industry, we
are talking about very substantial figures here. We think that the tax system
that we are now introducing, both on the fuel and VED encourages more
environmentally friendly forms of lorry. A rebate would be an extraordinary
crude way of achieving an objective unless you had a very sophisticated offset
to it, to some extent on a straight rebate, which is more or less what the
industry was advocating, you would be subsidising the less efficient vehicles
more than the more efficient vehicles. You would have to have a lot of
offsets to that to make it work. I think the other thing, of course, in terms
of the objective evidence of change is that the issue is not the amount of
tax, the issue is the price. We have been through a period of falling, until
very recently, until the last fifteen months or so, crude oil prices and pump
prices in real terms. You would not necessarily find in figures up until the
end of 1998 a positive movement as a result of behaviour change because it is
the price that affects behaviour not the level of tax within that price.
690. If you will not contemplate a rebate to the road haulage
industry, how about hypothecating some of that income by spending on the
railways to deal with the infrastructural problem that would stop the railways
taking extra capacity?
(Lord Whitty) The Chancellor indicated that if we do increase the fuel
duty escalator beyond the level of inflation all that money will be ploughed
back into transport infrastructure.
Chairman: That is not beyond the rate of inflation.
Mr Gray
691. Surely if there was any evidence of behavioural change at all
it would be logical that the revenues, which are listed in the back of the Red
Book, would slightly ease off or go down, but that is not the case and the
revenues for fuel duty go straight up in a straight line in direct proportion
to the amount by which they increased in last year's Budget and this year's
Budget, thereby saying there is no evidence at all of any behavioural change.
(Lord Whitty) You have to take out the effect of the economic growth and
the overall growth. If after that there is absolutely no change, then you
might be right but I do not believe that is the case.
Mr Gray: I think it is if you look at the figures.
Mr Bennett
692. Enforcement, in respect of both working hours and vehicles,
it is a joke, is it not?
(Lord Whitty) No, I do not think it is a joke. I think that the Vehicle
Inspectorate and the regulations are very important in the industry and the
deterrent effect of Vehicle Inspectorate powers do have an effect. Having said
that, I would accept that there are a number of vehicles on the road - I have
been out with the Vehicle Inspectorate myself and found a fair level of
noncompliance both in relation to tachographs and in relation to vehicle
safety. Nevertheless the deterrent effect is there. Regrettably there is a
significant part of the industry which tries to get by those regulations. The
responsible bodies do not like that and they press us for better enforcement
to ensure that that systematically illegal element is penalised.
693. What are you doing to improve that enforcement?
(Lord Whitty) We have already switched the VI approach to targeting the
worst offenders to a large extent. We have improved the information system
for VIs so they use a roadside electronic information system which will give
them the background on the vehicle.
694. Is that working?
(Lord Whitty) Yes.
695. Oh.
(Lord Whitty) As compared to other Government IT projects.
696. As compared to the one they have had for sometime, is it
working? I do not find it surprising if Government's computers do not work,
I find it astonishing if they do. I do happen to know they were in need of
a considerable amount of improvement.
(Lord Whitty) Not the system, it was how they were used on the roadside
needed some improvement and that has largely been done, I think.
697. Is there a disincentive for police to stop those vehicles
which are more likely to fail?
(Lord Whitty) A disincentive? No, there is an incentive to do so.
698. If they have to do so many checks a day, is it not better to
do checks where the person speaks good English, where the vehicle looks as
though it is in good order so you get all the ticks in the right place?
(Lord Whitty) I think precisely the opposite. The intelligence led
approach does tend to identify those where there is likely to be a problem,
that includes foreign lorries.
699. Does that include police officers as well as the special
inspectorate?
(Lord Whitty) The police are the only people who can stop the lorry and
in order to stop the lorry the police have to pull the lorry across, if we are
talking about taking it off the road, and that involves cooperation with the
VI. There are occasions inevitably where the police have other priorities
where the VI would like it. That has nothing to do with discrimination
between those who are likely to pass or those who are likely to fail. The
police will pull across those lorries which the VI identify for them or in
some cases the police identify themselves.
700. You are going to impound vehicles, is that right?
(Lord Whitty) We are going to introduce legislation that gives us the
right to impound. We not impounding vehicles for the sake of it, we are using
it as a deterrent.
