Memorandum by the Society of Motor Manufacturers
and Traders Ltd (RP 29)
ROAD PRICING
The Society of Motor Manufacturers and Traders
(SMMT) is the leading trade association for the UK automotive
industry. SMMT provides expert advice and information to members
as well as to external organisations. It represents some 600 member
companies ranging from vehicle manufacturers, component and material
suppliers to power train providers and design engineers. The motor
industry is an important sector of the UK economy. It generates
a manufacturing turnover approaching £45 billion and supports
around 850,000 jobs.
SMMT welcomes the opportunity of contributing
to the Transport Committee's inquiry into road pricing. There
has been a great deal of discussion on the merits of road pricing
and a limited amount of experience of its effects. Recent statements
from Government have created renewed interest and the Committee's
inquiry is timely.
SUMMARY
1. The discussion on road pricing should
not divert attention from the urgent need to invest in the upgrading
of the UK's transport infrastructure.
2. Congestion is a major concern for the
automotive sector. Unreliable journey times undermine efforts
to make UK vehicle and component manufacturing and distribution
globally competitive. These are concerns we share with other industry
sectors which are also concerned about their global competitiveness.
3. Road charging should not be used to increase
the cost of road use. A national road charging scheme must be
introduced on the basis of revenue neutrality and that this significant
change to the way road use is paid for will deliver substantial
economic, social and environmental benefits. Care should be taken
to ensure that those with no alternative to car use (such as rural
communities) are not placed in a position where their costs rise
with no benefits.
4. It is appropriate to consider tolling
for new road infrastructure, if it helps facilitate early construction
and operation. Tolling is not an appropriate response to congestion
on the existing road network, without ensuring a significant improvement
in road infrastructure.
5. Technology that allows sophisticated
systems of road charging is being developed for commercial vehicles,
mainly to equalise operating conditions for hauliers operating
from countries which impose very low rates of fuel duties. It
is essential that technology used for Road Charging schemes is
compatible with other systems being developed across Europe.
6. European technical standards should be
agreed for Road Charging technology, this should allow equipment
to be sourced from a variety of suppliers and the systems should
be open to all providers of added value information services.
TRANSPORT INVESTMENT
7. The SMMT foresees a continuing direct
link between GDP growth and growth in the level of movement of
people and goods expressed as traffic increase. People seek personal
mobility and businesses need the timely market access which road
transport provides. In a strong and growing economy demand for
transport will continue to increase. There has been chronic under-investment
in UK transport infrastructure and despite recent improvements,
the level of service on all modes of transport, particularly the
road network, is far below that required to meet the competitive
challenges of a global economy.
8. It is essential that Government deliver
on the actions and spending commitments outlined in its 10 year
transport plans. Industry requires a transport infrastructure
that can better support current and future demand. Whilst there
is recognition of the need and support for the long-term vision
outlined in the white paper "The Future of Transport,"
there is increasing frustration at the rate of progress. The debate
and discussion on the future of road charging must not delay or
divert resources from the infrastructure improvements that are
needed now.
CONGESTION
9. Road traffic congestion is a recurring
experience for vehicle owners and operators. It imposes direct
costs on motorists and businesses, and indirect economic, environmental,
and social costs on society and needs to be addressed. The CBI
has previously estimated that congestion may cost UK businesses
as much as £20 billion every year.
10. The automotive sector has a heavy reliance
on transport to facilitate efficient manufacturing and distribution
activities. Globally competitive vehicle and component manufacturing
requires just-in-time deliveries and with 70% of vehicles produced
in the UK exported reliable and cost effective transport is a
vital part of this business. Poor quality services by road and
rail impact on the automotive sector's ability to compete and
regular surveys of members' views indicates that transport improvements
are key priorities for the sector.
11. Whilst congestion is of national concern,
the root of the issue is characteristically local and time specific.
Often it is a result of related peak traffic flows operating on
a limited road network. There are a number of factors that contribute
to congestion, including road works, poor road maintenance, accidents,
breakdowns and periodic events. National and local highway authorities
must identify where the impact of these can be reduced through
the removal of bottlenecks, improved junction design, improved
co-ordination of private utility work, better up-keep of road
network, prompt identification and action upon incidents, and
the implementation of Intelligent Transport Systems (ITS). These
actions should be taken before any consideration of demand management
measures.
ROAD CHARGING
12. Road charging should not been seen as
a new lucrative form of taxation. As the recent feasibility study,
published by the Department for Transport emphasises, public acceptability
of such schemes depends upon Government winning the trust and
confidence of the public. A national road charging scheme should
not increase the level of tax taken from road users and should
only be pursued if changes to the way use is paid for delivers
not only environmental benefits, but also significant economic
and social benefits.
13. The plans for a Lorry Road Use Charging
Scheme represent a significant test of both sophisticated charging
technology and the Government's commitment to revenue neutrality.
SMMT support for the introduction of lorry road user charging
scheme is dependent on Government honouring its commitment to
tax neutrality and delivering a level playing field for the UK
haulage industry. It is worthwhile to recall that this technology
is intended to compensate for the massive disparity in the way
in which fuel is taxed in different countries in Europe. This
means that some national haulage firms get a "free ride"
when using the road infrastructure in other member states. Road
Charging technology will allow lorries to pay for road usage instead
of bearing high fixed costs in some countries and virtually none
in others. Careful consideration should be given to whether it
is necessary to extend this principle to private cars.
14. Powers to allow local authorities to
introduce local road charging schemes have not been widely used.
There had been widespread concern that the proliferation of local
schemes could create confusion for users and undermine attempts
to develop and introduce consistent and interoperable technologies.
