Jan/Feb 2005

Momentum behind Britain's proposed lorry road-user charging scheme is building up, but so are the doubts about how it will work, says Peter Rowlands

If you thought you'd heard enough about the UK's proposed telematics-based lorry road-user charging scheme, you'd better think again. This is the year when it could move from being a bright idea to being something that really will happen; so it looks like being a hot topic for moths to come.

The consortia tendering to implement the scheme (there are just six left out of the original ten) have now put in their preliminary bids to the Government, which plans to announce the successful contender by the end of this year. Before that, the Government hopes to lay down initial enabling legislation in its Finance Bill 2005.

Yet perversely in some ways, while all these concrete developments are already under way, there is still a lively debate going on about how the scheme should work - and in some quarters about whether it should be introduced at all.

 

Evidence was still being taken early this year by the Select Committee on Transport, and saw the leaders of both the Freight Transport Association and the Road Haulage Association acknowledging that they had ongoing concerns about many of the implications.

Roger King, chief executive of the RHA, expressed concerns about "technical solutions which will have to be arrived at" to implement a telematics-based solution, and Richard Turner, FTA chief executive, added: "We are getting a little bit nervous that we are being asked to bear the cost-risk of the scheme because nobody knows how much it will cost, and if it costs a lot we might be asked to contribute."

This may help explain why FTA has now appointed consultancy PricewaterhouseCoopers to produce what it says will be an independent review of the whole idea. If its findings come out damningly against the current proposals, that could well hold some sway in terms of what system is finally adopted.

Far cheaper alternative

Meanwhile, Professor Ian McKinnon of Heriot-Watt University, a self-confessed sceptic about the scheme, took the opportunity of the Select Committee hearing to restate the case for what he claims is a perfectly workable and far cheaper alternative charging system, which would be based essentially on mileage returns made by vehicle operators themselves. He suggests it would cost "a few tens of millions of pounds", compared with £500 million to £600 million for the full LRUC scheme.

A lynchpin of his argument is that the Government is not currently talking about differential charging at different times of day or on different roads - and he says this would be the only real justification for the complexity of the proposed real-time location monitoring system.

He is currently attracting national interest through his dispute with HM Customs & Excise, which will be overseeing the chosen system when it comes into force. It has intimated that it completely rejects his scheme, yet has so far declined to explain why. He is attempting to force a response by invoking the new Freedom of Information Act, although when we closed for press this had not yielded any result.

An inevitability

You might think you were being offered some chance to influence the scheme by the Government's new discussion paper, Modernising the taxation of the haulage industry: lorry road-user charge. But in spite of asserting that "views would be welcome on all aspects of the Government's approach," the paper actually carries the clear message that the system itself is an inevitability, and all you can do is make suggestions about the detail.

It is constructed as a series of discussions on different ways of implementing the scheme (it poses 33 main questions in all). While many are fairly banal, the document perhaps inadvertently reveals just how much of the rule book needs rewriting in order to accommodate the current proposals.

It admits, for instance, that the Government has not yet decided what is a "lorry" for these purposes: is it any non-passenger vehicle of over 3.5 tonnes, or a commercial HGV? Equally, there are problems over how the scheme should define the gross weight of a goods vehicle (legal maximum or technical maximum?). And how should it tackle multi-axle vehicles? It says that drivers might need to declare the presence of a chargeable trailer before the start of each journey - a process that sounds hopelessly complex.

One topic reserved for the closing stages of the report, yet opening huge potential for administrative cost and complexity, is that of managing fuel tax rebates to operators. Truck operators issuing fuel from their own yards might find themselves saddled with a brand new tiered approval scheme, in which they would be assessed on the accuracy and reliability of their metering systems. That suggests a whole new departmental inspection infrastructure, along with new controls and bureaucracy.

A rather intriguing proposal floated by the document is that of exempting petrol-powered goods vehicles from the scheme (it says there are currently only 4,000 such vehicles in service). But if you're tempted to rush out to buy petrol-engined trucks to get round the scheme, you might find them tricky to come by - not to mention expensive and a tad inconvenient to run.

What operators are facing

• The scheme will be based on distance rather than time. A rate of 8.5p per km currently looks likely.
• It will apply to all lorries with a maximum permissible weight over 3.5 tonnes driving in the UK. Heavier and more polluting lorries will pay a higher rate.
• There will be a compensating reduction in fuel duty available on fuel bought in the UK for lorries paying the charge, regardless of nationality. The reduction will be provided via a new fuel repayment scheme.
• In-cab telematics units tracking and reporting on the position of all vehicles are likely to be an integral feature of the scheme, although there may be alternative payment arrangements for "occasional use"