Select Committee on Trade and Industry Minutes of Evidence

Further supplementary memorandum submitted by The Road Haulage Association Ltd

  Further to the oral evidence that my colleagues, Karen Leeming and Professor Doug McWilliams, Centre for Economic and Business Research, University of Birmingham, and I gave on Wednesday 1 November 2000, I wanted to write and submit this letter as a further memorandum of evidence to the committee. I hope that this serves to clarify a number of issues that arose in the oral evidence session, and provides the data the committee was seeking.


  The table, entitled Total Insolvencies in England and Wales and Scotland—Industrial Analysis shows all the insolvencies that have occurred in the UK from 1992 to 1997. As you will see from the Transport and Communication row, the total number of insolvencies in this sector has increased from 1,588 in 1998 to 1,646 in 1999. Furthermore, the quarterly breakdown for 1999 to 2000 for the last three-quarters shows an upward trend from 372, to 380, to 415.

  The ICC, the leading business and credit information provider, has recently investigated insolvencies among hauliers over the previous decade and discovered alarming information. More haulage companies have failed in the last two years than the rest of the 1990s put together. ICC's database shows that since January 1998, 1,850 haulage companies have gone bankrupt compared with 1,700 from 1990 to the end of 1997. [Information to follow].

  The second table, entitled Annual Sales of Trucks and the Amount of Goods Transported, shows that fewer lorries are carrying more goods and covering more mileage. This is proof, if proof were needed, that the industry is constantly improving its efficiency.


  The RHA has made the point to Ministers that one of the main problems faced by the haulage industry is the crippling operational and cash flow challenge presented by fuel costs. While other big cost items such as VED are planned for and can be financed, drivers are often faced by the problem of limited credit offered by the oil companies, perhaps only up to 20 or 30 days, which must be settled before they can purchase more fuel. Meanwhile, any bills owing to them may be outstanding by as much as 60 or 90 days. This represents a real cash flow problem which is exacerbated by the increased costs in fuel or fuel duty, as the credit actually buys less fuel, making it harder for the haulier to operate effectively. The concept of offering a deferred payment on fuel duty would offer real assistance (though not in any actual savings) by gearing duty payments closer in line with customer payments.

  The Chancellor's pre-Budget statement will assist in some measure through the reductions in fuel duty, but the revised VED rates which were announced, whilst helpful, will not address the core problems of high fuel prices and their funding.

9 November 2000

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