Sunday, 16 September 2012

UK government confirms introduction of truck road user charging

UK media has been reporting that the Government has confirmed that it is proceeding with a truck road charging system, which is essentially a vignette system for vehicles over 12 tonnes.  Various reports indicate that legislation is to be introduced to allow the system to be operational in 2015 and raise slightly more than £20 million a year in net new revenue (after operation costs and refunding vehicle excise duty for UK lorries).

Whilst there are, as yet, no details on the Department for Transport website, it is expected that the details will broadly correspond with that previously released, which I wrote about here:


There isn't too much else to say, but it is worthwhile making a few points which are not clear from the media coverage (BBC report, Daily Telegraph reportThe Independent reportThe Sun report) and indeed completely incorrect from the Express.

Distance or time charging?

This is time based charging, by day.  Owners of lorries of 12 tonnes or greater will need to pre-purchase access to the UK road network for at least 1 day, with intervals likely of 1 week, 1 month or 1 year.  UK lorry owners will only be able to buy 1 year in association with their purchase of vehicle excise duty.
There will be no need for measuring distance travelled, so the report in the Express claiming there is a need for "a box which could be tracked by satellite" (a technology which doesn't exist) is nonsense.

Done elsewhere?

Yes, a very similar system exists now in the Netherlands, Belgium, Luxembourg, Denmark, Lithuania, Hungary, Romania and Bulgaria.  It's very simple.  It is still a big step from distance based charging.
Complex technology?

No, it only needs to be like Hungary or Romania, with vignettes purchased in advance, online, by phone or in person, for a vehicle identified by number plate.  Automatic Number Plate Recognition technology is needed only for enforcement.
Thin edge of the wedge?

You could argue it could allow for car vignettes to be introduced in the UK, but why would it bother?  There are relatively few foreign light vehicles entering the UK to make it worthwhile, as it would almost certainly only be introduced with an offset to vehicle excise duty.
You could also argue it could allow for distance charging next, which is supported by the Freight Transport Association.  However, it is a far bigger step to measure distance, transmit measurements of distance, and more importantly, offset existing taxation (which would have to be fuel duty).   There are sound reasons for considering heavy vehicle charging by distance to improve resource allocation, reduce cross subsidies between road users and better reflect the growth and reduction of demand over time.   Yet there is little evidence that any major UK political party wants to confront that.
Conclusion

This isn't a big deal.  It is the UK effectively introducing the system that exists in Hungary and Romania, except it will apply to all roads.  My key interest is how enforcement will be managed with the now open Irish border, as suddenly Irish lorries will find doing business in the UK will be more expensive.

UK lorry owners will face little difference.  Foreign lorry owners operating in the UK will face some increase in costs which will deter a few, but will mainly mean they are paying a share of the costs of maintaining UK roads (whereas before those that did not refill diesel in the UK did not pay any UK taxation).   The impact on foreign lorry presence on UK roads is likely to be minor, perhaps a reduction of less than 5%.   Revenue is minor, at just over £20 million a year more after costs.  It wont mean revenue will grow with growth in freight traffic, except a small increment of the presence of foreign lorries.  

In short, it helps cover a discrepancy in fairness between foreign and domestic UK lorries, but not by much.   Most European countries charge lorries for using their major networks, the UK does not.  The high UK fuel tax deters some from filling up in the UK, but fuel tax is also high in the Netherlands.  However, it isn't a radical form of road pricing, it will have little impact on demand and is not a reason for concern.  It's a small positive step forward for those wanting better pricing on UK roads.  That's it.

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