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Documents considered by the Committee on 6 December 2017 Contents

5Mobility Package: road use charges

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information awaited

Document details

(a) Proposal for a Directive amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures; (b) Proposal for a Directive on the interoperability of electronic road toll systems and facilitating cross-border exchanges of information on the failure to pay road fees in the Union ; (c) Proposal for a Directive amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures, as regards certain provisions on vehicle taxation

Legal base

(a) and (b) Article 91; ordinary legislative procedure; QMV (b) Article 113 TFEU; special legislative procedure; unanimity

Department

Transport

Document Numbers

(a) (38792), 9672/17 + ADDs 1–4, COM(17) 275; (b) (38793), 9673/17 + ADDs 1–5, COM(17)280; (c) (38827), 10175/17 + ADDs 1–4, COM(17)276

Summary and Committee’s conclusions

5.1Different aspects of road charging are considered in these Mobility Package proposals, which seek to promote the Commission’s high-level goals set out in its 2011 White Paper on transport. The broad principles of ‘polluter pays’ and ‘user pays’ run through these proposals, which are linked to the Energy Union package and other proposals related to low-emission transport.

5.2The Government has identified a number of issues in relation to these three proposals. One of these is the scope of the revisions on road charging, and whether it would run counter to the objective of countering congestion and air quality problems to make buses and coaches subject in principle to road charging. The case for bringing light commercial vehicles within the scope of the legislation is also questioned.

5.3Other issues concerning the road charging proposals are whether the required phasing out of time-based charging would be appropriate for the UK, as it would lead to a loss of flexibility in policy options; and whether the higher costs that will be incurred by a wider range of vehicles can be justified, particularly when considering the role of the freight transport industry in the wider economy.

5.4The Government notes that the UK’s current time-based HGV levy, instituted in 2014, raises £200 million per year, of which EU drivers contribute around £50 million. The Government states that “it remains to be determined whether a distance based charging scheme could be designed that raises the same net revenue and be acceptable to stakeholders”.

5.5The proposals on European Electronic Toll Systems raise questions as to their relevance for the UK. The Government notes that the UK’s geographical position in Europe may mean that providers may decide that there is an insufficient business case to extend services to the UK.

5.6The Government also notes that it is possible that the Commission’s proposals to standardise the type of road charging may end up becoming irrelevant if the goal of a single, interoperable electronic tolling system is achieved.

5.7There is obvious uncertainty because of the UK’s forthcoming exit from the EU as to whether these Directives will end up being applicable to the UK (although this could be the case if an implementation period extending the acquis is agreed). If the Directives do become applicable, the requirement in the EETS Directive to share vehicle registration data between Member States to aid better enforcement of toll charges across borders could raise data protection issues following the UK’s departure from the EU. The extent to which the UK’s future partnership agreement with the EU covers data sharing for such purposes would determine whether UK enforcement agencies will be able to receive and transmit vehicle registration data.

5.8The Government also raises several subsidiarity questions, which it notes it will be considering in its consultations and impact assessment. The issues the Government identifies relate mostly to the proportionality of what is being proposed. They do not, in large, address whether the proposed actions are better taken at EU level rather than left to Member States. However, the various objectives of the proposals are inherently cross-border in nature and difficult for Member States to achieve on their own: for example, the equivalent reduction of high CO emissions across the EU, tackling discrimination in respect of non-resident drivers, reducing costs and burdens arising from the non-interoperability of EETS across the EU and increasing fine enforcement and deterrence in relation to non-resident drivers using EETS. In the case of (a) and (c) the proposals simply seek to make more effective existing EU legislation. In any event the eight week deadlines for the House to submit a Reasoned Opinion to the EU on these proposals all expired in September before our formation as a Committee and we do not think there are clear subsidiarity grounds to justify entering into political dialogue with the Commission instead at this stage.

5.9Of those subsidiarity issues we would be grateful for further clarification from the Government in the area of vehicle taxation. The Explanatory Memorandum states at one point that the Government “will be considering the longstanding UK position that EU Member States should have the flexibility to set tax rates unless there is a strong case for having EU rules, and whether this proposal is consistent with that principle”.

5.10However, elsewhere in the document the Government states that “the Commission argues that in the absence of EU action, Member States would continue to be obliged to apply the minimum vehicle tax even if they introduced or intend to introduce a more appropriate instrument to recover infrastructure costs, directly related to the individual use of infrastructure. The government agrees that this is the case”.

5.11This latter statement suggests strongly that the Government accepts the case for EU action in amending the rules on vehicle taxation. We would be grateful for confirmation as to whether this is the case.

5.12Other questions of interest include whether it is justified to bring within the scope of the legislation occasional, foreign drivers; the necessity of requiring that EETS systems must be compatible with the EU’s GALILEO system (and its potential implications for UK suppliers of such systems post-Brexit), and whether estimated HGV carbon emissions are a sufficiently accurate basis for varied road charging, given that the methodology for such estimates is not yet entirely reliable.