701. Is it going to work?
(Lord Whitty) I think impounding is a pretty substantial deterrent. I
think it is important we now have agreement to put this in the Transport Bill.
Chairman
702. This Transport Bill going through the House at the moment?
(Lord Whitty) Indeed.
Mr Bennett
703. What are the implications if you have a vehicle that is
carrying a load of sheep? Sheep transporters always seem to me to be some of
the most dodgy vehicles on the road, who is going to look after the sheep
while it is impounded?
(Lord Whitty) You appear to be more familiar with sheep transporters
than I am. Clearly the inspectorate will have to have some regard to the
cargo and the perishability of the cargo.
704. What about that sort of vehicle or ones with refrigeration
units, is the temptation going to be we will not stop that one because it
might cause us a problem storing?
(Lord Whitty) I do not think that is a temptation. The vehicles will
be stopped, whether they will be impounded, we will obviously need to take
into account the effect on the cargo and if they are live animals that is a
particular problem.
705. I just picked that out - I would have thought that people who
knew a bit more about the industry than I do could pick out one or two others
where there might be problems with impounding.
(Lord Whitty) Nobody is saying there will not be problems. The threat
of impounding, the possibility of impounding applies in all of these areas.
The degree to which we would actually impound in particular circumstances does
need consideration on a case-by-case basis, it may also need some discussion
with the individual sectors of the road haulage industry as to how you deal
with particular circumstances. Obviously we would need to engage in
consultation on that once the primary legislation goes through.
706. Is there a shortage of qualified drivers or should more be
trained?
(Lord Whitty) Probably more should be trained. We have taken steps in
terms of the driver training scheme for 16 to 19 year olds, it has been
extended to 20 to encourage more people in to get their HGV licence at 21.
As with certain other slightly less attractive jobs, social and family
purposes, there are more people who have a HGV licence than are practising HGV
licence drivers. To say there is a shortage is not easy to establish. There
is a shortage of people who, for various reasons, wish to take it up, the
number of holders.
707. If they were paid more they might attract many of the people
who have a licence back.
(Lord Whitty) Pay is part of it certainly.
708. You can only hold a licence for a fairly short period without
driving.
(Lord Whitty) Can anybody help me out on how long that is?
Chairman: Two years. We are happy to supply the answers as well as ask
the questions.
Dr Ladyman: I was approached by a constituent a year or so ago because
the classes of the tests were being changed so that you could drive different
classes of vehicle. He provided a HGV driving instruction service and his
view was that it was no longer worth people training for a Class 1 licence
because the additional cost involved in going for a Class 1 licence was so
much greater than a Class 2 and people could earn a perfectly satisfactory
living at Class 2. He found that his business was drying up with people
willing to make that extra step into Class 1. Do you have any evidence of
that as a result of the changes that have been made to the testing of HGV
licences?
Chairman
709. We are happy to have a supplementary note on some of these
things. If the Department has information we are happy to have that
supplementary. I want to ask you two or three small matters before I allow
you to escape. Is it too easy to get into the industry?
(Lord Whitty) It is an industry in which the threshold of entering is
fairly low. By and large we think it has to be a competitive industry, we do
not wish to put artificial barriers there.
710. Where it is low you accept that?
(Lord Whitty) I broadly accept it. The question of the financial status
of drivers needs some addressing, apart from that I accept that it is and
probably will continue to be and should continue to be relatively easy to go
into the industry, provided you are qualified.
711. Have you discussed the whole business of the financial
probity? We have heard quite horrifying stories of how people establish their
financial probity. You are seriously considering whether the step should not
be a higher step in relation to financial probity. Good. We can expect some
answer to that at some point in the near future.
(Lord Whitty) Certainly the traffic commissioners are looking at it and
we are concerned about their advice.
712. Are there too many vehicles in the industry? Are they
competing in such a way that they are able to undercut one another because
there are too many vehicles?
(Lord Whitty) There are more vehicles in the industry than there are on
the road in an active economic activity at any given time. We want to
encourage the turnover of vehicles so that we get cleaner, better vehicles and
more efficient vehicles.
713. You have just told us it is easy to get in, there is not any
particular way of pushing owners into getting new and better vehicles but you
are still quite content there should be more vehicles that are economically
capable of being viable, is that what you said?
(Lord Whitty) I suppose I am saying if we decide in arithmetic terms
there are too many vehicles, what do you do about it? We want newer, cleaner
and more efficient vehicles.