The Government appears keen to encourage local authorities to
take up charging schemes and whilst the London scheme has proved
less controversial than was anticipated, it has also cost more
and raised less than was originally planned. The DfT road charging
feasibility study indicated that there were few urban areas that
could afford a London style scheme, because of the cost of enforcement
and its reliance on camera technology.
15. SMMT believes that if further local
schemes are to proceed they must clearly detail how all funds
raised from charges are to be recycled within the local transport
network. We strongly support the hypothecation of revenue to improve
local transport systems, including the road system. This investment
must be genuinely additional expenditure.
16. Proper consultation with local people
and businesses about local travel conditions and transport options
must precede the implementation of any charging mechanisms. This
will ensure the measures are necessary, fair and effective. Local
authorities must clearly state what improvements to the quality
of service road users can expect to receive. Regular monitoring,
reporting and evaluating must follow implementation, and where
the measure fails to bring about its stated aim, the scheme should
be amended or withdrawn.
ROAD TOLLS
17. The successful introduction of the Birmingham
Northern Relief Road, alongside the Dartford River Crossing and
Severn Bridge, demonstrates that where new road infrastructure
delivers significant benefits users are prepared to accept direct
tolls. These schemes, financed by the private sector, demonstrate
that there is a willingness to pay for additional capacity and
the improved journey reliability it can provide.
18. These types of schemes, whilst always
likely to be limited in number, set an important precedent. It
is possible to charge for new capacity, allowing the private sector
to deliver schemes more quickly than the public highway authorities.
The response to the Government's plans to upgrade the M6 by using
a tolled dual expressway will provide further evidence of the
public's appetite for this type of approach.
19. SMMT believe that tolling is an appropriate
option where new infrastructure and capacity is being provided,
although measures need to be taken to ensure that it is delivered
more quickly than the publicly funded alternative.
NEW TECHNOLOGY
20. The European Commission has introduced
a directive addressing the widespread introduction and interoperability
of electronic toll systems. This requires that all electronic
road toll systems introduced should be compatible and allow users
to utilise common in vehicle technology. The Commission plans
to develop specifications for integrating equipment into vehicles
and procedures for approving at European level on-board and roadside
equipment.
21. Tolled motorways are a common feature
of travel in a number of EU member states and these already operate
electronic charging systems for some users. Similar systems are
also used on the Birmingham Northern Relief Road, as well as the
Dartford and Severn Crossings. These systems are based on microwave
technology and are commonly known as DSCR systems.
22. The UK Lorry Road User Charging scheme
aims to use global positioning satellite technology, allied to
mobile telephony to track vehicles and record the distance they
have travelled on all roads. This is similar to the approach that
has been adopted in Germany and that outlined in the DfT feasibility
report on road charging. These systems are generally known as
GSM/GPS systems.
23. The requirements of the Interoperability
Directive make it likely that all on-board equipment developed
for more sophisticated charging schemes will need to have at least
dual functionality. This is likely to make these systems expensive,
it is currently estimated that such equipment would cost around
200 Euros per vehicle. The DfT feasibility report indicated that
equipping vehicles in the UK market would cost in the region of
£3 billion.
24. It is important that charging schemes
establish common standards for on board units (OBUs) and allow
access to added value service providers. This will allow a number
of manufacturers to compete to provide the OBUs and give customers
the opportunity to access a range of additional information services
that might make such technology more attractive.
Should road pricing be introduced for certain
sections of the road network in the short term? If road pricing
is introduced, what factors should determine which roads are priced
and what technology should be used?
25. SMMT believe that it may be appropriate
to introduce direct road charging (Toll) for wholly new pieces
of infrastructure, where charges are used to offset the cost of
infrastructure provision.
26. A clear distinction is needed between
charging for the use of a road in order to pay for its construction
and road pricing for the purposes of reducing congestion or demand
management.
How "hi-tech" does road pricing need
to be?
27. The Interoperability Directive and the
standards it establishes must provide the basis for all charging
schemes at both local and national level. Road users should not
be faced with a wide variety of charging regimes and vehicle manufacturers
should not be expected to supply different equipment specifications.
What role should local highway authorities play
in introducing road pricing?
28. SMMT believe that the costs of introducing
small scale pricing schemes will make it uneconomic for most local
authorities to consider charging regimes. In any national scheme
local highway authorities need to participate in the planning
process and guide national decisions on charging rates for roads
that they are responsible for.
How easy will it be to move from individual toll
roads and urban congestion charging schemes in the short-term,
to national road pricing in the longer term, what needs to be
done to ensure the transition is a success?
29. Harmonised standards for the technology
are essential as is limiting the variability of charging regimes
so that they conform to a coherent national and international
framework. This means that the take up of local schemes will not
be significant, but that of a national scheme will have a greater
opportunity of success. Experience in other EU countries where
tolling systems exist, suggest that integration will not be easy.
How will the Lorry Road User Charge fit into any
national road pricing and motorway tolling developments?
30. The technology and back office administration
of the LRUC scheme will provide the model for any longer-term
developments. It is important that the progress of the scheme
is closely monitored and lessons from it used to inform decisions
on any national proposals. Nevertheless there are some major differences
in the ownership and use between trucks and private cars.
Are there other measures which could reduce congestion
more effectively?
31. In the short to medium term investment
in new and improved transport infrastructure is essential. Charging
may have a role to play in the longer-term management of demand,
but the future competitiveness of the UK economy requires greater
journey reliability on the road and rail networks. The Government
has developed a ten year plan for transport the priority must
be to see it delivered in the shortest time possible.
November 2004
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