July/Aug 2005

The abandonment of the UK's lorry road-user charging proposals could go down as one of the great volte faces of modern government. What went wrong?

For the past two years the UK's transport and logistics world has been gearing itself up to the prospect of having to accept a universal, telematics-base tracking and monitoring system for all goods vehicles of over 3.5 tonnes gross. It could have been in place within the next couple of years.

The scheme was intended to allow vehicles to be taxed directly according to how far they travelled, and later perhaps according to what time of day they were used, and which roads they were on. Fuel duty rebates would have been offered to compensate operators for any unfairness in their overall tax burden.

The long-term intentions behind the scheme were never made clear, but one of the key short-term objectives was to prevent foreign-based vehicles from operating in Britain on cheap fuel brought over from the Continent, undercutting locally-based British operators because they paid no compensating tax. There was also a drive by industry to 'decouple' the basis of lorry fuel tax from that of car fuel tax.

 

Now, after reportedly investing over £20 million in preparatory work, the Government has dropped the entire scheme, leaving nothing in its place. Instead, it says the concept is to be rolled into a much broader but longer-term plan to introduce a distance-based road pricing scheme for all vehicles. But this is not likely to happen until around 2015.

The reactions of the big trade associations have been predictable. Having been overtly the strongest advocates of the LRUC proposal in its early days, they have shown increasing disquiet over the possible cost to operators and other practical aspects. However, now that the plan has been dropped, their focus is back squarely on the fuel tax anomaly - which is why the Freight Transport Association and Road Haulage Association have already announced a high-profile inquiry into the fuel tax position, headed by long-time industry stalwart Robbie Burns.

Not invented here

Will this inquiry consider the much simpler non-telematics taxation solution already proposed by the team at Heriot-Watt University? 'I hope so,' Professor Alan McKinnon told us, 'but there's always the risk of a 'not invented here' feeling towards it. However, I'd like to think an impartial inquiry will be able to look beyond that.'

He is however not over-optimistic about official support for his scheme. He says that on the abandonment of the original scheme he wrote to Transport Secretary Alistair Darling with new details of his team's alternative proposals. A month later he had received no response.

So why has the much-trumpeted LRUC scheme been dropped? Officially, those in authority are remaining tight-lipped about this, so the whole subject is somewhat cloaked in rumour and conjecture. However, it seems likely that the Governement was simply forced to accept that the scheme would have cost much more than originally expected - a view which we understand was supported by the this year's review by PricewaterhouseCoopers, commissioned by the FTA but never published. If so, it reflects the similar conclusion put forward in the detailed Heriot-Watt analysis.

Expensive IT projects are of course currently anathema to the Government, which is already under pressure to cut back on expenditure in this area. An LRUC budget running out of control was perhaps a bridge too far even to contemplate.

However, the abandonment puts Britain's generally pro-technology Government out of step with the many other European countries that are moving steadily towards technology-based road use charging. Austria, German and Switzerland have already implemented a form of telematics-based road tolling, although in these cases only on selected motorway-style roads, not all roads, as would have been the case in Britain.

The only sop to supporters of this approach came when Alistair Darling told Parliament: 'We will continue to work with industry and ensure that we carry the full experience gained from the project into the wider work to develop a national road pricing system for cars and lorries.'

Those with a civil rights bent will no doubt be celebrating the collapse of the project, having argued vehemently against the idea of any system that could put such enormous power in the hands of government to track individuals throughout the country at all times. The trade unions have generally resisted jumping on that bandwagon, although at least one, the GMB, has lately expressed reservations about all such systems.

Ironically, the abandonment of the scheme came shortly before the 22 July London bombings, which appear to have given rise to a much more resigned public approach to the idea of being tracked and monitored. Whether such objections ever concerned the Government before is not clear, but if so, it might have seen less reason to backtrack post Twenty-Two Seven.

What next? Assuming that the international fuel tax anomaly will not be allowed to fester for ten more years, it seems quite possible that a modified version of the Heriot-Watt plan will eventually emerge, whether or not acknowledged as such. But it looks as though industry rather than government will now be responsible for any harmonisation of standards in the telematics industry - in the UK, at least.