5.13Given that the Government has not yet concluded its consultations on the proposals with interested parties, and will need to carry out an impact assessment as well as subsidiarity assessment, we retain these documents under scrutiny until the Government has reported back to us on the issues raised in its Explanatory Memorandum, as well as on the possible implications of data protection requirements post-Brexit.

Full details of the documents

(a) Proposal for a Directive amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures: (38792), 9672/17 + ADDs 1–4, COM(17) 275; (b) Proposal for a Directive on the interoperability of electronic road toll systems and facilitating cross-border exchanges of information on the failure to pay road fees in the Union : (38793), 9673/17 + ADDs 1–5, COM(17)280; (c) Proposal for a Directive amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures, as regards certain provisions on vehicle taxation: (38827), 10175/17 + ADDs 1–4, COM(17)276.

Background

5.14These three documents concern proposals to update EU legislation on road charging. They aim to promote sustainable and equitable road transport through wider application of the ‘user pays’ and ‘polluter pays’ principles − both longstanding EU policy objectives.

(a) Proposal for a Directive amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures (‘Eurovignette Directive’)

5.15The Eurovignette Directive established the legal framework for Member States that have distance-based and time-based user charges for heavy goods vehicles (HGVs). Its aim was to make HGVs pay for the damage caused to roads, and it set minimum levels of vehicle taxes and specified the variation of charges according to the environmental performance of vehicles.

5.16The Commission has identified that road transport is responsible for 17% of the EU’s CO² emissions, and that the current rate of uptake of low and zero emission vehicles is insufficient to meet its 2030 climate and energy targets. In addition it has found that the quality of roads in the EU is degrading, due in part to a 30% decrease in public spending on road maintenance between 2006 and 2013.

5.17In addition, the Commission has concluded that the use by Member States of time-based road charges (vignettes), as well as being ineffective in reducing congestion or incentivising cleaner transport, also discriminates against occasional, foreign drivers. While 24 Member States implement some form of road charging, the Commission’s evaluation has found significant disparities in national road charging policies, and has concluded that this lack of harmonisation results in administrative burdens for public authorities and road users.

5.18The proposals seek to contribute to the reduction of CO² emissions in transport via pricing; address degradation of road quality; ensure that road charging schemes do not discriminate against non-resident motorists; and use road charging as a more effective tool in reducing air pollution and congestion.

(b) Proposal for a Directive on the interoperability of electronic toll systems and facilitating cross-border exchange of information on the failure to pay road fees in the Union (recast) (‘EETS Directive’)

5.19Directive 2004/52/EC mandated the establishment of a European Electronic Toll Service (EETS) by which road users could, through a single contract with an EETS provider, and using a single on-board unit, pay electronic tolls throughout the EU. The Directive was accompanied by Commission Decision 2009/750/EC, which further defined the EETS.

5.20The objectives of the legislation were to establish technical, contractual and procedural interoperability of electronic tolls throughout the EU, which would have the benefit of:

5.21The EETS Directive specified that all new electronic toll systems requiring the installation of on-board equipment and brought into operation after January 2007 should use one of three specified technologies (satellite position, mobile communications or microwave technology). EETS was to be provided to heavy duty vehicles by October 2012 and to cars by October 2014.

5.22Member States were required to put in place the necessary regulatory framework for the operation of EETS; toll chargers (road operators) were to accept on a non-discriminatory basis all interested EETS providers and their certified equipment; EETS providers were required to provide their services in all electronic toll domains in the EU within 24 months of their registration by their Member State of establishment, and EETS users (road users) were to ensure the accuracy of all data provided and to comply with their obligation to pay tolls.

5.23The Commission conducted an evaluation in 2015 to 2016, which found that the legislation had failed to deliver on most of its objectives. A European Electronic Toll Service has not been set up, and there has been hardly any progress on interoperability; on-board units have not been integrated with other vehicle devices; and, despite a reduction in the cost of on-board technologies, the costs of electronic tolling for toll chargers and road users has fallen very little.

5.24The evaluation identified the following causes for the failures of the legislation:

(c) Proposal for a Directive amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures, as regards certain provisions on vehicle taxation (‘vehicle taxation Directive)

5.25The Eurovignette Directive sets minimum levels of vehicle taxes for HGVs. The Commission has concluded that vehicle taxes, which reflect registration by the taxpayer rather than use of infrastructure, are not effective in incentivising cleaner and more efficient road operations, or in reducing congestion.

5.26The Commission believes that vehicle taxes may also act as an obstacle to the introduction of tolls. Since the promotion of distance-based tolls is a key feature of the revisions to the Eurovignette Directive, the Commission believes that giving Member States the ability to reduce charges relating to ownership is now required.

The Commission’s Proposals

(a) ‘Eurovignette Directive’

5.27The Commission believes that new rules are necessary to contribute to the reduction of CO² emissions from transport. The key change is that all vehicles will be brought within the scope of the legislation. The Commission notes that while cars and vans cause less damage to road infrastructure than HGVs, passenger cars “are the source of about 2/3 of external costs (including the cost of climate change, air pollution, noise, accidents and other negative impacts) generated by road transport, or about 1.8–2.4% of GDP”.