714. I know what you want. We have had a clear indication of your
wishes. If it is an industry that is very easy to get into, where the steps
concerned in order to prove your financial probity and general viability are
not high and where you say that in the name of private enterprise they should
be allowed to do whatever they like, are we to take your protestations about
caring about climate change and other aspects of the environment terribly
seriously?
(Lord Whitty) Yes, I think so. I would hope so. When we say it is easy
to enter the industry, it is easy to enter the industry provided your vehicles
are safe. We are tidying up and trying to enforce better safety standards.
715. How many people are you going to need to get that level of
enforcement? What urgent talks did you have with the Home Office about the
need for enforcement? We are told consistently enforcement, enforcement,
tachographs, quality of drivers hours. We are given all this anecdotal
evidence, East German drivers coming in, although we are unable to establish
the size of it. What are the Department doing about enforcement? If you are
saying to us we can deal with this because we know we have good enforcement,
what can you do that demonstrates that?
(Lord Whitty) We have enforcement into the entry of the industry through
the Traffic Commission.
716. That is very low, we have just agreed. You are looking at
that. Let us not do that one again.
(Lord Whitty) On that point, you asked me whether it was the near
future, the consultation will be completed this summer.
717. Not the near future.
(Lord Whitty) Fairly near future. Reasonably near future. We have also
agreed with the Treasury that the licence income can now be hypothecated back
to the Vehicle Inspectorate and that will give them more resources. We
improved technology of the Vehicle Inspectorate and we are improving the
facilities of the Vehicle Inspectorate and we are taking steps to increase the
quantity and quality of enforcement. I do believe that that does have a
fairly strong deterrent value. I accept, however, as I said earlier, there
is still a serious problem of illegal operators on our roads.
718. Do you want to tell us what proportion of tax paid by road
users was paid by the road haulage industry?
(Lord Whitty) The proportion of total tax take?
719. What proportion was paid by road hauliers?
(Mr Todd) The most recent year for which we have figures is 1997/1998
and the total tax for VED fuel duty was œ23.8 billion.
720. 23.8 billion. That is all road users. What percentage of
that was paid by the road haulage industry?
(Mr Todd) The road haulage industry above 3.5 tonnes is 16.8 per cent
- about 4 billion.
721. Can you also tell me how much is the Government spend on all
forms of transport, not just sustaining and improving the road network?
(Lord Whitty) Yes. The figure is 8.6 billion over the last full year.
Of course that is transport expenditure, it does not include the policing of
the roads.
722. Can you tell us, after you have taken account of all forms of
taxation and all other on-costs, whether it is cheaper or more expensive to
operate a lorry in the United Kingdom rather than other European countries?
(Lord Whitty) We touched on this earlier, the indications that we have,
we have done a lot of work on this and the industry provided figures - and we
are not completely in accord with the industry on this - and it indicated
taking all costs into account we are very much on par with the Netherlands and
Belgium and we are slightly higher than France. I cannot give you other EU
countries, although we did briefly look at Germany, although we did not reach
a conclusion.
723. If your Road Haulage Forum is doing such a good job, why do
you think we have had to take evidence this afternoon from a group calling
themselves the Shadow Road Haulage Forum?
(Lord Whitty) Far be it from me to suggest that there might be a little
element of political motivation here, we know the origins of that body, that
is not to say they cannot give you useful advice, we are dealing with the
authoritative trade associations and trade unions with the road haulage
industry in the Road Haulage Forum. As I have said, we have not always agreed
on everything but that is a process which we are now engaged in. We have
reduced the area of disagreement and we have a number of constructive
approaches and various working parties, to which Mr Todd has referred, which
include demand enforcement and include looking at the regulations more
generally, including the recently set up one on the Working Time Directive.
All of that is a constructive relationship rather than a lobbying
relationship.
724. Are your Working Parties going on now?
(Lord Whitty) Yes.
725. Are you intending to call them altogether before very long?
(Lord Whitty) The main Forum are meeting sometime in April and the
Working Parties go on between that.
726. Will that evidence be made public or is it just to the
Government?
(Lord Whitty) We will have to decide that between ourselves and the
industry, what evidence we agree on may be made public.
Mr Bennett
727. You keep secret the stuff you disagree on.
(Lord Whitty) If the industry disagree, I have no doubt they will tell
the public anyway.
