Written evidence from the Road Haulage
Association
SUMMARY
1. The RHA has pleasure in submitting this
memorandum on behalf of the hire or reward sector of the road
transport industry. A summary of the memorandum is as follows:
— The RHA's main concern is the absolute
level of the toll.
— The road transport sector of Welsh logistics
plays a very important role in the Welsh economy.
— The impact of the toll on the road transport
industry is significant.
- The area served by the Severn bridges reduces
as the toll rises.
— At the end of the concession period the
tolls should be reduced to cover the ongoing maintenance of the
bridges with any surplus hypothecated for investment in roads
such as the M4 in the Newport area which is presently not fit
for purpose.
INTRODUCTION
2. The RHA is the primary trade association
representing the hire-or-reward sector of the UK road freight
transport industry. The Association comprises some 8,000 member
companies, operating between them 100,000+ lorries and employing
some 250,000 staff. Members range from single vehicle owner-drivers
right through to multi-national fleet operators. A number of the
member companies are either wholly or partly employed in the movement
of goods to and from Wales. As such the evidence below focuses
on the interests of this type of professional road haulier.
3. It is in the interests of RHA members
that the future of the Severn River Crossing tolling regime is
decided as soon as possible. This is especially so against the
background of the present economic situation and to allow meaningful
forward planning on the part of those companies using the Severn
Bridge.
PRINCIPLE OF
TOLLING
4. The RHA has never objected to the use
of tolling to fund either river or estuarial crossings since by
their nature distances travelled can be reduced and this in turn
reduces the time and fuel costs. However, the RHA has long been
concerned at the absolute level of the toll which stands at £16.40
for HGVs. This compares badly with the toll of £11.00 for
the 27 kilometre stretch of the M6 toll.
5. It is our understanding that the construction
costs of the second bridge have now been covered since SRC Plc
took over the tolling responsibility in 1992. Some £70 million
is collected per year against maintenance costs for both bridges
of up to £5 million per year.[3]
The unplanned imposition of VAT on the tolls led to an extension
of the concession period which now finishes in 2017. The decision
by Government to fund the VAT thus avoiding an overnight increase
was of little help to the haulage industry since the majority
of haulage companies can reclaim the VAT. Clearly, it was of benefit
to the general public using the bridge.
BACKGROUND TO
THE WELSH
ROAD HAULAGE
INDUSTRY
6. The Welsh road haulage sector has an
essential role to play in the Welsh economy as part of the overall
logistics sector. Logistics contributes some £2.5 billion
per year to the Welsh economy and accounts for 7% of employment
in Wales with 61,000 people directly employed in logistics companies
and a further 30,000 in logistics roles for other organisations.
According to the Vehicle and Operator Services Agency (VOSA),
there are 6,747 Goods Vehicle Operators' Licences in place covering
19,412 registered goods vehicles.[4]
THE ECONOMIC
IMPACT OF
THE TOLLS
7. Road Haulage is a very competitive industry
that has traditionally run on very tight margins of less than
3%. Commercial viability for hauliers depends on obtaining back-loads
following the delivery of the prime load. This is especially so
for Welsh hauliers attempting to get back-loads into Wales on
the return journey. Quite often the cost of the toll equates to
the profit margin on a back-load thus making the journey only
cost neutral. It is sadly the case that the imposition of the
toll on top of the transport costs will tempt less scrupulous
operators to bend or break the rules in order to remain competitive.
8. Two large RHA member companies spend
the following per year on the Severn toll:
— Owens Road Services Ltd, Llanelli £200,000+
— Mansel Davies and Son Ltd, Llanfyrnach
£120,000+
The majority of RHA member companies operate 10 vehicles
or fewer and while their total bill will be less, it will be in
the same proportion to their costs. The smaller firms may also
find it more difficult in practice to recover their toll costs
from customers, although that is an issue for firms of all sizes.
The UK average number of HGVs per operator is 3.7;[5]
for RHA members, the figure is around seven vehicles. We have
always urged our members to pass on to customers all costs that
cannot be avoided and that pushes up costs to both businesses
and consumers in Wales.
9. The DfT forecasts that by 2030, the final
origin or destination of more than 40% of all goods being moved
in the UK will be abroad with the great majority passing through
the UK's ports.[6]
According to the CBI, some 10% of the UK's trade currently transits
through Welsh ports. Together with the environmental imperative,
there can be no doubt that trade through Welsh ports will increase.
For incoming goods being moved into England (eastbound) there
is no financial penalty but this is not the case for goods from
England transitting to Welsh ports. Shipping is no different from
other logistic modes in that shipping companies will be seeking
loads both in and out of Wales and anything that might reduce
the tonnages being shipped out of Wales could be detrimental to
the Welsh economy.
THE LOCATION
OF THE
SEVERN BRIDGE
10. The principle determinants relating
to choice of haulage routes are fuel and time costs. As the tolls
have increased, the geographical decision line at which the use
of the bridge becomes marginal has changed. As the toll increases,
the line will tend to move south from the axis of Gloucester—Oxford—Milton
Keynes—Felixstowe. Thus, the area served by the Severn Bridge
will decrease.
11. HGV traffic from Northern England and
the Midlands will naturally try and avoid the bridge toll and
will use the A40/A48/A449 with little cost detriment in comparison
to the toll. However, this then results in HGVs leaving the motorways
and travelling on less suitable roads to get to their destination.
The RHA has always supported the use of strategic motorways for
as much as possible of HGV journeys before branching off onto
smaller roads. However, we understand fully why HGVs should, on
a cost neutral basis, avoid the toll. This increase in HGV traffic
then results in complaints from people living on the less suitable
routes.
12. The M4 motorway is the main strategic
route into South Wales and parts of the M4 are not fit for purpose.
The demise of the M4 Relief Road, whilst understandable, does
not make the Severn Bridge together with its toll and the M4 any
more attractive for HGV traffic. In fact it could be seen as a
disincentive to inward investment to the detriment of the Welsh
economy.
THE FUTURE
OF THE
TOLLS
13. When the Severn Bridge reverts to public
ownership there will be a unique opportunity by the Government
to implement a new tolling regime that will be of greater benefit
to Wales. Ideally, we would wish to see the toll removed completely
but we understand that this is not possible because of the ongoing
maintenance costs of the two bridges.
14. As a minimum, the new tolls should cover
the maintenance costs with a modest surplus to be hypothecated
for reinvestment in the Welsh roads infrastructure. The state
of the M4 motorway has already been mentioned and this could be
one method of helping to fund improvements.
15. We would strongly resist the temptation
on the Government's part to retain the level of the existing toll
since this will be seen as an overt "tax" on vehicles
travelling into Wales.
GREATER WELSH
ASSEMBLY GOVERNMENT
INVOLVEMENT
16. We feel that the Welsh Assembly Government
has a vital role in making sure planning and transport infrastructure
issues are addressed to benefit the Welsh economy. To this end,
we would wish to see the Welsh Assembly Government taking responsibility
for the Severn Crossings.
CONCLUSION
17. The RHA is concerned at the future of
the Severn Toll and would wish an early decision to be made with
regard to the future of the tolling regime for the benefit of
both the road transport industry and Wales Plc.
October 2010
3 National Assembly for Wales-Record of proceedings-Wednesday
20 January 2010. Back
4
Traffic Commissioners' Annual Reports 2008-09. Back
5
Traffic Commissioners' Annual Reports 2008-09. Back
6
House of Commons Transport Committee-the Ports Industry in England
and Wales-15 January 2007. Back
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