5.28The other elements of the proposed changes are:

(b) ‘EETS Directive’

5.29The Commission proposes the following changes for a recast of the Directive:

5.30The recast Directive maintains, however, the requirements that satellite equipment provided must be capable of working with the EU’s GALILEO system.

(c) Vehicle taxation Directive

5.31The Commission proposes to allow Member States more scope to lower vehicle taxes, by reduction of the minimum level set out in the Directive. The amendment enables the gradual reduction of the minimum level to zero, in five steps (20% reduction each year) taken over five consecutive years.

5.32The Commission’s Explanatory Memorandum notes that the need to minimise the risk of distortions of competition between transport operators established in different Member States means that the proposed reduction in taxation must be gradual.

5.33The Commission notes that the EU shares competence with Member States to regulate in the field of transport, but that the gradual decrease of existing minimum taxation level fixed by the Union can only be amended by the Union itself.

5.34It goes on to state that “without EU intervention, Member States would continue to be obliged to apply the minimum vehicle tax even if they have introduced or intend to introduce a more appropriate instrument to recover infrastructure costs, directly related to the individual use of infrastructure”.

The Government’s Explanatory Memorandum

5.35Jesse Norman, Parliamentary Under Secretary of State for Transport, in an Explanatory Memorandum of July 2017, informs us that the Government has not yet been able to consult on these proposals, and will be seeking the views of the road transport industry, Devolved Administrations and other interested parties.

5.36He notes, however, that:

“the negotiations on road haulage will ultimately determine whether or not the road charging proposals apply to the UK, but if they were to do so there would be an impact on what sort of charges and tolls could apply in the UK. In particular, the existing HGV road user levy, introduced in 2014, would be impacted as it is a time-based charge that excludes HGVs under 12 tonnes.”

5.37The Parliamentary Under Secretary is also able to provide some initial views on policy implications:

Eurovignette Directive

5.38The Government believes that the Commission’s proposals “would probably mean higher charges, for a wider range of vehicles, because the running and set-up costs tend to be higher for distance based than for time based charging”.

5.39The Explanatory Memorandum states that the Government will consider the following questions as part of its analysis:

EETS Directive

5.40The Explanatory Memorandum highlights the following questions:

Vehicle taxation

5.41The Explanatory Memorandum notes that:

“in reaching a view on these proposals, the Government will be considering the longstanding UK position that EU Member States should have the flexibility to set tax rates unless there is a strong case for having EU rules, and whether this proposal is consistent with that principle.”

Subsidiarity issues

5.42The Government agrees with the Commission that any adaptation of existing rules on road charging can only be carried out by the Union. The Explanatory Memorandum notes the Commission’s arguments that the three sets of proposals comply with the subsidiarity principle and states that it will take the following points into account when assessing the issue:

5.43On vehicle taxation, the Government states:

“on the proposals relating to the removal of minimum rates for VED [vehicle excise duty] (and its equivalent in other countries) the Commission argues that in the absence of EU action, Member States would continue to be obliged to apply the minimum vehicle tax even if they have introduced or intend to introduce a more appropriate instrument to recover infrastructure costs, directly related to the individual use of infrastructure. The Government agrees that this is the case.”

5.44This appears to contradict the statement at paragraph 5.41, since the above suggests strongly that the Government accepts that Union-level action on vehicle taxation in this instance is the most appropriate.

5.45In any event, the Explanatory Memorandum notes that the UK is “close to, or at, the current minimum levels of VED for some categories of vehicles”.

5.46On EETS, the Government notes the Commission’s argument that EU action is justified because individual Member States lack incentive to improve the operation of tolling systems across national boundaries, and because cross-border enforcement of tolls has not been effective since it requires bilateral data-sharing agreements.

5.47The Government is also considering whether the Commission’s proposed requirement that electronic road toll systems be compatible with the GALILEO system is “proportionate or necessary”.

Impact assessment

5.48The Government states that its interim view of the Commission’s impact assessment,

“suggests that the modelling assumptions that underpin their work may be optimistic. The revenue projections seem high, as do the projected benefits, and it is not clear how they would apply to the specific circumstances of the UK.”

5.49The Explanatory Memorandum adds that it is unclear to the Government whether the Commission has properly considered the role that the freight transport industry plays in the wider economy, noting that hauliers may have only limited power to pass on increases in costs arising from the proposals.

Financial implications

5.50The Government notes that if the UK were required to comply with the proposals, there would be costs involved in designing future road tolls and charging systems in particular ways.

5.51It adds that the current HGV road user levy raises approximately £200 million from UK and foreign vehicles, with EU drivers contributing around £50 million of this sum. The Explanatory Memorandum states that:

“it remains to be determined whether a distance based charging scheme could be designed that raises the same net revenue and be acceptable to stakeholders (the proposal to eliminate minimum VED levels would create more flexibility to do so however).”

Previous Committee Reports

None.



11 December 2017