Chairman
728. It is possible that your Working Parties will come up with
evidence which will be quite useful to this Committee, particularly on
enforcement or some of the other problems we talked about.
(Lord Whitty) Would it be helpful to you if I committed myself today to
say that any such information which comes up in the timescale of your
investigation we will obviously provide to your secretary?
Mr Gray
729. On this question about impounding vehicles, there is a
proposal for impounding powers in the Immigration and Asylum Bill, are there
going to be new powers brought into the existing Transport Bill for other
reasons?
(Lord Whitty) That was the implication of the Chancellor's statement -
the Chairman will have a go at me - that was said around the Budget time.
Chairman: I have never had a go at you, even when you were a commoner.
Mr Gray: The Bill is processed through this House?
Chairman
730. Are you saying you would go for a general empowerment in the
Bill? It needs to be done by regulation, is that what you are saying?
(Lord Whitty) Yes, it needs regulation.
731. This is not in the existing legislation brought in either at
Report stage or in another place, is that what you are saying?
(Lord Whitty) Yes.
732. Which of those?
(Lord Whitty) I think it is probably a matter for those who are dealing
with the Bill.
733. No, no. You are in control of the legislation in your
Department. I ask you again.
(Lord Whitty) We will bring it in as soon as we can. We are still in
committee on that Bill, as you well know. It is our intention to bring it in
as early as possible, I cannot say more than that.
734. You expect it to be done subsequently by regulation. Either
positive or negative, you have not come to the point where you have taken a
decision on that?
(Lord Whitty) Most of it would be done by negative resolution.
735. We would welcome a small note from you on that.
(Lord Whitty) As soon as we finalise the proposition I will ensure that
a letter goes to you at the same time.
Chairman: You so inspire my colleagues, I keep thinking I am winding
up.
Mr Forsythe: Very briefly, the decision taken by the Republic of
Ireland to clamp down on some ways of "flagging out", did any discussions take
place between the Republic of Ireland Government and Her Majesty's Government
before that happened?
Chairman
736. Do you mean by de-flagging, which sounds like a very Irish
solution?
(Lord Whitty) Basically they are lorries which were then registered in
the Irish Republic but did all of their business back in Northern Ireland.
The Irish Authorities felt that was not appropriate. They did have
discussions with us and the Department of Transport in Northern Ireland.
Miss McIntosh
737. The Department I am sure will be aware of the huge concerns
which are reflected in the evidence that this Committee has heard on the
œ2,000 fine for vehicles under the Asylum and Immigration Act, has the
Minister or Government considered taking any measures to allay the fears of
what the impact will be on each individual haulier, particularly those who are
working for a larger company, who will be put very much at risk, and even more
so for the owner-drivers?
(Lord Whitty) We have. This is more a matter for the Home Office
Minister than myself. It has an implication for this industry and we had to
strike a balance between what is a very serious problem of smuggling illegal
immigrants and the potential difficulty for the industry or individual driver
themselves. Considerable inter-departmental discussions did go on about this
being introduced and the Act is obviously not designed to penalise hauliers
who unwittingly carry illegal entrants. On the other hand it is an incentive
to check, for both owners and drivers, and we are consulting on that with the
Home Office and we are consulting on the details of the Code of Practice under
which these powers will be exerted. I do recognise the anxiety in the
industry and amongst the trade unions on this. I hope that Code of Practice
will make it clear what our intention is.
Chairman
738. I think, put simply, a driver who was handed a vehicle that
he cannot get into to check, for whatever reason, and finds himself in jail
he is not going to be a happy person.
(Lord Whitty) There are certain checks that a driver can make and there
are certain routines the employer can insure or require him to make, that
ought to be the effect of the Act.
Dr Ladyman
739. What, the status of the agreed Code of Practice for drivers?
If the driver followed that Code of Practice he is not at risk?
(Lord Whitty) Courts would have to take that into account.
Chairman
740. My Lord, I think you should. We are very grateful to you for
coming. I am sure your knowledge and your previous training in your Labour
party trade union post enabled you to deal with this Committee with great
charm and speed, and all of those matters that make a successful Minister.
We shall call you back.
(Lord Whitty) Thank you very much. We will provide that additional
information as rapidly as possible.
Chairman: It was very nice to get the chance to question you, yet
again.
